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


                                   FORM 10-QSB

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

                For the quarterly period ended December 31, 2001

                                       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                               (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)


3101 SW THIRD AVE., FT. LAUDERDALE, FLA.                            33315
----------------------------------------                          ---------
(ADDRESS OR PRINCIPAL EXECUTIVE OFFICE)                           (ZIP CODE)


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

                                      NONE
-------------------------------------------------------------------------------
              (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 December 31,
2001 - 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 - -
               DECEMBER 31, 2001 AND SEPTEMBER 30, 2001                   3

      CONSOLIDATED CONDENSED STATEMENTS OF INCOME - -
               THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000              4

      CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS -
               THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000              5

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL
               STATEMENTS                                                6-8

      MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
               CONSOLIDATED CONDENSED STATEMENTS                        9-10

PART II.       OTHER INFORMATION                                         11



                                       2
<PAGE>


                          PART I. FINANCIAL INFORMATION

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



ASSETS                                                   12/31/01      9/30/01
------                                                 -----------   -----------

CURRENT ASSETS:
--------------
      CASH AND CASH EQUIVALENTS                        $ 1,261,739   $ 2,015,918
      ACCOUNTS RECEIVABLE                                1,987,589     1,118,377
      INVENTORIES                                        5,576,036     5,674,421
      SHORT TERM INVESTMENTS                                81,001        81,001
      PREPAID EXPENSES AND OTHER
         CURRENT ASSETS                                     47,535       136,139
                                                       -----------   -----------

             TOTAL CURRENT ASSETS                        8,953,900     9,025,856
                                                       -----------   -----------

INVESTMENTS                                              3,038,563     3,045,731
-----------

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

PROPERTY, PLANT AND EQUIPMENT-NET                          835,793       814,038
---------------------------------

TOTAL ASSETS                                           $13,130,439   $13,187,808
=============                                          ===========   ===========

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

CURRENT LIABILITIES:
-------------------

      ACCOUNTS PAYABLE AND ACCRUED EXPENSES            $   183,968   $   411,084
                                                       -----------   -----------

           TOTAL CURRENT LIABILITIES                       183,968       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                                  9,599,315     9,429,568
                                                       -----------   -----------
                                                        12,575,471    12,405,724

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY               $13,130,439   $13,187,808
=========================================              ===========   ===========



                                       3
<PAGE>


                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)


                                                         THREE MONTHS ENDED
                                                         ------------------
                                                      12/31/01        12/31/00
                                                    -----------     -----------

SALES                                               $ 1,847,750     $ 1,369,356
COST OF SALES                                         1,203,534       1,058,780
                                                    -----------     -----------

GROSS PROFIT                                            644,216         310,576
SELLING, GENERAL & ADMINISTRATIVE EXPENSES              455,922         353,256
                                                    -----------     -----------

OPERATING INCOME (LOSS)                                 188,294         (42,680)
OTHER INCOME:
      INTEREST INCOME                                    62,092          76,974
      OTHER, NET                                          4,373           5,452
                                                    -----------     -----------

INCOME BEFORE (PROVISION)
  FOR INCOME TAXES                                      254,759          39,746

(PROVISION) FOR
  INCOME TAXES                                          (85,000)        (16,500)
                                                    -----------     -----------


NET INCOME                                          $   169,759     $    23,246
                                                    ===========     ===========

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                                    3,692,570       3,692,570
NET INCOME PER SHARE (BASIC AND DILUTED)            $      0.05     $      0.01
                                                    ===========     ===========


                                       4

<PAGE>


                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)



                                                          THREE MONTHS ENDED
                                                          ------------------
                                                       12/31/01       12/31/00
                                                     -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME                                           $   169,759    $    23,246
ADJUSTMENTS TO RECONCILE NET INCOME TO
 NET CASH PROVIDED BY OPERATING ACTIVITIES
      DEPRECIATION AND AMORTIZATION                       34,049         34,573
      CHANGES IN OPERATING ACTIVITIES:
        (INCR) DECR IN ACCOUNTS RECEIVABLE              (869,212)       368,475
        DECR IN INVENTORY                                 98,385        247,239
        (INCR) DECR IN OTHER ASSETS                       88,604        (54,771)
        (DECR) IN ACCOUNTS PAYABLE AND
                  ACCRUED EXPENSES                      (227,116)      (117,369)
        INCR (DECR) IN INCOME TAX PAYABLE                      0        (97,500)
                                                     -----------    -----------

NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES                                    (705,531)       403,893
                                                     -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
PURCHASE OF PROPERTY, PLANT & EQUIPMENT                  (55,816)       (12,488)
SALE OF INVESTMENTS - NET                                      0        407,168
                                                     -----------    -----------

NET CASH PROVIDED BY (USED IN) INVESTING
        ACTIVITIES                                         7,168        394,680
                                                     -----------    -----------

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

NET INCREASE (DECREASE) IN CASH                         (754,179)       798,573
CASH AT BEGINNING OF PERIOD                            2,015,918        629,968
                                                     -----------    -----------

CASH AT END OF PERIOD                                $ 1,261,739    $ 1,428,541
                                                     ===========    ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
     CASH PAID DURING THE PERIOD FOR INTEREST        $         0    $         0
                                                     ===========    ===========

     CASH PAID DURING THE PERIOD FOR INCOME
        TAXES                                        $         0    $   110,000
                                                     ===========    ===========


                                       5

<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 THREE MONTHS ENDED DECEMBER 31,
         2001 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:
                                                  12/31/01              9/30/01
                                                 ----------           ----------
                  RAW MATERIALS                  $2,202,500           $1,848,096
                  WORK IN PROCESS                 3,006,532            3,475,703
                  FINISHED GOODS                    367,004              350,622
                                                 ----------           ----------
                                                 $5,576,036           $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.


                                       6
<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:

         DURING THE FISCAL YEAR ENDED SEPTEMBER 30, 2001, OPTIONS TO
         PURCHASE 225,000 SHARES AT $2.25 PER SHARE WERE ISSUED TO KEY
         EMPLOYEES OF THE COMPANY. OPTIONS FOR 76,500 SHARES ARE
         EXERCISABLE BEGINNING IN THE SECOND YEAR OF THE OPTION PERIOD AND
         74,250 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.

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.

         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

                                       7
<PAGE>

         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.


                                       8

<PAGE>


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

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


DURING THE FIRST THREE MONTHS OF THE CURRENT FISCAL YEAR ENDING DECEMBER 31,
2001, THE COMPANY MAINTAINED CASH AND SHORT TERM INVESTMENTS MORE THAN ADEQUATE
TO COVER KNOWN REQUIREMENTS, UNFORESEEN EVENTS OR UNCERTAINTIES THAT MIGHT
OCCUR. DURING THE THREE MONTH PERIOD, CASH AND SHORT TERM INVESTMENTS MAINTAINED
AN AVERAGE BALANCE OF $1,402,000, COMPARED TO AN AVERAGE BALANCE OF $1,540,000
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30,2001. SHORT TERM INVESTMENTS ARE TAX
EXEMPT MONEY MARKET FUNDS 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 RESERVES ARE MAINTAINED TO COVER CANCELLATION CHARGES UNPAID AND
ANY FREIGHT CHARGE DISPUTES. ALL MONETARY TRANSACTIONS ARE IN U.S. DOLLARS AND
NO LETTERS OF CREDIT INVOLVE FOREIGN EXCHANGE.

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

DURING THE FIRST THREE MONTHS OF THE CURRENT FISCAL YEAR, THE COMPANY EXPENDED
$55,816 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 FIRST QUARTER OF THE CURRENT FISCAL YEAR ENDED DECEMBER 31, 2001,
SHIPMENTS WERE $1,847,750, UP FROM SHIPMENTS OF $1,369,356 OR 34.9% FOR THE SAME
QUARTER ONE YEAR AGO. EXPORT SHIPMENTS FOR THE THREE MONTHS ENDED DECEMBER 31,
2001 WERE $1,007,631 OR 54.5% OF TOTAL SALES, UP $558,820 OR 124.5% FROM THE
SAME PERIOD ONE YEAR AGO. DOMESTIC SHIPMENTS FOR THE FIRST THREE MONTHS OF THE
CURRENT FISCAL YEAR WERE $840,119, COMPARABLE TO SHIPMENTS FOR THE SAME PERIOD
ONE YEAR AGO OF $920,545, DOWN $80,426 OR 8.7%.

SHIPMENTS FOR THE FIRST THREE MONTHS ARE 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.
BACKLOG AT DECEMBER 31, 2001 WAS $766,000 AS COMPARED TO $1,015,000 FOR THE SAME
PERIOD A 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 SECOND QUARTER TO DEFINITIZE SYSTEM SPECIFICATIONS. ALSO NOT INCLUDED ARE
PROJECTED ORDERS ON CONTRACTS RECEIVED IN FISCAL 1999 AND 2000 IN EXCESS OF
$19,000,000 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.


                                       9
<PAGE>


RESULTS OF OPERATIONS: (CONTINUED)
---------------------

COST OF SALES WAS LOWER AT 65.1% OF SALES IN THE FIRST QUARTER OF FISCAL 2002 AS
COMPARED TO 77.3% OF SALES IN THE SAME PERIOD ONE YEAR AGO DUE PRIMARILY TO
REDUCED MANUFACTURING OVERHEADS. 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 DECEMBER 31, 2001 WAS $98,385 LOWER THAN SEPTEMBER 30, 2001 DUE TO
CONTINUED EFFORTS AT INVENTORY REDUCTION. HOWEVER, DUE TO EXTENDED PROCUREMENT
AND BUILD TIMES, SUFFICIENT LEVELS 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 TURN AROUND
REQUIREMENTS WHEN DELIVERY ORDERS ARE RECEIVED.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES OF $455,922 INCREASED $102,666 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 IN THE FIRST
QUARTER. SLIGHT INCREASES IN THE DIRECT LABOR FORCE CONTINUE IN ORDER TO REACH
SUFFICIENT FINISHED GOODS LEVELS TO MEET HIGH PROBABILITY FORECASTS.

PROGRESS CONTINUES IN THE REORGANIZATION AND OPTIMUM USAGE OF COMPANY RESOURCES.
EMPHASIS BY THE NEW SALES AND MARKETING TEAM IS DIRECTED TOWARD DEVELOPMENT OF
NEW INTERNATIONAL MARKETS IN SELECTED COUNTRIES. TOWARD THIS END, PLANS ARE IN
PLACE FOR TRIPS IN THE NEXT QUARTER TO THE PACIFIC RIM, NORTH AFRICA, EUROPE AND
ITS NATO COMMUNITIES TO IDENTIFY AND EXPLOIT NEW AND EXISTING MARKETS.


                                       10
<PAGE>


                            PART II OTHER INFORMATION


5.     OTHER INFORMATION

       NONE

6.     EXHIBITS AND REPORTS ON FORM 8-K

       NONE



                                       11
<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     FEBRUARY 12, 2002                      /S/ JAMES E. LAURENT
    --------------------------                  -----------------------------
                                                 JAMES E. LAURENT, PRINCIPAL
                                                 EXECUTIVE OFFICER


DATE     FEBRUARY 12, 2002                      /S/ SYNNOTT B. DURHAM
    -------------------------                   -----------------------------
                                                 SYNNOTT B. DURHAM, PRINCIPAL
                                                 ACCOUNTING OFFICER



                                       12