GYRODYNE CO OF AMERICA INC 

	Filing Type:	PROXY 
	Description:	N/A 
	Filing Date:	12/09/05 

	Ticker:	GYRO 
	Cusip:	403820 
	State:	NY 
	Country:	US 
	Primary SIC:	6519 
	Primary Exchange:	NSD 
	Billing Cross Reference:	 
	Date Printed:	11/09/05

Table of Contents

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Filing Sections

Document	
Base	
Cover Page	
Notice of Meeting	
Voting Issues	
General/Summary/Introduction	
Election of Directors	
Principal Shareholders	
Beneficial Ownership	
Security Ownership of Management	
Other Benefit Plans	
Compensation of Directors	
Board Committees	
Officers	
Executive Compensation	
Summary Compensation Table	
Options	
Other Benefit Plans	
Certain Transactions	
Accountants	

Exhibits

Exhibits	

                        Section 240.14a-101 Schedule 14A. 
                    Information required in proxy statement. 
                            Schedule 14A Information 
           Proxy Statement Pursuant to Section 14(a) of the Securities 
                              Exchange Act of 1934 
                                (Amendment No. ) 

Filed by the Registrant {X} 
Filed by a party other than the Registrant { } 
Check the appropriate box: 
{X}  Preliminary Proxy Statement 
{ }  Confidential, for Use of the Commission Only (as permitted by Rule 
     14a-6(e)(2)) 
{ }  Definitive Proxy Statement 
{ }  Definitive Additional Materials 
{ }  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 
 
                        Gyrodyne Company of America, Inc. 
                        --------------------------------- 
                (Name of Registrant as Specified In Its Charter) 

    ------------------------------------------------------------------------ 
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant) 

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{ } Fee paid previously with preliminary materials. 
 
{ } Check box if any part of the fee is offset as provided by Exchange Act Rule 
0-11(a)(2) and identify the filing for which the offsetting fee was paid 
previously. Identify the previous filing by registration statement number, or 
the Form or Schedule and the date of its filing. 
 
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                                       2 

 
                        GYRODYNE COMPANY OF AMERICA, INC. 
                                 102 FLOWERFIELD 
                           SAINT JAMES, NEW YORK 11780 
 
                            NOTICE OF ANNUAL MEETING 
                                 OF SHAREHOLDERS 
                                  TO BE HELD ON 
                                DECEMBER 9, 2005 
 
TO THE SHAREHOLDERS OF GYRODYNE COMPANY OF AMERICA, INC.: 
 
NOTICE IS HEREBY GIVEN, pursuant to the by-laws, that the Annual Meeting of 
Shareholders (the "Annual Meeting") of Gyrodyne Company of America, Inc. (the 
"Company") will be held at Flowerfield Celebrations, Mills Pond Road, Saint 
James, New York 11780, on Friday, December 9, 2005 at 11:00 a.m., Eastern Time. 
 
The purpose of the Annual Meeting is to consider and vote upon the following 
matters: 
 
     1.   To elect two (2) directors to a three year term of office, or until 
          their successors shall be duly elected and qualified; 
 
     2.   To ratify the engagement of Holtz Rubenstein Reminick LLP, independent 
          accountants, as auditors of the Company and its subsidiaries for the 
          Fiscal Year ending April 30, 2006; 
 
     3.   To consider and vote upon a proposal to amend the Company's by-laws to 
          allow shareholders holding an aggregate of 30% or more of the 
          outstanding shares of the Company to call a special meeting of 
          shareholders; 
 
     4.   To act upon a shareholder proposal, opposed by the Board of Directors, 
          to promptly engage an investment bank to pursue a sale of the Company; 
          and 
 
     5.   To transact such other business as may properly come before the Annual 
          Meeting or any adjournment thereof. 
 
The foregoing items of business are more fully described in the Proxy Statement 
accompanying this Notice. By order of the Board of Directors, only Shareholders 
of Record at the close of business on November 3, 2005 are entitled to notice of 
and to vote at the Annual Meeting, or any adjournment thereof. Enclosed in this 
mailing are the Notice of the 2005 Annual Meeting of Shareholders, Proxy 
Statement, Proxy Card and Attendance Registration. 
 
To obtain an admittance card for the Annual Meeting, please complete the 
enclosed Attendance Registration form and return it with your Proxy Card. If 
your shares are held by a bank or broker, you may obtain an admittance card by 
returning the Attendance Registration form they forwarded to you. If you do not 
receive an Attendance Registration form, you may obtain an admittance card by 
sending a written request, accompanied by proof of share ownership, to the 
undersigned. For your convenience, we recommend that you bring your admittance 

                                       3 

 
card to the Annual Meeting so you can avoid registration and proceed directly to 
the Annual Meeting. However, if you do not have an admittance card by the time 
of the Annual Meeting, please bring proof of share ownership to the registration 
area where our staff will assist you. 

                                        By Order of the Board of Directors, 

                                        Peter Pitsiokos 
                                        Corporate Secretary 
 
November 17, 2005 
 
                             YOUR VOTE IS IMPORTANT 
 
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. 
HOWEVER, WE ENCOURAGE YOU TO SIGN, DATE AND PROMPTLY RETURN THE PROXY IN THE 
ENCLOSED ENVELOPE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING. GIVING 
YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE 
MEETING, BUT WILL HELP ASSURE A QUORUM AND AVOID FURTHER PROXY SOLICITATION 
COSTS. ATTENDANCE AT THE ANNUAL MEETING IS LIMITED TO SHAREHOLDERS, THEIR 
PROXIES AND INVITED GUESTS OF THE COMPANY. FOR IDENTIFICATION PURPOSES, "STREET 
NAME" SHAREHOLDERS WILL NEED TO BRING A COPY OF A BROKERAGE STATEMENT REFLECTING 
STOCK OWNERSHIP AS OF THE RECORD DATE. 

 
                                       4 

 
                                 PROXY STATEMENT 
                         ANNUAL MEETING OF SHAREHOLDERS 

                                     GENERAL 
 
This Proxy Statement is furnished in connection with the solicitation of proxies 
by the Board of Directors (the "Board") of Gyrodyne Company of America, Inc. 
("Gyrodyne" or the "Company") for use at the Annual Meeting of Shareholders (the 
"Annual Meeting") to be held Friday, December 9, 2005 at 11:00 a.m., Eastern 
Time at Flowerfield Celebrations, Mills Pond Road, Saint James, New York 11780 
and at any and all adjournments thereof. 

                          VOTING SECURITIES AND PROXIES 
 
The Board has fixed the close of business on November 3, 2005 as the record date 
(the "Record Date") for the determination of shareholders entitled to notice of, 
and to vote at, the Annual Meeting. The securities which may be voted at the 
Annual Meeting consist of shares of common stock, par value $1.00 per share, of 
the Company (the "Common Stock"). Holders of Common Stock are entitled to one 
vote per share. Shareholders do not have cumulative voting rights. It is 
necessary for a quorum that record holders of a majority of the shares 
outstanding and entitled to vote as of the Record Date be represented by proxy 
or in person at the Annual Meeting. The number of shares of Common Stock, the 
Company's only authorized class of stock, outstanding on the Record Date was 
1,230,767. This Proxy Statement and the enclosed proxy card were mailed starting 
on or about November 18, 2005. 
 
At the Annual Meeting, shareholders will consider and vote upon the following 
matters: (i) the election of two (2) directors to a three-year term of office, 
(ii) the ratification of the engagement of independent accountants for the 
Company for the fiscal year ending April 30, 2006, (iii) a proposal to amend the 
Company's by-laws to allow shareholders holding an aggregate of 30% or more of 
the outstanding shares to call a special meeting of shareholders (the "By-law 
Amendment"), and (iv) a shareholder proposal, opposed by the Board, requesting 
that the Company promptly engage an investment bank to pursue a sale of the 
Company (the "Shareholder Proposal"). 
 
Proxies solicited by the Board will be voted in accordance with the instructions 
given therein. Where no instructions are indicated, proxies will be voted "FOR" 
the election of the nominees for director, "FOR" the ratification of the 
engagement of independent accountants, "FOR" the By-law Amendment and "AGAINST" 
the Shareholder Proposal. Directors shall be elected by a plurality of the votes 
cast. The proposal to ratify the appointment of independent accountants, the 
By-law Amendment and the Shareholder Proposal will be decided by a majority of 
the votes cast. If you do not return your duly signed proxy card, your shares 
cannot be voted unless you attend the Annual Meeting and vote in person or 
present a duly signed proxy at the Annual Meeting. Proxies solicited hereby will 
be tabulated by inspectors of election designated by the Board of Directors, who 
will not be directors or officers of the Company. After the final adjournment of 
the Annual Meeting, the proxies will be returned to the Company for safekeeping. 

                                       5 

 
Management does not know of any other matters that may be presented. If any 
other matters properly come before the Annual Meeting or adjournments thereof, 
the persons named in the enclosed proxy will vote on such matters in accordance 
with their best judgment pursuant to the discretionary authority included in the 
proxy. 
 
The cost of soliciting proxies will be paid by the Company. In addition to 
solicitation by mail, officers, directors, and regular employees of the Company 
may, without compensation other than their regular compensation, solicit proxies 
telephonically, electronically or by other means of communication. Brokerage 
houses and other custodians, nominees and fiduciaries will be requested to 
forward solicitation materials to their principals and the Company will 
reimburse the expense of doing so. In addition, Mackenzie Partners Inc., a proxy 
solicitation firm, will assist the Company in soliciting proxies for the Annual 
Meeting and will be paid a fee of $7,500 plus out-of-pocket expenses. 
 
Any shareholder executing the enclosed proxy has the right to revoke it at any 
time prior to its exercise by delivering to the Company a written revocation or 
a duly executed proxy bearing a later date, or by attending the Annual Meeting 
and voting in person. However, if you are a shareholder whose shares are not 
registered in your own name, you will need appropriate documentation from your 
record holder to attend the Annual Meeting and to vote personally at the Annual 
Meeting. 
 
           CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS 
                             IN THIS PROXY STATEMENT 
 
     This Proxy Statement and the documents incorporated by reference into this 
Proxy Statement contain forward-looking statements about Gyrodyne within the 
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 
Statements containing the words "believes," "anticipates," "estimates," 
"expects," "intends," "plans," "seeks," "will," "may," "should," "would," 
"projects," "predicts," "continues" and similar expressions or the negative of 
these terms constitute forward-looking statements that involve risks and 
uncertainties. We intend such forward-looking statements to be covered by the 
safe harbor provisions for forward-looking statements contained in the Private 
Securities Litigation Reform Act of 1995, and they are included in this 
Statement for the purpose of invoking these safe harbor provisions. Such 
statements are based on current expectations and are subject to risks, 
uncertainties and changes in condition, significance, value and effect. Such 
risks, uncertainties and changes in condition, significance, value and effect 
could cause Gyrodyne's actual results to differ materially from those 
anticipated events, such as the effect of economic and business conditions, 
risks inherent in the Long Island, New York and Palm Beach County, Florida real 
estate markets, the ability to obtain additional capital to develop the 
Company's existing real estate and other risks detailed from time to time in the 
Company's SEC reports. Except as may be required under federal law, we undertake 
no obligation to update publicly any forward-looking statements for any reason, 
even if new information becomes available or other events occur. 

                                       6 

 
         DISCUSSION OF PROPOSALS TO BE CONSIDERED AT THE ANNUAL MEETING 

                              ELECTION OF DIRECTORS 
                                  (Proposal 1) 
 
     The By-Laws of the Company provide that there shall be not less than three 
(3), nor more than nineteen (19), directors. The Board of Directors of the 
Company consists of seven (7) directors and is divided into three (3) classes of 
directors serving staggered terms of office with each class to consist, as 
nearly as possible, of one-third of the total number of directors constituting 
the entire Board of Directors. Upon the expiration of the term of office for a 
class of directors, the nominees for that class are elected for a three (3) year 
term to serve until the election and qualification of their successors. At the 
Annual Meeting, two (2) directors of the Company are to be elected to three-year 
terms, each to serve until his or her successor is elected and has been 
qualified. The Board of Directors of the Company has nominated Robert H. Beyer 
and Elliot H. Levine to three (3) year terms, upon the recommendation of our 
Nominating Committee. Both nominees are members of the present Board of 
Directors of the Company, with terms expiring at the Annual Meeting. Each 
properly executed proxy received will be voted for the election of the two (2) 
nominees named below as directors to serve until the designated Annual Meeting 
of Shareholders shown below or until their respective successors shall be 
elected and shall qualify. The nominees have consented to be named as nominees 
in the Proxy Statement and to serve as directors if elected. 
 
Should any nominee become unable or unwilling to accept a nomination or 
election, the persons named in the enclosed proxy will vote for the election of 
a nominee designated by the Board. 
 
Information concerning the nominees and continuing directors of the Company, 
showing the year when first elected as a director of the Company, the age, 
principal occupation and principal affiliations, is as follows. Unless otherwise 
indicated, each of the following persons has held his or her present position 
for the last five years. 
 
Nominees for Election at the Annual Meeting 
------------------------------------------- 
 
                    Business Experience and Current            Director   Term 
      Name                   Directorships              Age     Since   Expiring 
      ----                   -------------              ---     -----   -------- 
 
Robert H. Beyer     Management and Sales                 72      1977     2005 
                    Consultant for more than the 
                    past five years; Naval Air 
                    Systems Command Engineer prior 
                    to retirement in 1998; 
                    Captain, United States Naval 
                    Reserves, prior to retirement 
                    in 1993; Technical 
                    Representative for the 
                    Company's former helicopter 
                    subsidiary until 1973. 

                                        7 

 
                    Business Experience and Current            Director   Term 
      Name                   Directorships              Age     Since   Expiring 
      ----                   -------------              ---     -----   -------- 
 
Elliot H. Levine    Senior member, Levine &              52      2004     2005 
                    Seltzer LLP, from January 1992 
                    to present. 

Incumbent Directors - Terms Expiring 2006 
----------------------------------------- 
 
                    Business Experience and Current            Director   Term 
      Name                   Directorships              Age     Since   Expiring 
      ----                   -------------              ---     -----   -------- 
 
Paul L. Lamb        Chairman of the Board of             60      1997     2006 
                    Directors of the Company from 
                    March 1999 to present; 
                    Partner, Lamb & Barnosky, LLP 
                    since 1984. 
 
Richard B. Smith    Banking Consultant, March 2005       51      2002     2006 
                    to present; Senior Vice President 
                    for Private Banking, Suffolk 
                    County National Bank, May 2000 
                    to February 2005; District 
                    Manager for Private Banking, 
                    Key Bank, January 1989 to May 
                    2000; Mayor of the 
                    Incorporated Village of 
                    Nissequogue, New York; Trustee 
                    of Smithtown Historical 
                    Society; Trustee of St. 
                    Catherine's Medical Center. 

Incumbent Directors - Terms Expiring 2007 
----------------------------------------- 
 
                    Business Experience and Current            Director   Term 
      Name                   Directorships              Age     Since   Expiring 
      ----                   -------------              ---     -----   -------- 
 
Ronald J. Macklin   Assistant General Counsel,           43      2003     2007 
                    Keyspan Corporate Services, a 
                    wholly-owned subsidiary of 
                    Keyspan Corporation, October 
                    2003 to present; various 
                    positions within the Office of 
                    General Counsel of Keyspan 
                    Corporate Services, 1991 to 
                    October 2003. 

                                        8 

 
                    Business Experience and Current            Director   Term 
      Name                   Directorships              Age     Since   Expiring 
      ----                   -------------              ---     -----   -------- 
 
Stephen V. Maroney  President, CEO and Treasurer         63      1996     2007 
                    of the Company, March 14, 1999 
                    to present; Director of real 
                    estate development for the 
                    Company, June 1996 to March 
                    1999; former President of 
                    Extebank, a Long Island based 
                    commercial bank. 
 
Philip F. Palmedo   Chairman of the Board,               71      1996     2007 
                    International Resources Group, 
                    1978 to present; Director, EHR 
                    Investments, 2001 to present; 
                    President, Palmedo Associates, 
                    1980 to present; Director, 
                    Stony Brook Foundation, 1990 
                    until 2005. 

            THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE 
            "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR. THIS IS 
                IDENTIFIED AS ITEM 1 ON THE ENCLOSED PROXY CARD. 

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
 
Principal Shareholders 
 
     The following table contains common stock ownership information for persons 
known by the Company to own beneficially 5% or more of the Company's common 
stock, par value $1.00 per share (the "Common Stock"), as of November 3, 2005. 
In general, beneficial ownership includes those shares that a person has the 
power to vote, sell or otherwise dispose of. Beneficial ownership also includes 
that number of shares which an individual has the right to acquire within 60 
days (such as stock options) of the date this table was prepared. Two or more 
persons may be considered the beneficial owner of the same shares. We obtained 
the information provided in the following table from filings with the SEC and 
from information otherwise provided to the Company. In this Proxy Statement, 
"voting power" is the power to vote or direct the voting of shares, and 
"investment power" is the power to dispose or direct the disposition of shares. 

                                       9 

 
                                        Type of         Number of     Percent of 
        Name and Address               Ownership      Shares Owned      Class 
        ----------------               ---------      ------------      ----- 
 
Goldstein/Dakos                        Beneficial      135,569 (1)     11.02% 
60 Heritage Drive 
Pleasantville, NY 10570 
 
Bruce Sherman                          Beneficial      130,837 (2)     10.63% 
8889 Pelican Bay Blvd., Suite 500 
Naples, Florida 34108 
 
Gerard Scollan                         Beneficial      103,741 (3)      8.43% 
80 Browns River Road 
Sayville, NY 11782 
 
Kellogg/Everest                        Beneficial       92,296 (4)      7.50% 
14 Wall Street, 27th Floor 
New York, NY 10005 
 
Private Capital Management, LP         Beneficial       74,935 (2)      6.09% 
8889 Pelican Bay Blvd., Suite 500 
Naples, Florida 34108 
 
Gyrodyne Company of America, Inc.      Beneficial       67,580 (5)      5.49% 
St. James, NY 11780 
 
(1)  On May 18, 2005, Phillip Goldstein and Andrew Dakos filed a joint Schedule 
     13D/A with the Securities and Exchange Commission stating that Mr. Phillip 
     Goldstein is deemed to be the beneficial owner of 102,519 shares of 
     Gyrodyne stock, and Mr. Dakos is deemed to be the beneficial owner of 
     33,050 shares of Gyrodyne stock. Mr. Goldstein has sole investment power 
     over 102,519 shares, sole voting power over 6,560 shares and shared voting 
     power over 1,000 shares of Gyrodyne stock. Mr. Dakos has sole investment 
     and voting power over 33,050 shares of Gyrodyne stock. 
 
(2)  Mr. Sherman is the CEO of Private Capital Management, LP, and in this 
     capacity he exercises shared dispositive and shared voting power with 
     regard to the shares held by Private Capital Management, LP's clients and 
     managed by Private Capital Management, LP. Mr. Sherman disclaims beneficial 
     ownership of the 74,935 shares held by Private Capital Management, LP's 
     clients and disclaims the existence of a group. 
 
(3)  Includes 99,241 shares of Company Stock held by Lovin Oven Catering of 
     Suffolk, Inc, of which Mr. Scollan is the majority shareholder. 
 
(4)  On June 16, 2005, Kellogg Capital Group, LLC and Everest Special Situations 
     Fund, L.P. filed a joint Schedule 13D/A with the Securities and Exchange 
     Commission pursuant to which both companies may be deemed to own 
     beneficially in the aggregate 92,296 shares of Gyrodyne stock. 

                                       10 

 
(5)  Since the Company has the authority to direct HSBC Bank, USA, the Trustee 
     of the Gyrodyne Pension Plan, to vote the securities of the Company held by 
     the Pension Fund, Gyrodyne Company of America, Inc. has been listed above 
     as the beneficial owner of the 67,580 shares held by HSBC Bank, USA as 
     Trustee for the Gyrodyne Pension Fund. The Board of Directors intends to 
     instruct the trustees of the Pension Fund to vote "FOR" the election of the 
     nominees for director, "FOR" ratification of the appointment of independent 
     auditors, "FOR" the By-law Amendment and "AGAINST" the Shareholder 
     Proposal. 
 
Security Ownership of Directors and Executive Officers 
 
     The following table sets forth as of November 3, 2005 the outstanding 
voting securities beneficially owned by the directors and executive officers 
individually and the number of shares owned by directors and executive officers 
as a group. Except as otherwise indicated, each person and each group shown in 
the table has sole voting and investment power with respect to the shares of 
Common Stock listed next to their name. 

          
    Name, Positions with the                     Amount and Nature of        Percentage of 
      Company and Address                       Beneficial Ownership (1)   Common Stock Owned 
      -------------------                       ------------------------   ------------------ 
                                                                                     
Stephen V. Maroney, President, CEO,                    92,894 (2)                7.24% 
Treasurer and Director 
c/o Gyrodyne Company of America, Inc. 
102 Flowerfield 
St. James, NY 11780 
 
Peter Pitsiokos, Chief Operating Officer,              35,205 (3)                2.86% 
Executive Vice President and Secretary 
c/o Gyrodyne Company of America, Inc. 
102 Flowerfield 
St. James, NY 11780 
 
Robert H. Beyer, Director                              14,634 (4)                1.19% 
10505 Indigo Lane 
Fairfax, Virginia 22032 
 
Paul L. Lamb, Chairman of the Board of                 22,864 (5)                1.85% 
Directors 
c/o Lamb & Barnosky, LLP 
534 Broadhollow Road 
Melville, NY 11747 
 
Elliot H. Levine, Director                                  0                      * 
c/o Levine & Seltzer, LLP 
150 East 52nd Street 
New York, NY 10022  

 
                                       11 

 

Ronald J. Macklin, Director                               200                      * 
c/o Keyspan Corporate Services 
175 E. Old Country Road 
Hicksville, NY 11801 
 
Philip F. Palmedo, Director                            12,749 (6)                1.03% 
4 Piper Lane 
St. James, NY 11780 
 
Richard B. Smith, Director                              1,000                     * 
697 Short Beach Road 
St. James, NY 11780 
 
All Directors and Executive Officers as a             179,546 (7)               13.90% 
Group (Eight (8) Persons)  

* Less than one percent of the total shares of outstanding stock. 
 
(1)  For a definition of "beneficial ownership" see "Principal Shareholders." 
 
(2)  Includes 52,980 shares issuable upon the exercise of stock options to 
     purchase Company stock which are exercisable within sixty (60) days of 
     November 3, 2005. 
 
(3)  Does not include his wife's and minor children's ownership of 1,089 shares 
     in which he denies any beneficial interest. 
 
(4)  Does not include his wife's ownership of 1,801 shares in which he denies 
     any beneficial interest. Includes 2,750 shares issuable upon the exercise 
     of stock options to purchase Company stock which are exercisable within 
     sixty (60) days of November 3, 2005. 
 
(5)  Includes 13,747 shares of Company stock held by Lamb & Barnosky, LLP Profit 
     Sharing Trust. Mr. Lamb is a Trustee of the Profit Sharing Trust and a 
     partner in Lamb & Barnosky, LLP. Includes 2,750 shares issuable upon the 
     exercise of stock options to purchase Company stock which are exercisable 
     within sixty (60) days of November 3, 2005. 
 
(6)  Does not include his wife's ownership of 4,125 shares in which he denies 
     any beneficial interest. Includes 2,750 shares issuable upon the exercise 
     of stock options to purchase Company stock which are exercisable within 
     sixty (60) days of November 3, 2005. 
 
(7)  Includes 61,230 shares issuable upon the exercise of stock options to 
     purchase Company stock which are exercisable within sixty (60) days of 
     November 3, 2005. 

                                       12 

 
             INFORMATION ABOUT THE BOARD OF DIRECTORS AND MANAGEMENT 
 
Director Compensation 
 
     Directors who are full-time salaried employees of the Company are not 
compensated for their service on the Board or any committee. Non-employee 
directors are paid an annual fee of $12,000.00, $1,000.00 for each director's 
meeting attended, $500.00 for each committee meeting attended and travel and 
lodging expenses where appropriate. All compensation is paid in cash. Beginning 
in Fiscal Year 2005, the Company began paying an additional fee of $2,000.00 per 
month to the Chairman of the Board of Directors. There were no other 
arrangements pursuant to which any director was compensated during Fiscal Year 
2005 for any service provided as a director. 
 
Non-Employee Directors Stock Option Plan 
 
     The Company adopted a non-qualified stock option plan for all non-employee 
directors of the Company in October 1996. The plan expired in September 2000. 
Each non-employee director was granted an initial 2,500 options on the date of 
adoption of the plan. These options were exercisable in three equal annual 
installments commencing on the first anniversary date subsequent to the grant. 
Additionally, each non-employee director was granted 1,250 options on each 
January 1, 1997 through 2000, respectively. These additional options were 
exercisable in full on the first anniversary date subsequent to the date of each 
grant. The options expire between November 2005 and January 2007. 

                                       13 

 
     A summary of the Company's various fixed stock option plans as of April 30, 
2005 and 2004, respectively, and changes during the years then ended is 
presented below: 
 
                                              Years Ended April 30, 
                                              --------------------- 
                                           2005                   2004 
                                   ---------------------  ---------------------- 
                                               Weighted                 Weighted 
                                                Average                  Average 
                                               Exercise                 Exercise 
Fixed Stock Options                  Shares     Price       Shares       Price 
-------------------                ---------   --------   ---------    --------- 
Outstanding, beginning of year       164,650    $16.30      174,740    $  15.28 
Granted                                    -         -       38,500       16.87 
Exercised                            (73,620)    16.83      (38,670)      12.62 
Canceled                                   -         -       (9,920)      14.91 
                                   ---------              --------- 
Outstanding, end of year              91,030     15.87      164,650       16.30 
                                   =========              ========= 
 
Options exercisable at year end       91,030     15.87      164,650       16.30 
                                   =========              ========= 
Weighted average fair value of 
options granted during the year                 $  *                   $   5.31 
                                                ======                 ======== 
 
*  During Fiscal Year 2005, there were no options/SAR grants issued to any 
   directors or officers. 

                                       14 

 
The following table summarizes information about stock options outstanding at 
April 30, 2005: 

          
                  Options Outstanding                            Options Exercisable 
----------------------------------------------------------     ------------------------ 
                                   Weighted 
                                    Average       Weighted                     Weighted 
                                   Remaining       Average                      Average 
    Range of         Number       Contractual     Exercise       Number        Exercise 
Exercise Prices    Outstanding        Life         Price       Outstanding      Price 
---------------    -----------    -----------     --------     -----------     -------- 
                                                                                  
 $13.46-14.23        19,800            .43         13.91          19,800      $  13.91 
 $15.46-16.87        64,355           2.47         16.20          64,355      $  16.20 
    $18.44            6,875           1.67         18.44           6,875      $  18.44  

Shares reserved for future issuance at April 30, 2005 are comprised of the 
following: 
 
Shares issuable upon exercise of stock options under the 
Company's Non-Employee Director Stock Option Plan:              17,875 
 
Shares issuable upon exercise of stock options under 
the Company's stock incentive plan:                             73,155 
                                                                ------ 
 
                                                                91,030 
                                                                ====== 

                    BOARD MEETINGS, COMMITTEES AND ATTENDANCE 
 
Attendance 
 
     There were 10 regular and special meetings of the Board of Directors during 
Fiscal Year 2005. Each director attended at least 75% of the meetings of the 
Board of Directors and at least 75% of the meetings of each committee of the 
Board on which such director served during Fiscal Year 2005. 
 
Independence 
 
     The majority of the members of the Board of Directors are independent 
directors as defined by the listing requirements of The NASDAQ Stock Market. 
 
Committees 
 
     The Board of Directors of the Company has established the following 
committees: 
 
     The Company has a separately-designated standing Audit Committee 
established in accordance with Section 3(a)(58)(A) of the Exchange Act, and its 
current members are Messrs. Smith (Chairman), Levine and Macklin. The Audit 
Committee meets with the Company's independent auditors annually to review 
financial results, audited financial statements, internal financial controls and 
procedures and audit plans and recommendations. The Audit Committee also 
recommends the selection, retention or termination of the Company's independent 

                                       15 

 
auditors, approves services to be provided by the independent public accountants 
and evaluates the possible effect the performance of such services will have on 
the accountants' independence. The Company has adopted a written charter for the 
Audit Committee, a copy of which was attached as an exhibit to the Company's 
Proxy Statement in connection with its 2004 Annual Meeting. All of the members 
of the Audit Committee are independent directors as defined by the listing 
requirements of The NASDAQ Stock Market. The Audit Committee met eight (8) times 
during Fiscal Year 2005. All members of the Audit Committee are "financially 
literate" and have been determined to be "independent" within the meaning of SEC 
regulations and NASDAQ rules. The Board has determined that at least one member, 
Mr. Levine, a certified public accountant, qualifies as an "audit committee 
financial expert" as a result of relevant experience as a partner in the 
accounting firm of Levine & Seltzer, LLP, over ten years of accounting 
experience as a partner and director of taxes at Leslie Sufrin & Co. P.C. and 
several other years of experience in the field of public accounting. 
 
     The Executive Compensation Committee consists entirely of non-employee 
directors and oversees the Company's compensation and benefit policies and 
programs. It recommends to the Board annual salaries, bonuses and other benefits 
for elected officers. The Committee met four times in Fiscal Year 2005 and its 
members currently are Mr. Levine (Chairman), Mr. Palmedo and Mr. Macklin. 
 
     The Nominating Committee consists entirely of non-employee directors and 
recommends guidelines to the Board regarding the size and composition of the 
Board and criteria for the selection of nominees. It also recommends the slate 
of director nominees to be included in the Proxy Statement and recommends 
candidates for vacancies which may occur. The Nominating Committee has a written 
charter, which is available on the Company's website, www.gyrodyne.com. Each 
member of the Nominating Committee is an independent director as defined by the 
listing standards of The NASDAQ Stock Market. The Nominating Committee will 
accept for consideration stockholders' nominations for directors if made in 
writing. The nominee's written consent to the nomination and sufficient 
background information on the candidate must be included to enable the Committee 
to make proper judgments as to his or her qualifications. Nominations must be 
addressed to the Secretary of the Company at the Company's headquarters and must 
be received no later than the deadline for submissions of stockholders proposals 
in order to be considered for the next annual election of directors. The 
Nominating Committee believes that having directors with relevant experience in 
business and industry, government, education and other areas is beneficial and 
the Committee seeks to monitor the skills and experience of the Company's 
directors. All identified candidates, including shareholder-proposed candidates, 
are evaluated by the Committee using generally the same methods and criteria, 
although those methods and criteria are not standardized and may vary from 
time-to-time. The Committee met twice during Fiscal Year 2005 and its members 
currently are Mr. Beyer (Chairman), Mr. Palmedo and Mr. Smith. 
 
     The Stock Option Committee consists entirely of non-employee directors not 
eligible to participate in the Company's 1993 Stock Incentive Plan or other 
stock option plans for the benefit of Company employees. The primary functions 
of the Stock Option Committee include the review and administration of employee 
stock option plans for the benefit of officers and key employees. It also 
recommends to the Board stock options and awards. The Stock Option Committee 
consists of Mr. Palmedo (Chairman), Mr. Levine and Mr. Macklin. The Committee 
did not meet in Fiscal Year 2005. 

                                       16 

 
Communication with the Board of Directors 
 
     The Board does not currently provide a process for shareholders to send 
communications to the Board or any of the directors. The Company believes that 
senior management, as opposed to individual directors, provides the public voice 
of the Company, and that shareholders can effectively communicate with the 
Company by contacting the management of the Company through either regular mail, 
email or in person. Shareholders also have meaningful access to the Board 
through the shareholder proposal process, which is described below. 
 
Board Attendance Policy 
 
     The Company encourages, but does not require, all of its directors to 
attend annual shareholders meetings of the Company. Last year all of the 
directors were in attendance at the annual meeting of the Company's 
shareholders. 
 
                          REPORT OF THE AUDIT COMMITTEE 
 
     Pursuant to newly adopted rules by the Securities and Exchange Commission 
(the "SEC") and the National Association of Securities Dealers, Inc. (the 
"NASD"), the Audit Committee of Gyrodyne Company of America, Inc. has issued the 
following report and affirmed that: 
 
(i)   We have reviewed and discussed with management the audited financial 
      statements for the fiscal year ended April 30, 2005. 
 
(ii)  We have discussed with the independent auditors the matters required to be 
      discussed by Statement on Auditing Standards No. 61 pertaining to 
      communications with Audit Committees, as may be modified or supplemented. 
 
(iii) We have received from the Company's independent accountants the written 
      disclosures and the letter regarding the auditors' independence as 
      required by Independence Standards Board Standard No. 1 and we have 
      discussed with the independent accountant their independence with respect 
      to the Company. 
 
(iv)  Based on the review and discussions referred to above, we recommended to 
      the Board that the audited financial statements be included in the 
      Company's Annual Report on Form 10-KSB for the most recent fiscal year for 
      filing with the SEC. 
 
(v)   All of the members of the Company's Audit Committee qualify as being 
      independent as defined in the applicable listing standards issued by the 
      NASD. 
 
(vi)  The Board of Directors has adopted a written charter for the Audit 
      Committee. 

                                       17 

 
               Members of the Committee 
               Richard B. Smith (Chairman) 
               Elliot H. Levine 
               Ronald J. Macklin 
 
                    EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS 
 
     Peter Pitsiokos, age 46, has served as Executive Vice President and 
Secretary for more than the past five years, as Chief Operating Officer and 
Chief Compliance Officer since 2004 and as General Counsel from November 1992 
until 2004. Mr. Pitsiokos was formerly the Executive Assistant District Attorney 
in Suffolk County, New York. He also served as the Assistant Director of 
Economic Development and the Director of Water Resources in the Town of 
Brookhaven. 
 
                             EXECUTIVE COMPENSATION 
 
     The following table sets forth all compensation during the fiscal years 
ended April 30, 2005, April 30, 2004 and April 30, 2003 awarded to, earned by or 
paid to Stephen V. Maroney, the Company's President and Chief Executive Officer, 
and Peter Pitsiokos, the Company's Executive Vice President and Secretary. No 
other executive officer's total annual salary and bonus for fiscal year end 
April 30, 2005 exceeded $100,000. 

          
                                                   SUMMARY COMPENSATION TABLE 
 
                                                                                    Long Term Compensation 
                                                                            -------------------------------------- 
                                             Annual Compensation                      Awards             Payouts 
                                  ----------------------------------------  --------------------------  ---------- 
         (a)              (b)         (c)          (d)           (e)             (f)          (g)           (h)          (i) 
 
                                                                Other        Restricted   Securities 
                                                                Annual          Stock     Underlying       LTIP      All Other 
 Name and Principal                 Salary        Bonus      Compensation      Award(s)     Options/      Payouts   Compensation 
      Position           Year         ($)          ($)          ($)(A)           ($)        SARs(#)         ($)          ($) 
-------------------------------------------------------------------------------------------------------------------------------- 
                                                                                                                             
Stephen V. Maroney       2005       209,500           0        29,688(B)          0               0          0           0 
President and CEO 
                         2004       209,500           0        49,628(B)          0          17,500          0           0 
 
                         2003       209,500           0        22,422(B)          0          20,355          0           0 

Peter Pitsiokos          2005       152,500      10,000             0(C)          0               0          0           0 
COO, Exec. V.P. and 
Secretary                2004       152,500           0        70,188(C)          0          13,500          0           0 
 
                         2003       148,990           0        17,797(C)          0          13,945          0           0  

 
                                       18 

 
(A)  The Company has concluded that aggregate amounts of personal benefits to 
     any of the current executives does not exceed the lesser of $50,000 or 10% 
     of compensation and bonuses reported above for the named executive 
     officers, and that the information set forth in tabular form above is not 
     rendered materially misleading by virtue of the omission of such personal 
     benefits. 
 
(B)  In Fiscal Year 2005, Mr. Maroney exercised 1,375 options and received an 
     equal number of shares with a value of $29,688. In Fiscal Year 2004, Mr. 
     Maroney exercised 4,125 options and received an equal number of shares with 
     a value of $49,628. In Fiscal Year 2003, Mr. Maroney received 1,430 shares 
     from stock awards granted with a value of $22,422. 
 
(C)  In Fiscal Year 2005, Mr. Pitsiokos did not exercise any stock options or 
     receive any stock awards. In Fiscal Year 2004, Mr. Pitsiokos exercised 
     6,600 options with SAR's and received 2,922 shares with a value of $70,188. 
     In Fiscal Year 2003, Mr. Pitsiokos received 1,135 shares from stock awards 
     granted with a value of $17,797. 
 
     During Fiscal Year 2005, there were no options/SAR grants issued to any 
directors or officers. 
 
Employment Contracts 
 
     Effective January 23, 2003, the Company entered into amended and restated 
employment agreements with Stephen V. Maroney as President, Chief Executive 
Officer, and Treasurer and Peter Pitsiokos as Executive Vice President and 
Secretary. Their annual salaries are currently at $209,500 and $152,500, 
respectively. The terms of the agreements were extended from one to three years, 
contain evergreen provisions, and provide for severance payments equivalent to 
three years' salary in the event of a change in control. Both agreements were 
attached as Exhibit 10, Material Contracts, in the Form 10-QSB dated January 31, 
2003. 
 
1993 Stock Incentive Plan 
 
     The shareholders in 1993 adopted a stock incentive plan (the "Plan"), which 
expired in October 2003, under which participants may be granted Incentive Stock 
Options ("ISOs"), Non-Qualified Stock Options ("NQSOs") or Stock Grants. The 
purpose of the Plan was to promote the overall financial objectives of the 
Company and its shareholders by motivating those persons selected to participate 
in the Plan to achieve growth in shareholder value and retain the association of 
those individuals who are instrumental in achieving this growth. Such options or 
grants became exercisable at various intervals based upon vesting schedules as 
determined by the Executive Compensation Committee. The options expire between 
August 2005 and May 2008. There are no remaining shares or rights available for 
issuance under this plan. No options or SARs were issued during the last fiscal 
year. 
 
     The ISOs were granted to employees and consultants of the Company at a 
price not less than the fair market value on the date of grant. All such options 
were authorized and approved by the Board of Directors, based on recommendations 
of the Compensation Committee. ISOs were granted along with Stock Appreciation 

                                       19 

 
Rights, which permitted the holder to tender the option to the Company in 
exchange for stock, at no cost to the optionee, that represented the difference 
between the option price and the fair market value on date of exercise. NQSOs 
were issued with Limited Stock Appreciation Rights, which were exercisable, for 
cash, in the event of a change of control. In addition, an incentive kicker was 
provided for Stock Grants, ISOs and NQSOs, which increased the number of grants 
or options based on the market price of the shares at exercise versus the option 
price. 

          
                            AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR 
                                       AND FY-END OPTION/SAR VALUES 
----------------------------------------------------------------------------------------------------------- 
 
        (a)                      (b)                (c)                   (d)                    (e) 
                                                                 Number of Securities          Value of 
                                                                Underlying Unexercised        Unexercised 
                                                                    Options/SARs at          In-the-Money 
                                                                      FY-End (#)            Options/SARs at 
                                                                                              FY-End ($) 
 
                           Shares Acquired                            Exercisable/           Exercisable/ 
       Name                  on Exercise      Value Realized         Unexercisable          Unexercisable 
----------------------------------------------------------------------------------------------------------- 
                                                                                                
Stephen V. Maroney               7,946            $178,971             64,530/0             $1,609,322/$0 
President and CEO 
 
Peter Pitsiokos 
COO and Secretary               31,600            $814,859                0/0                   $0/$0  

Incentive Compensation Plan 
 
     The Company has an incentive compensation plan, which was established in 
1999 and amended in 2004, for all full-time employees and members of the Board 
in order to promote shareholder value. The benefits of the incentive 
compensation plan are realized only upon a change in control of the Company. 
Change in control is defined as the accumulation by any person, entity or group 
of 30% or more of the combined voting power of the Company's voting stock or the 
occurrence of certain other specified events. In the event of a change in 
control, the Company's plan provides for a cash payment equal to the difference 
between the plan's "establishment date" price of $15.39 per share and the per 
share price of the Common Stock on the closing date, equivalent to 100,000 
shares of Common Stock. The payment amount would be distributed to eligible 
participants based upon their respective weighted percentages (ranging from 0.5% 
to 18.5%). 
 
                    TRANSACTIONS WITH CERTAIN RELATED PERSONS 
 
     There were two transactions in Fiscal Year 2004, and two transactions in 
Fiscal Year 2005, in which the Company was a party and in which any officer, 
director or beneficial owner of more than 5% of the Company's common stock, or 
any member of the immediate family of any of the foregoing persons, had a direct 
or indirect material interest which exceeded $60,000. 

                                       20 

 
     The Company had a mortgage receivable as of the end of Fiscal Year 2005 in 
the original principal amount of $1,800,000 due from Gerard Scollan, a former 
tenant and current beneficial owner of more than five percent of the Company's 
Common Stock. The mortgage bears interest at 5% annually and the Company 
received $86,361 in interest during Fiscal Year 2005 and $90,000 in Fiscal Year 
2004. During Fiscal Year 2005, Mr. Scollan prepaid $500,000 of the principal 
amount of the mortgage receivable. The Company believes that the terms of the 
mortgage are no less favorable to the Company than could have been obtained from 
an unaffiliated third party. 
 
     Mr. Paul L. Lamb, Chairman of the Board of Directors, is a partner in the 
law firm of Lamb & Barnosky, LLP, which until June 2005 performed legal services 
for the Company and was paid its usual and customary fees for those services. 
Total fees paid to Lamb & Barnosky, LLP were $109,550 in Fiscal Year 2005 and 
$228,962 in Fiscal Year 2004. 
 
             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 
 
     Section 16(a) of the Exchange Act requires that the Company's directors, 
executive officers and any person holding more than ten percent of the Company's 
Common Stock file with the SEC reports of ownership and changes in ownership, 
and that such individuals furnish the Company with copies of the reports. 
 
     Based solely on our review of the copies of such forms received by us with 
respect to Fiscal Year 2005, and any written representations from reporting 
persons that no Forms 5 were required, the Company believes that all Section 
16(a) filing requirements applicable to our officers and directors were complied 
with in Fiscal Year 2005. A review of prior year filings indicates that no 10% 
holder of Gyrodyne Common Stock failed to file timely reports. 
 
               RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS 
                                  (Proposal 2) 
 
     The Board of Directors, upon the recommendation of the Audit Committee, 
which is comprised entirely of independent directors, has appointed the 
accounting firm of Holtz Rubenstein Reminick LLP ("Holtz Rubenstein") as 
independent public accountants of the Company and its subsidiaries for the 
current Fiscal Year. The appointment of Holtz Rubenstein has been ratified by 
the shareholders every year since 1990. The Board is requesting ratification of 
Holtz Rubenstein as independent public accountants. This firm has no financial 
interest in the Company or any connection with the Company other than as 
auditors and independent public accountants. The report of Holtz Rubenstein with 
respect to the Company's financial statements appears in the Company's annual 
report for Fiscal Year 2005. 
 
     In the event the proposal is defeated, the adverse vote will be considered 
a direction to the Board to select other independent public accountants for the 
next fiscal year. However, because of the expense and difficulty of making any 
substitution of independent public accountants after the beginning of a fiscal 
period, it is contemplated that the appointment for Fiscal Year 2006 will be 
permitted to stand unless the Board finds other reasons for making the change. 

                                       21 

 
     Audit Fees. Audit fees with out of pocket expenses billed or expected to be 
billed to the Company by Holtz Rubenstein for professional services rendered for 
the audit of the Company's financial statements for the fiscal year ended April 
30, 2005 and for reviews of the Company's financial statements included in the 
Company's quarterly reports on Form 10-QSB for the last fiscal year totaled 
$43,100 and for Fiscal Year 2004 totaled $40,000. 
 
     Audit-Related Fees. Audit-related fees, consisting of aggregate fees billed 
for assurance and related services by Holtz Rubenstein that are reasonably 
related to the performance of the audit or review of the Company's financial 
statements that are not reported under "Audit Fees" totaled $17,444 in Fiscal 
Year 2005 and totaled $8,800 for Fiscal Year 2004. 
 
     Tax Fees. Aggregate fees billed for professional services rendered by Holtz 
Rubenstein for tax compliance, tax planning and tax advice totaled $22,900 in 
Fiscal Year 2005 and $13,100 in Fiscal Year 2004. 
 
     All Other Fees. No other fees were billed or expected to be billed to the 
Company for other products and services provided by Holtz Rubenstein during the 
two last fiscal years. 
 
     None of the services performed by Holtz Rubenstein for the Company were 
performed by non full time Holtz Rubenstein employees. 
 
     Our Audit Committee has determined not to adopt any blanket pre-approval 
policies or procedures. Instead, the Committee will review each service on a 
case-by-case basis before approving the engagement of Holtz Rubenstein for audit 
or permissible non-audit services. 
 
     The Audit Committee reviews each proposed engagement to determine whether 
the provision of services is compatible with maintaining the independence of the 
independent auditors. All of the fees shown above were pre-approved by the Audit 
Committee. 
 
     A representative of Holtz Rubenstein is expected to be present at the 
Annual Meeting, will be given an opportunity to make a statement if he or she 
desires to do so and is expected to be available at a designated time during the 
Annual Meeting to respond to appropriate questions. 
 
             ------------------------------------------------------ 
 
             THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE 
           SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF APPOINTMENT OF 
             HOLTZ RUBENSTEIN REMINICK LLP AS INDEPENDENT AUDITORS. 
            THIS IS IDENTIFIED AS ITEM 2 ON THE ENCLOSED PROXY CARD. 
 
             ------------------------------------------------------ 

                                       22 

 
                                BY-LAW AMENDMENT 
                                  (Proposal 3) 
 
     Under New York law, shareholders of a company incorporated in New York, 
such as the Company, may not call a special meeting of shareholders unless the 
company's by-laws or charter provide this right. Neither the Company's by-laws 
nor its charter currently allow shareholder's to call a special meeting. The 
Company is now proposing an amendment to the Company's by-laws that would allow 
shareholders holding an aggregate of at least 30% of the outstanding shares of 
the Company to call a special meeting of shareholders. The amendment would be 
effective upon approval by the Company's shareholders. 
 
     The resolution to be considered by the shareholders at the Annual Meeting 
reads as follows: 
 
     RESOLVED, that Section 203 of the Company's Amended and Restated 
     By-laws be further amended and restated to read in full as follows: 
 
          "Section 203. Special meetings. Special meetings of the 
          stockholders may be called at any time by (i) the President, 
          (ii) the Chairman of the Board, (iii) the Board of Directors 
          pursuant to a resolution adopted by a majority of the total 
          number of directors that the Corporation would have if there 
          were no vacancies (the "Whole Board"), or (iv) Qualified 
          Stockholders holding at least thirty percent (30%) of all 
          the votes entitled to be cast on any issue proposed to be 
          considered at the special meeting. For purposes of this 
          Section, a Qualified Stockholder shall mean a person who 
          shall have been a stockholder of the Corporation for at 
          least six (6) months immediately preceding the request for a 
          special meeting." 
 
     The Board of Directors believes that permitting an appropriate number of 
shareholders to call a special meeting of shareholders promotes shareholder 
democracy. The Board also believes that a meaningful aggregate share ownership 
requirement properly balances the dual goals of shareholder democracy and 
efficient corporate governance. The Company had received a proposal from a 
shareholder, which the Company properly excluded from this Proxy Statement in 
accordance with regulations promulgated by the SEC, that would have allowed 
shareholders with only 15% of the outstanding shares in the aggregate to call 
special meetings. The Board believes that requiring shareholders calling a 
special meeting to own an aggregate of 30% or more of the shares, rather than a 
lower ownership level such as 15%, will prevent a small minority of shareholders 
from imposing on the Company the significant financial and administrative 
burdens of special shareholders meetings. Given the concentration of significant 
share ownership among a relatively small number of Company shareholders, a 15% 
ownership requirement would mean that just two shareholders would have the power 
to call a special meeting without regard to the holders of the other 85% of the 
shares. Allowing a small minority of shareholders to call an unlimited number of 
special meetings for any reason would be disruptive to the conduct of the 
Company's business and potentially expensive. The Company is required to send 
each holder of common stock a notice and proxy materials for every special 
meeting of shareholders, which results in enormous legal, printing and mailing 
expenses in addition to other costs normally associated with an annual meeting. 
Moreover, preparing for shareholders meetings requires significant attention of 

                                       23 

 
the Company's directors, officers and significant employees, diverting their 
attention away from performing their primary function which is to operate the 
business of the Company in the best interests of the shareholders. The Board 
believes that the interests of the shareholders would best be served if the 
Company's resources were utilized to operate and grow the Company's business and 
profitability, particularly since shareholders already have an opportunity to 
bring matters before shareholders meetings on an annual basis. 
 
     Under the Company's by-laws, the Board has the authority to approve the 
proposed by-law amendment, and neither the by-laws nor New York law would 
require the shareholders to ratify it. Nevertheless, the Board is seeking the 
approval of the shareholders because of the direct impact the proposal would 
have on the shareholders, and because New York law provides that any by-law 
adopted by the Board could then, in any event, be repealed or amended by the 
shareholders. Under the Company's by-laws, the proposal requires the affirmative 
vote, either in person or by proxy, of a majority of the Company's stock issued 
and outstanding and entitled to vote at the Annual Meeting. 
 
     To approve the proposal, you should cast a "FOR" vote for Proposal No. 3 by 
following the instructions contained in the enclosed proxy card. If you properly 
sign and return your proxy card with no voting instructions, you will be deemed 
to have voted "FOR" approval of the by-law amendment. If you fail to return your 
proxy card and fail to vote at the Annual Meeting, the effect will be the same 
as a vote against the approval and adoption of the proposal. RETURING THE PROXY 
CARD DOES NOT DEPRIVE YOU OF YOUR RIGHT TO ATTEND THE ANNUAL MEETING AND VOTE 
YOUR SHARES IN PERSON. 
 
       THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS 
     VOTE "FOR" THE PROPOSED AMENDMENT OF THE COMPANY'S BY-LAWS AS DESCRIBED 
         ABOVE. THIS IS IDENTIFIED AS ITEM 3 ON THE ENCLOSED PROXY CARD. 
 
                              SHAREHOLDER PROPOSAL 
                                  (Proposal 4) 
 
     Matthew Brand, as Managing Director of Kellogg Capital Group, LLC (the 
"Proponent"), 55 Broadway, 4th Flr, New York, NY 10006, reporting beneficial 
ownership of 61,772 shares of Gyrodyne common stock, has submitted the following 
proposal and supporting statement for inclusion in this Proxy Statement for the 
Annual Meeting. The proposed resolution and supporting statement, for which the 
Board and the Company accept no responsibility, are presented below in the form 
received from the Proponent. The affirmative vote of a majority of the votes 
cast at the Annual Meeting is required to approve this proposal. 
 
     RESOLVED: The stockholders of Gyrodyne request that an investment 
     banking firm be promptly engaged to pursue a sale of the Company. 

                                       24 

 
Supporting Statement 
 
     "We believe Gyrodyne's shares trade at a significant discount to their 
intrinsic value because of the pending eminent domain taking by SUNY of a large 
part of Gyrodyne's major asset, the Flowerfield property. Given the uncertainty 
about (1) when and how the eminent domain issue will be resolved (2) the amount 
and timing of the proceeds to be received from the taking and (3) whether 
management will be able to profitably invest the proceeds that would be paid for 
any taking, we think this is an appropriate time to hire an investment banker to 
find the highest and best bidder for the company." 
 
     "If you believe the company should explore opportunities to maximize the 
value of your shares now, please vote FOR this proposal." 
 
Board of Directors Statement in Opposition to the Shareholder Proposal 
 
     Your Board of Directors recommends a vote AGAINST this proposal because (i) 
the Company already retained an investment bank in June 2005 to advise the Board 
on strategic alternatives, (ii) the Board recently received a report from the 
investment bank setting forth its strategic analysis and recommendations, (iii) 
the Board is now in the process of developing a strategic plan based upon the 
investment bank's report, (iv) under the foregoing circumstances, retaining a 
second investment bank would divert the Board's focus away from developing a 
strategic plan that maximizes shareholder value and would be a waste of Company 
resources, (v) blindly pursuing a sale of the Company would ignore the strategic 
analysis performed by the Company's investment bank and possibly prevent the 
Company from pursuing alternate strategies, such as a sale of real property, 
that would maximize shareholder value, and (vi) pursuing a sale of the Company 
while the eminent domain proceedings over the Company's Flowerfield property 
remain pending would inevitably lead to a discounted price. 
 
     In the three and one-half year period ended October 31, 2005, the Company's 
market capitalization increased by over 200%, from $17.1 million at April 30, 
2002 to $53.4 million as of November 3, 2005. The Board is committed to 
maximizing long term shareholder value further in keeping with its fiduciary 
obligations to the shareholders, and, as holders of more than 9.6% of the 
outstanding common stock, the Board and Management also have a financial 
incentive to do so. 
 
     On June 17, 2005, the Company announced that it had retained the investment 
banking firm of Coady Diemar Partners to assist Management and the Board in 
reviewing strategic options to maximize shareholder value. The engagement called 
for a comprehensive analysis of the Company's business, operations, financial 
condition and prospects, an assessment of the market values of the Company's 
assets under various scenarios and a review of various types of possible 
transactions along with appropriate recommendations. In October, Coady Diemar 
delivered its draft report to the Board. Coady Diemar's draft report consists of 
its findings and recommendations regarding strategic alternatives against a 
backdrop of critical issues facing the Company, including: 
 
     o    uncertainty surrounding the timing and outcome of the Flowerfield 
          property eminent domain proceedings; 
     o    current and prospective zoning for the Flowerfield property; 

                                       25 

 
     o    uncertainty regarding the value and exit strategy of the Company's 
          limited partnership interest in Callery-Judge Grover, L.P.; 
     o    objectives of larger shareholders; 
     o    tax consequences associated with different strategic alternatives; 
     o    the Company's projected operating performance and cash resources; 
     o    the likelihood of achieving various strategic outcomes; and 
     o    timing issues associated with the strategic alternatives. 
 
     The Board has been carefully reviewing Coady Diemar's draft comprehensive 
report, and is now in the process of formulating a strategic plan for the 
Company for the purpose of maximizing long-term shareholder value in keeping 
with its fiduciary duties. 
 
     Before committing to any one particular strategy, which is what the 
Shareholder Proposal would call on the Company to do, the Board believes that 
ample opportunity should be given to considering carefully Coady Diemar's 
analysis and recommendations and then proceeding with whatever strategic path 
the Board determines is in the best interests of the Company and its 
shareholders. The Board agrees with the Proponent that the uncertainty resulting 
from the eminent domain proceeding has undoubtedly prevented the Company's stock 
from realizing its true value. Yet the Board has a profound disagreement with 
the Proponent as to what course of action against the backdrop of the eminent 
domain proceeding would have the best chance of maximizing shareholder value. 
The Proponent advocates that pursuing a sale of the Company during the pendency 
of eminent domain proceedings affecting the Company's most valuable asset is the 
prudent action to take. The Board disagrees. A sale now, if it can be achieved, 
may lead to a quick return for the shareholders, which is what the Proponent 
appears to desire for itself, but a return that the Board believes would be much 
lower than what could be achieved through following a strategy developed with 
the benefit of Coady Diemar's analysis and recommendations, which may or may not 
result in a sale of the Company. 
 
     Approval of the Shareholder Proposal requires the affirmative vote of a 
majority of the votes attributable to all shares of Common Stock represented at 
the Annual Meeting, in person or by proxy, and entitled to vote. In determining 
whether the Shareholder Proposal has received the requisite number of 
affirmative votes, abstentions will be counted and will have the same effect as 
a vote against the Shareholder Proposal; broker non-votes will be disregarded 
and will have no effect on the outcome of the vote. 
 
     The Board does not believe that a vote for the Shareholder Proposal would 
be in the best interests of the Company and its shareholders, and therefore 
recommends voting against the Shareholder Proposal. 
 
      THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "AGAINST" 
        THE SHAREHOLDER PROPOSAL, AND YOUR PROXY WILL BE SO VOTED IF THE 
           PROPOSAL IS PRESENTED UNLESS YOU SPECIFY OTHERWISE. THIS IS 
                IDENTIFIED AS ITEM 4 ON THE ENCLOSED PROXY CARD. 

                                       26 

 
                              FINANCIAL STATEMENTS 
 
     Accompanying this Proxy Statement is the Annual Report for Fiscal Year 
ended April 30, 2005 which includes audited Balance Sheets and Statements of 
Income and Cash Flow for each of the two most recent fiscal years. 
 
                          2005 STOCKHOLDER'S PROPOSALS 
 
     If a shareholder wishes to have a particular proposal considered by the 
Board for inclusion in the Company's Proxy Statement for an Annual Meeting of 
Shareholders, the shareholder must satisfy the requirements set by the SEC in 
its proxy rules. The particular proxy rule, Rule 14a-8, requires that 
shareholders submit their proposals in writing to the Company at least 120 days 
before the anniversary date of the proxy statement mailing date for the prior 
year's annual meeting. Thus, shareholders who wish to submit their proposals for 
inclusion in the Company's proxy statement for next year's annual meeting (in 
2006) must deliver such proposals to the Corporate Secretary on or before August 
11, 2006. The notice must clearly identify the proposal, contain a brief 
supporting statement and all required information about the proposing 
shareholder, and otherwise satisfy the SEC's rule. Proposals should be addressed 
to the Secretary of the Company, Gyrodyne Company of America, Inc., 102 
Flowerfield, Saint James, New York 11780. 
 
     In order for a shareholder nomination or proposal to be raised from the 
floor during the 2006 Annual Meeting of Shareholders, the Company's by-laws 
require that written notice thereof must be received by the Company not less 
than 120 days nor more than 150 days before the anniversary date of the prior 
year's annual meeting (there are special rules if the current year's meeting 
date is changed by more than 30 days from the prior year's meeting date or the 
number of directors are changed). For the 2006 Annual Meeting of Stockholders, 
the written notice must be given not later than August 11, 2006 and no earlier 
than July 12, 2006. The shareholder's written notice must contain (i) all 
information relating to any nominees proposed by the shareholder that is 
required to be disclosed in solicitations of proxies pursuant to Regulation 14A 
under the Securities Exchange Act of 1934 and Rule 14a-11 thereunder, (ii) a 
brief description of any proposals sought to be presented for a vote at the 
Meeting, (iii) the shareholder's name and record address and (iv) the class and 
number of shares of Company Common Stock that is beneficially owned. 
Shareholders proposing nominees for election to the Board of Directors must have 
continuously held at least $2,000 in market value, or 1%, of the Company's 
outstanding Common Stock entitled to vote for at least one year by such date of 
giving of notice or be entitled to cast votes with respect to at least 5% of the 
outstanding Common Stock. Nominations and proposals should be submitted in 
writing to the Secretary of the Company, Gyrodyne Company of America, Inc., 102 
Flowerfield, Saint James, New York 11780, who will submit them to the Board for 
its consideration. 

                  BY ORDER OF THE BOARD OF DIRECTORS 

                  Peter Pitsiokos 
                  Corporate Secretary 

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                                   Appendix 1 
 
                        GYRODYNE COMPANY OF AMERICA, INC. 
 
                                 Revocable Proxy 
 
                 PROXY/AUTHORIZATION AND DIRECTION FOR EXECUTION 
             OF PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS 
 
     The undersigned hereby designates Stephen V. Maroney and Peter Pitsiokos, 
and each of them, their true and lawful agents and proxies with full power of 
substitution in each, to represent the undersigned at the Annual Meeting of 
GYRODYNE COMPANY OF AMERICA, INC. to be held at the Company's Flowerfield 
Complex, St. James, New York 11780 on Friday, December 9, 2005 at 11:00 A.M., 
and any adjournment thereof, and revoking all proxies heretofore given, as 
designated hereon. As to any other matter, the proxies shall be authorized to 
vote in accordance with their best judgment. This proxy shall remain in effect 
for a period of one year from its date. 
 
     SIGN BELOW - Please sign exactly as your name appears hereon. If shares are 
registered in more than one name, all should sign but if one signs, it binds the 
others. When signing as attorney, executor, administrator, agent, trustee or 
guardian, please give full title as such. If a corporation, please sign in full 
corporate name by an authorized person. If a partnership, please sign 
partnership name by an authorized person. 
 
Dated  _______________________          Signature_______________________________ 

                                        Signature_______________________________ 
 
THIS PROXY/AUTHORIZATION AND DIRECTION FOR EXECUTION OF PROXY, IF PROPERLY 
EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE FOR A PROPOSAL, THE 
SHARES WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. 
 
Receipt of the Proxy Statement and Annual Report is hereby acknowledged. 

A vote FOR Item 1 is recommended by the Board of Directors. 
 
Proposal 1:   To elect two directors to serve for a term    1: { } FOR 
              of three years and until their successors        { } WITHHELD 
              shall be elected and shall qualify: 
 
       Robert H. Beyer            Term Expiring 2008 
       Elliot H. Levine           Term Expiring 2008 

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To withhold authority to vote for any nominee(s), draw a line through or 
otherwise strike out the name of such nominee(s). 

A vote FOR Item 2 is recommended by the Board of Directors. 
 
Proposal 2:   To ratify the engagement of Holtz             2: { } FOR 
              Rubenstein Reminick LLP as Certified             { } AGAINST 
              Public Accountants for the current               { } ABSTAIN 
              fiscal year. 

A vote FOR Item 3 is recommended by the Board of Directors. 
 
Proposal 3:   Approval of the amendment of Gyrodyne's       3: { } FOR 
              by-laws to allow shareholders holding an         { } AGAINST 
              aggregate of at least 30% of the outstanding     { } ABSTAIN 
              shares of Gyrodyne common stock to call 
              special meetings. 
 
A vote AGAINST Item 4 is recommended by the Board of Directors. 
 
Proposal 4:   Approval of the shareholder proposal to       4: { } FOR 
              engage promptly an investment banking firm       { } AGAINST 
              to pursue a sale of the Company.                 { } ABSTAIN 

 
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