UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002

                                       OR

            TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                          Commission file number I-4334

                            SUNAIR ELECTRONICS, INC.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


        FLORIDA                                        59-0780772
--------------------------------           -------------------------------------
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)              (I.R.S. EMPLOYER IDENTIFICATION NO.)


   3005 SW THIRD AVE., FT. LAUDERDALE, FL                            33315
------------------------------------------                        ----------
 (ADDRESS OR PRINCIPAL EXECUTIVE OFFICE)                          (ZIP CODE)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE              (954) 525-1505
                                                                ---------------

            FORMER ADDRESS: 3101 SW THIRD AVE., FT. LAUDERDALE, FLA.
--------------------------------------------------------------------------------
              (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
                          IF CHANGED SINCE LAST REPORT)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X   No
                                                             ---     ---

Registrant's common stock - par value 10 cents, outstanding as of March 31, 2002
- 3,692,570 shares.

Transitional Small Business Disclosure format.  Yes  X   No
                                                    ---     ---




<PAGE>

                     SUNAIR ELECTRONICS, INC. AND SUBSIDIARY

                                      INDEX
                                      *****
                                                                        PAGE NO.
                                                                        ********
PART I.        FINANCIAL INFORMATION:

      CONSOLIDATED CONDENSED BALANCE SHEETS - -
               MARCH 31, 2002 AND SEPTEMBER 30, 2001                       3

      CONSOLIDATED CONDENSED STATEMENTS OF INCOME - -
               SIX MONTHS ENDED MARCH 31, 2002 AND 2001                    4

      CONSOLIDATED CONDENSED STATEMENTS OF INCOME - -
               THREE MONTHS ENDED MARCH 31, 2002 AND 2001                  5

      CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS -
               SIX MONTHS ENDED MARCH 31, 2002 AND 2001                    6

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL
               STATEMENTS                                                 7-9

      MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
               CONSOLIDATED CONDENSED STATEMENTS                         10-11

PART II.       OTHER INFORMATION                                          12



                                     - 2 -
<PAGE>

                          PART I. FINANCIAL INFORMATION

                     SUNAIR ELECTRONICS, INC. AND SUBSIDIARY
                CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)


ASSETS                                                   3/31/02       9/30/01
------                                                 -----------   -----------

CURRENT ASSETS:
---------------
      CASH AND CASH EQUIVALENTS                        $ 1,976,349   $ 2,015,918
      ACCOUNTS RECEIVABLE                                  848,341     1,118,377
      INVENTORIES                                        5,957,250     5,674,421
      SHORT TERM INVESTMENTS                               580,106        81,001
      PREPAID EXPENSES AND OTHER
         CURRENT ASSETS                                     46,144       136,139
                                                       -----------   -----------

             TOTAL CURRENT ASSETS                        9,408,190     9,025,856
                                                       -----------   -----------

INVESTMENTS                                              3,031,394     3,045,731
-----------

NOTE RECEIVABLE                                            302,183       302,183
---------------

PROPERTY, PLANT AND EQUIPMENT-NET                          814,020       814,038
---------------------------------

TOTAL ASSETS                                           $13,555,787   $13,187,808
============                                           ===========   ===========

LIABILITIES & SHAREHOLDERS' EQUITY
----------------------------------

CURRENT LIABILITIES:
--------------------
      ACCOUNTS PAYABLE AND ACCRUED EXPENSES            $   534,983   $   411,084
                                                       -----------   -----------

           TOTAL CURRENT LIABILITIES                       534,983       411,084
                                                       -----------   -----------

LONG-TERM LIABILITIES:
----------------------
      LONG-TERM PORTION OF INCOME TAXES PAYABLE            371,000       371,000
                                                       -----------   -----------

STOCKHOLDERS' EQUITY
--------------------
      PREFERRED STOCK, NO PAR VALUE,
           500,000 SHARES AUTHORIZED,
           NO SHARES ISSUED                                      0             0
      COMMON STOCK, $.10 PAR VALUE,
           6,000,000 SHARES AUTHORIZED,
           3,692,570 SHARES ISSUED
           AND OUTSTANDING                                 369,257       369,257
      ADDITIONAL PAID-IN-CAPITAL                         2,606,899     2,606,899
      RETAINED EARNINGS                                  9,673,648     9,429,568
                                                       -----------   -----------
                                                        12,649,804    12,405,724

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY               $13,555,787   $13,187,808
========================================               ===========   ===========

                                     - 3 -
<PAGE>

                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)

                                                          SIX MONTHS ENDED
                                                          ----------------
                                                      3/31/02         3/31/01
                                                    -----------     -----------

SALES                                               $ 2,884,580     $ 2,539,604
COST OF SALES                                         1,737,746       1,993,887
                                                    -----------     -----------

GROSS PROFIT                                          1,146,834         545,717
SELLING, GENERAL & ADMINISTRATIVE EXPENSES              893,087         739,195
                                                    -----------     -----------

OPERATING INCOME (LOSS)                                 253,747        (193,478)
OTHER INCOME:
  INTEREST INCOME                                       124,631         148,364
  OTHER, NET                                              2,502            (363)
                                                    -----------     -----------

INCOME (LOSS) BEFORE (PROVISION)
  BENEFIT FOR INCOME TAXES                              380,880         (45,477)

(PROVISION) BENEFIT FOR
  INCOME TAXES                                         (136,800)         13,800
                                                    -----------     -----------


NET INCOME (LOSS)                                   $   244,080     $   (31,677)
                                                    ===========     ===========

WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                                  3,692,570       3,692,570

NET INCOME PER SHARE (BASIC AND DILUTED)            $      0.07     $     (0.01)
                                                    ===========     ===========



                                     - 4 -
<PAGE>

                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)


                                                        THREE MONTHS ENDED
                                                        ------------------
                                                      3/31/02         3/31/01
                                                    -----------     -----------

SALES                                               $ 1,036,830     $ 1,170,248
COST OF SALES                                           534,212         935,107
                                                    -----------     -----------

GROSS PROFIT                                            502,618         235,141
SELLING, GENERAL & ADMINISTRATIVE EXPENSES              437,165         385,939
                                                    -----------     -----------

OPERATING INCOME (LOSS)                                  65,453        (150,798)
OTHER INCOME:
  INTEREST INCOME                                        62,539          71,390
  OTHER, NET                                             (1,871)         (5,815)
                                                    -----------     -----------

INCOME (LOSS) BEFORE (PROVISION)
  BENEFIT FOR INCOME TAXES                              126,121         (85,223)

(PROVISION) BENEFIT FOR
  INCOME TAXES                                          (51,800)         30,300
                                                    -----------     -----------


NET INCOME (LOSS)                                   $    74,321     $   (54,923)
                                                    ===========     ===========

WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                                  3,692,570       3,692,570

NET INCOME PER SHARE (BASIC AND DILUTED)            $      0.02     $     (0.02)
                                                    ===========     ===========


                                     - 5 -
<PAGE>


                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                         SIX MONTHS ENDED
                                                         ----------------
                                                       3/31/02        3/31/01
                                                    -----------     -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS)                                   $   244,080     $   (31,688)
ADJUSTMENTS TO RECONCILE NET INCOME TO
 NET CASH PROVIDED BY OPERATING ACTIVITIES
      DEPRECIATION AND AMORTIZATION                      68,123          69,146
      CHANGES IN OPERATING ACTIVITIES:
        DECR IN ACCOUNTS RECEIVABLE                     270,036         464,976
        (INCR) DECR IN INVENTORY                       (282,829)        402,439
        (INCR) DECR IN OTHER ASSETS                      89,995         (30,404)
        (DECR) IN ACCOUNTS PAYABLE AND
                  ACCRUED EXPENSES                      (12,901)        (81,577)
        (INCR) IN NOTE RECEIVABLE                             0          (1,335)
        (DECR) INCR IN ACCRUED INCOME TAX               136,800        (105,853)
                                                    -----------     -----------

NET CASH PROVIDED BY OPERATING ACTIVITIES               513,304         685,704
                                                    -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
(PURCHASE) OF PROPERTY, PLANT & EQUIPMENT               (68,105)       (120,569)
SALE (PURCHASES) OF INVESTMENTS - NET                  (484,768)        399,337
                                                    -----------     -----------

NET CASH PROVIDED BY INVESTING ACTIVITIES              (552,873)        278,768
                                                    -----------     -----------

CASH FLOWS FROM FINANCING ACTIVITIES:                         0               0
                                                    -----------     -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS               (39,569)        964,472
CASH AND CASH EQUIVALENTS AT BEGINNING
 OF PERIOD                                            2,015,918         629,968
                                                    -----------     -----------

CASH AND CASH EQUIVALENTS AT END
 OF PERIOD                                          $ 1,976,349     $ 1,594,440
                                                    ===========     ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
 CASH PAID DURING THE PERIOD FOR INTEREST           $         0     $         0
                                                    ===========     ===========
 CASH PAID DURING THE PERIOD FOR INCOME
  TAXES                                             $         0     $   110,000
                                                    ===========     ===========


                                     - 6 -
<PAGE>


              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

       1.      BASIS OF PRESENTATION

               THE ACCOMPANYING UNAUDITED FINANCIAL STATEMENTS HAVE BEEN
               PREPARED IN ACCORDANCE WITH THE INSTRUCTIONS TO FORM 10-QSB AND
               DO NOT INCLUDE ALL OF THE INFORMATION AND FOOTNOTES REQUIRED BY
               GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL
               STATEMENTS. IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS
               (CONSISTING OF NORMAL RECURRING ACCRUALS) CONSIDERED NECESSARY
               FOR A FAIR PRESENTATION HAVE BEEN INCLUDED. OPERATING RESULTS FOR
               THE SIX MONTHS ENDED MARCH 31, 2002 ARE NOT NECESSARILY
               INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED FOR THE FISCAL
               YEAR ENDING SEPTEMBER 30,2002. FOR FURTHER INFORMATION REFER TO
               THE CONSOLIDATED FINANCIAL STATEMENTS AND FOOTNOTES THERETO
               INCLUDED IN THE COMPANY'S ANNUAL REPORT IN FORM 10-KSB FOR THE
               FISCAL YEAR ENDED SEPTEMBER 30, 2001.

       2.      ACCOUNTING POLICIES

       (A)     PRINCIPLES OF CONSOLIDATION-
               THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE
               ACCOUNTS OF THE COMPANY AND ITS SUBSIDIARY. ALL SIGNIFICANT
               INTER-COMPANY ACCOUNTS AND TRANSACTIONS HAVE BEEN ELIMINATED
               IN CONSOLIDATION.

       (B)     PROPERTY, PLANT AND EQUIPMENT-
               PROPERTY, PLANT AND EQUIPMENT IS DEPRECIATED OVER THE ESTIMATED
               USEFUL LIVES OF THE ASSETS USING BOTH STRAIGHT-LINE AND
               ACCELERATED METHODS.

       (C)     RESEARCH AND DEVELOPMENT COSTS-
               ALL RESEARCH AND DEVELOPMENT COSTS ARE CHARGED TO EXPENSE AS
               INCURRED.

       (D)     EARNINGS PER COMMON SHARE-
               EARNINGS PER COMMON SHARE ARE COMPUTED BASED ON WEIGHTED AVERAGE
               NUMBER OF SHARES OUTSTANDING DURING EACH PERIOD.

       (E)     INVENTORIES-
               INVENTORIES CONSIST OF THE FOLLOWING:

                                                  3/31/02              9/30/01
                                                ----------           ----------
                    RAW MATERIALS               $2,116,342           $1,848,096
                    WORK IN PROCESS              3,072,187            3,475,703
                    FINISHED GOODS                 768,721              350,622
                                                ----------           ----------
                                                $5,957,250           $5,674,421

       (F)     INVESTMENTS -
               INVESTMENTS INCLUDE PRIVATE EXPORT FUNDING CORPORATION (PEFCO)
               NOTES. THESE NOTES ARE GUARANTEED BY THE EXPORT-IMPORT BANK OF
               THE UNITED STATES, AN AGENCY OF THE UNITED STATES. THE COMPANY
               HAS CLASSIFIED THESE SECURITIES AS "HELD-TO-MATURITY"
               SECURITIES, IN ACCORDANCE WITH STATEMENT OF FINANCIAL ACCOUNTING
               STANDARDS (SFAS) NO. 115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN
               DEBT AND EQUITY SECURITIES". HELD-TO-MATURITY SECURITIES ARE
               RECORDED AT AMORTIZED COST. AMORTIZATION OF RELATED DISCOUNTS OR
               PREMIUMS IS INCLUDED IN THE DETERMINATION OF NET INCOME.


                                     - 7 -
<PAGE>

       3.      INCOME TAXES:

               DURING 1995, IT WAS DETERMINED THAT CONTINUED OPERATIONS OF ITS
               INTEREST CHARGE-DOMESTIC INTERNATIONAL SALES CORPORATION
               (IC-DISC) SUBSIDIARY'S TAX ELECTION WAS NO LONGER ADVANTAGEOUS TO
               THE COMPANY. ACCORDINGLY, THE TAX ELECTION OF THE SUBSIDIARY WAS
               DISCONTINUED AND ITS RETAINED EARNINGS OF APPROXIMATELY
               $3,200,000 WERE DISTRIBUTED TO THE COMPANY. FEDERAL TAX
               REGULATIONS PROVIDE FOR THE TAXATION OF SUCH DISTRIBUTION OVER A
               TEN YEAR PERIOD IN EQUAL ANNUAL INCREMENTS. UTILIZING THE MAXIMUM
               TAX RATES, THE INCOME TAX CONSEQUENCE OF SUCH DISTRIBUTION WILL
               APPROXIMATE $123,000 PER YEAR. NO INTEREST IS PAYABLE ON THIS
               UNPAID PORTION.

       4.      PREFERRED STOCK:

               THE COMPANY HAS 500,000 AUTHORIZED SHARES OF PREFERRED STOCK, NO
               PAR VALUE, THAT MAY BE ISSUED AT SUCH TERMS AND PROVISIONS AS
               DETERMINED BY THE BOARD OF DIRECTORS. NONE ARE OUTSTANDING.

       5.      STOCK OPTIONS:

               AS OF MARCH 31, 2002, THE COMPANY HAD AUTHORIZED 400,000 SHARES
               OF THE COMPANY'S COMMON STOCK FOR NON-QUALIFIED STOCK OPTIONS. AS
               OF THE CURRENT DATE, THE COMPANY HAD ISSUED OPTIONS TO PURCHASE
               275,000 SHARES AT $2.25 PER SHARE TO KEY EMPLOYEES OF THE
               COMPANY. OPTIONS FOR 93,400 SHARES ARE EXERCISABLE BEGINNING IN
               THE SECOND YEAR OF THE OPTIONS PERIOD AND 90,800 SHARES IN EACH
               OF THE THIRD AND FOURTH YEARS. THE OPTIONS GRANTED SHALL BE
               EXERCISABLE UP TO AND INCLUDING FIVE YEARS FROM THE DATE OF
               GRANT. NONE HAVE BEEN EXERCISED.

     6.        RECENT ACCOUNTING PRONOUNCEMENTS

               SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
               ACTIVITIES", IS EFFECTIVE FOR FINANCIAL STATEMENTS ISSUED FOR
               FISCAL YEARS BEGINNING AFTER JUNE 15, 2000. SFAS NO. 133
               ESTABLISHES ACCOUNTING AND REPORTING STANDARDS FOR DERIVATIVE
               INSTRUMENTS, INCLUDING CERTAIN DERIVATIVE INSTRUMENTS EMBEDDED
               IN OTHER CONTRACTS, AND FOR HEDGING ACTIVITIES. SFAS NO. 133 HAD
               NO MATERIAL AFFECT ON THE COMPANY'S FINANCIAL STATEMENTS.

               SFAS NO. 141, "BUSINESS COMBINATIONS" ESTABLISHES ACCOUNTING AND
               REPORTING STANDARDS FOR BUSINESS COMBINATIONS, INCLUDES
               APPLICATION OF THE PURCHASE METHOD AND DETERMINING THE COST OF
               THE ACQUIRED ENTITY. THE PROVISION OF THIS STATEMENT SHALL APPLY
               TO ALL BUSINESS COMBINATIONS INITIATED AFTER JUNE 30, 2001. USE
               OF THE POOLING-OF-INTERESTS METHOD FOR THOSE BUSINESS
               COMBINATIONS IS PROHIBITED. ALSO, THE STATEMENT SHALL APPLY TO
               ALL BUSINESS COMBINATIONS ACCOUNTED FOR BY THE PURCHASE METHOD
               FOR WHICH THE DATE OF ACQUISITION IS JULY 1, 2001, OR LATER.
               SFAS NO. 141 HAD NO MATERIAL AFFECT ON THE COMPANY'S FINANCIAL
               STATEMENTS.


                                     - 8 -
<PAGE>


               SFAS NO. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS", ESTABLISHES
               ACCOUNTING AND REPORTING STANDARDS FOR ACQUIRED GOODWILL AND
               OTHER INTANGIBLE ASSETS. THIS STATEMENT ADDRESSES HOW INTANGIBLE
               ASSETS THAT ARE ACQUIRED INDIVIDUALLY OR WITH A GROUP OF OTHER
               ASSETS SHOULD BE ACCOUNTED FOR AND THE INITIAL RECOGNITION IN THE
               FINANCIAL STATEMENTS. THE PROVISIONS OF THIS STATEMENT ARE
               REQUIRED TO BE APPLIED STARTING WITH FISCAL YEARS BEGINNING AFTER
               DECEMBER 15, 2001. EARLY APPLICATION IS PERMITTED FOR ENTITIES
               WITH FISCAL YEARS BEGINNING AFTER MARCH 15, 2001, PROVIDED THAT
               THE FIRST INTERIM FINANCIAL STATEMENTS HAVE NOT PREVIOUSLY BEEN
               ISSUED. SFAS NO. 142 WILL HAVE NO MATERIAL AFFECT ON THE
               COMPANY'S FINANCIAL STATEMENTS.

       7       FINANCIAL INSTRUMENTS:

               THE CARRYING AMOUNTS OF CASH AND CASH EQUIVALENTS, ACCOUNTS
               RECEIVABLE, LOANS PAYABLE, ACCOUNTS PAYABLE AND ACCRUED INCOME
               TAXES PAYABLE APPROXIMATE FAIR VALUE DUE TO THE SHORT MATURITY OF
               THE INSTRUMENTS AND RESERVES FOR POTENTIAL LOSSES, AS APPLICABLE.



                                     - 9 -
<PAGE>


         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS

LIQUIDITY:
----------


DURING THE FIRST SIX MONTHS OF THE CURRENT FISCAL YEAR ENDING MARCH 31, 2002,
THE COMPANY MAINTAINED CASH AND SHORT TERM INVESTMENTS MORE THAN ADEQUATE TO
COVER KNOWN REQUIREMENTS, UNFORESEEN EVENTS OR UNCERTAINTIES THAT MIGHT OCCUR.
DURING THE SIX MONTH PERIOD, CASH AND SHORT TERM INVESTMENTS MAINTAINED AN
AVERAGE BALANCE OF $1,882,000, COMPARED TO AN AVERAGE BALANCE OF $1,540,000 FOR
THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001. SHORT TERM INVESTMENTS ARE BONDS AND
CERTIFICATES OF DEPOSIT THAT ARE READILY AVAILABLE FOR IMMEDIATE USE SHOULD THE
OCCASION ARISE. IT IS ANTICIPATED THAT THE COMPANY WILL REMAIN AS LIQUID DURING
THE REST OF FISCAL 2002. INVENTORIES CONTAIN NO OBSOLESCENCE AS ADJUSTMENTS ARE
MADE AS THEY OCCUR. ACCOUNTS AND NOTES RECEIVABLE CONTAIN NO BAD DEBTS. INTERIM
NON CASH RESERVES ARE MAINTAINED TO COVER WARRANTY REPAIRS AND OTHER CHARGES
THAT MAY BE IN DISPUTE. ALL MONETARY TRANSACTIONS ARE IN U.S. DOLLARS AND NO
LETTERS OF CREDIT INVOLVE FOREIGN EXCHANGE.

CAPITAL RESOURCES:
------------------

DURING THE FIRST SIX MONTHS OF THE CURRENT FISCAL YEAR, THE COMPANY EXPENDED
$68,105 FOR CAPITAL ASSETS. NO EXPENDITURES ARE CONTEMPLATED FOR PLANT EXPANSION
OR EXTENSIVE MAINTENANCE. THE COMPANY HAS NO LONG TERM DEBT AND NONE IS
CONTEMPLATED. LIABILITIES CONSIST OF CURRENT ACCOUNTS PAYABLE AND EXPENSES
RELATED TO THE CURRENT ACCOUNTING PERIOD.

RESULTS OF OPERATIONS:
----------------------

DURING THE SECOND QUARTER OF THE CURRENT FISCAL YEAR ENDED MARCH 31, 2002,
SHIPMENTS WERE $1,036,830, DOWN FROM SHIPMENTS OF $1,847,750 FOR QUARTER ENDED
DECEMBER 31, 2001. SHIPMENTS FOR THE SIX MONTHS ENDED MARCH 31, 2002 WERE
$2,884,580, UP FROM SHIPMENTS OF $2,539,604 OR 13.6% FOR THE SAME PERIOD ONE
YEAR AGO. EXPORT SHIPMENTS FOR THE SIX MONTHS ENDED MARCH 31, 2002 WERE
$1,179,545 OR 40.9% OF TOTAL SALES, UP $580,902 OR 97.0% FROM THE SAME PERIOD
ONE YEAR AGO. DOMESTIC SHIPMENTS FOR THE FIRST SIX MONTHS OF THE CURRENT FISCAL
YEAR WERE $1,705,035 OR 12.2% BEHIND SHIPMENTS FOR THE SAME PERIOD ONE YEAR AGO
OF $1,940,961.

SHIPMENTS FOR THE FIRST SIX MONTHS WERE HIGHER THAN SHIPMENTS FOR THE SAME
PERIOD ONE YEAR AGO DUE TO AN $810,000 U.S. GOVERNMENT FOREIGN MILITARY FUNDED
(FMF) DELIVERY WHICH REQUIRED A ONE LOT INSPECTION AND A SINGLE SHIPMENT AS WELL
AS CONTINUING DELIVERIES AGAINST THE COMPANY'S FIVE YEAR CONTRACT WITH THE U.S.
COAST GUARD.

BACKLOG AT MARCH 31, 2002 WAS $561,000 AS COMPARED TO $256,000 FOR THE SAME
PERIOD ONE YEAR AGO. NOT INCLUDED IN THIS BACKLOG IS A $600,000 SYSTEMS ORDER
RECEIVED FROM A MAJOR DEFENSE CONTRACTOR, PENDING A DESIGN REVIEW SCHEDULED FOR
THE CURRENT QUARTER AND CONTINUING INTO THE THIRD QUARTER, TO DEFINITIZE THE
SYSTEM SPECIFICATIONS. ALSO NOT INCLUDED ARE PROJECTED ORDERS ON CONTRACTS


                                     - 10 -
<PAGE>

RECEIVED IN FISCAL 1999 AND 2000 IN EXCESS OF $19,000,000 FOR DELIVERY OVER A
FIVE YEAR PERIOD. $1,000,000 IN ORDERS ON THESE CONTRACTS WAS SHIPPED IN FISCAL
2000 AND $2,000,000 WAS SHIPPED IN FISCAL 2001. THE LARGEST DELIVERIES AGAINST
THESE CONTRACTS ARE BUDGETED FOR FISCAL 2002 AND BEYOND.

COST OF SALES WAS LOWER AT 60.2% OF SALES IN THE FIRST SIX MONTHS OF FISCAL 2002
AS COMPARED TO 78.5% OF SALES IN THE SAME PERIOD ONE YEAR AGO DUE PRIMARILY TO
REDUCED MANUFACTURING OVERHEADS AND REDUCED MATERIAL COSTS DUE TO FAVORABLE
QUANTITY BUYS. MANAGEMENT CONTINUES TO FOCUS ON IMPROVED OPERATIONS AND
MANUFACTURING PROCESSES FOR IMPROVED EFFICIENCIES AND REDUCED OVERHEADS.
EMPHASIS WILL CONTINUE TO BE PLACED ON REDUCTION OF INVENTORY LEVELS.

INVENTORY AT MARCH 31, 2002 WAS $282,829 HIGHER THAN SEPTEMBER 30, 2001 DUE TO
PURCHASES OF MATERIAL TO MEET PROJECTED DELIVERY ORDERS ON EXISTING CONTRACTS.
EVEN THOUGH EFFORTS CONTINUE TO DECREASE INVENTORY AND INCREASE EFFICIENCY,
SUFFICIENT INVENTORY MUST BE MAINTAINED TO MEET CONTRACTUAL OBLIGATIONS AS WELL
AS FORECASTED CUSTOMER REQUIREMENTS. DUE TO AN INCREASED NUMBER OF PRODUCT
CONFIGURATIONS, IT IS NECESSARY TO CARRY A QUANTITY OF MANY DIFFERENT MODELS IN
FINISHED GOODS, AND WORK-IN PROCESS, FOR FAST TURNAROUND REQUIREMENTS WHEN
CUSTOMERS RELEASE DELIVERY ORDERS AGAINST OPEN BASIC ORDERING AGREEMENTS (BOA).

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES OF $893,087 INCREASED $153,892 FROM
THE SAME PERIOD ONE YEAR AGO DUE PRIMARILY TO INCREASED RECRUITING AND SALARY
EXPENSES IN THE SALES AND MARKETING AREA. THE ADDITION OF A NEW DIRECTOR OF
SALES AND MARKETING AS WELL AS INCREASED SALES STAFF OCCURRED THIS FISCAL YEAR.
SLIGHT INCREASES IN THE DIRECT LABOR FORCE CONTINUE IN ORDER TO REACH SUFFICIENT
FINISHED GOODS LEVELS TO MEET HIGH PROBABILITY FORECASTS.

INTEREST INCOME DECREASED $23,733 FOR THE FIRST SIX MONTHS OF THE CURRENT FISCAL
YEAR DUE TO LOWER YIELD ON INVESTMENTS.

THE COMPANY IS CONFIDENT THAT FORECASTED ORDERS FOR THE THIRD QUARTER OF FISCAL
2002 WILL INCREASE COMPANY'S BACKLOG TO THE $2,000,000 LEVEL. THE MAJORITY OF
THESE ORDERS WILL REQUIRE SHIPMENT BEFORE FISCAL YEAR END.

OUR MARKETING STRATEGY TO FOCUS ON SECOND AND THIRD TIER SUBCONTRACTOR
OPPORTUNITIES WITH MAJOR DEFENSE CONTRACTORS AND OTHER INTEGRATORS OF
SOPHISTICATED COMMUNICATIONS SYSTEMS HAS SHOWN SUBSTANTIAL PROGRESS. SEVERAL
SUCH OPPORTUNITIES ARE UNDER TECHNICAL DISCUSSIONS AND OUR ENGINEERING
CAPABILITIES ARE GAINING RECOGNITION AS A CONTRIBUTOR TO SYSTEMS SOLUTIONS. THIS
BRINGS INCREASED POTENTIAL FOR EXPANSION AND GROWTH.

SUNAIR CONTINUES TO EMPHASIZE STREAMLINING OF OPERATIONS, COST REDUCTIONS AND
INCREASED SHAREHOLDER VALUE.


                                     - 11 -
<PAGE>


                            PART II OTHER INFORMATION


5.     OTHER INFORMATION

       IN APRIL OF THIS YEAR THE COMPANY COMPLETED THE REORGANIZATION OF ITS
       FACILITIES WITH THE CONSOLIDATION OF ALL OPERATIONS INTO ONE BUILDING.
       THE VACATED FACILITIES CONSISTING OF 35,000 SQUARE FEET WAS SUBSEQUENTLY
       SOLD FOR $1,500,000 REFLECTING A NET GAIN BEFORE TAX OF APPROXIMATELY
       $1,300,000. THE REMAINING FACILITIES WILL ACCOMODATE ALL THE COMPANY'S
       NEEDS FOR THE FORESEEABLE FUTURE. REDUCED OVERHEADS WILL REFLECT IN
       INCREASED PROFIT MARGINS AS WELL.

6.     EXHIBITS AND REPORTS ON FORM 8-K

       NONE



                                     - 12 -
<PAGE>


                                   SIGNATURES
                                   ----------


PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.


                                                SUNAIR ELECTRONICS, INC.


DATE        MAY 14, 2002                         /S/ JAMES E. LAURENT
     -------------------------                  ------------------------------
                                                JAMES E. LAURENT, PRINCIPAL
                                                EXECUTIVE OFFICER


DATE        MAY 14, 2002                         /S/ SYNNOTT B. DURHAM
    ---------------------------                 ______________________________
                                                SYNNOTT B. DURHAM, PRINCIPAL
                                                ACCOUNTING OFFICER