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


3005 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,
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 - -
                      DECEMBER 31, 2002 AND SEPTEMBER 30, 2002             3

             CONSOLIDATED CONDENSED STATEMENTS OF INCOME - -
                      THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001        4

             CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS -
                      THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001        5

             NOTES TO CONSOLIDATED CONDENSED FINANCIAL
                      STATEMENTS                                          6-8

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

             CONTROLS AND PROCEDURES                                      11

       PART II.       OTHER INFORMATION                                   12

                                     - 2 -
<PAGE>
                          PART I. FINANCIAL INFORMATION

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

ASSETS                                                12/31/02       9/30/02
------                                               -----------   -----------

CURRENT ASSETS:
---------------
      CASH AND CASH EQUIVALENTS                      $ 1,207,310   $ 2,422,833
      ACCOUNTS RECEIVABLE                              1,032,754       784,738
      INTEREST RECEIVABLE                                185,552       128,633
      INVENTORIES                                      5,597,044     5,437,104
      SHORT TERM INVESTMENTS                           2,298,105     1,499,105
      CERTIFICATE OF DEPOSIT                                   0        84,313
      PREPAID EXPENSES AND OTHER
         CURRENT ASSETS                                   43,554        20,995
                                                     -----------   -----------

             TOTAL CURRENT ASSETS                     10,364,319    10,377,721
                                                     -----------   -----------

INVESTMENTS                                            3,508,348     3,515,516
-----------

NOTE RECEIVABLE                                          334,986       334,986
---------------

PROPERTY, PLANT AND EQUIPMENT-NET                        713,889       734,079
---------------------------------                    -----------   -----------

TOTAL ASSETS                                         $14,921,542   $14,962,302
------------                                         ===========   ===========

LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------

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

      ACCOUNTS PAYABLE AND ACCRUED EXPENSES          $   963,177   $   504,268
      INCOME TAXES PAYABLE                                     0       568,709
                                                     -----------   -----------

           TOTAL CURRENT LIABILITIES                     963,177     1,072,977
                                                     -----------   -----------

LONG-TERM LIABILITIES:
----------------------

      INCOME TAXES PAYABLE, NET OF CURRENT PORTION       244,000       244,000
                                                     -----------   -----------

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                               10,738,209    10,669,169
                                                     -----------   -----------

           TOTAL STOCKHOLDERS' EQUITY                 13,714,365    13,645,325
                                                     -----------   -----------

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY             $14,921,542   $14,962,302
----------------------------------------             ===========   ===========

                                     - 3 -
<PAGE>
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (UNAUDITED)

                                                  THREE MONTHS ENDED
                                             --------------------------
                                              12/31/02        12/31/01
                                             -----------    -----------

SALES                                        $ 1,065,447    $ 1,847,750
COST OF SALES                                    555,199      1,203,534
                                             -----------    -----------

GROSS PROFIT                                     510,248        644,216
SELLING, GENERAL & ADMINISTRATIVE EXPENSES       495,525        455,922
                                             -----------    -----------

OPERATING INCOME                                  14,723        188,294
OTHER INCOME:
    INTEREST INCOME                               77,163         62,092
    OTHER, NET                                    15,066          4,373
                                             -----------    -----------

INCOME BEFORE PROVISION
  FOR INCOME TAXES                               106,952        254,759

PROVISION FOR

  INCOME TAXES                                   (37,900)       (85,000)
                                             -----------    -----------

NET INCOME                                   $    69,052    $   169,759
                                             ===========    ===========

NET INCOME PER SHARE:
    BASIC                                    $      0.02    $      0.05
                                             ===========    ===========
    DILUTED                                  $      0.02    $      0.05
                                             ===========    ===========

WEIGHTED AVERAGE SHARES OUTSTANDING:
    BASIC                                      3,692,570      3,692,570
                                             ===========    ===========
    DILUTED                                    3,711,702      3,711,702
                                             ===========    ===========

                                     - 4 -
<PAGE>
                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                        THREE MONTHS ENDED
                                                    --------------------------
                                                      12/31/02      12/31/01
                                                    -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
    NET INCOME                                      $    69,052    $   169,759
    ADJUSTMENTS TO RECONCILE NET INCOME TO
       NET CASH USED IN OPERATING ACTIVITIES:
       DEPRECIATION                                      32,201         34,049
       (INCREASE) DECREASE IN ASSETS:
          ACCOUNTS RECEIVABLE                          (304,935)      (869,212)
          INVENTORIES                                  (159,940)        98,385
          PREPAID AND OTHER CURRENT ASSETS              (22,559)        88,604
       INCREASE (DECREASE) IN LIABILITIES:
          ACCOUNTS PAYABLE AND ACCRUED EXPENSES         458,909       (227,116)
          INCOME TAXES PAYABLE                         (568,709)             0
                                                    -----------    -----------
    NET CASH USED IN OPERATING ACTIVITIES              (495,981)      (705,531)
                                                    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    PURCHASE OF PROPERTY, PLANT, AND EQUIPMENT          (12,023)       (55,816)
    SALES (PURCHASES) OF INVESTMENTS                   (707,519)         7,168
                                                    -----------    -----------
    NET CASH USED IN INVESTING ACTIVITIES              (719,542)       (48,648)
                                                    -----------    -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS            (1,215,523)      (754,179)

CASH AND CASH EQUIVALENTS, AT BEGINNING OF YEAR       2,422,833      2,015,918
                                                    -----------    -----------

CASH AND CASH EQUIVALENTS, AT END OF YEAR           $ 1,207,310    $ 1,261,739
                                                    ===========    ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    CASH PAID DURING THE YEAR FOR INCOME TAXES      $   640,000    $         0
                                                    ===========    ===========

                                     - 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, 2002 ARE NOT NECESSARILY
               INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED FOR THE FISCAL
               YEAR ENDING SEPTEMBER 30,2003. 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, 2002.

       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:

                                             12/31/02     9/30/02
                                            ----------   ----------
                          RAW MATERIALS     $1,777,057   $1,974,324
                          WORK IN PROCESS    3,339,985    2,999,000
                          FINISHED GOODS       480,002      463,780
                                            ----------   ----------
                                            $5,597,044   $5,437,104

       (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:

               AT THE FISCAL YEAR ENDED SEPTEMBER 30, 2002, OPTIONS TO PURCHASE
               270,000 SHARES AT $2.25 PER SHARE HAD BEEN ISSUED TO KEY
               EMPLOYEES OF THE COMPANY. OPTIONS FOR 91,700 SHARES ARE
               EXERCISABLE BEGINNING IN THE SECOND YEAR OF THE OPTION PERIOD AND
               89,150 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. 143, "ACCOUNTING FOR ASSET RETIREMENT OBLIGATIONS". THIS
               STATEMENT ADDRESSES FINANCIAL ACCOUNTING AND REPORTING FOR
               OBLIGATIONS ASSOCIATED WITH THE RETIREMENT OF TANGIBLE LONG-LIVED
               ASSETS AND THE ASSOCIATED ASSET RETIREMENT COSTS. THIS STATEMENT
               REQUIRES THAT THE FAIR VALUE OF A LIABILITY FOR AN ASSET
               RETIREMENT OBLIGATION BE RECOGNIZED IN THE PERIOD IN WHICH IT IS
               INCURRED IF A REASONABLE ESTIMATE OF FAIR VALUE CAN BE MADE. THE
               ASSOCIATED ASSET RETIREMENT COSTS ARE CAPITALIZED AS PART OF THE
               CARRYING AMOUNT OF THE LONG-LIVED ASSET AND SUBSEQUENTLY
               ALLOCATED TO EXPENSE USING A SYSTEMATIC AND RATIONAL METHOD.
               ADOPTION OF THIS STATEMENT IS REQUIRED FOR FISCAL YEARS BEGINNING
               AFTER JUNE 15, 2002. THE ADOPTION OF STATEMENT NO. 143 IS NOT
               EXPECTED TO MATERIALLY AFFECT THE COMPANY'S FINANCIAL STATEMENTS.

               SFAS NO. 144, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
               AND LONG-LIVED ASSETS TO BE DISPOSED OF". THIS STATEMENT
               SUPERSEDES STATEMENT NO. 121 BUT RETAINS MANY OF ITS FUNDAMENTAL
               PROVISIONS. THE STATEMENT ALSO ESTABLISHES A SINGLE ACCOUNTING
               MODEL, BASED ON THE FRAMEWORK ESTABLISHED IN STATEMENT 121, FOR
               LONG-LIVED ASSETS TO BE DISPOSED OF BY SALE. ADDITIONALLY, THE
               STATEMENT RESOLVES SIGNIFICANT IMPLEMENTATION ISSUES RELATED TO
               STATEMENT NO. 121. THE PROVISIONS OF THIS STATEMENT ARE EFFECTIVE
               FOR FINANCIAL STATEMENTS ISSUED FOR FISCAL YEARS BEGINNING AFTER
               DECEMBER 15, 2001. THE PROVISION OF STATEMENT NO. 144 IS NOT
               EXPECTED TO MATERIALLY AFFECT THE COMPANY'S FINANCIAL STATEMENTS.

                                     - 7 -
<PAGE>

               SFAS NO. 145, "RESCISSION OF FASB STATEMENTS NO. 4, 44, AND 64,
               AMENDMENT OF FASB STATEMENT NO. 13 AND TECHNICAL CORRECTIONS".
               THIS STATEMENT, AMONG OTHER THINGS, REQUIRES THAT GAINS AND
               LOSSES RELATED TO EXTINGUISHMENTS OF DEBT BE CLASSIFIED AS
               EXTRAORDINARY ITEMS ONLY IF THEY MEET THE CRITERIA IN OPINION NO.
               30. THE PROVISION OF STATEMENT NO. 145 RELATED TO THE RESCISSION
               OF STATEMENT NO. 4 SHOULD BE APPLIED IN FISCAL YEARS BEGINNING
               AFTER MAY 15, 2002. ANY GAIN OR LOSS ON EXTINGUISHMENT OF DEBT
               THAT WAS CLASSIFIED AS AN EXTRAORDINARY ITEM IN PRIOR PERIODS
               PRESENTED THAT DOES NOT MEET THE CRITERIA IN OPINION NO. 30 FOR
               CLASSIFICATION AS AN EXTRAORDINARY ITEM SHOULD BE RECLASSIFIED.
               THE PROVISION OF STATEMENT NO. 145 IS NOT EXPECTED TO MATERIALLY
               AFFECT THE COMPANY'S FINANCIAL STATEMENTS.

               SFAS NO. 146, "ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR
               DISPOSAL ACTIVITIES". THIS STATEMENT ADDRESSES FINANCIAL
               ACCOUNTING AND REPORTING FOR COSTS ASSOCIATED WITH EXIT OR
               DISPOSAL ACTIVITIES AND REPLACES EMERGING ISSUES TASK FORCE
               (EITF) ISSUE NO. 94-3, LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE
               TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY
               (INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING)." THIS
               STATEMENT IS EFFECTIVE FOR EXIT OR DISPOSAL ACTIVITIES THAT ARE
               INITIATED AFTER DECEMBER 31, 2002, WITH EARLY APPLICATION
               ENCOURAGED. THE EFFECT OF ADOPTING SFAS NO. 146 IS NOT EXPECTED
               TO HAVE A MATERIAL IMPACT ON THE COMPANY'S FINANCIAL POSITION OR
               RESULTS OF OPERATIONS.

       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,
2002, THE COMPANY MAINTAINED CASH AND CASH EQUIVALENTS MORE THAN ADEQUATE TO
COVER KNOWN REQUIREMENTS, UNFORESEEN EVENTS OR UNCERTAINTIES THAT MIGHT OCCUR.
DURING THE THREE MONTH PERIOD, CASH AND CASH EQUIVALENTS MAINTAINED AN AVERAGE
BALANCE OF $1,638,000, COMPARED TO AN AVERAGE BALANCE OF $2,174,000 FOR THE
TWELVE MONTHS ENDED SEPTEMBER 30, 2002. CASH EQUIVALENTS 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 2003. 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 THREE MONTHS OF THE CURRENT FISCAL YEAR, THE COMPANY EXPENDED
$12,023 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, 2002,
SHIPMENTS WERE $1,065,447, DOWN FROM SHIPMENTS OF $1,847,750 OR 42.3% FOR THE
SAME QUARTER ONE YEAR AGO. EXPORT SHIPMENTS FOR THE THREE MONTHS ENDED DECEMBER
31, 2002 WERE $100,854 OR 9.5% OF TOTAL SALES, DOWN $906,777 OR 90.0% FROM THE
SAME PERIOD ONE YEAR AGO. DOMESTIC SHIPMENTS FOR THE FIRST THREE MONTHS OF THE
CURRENT FISCAL YEAR WERE $964,593, COMPARABLE TO SHIPMENTS FOR THE SAME PERIOD
ONE YEAR AGO OF $840,119, UP $124,474 OR 14.8%.

SHIPMENTS FOR THE FIRST THREE MONTHS ARE LOWER THAN SHIPMENTS FOR THE SAME
PERIOD ONE YEAR AGO DUE TO THE DELIVERY OF A SINGLE U.S. GOVERNMENT FOREIGN
MILITARY FUNDED (FMF) CONTRACT FOR AN $810,000 SYSTEM IN THE FIRST QUARTER OF
ONE YEAR AGO. THIS DIFFERENCE IS NOT AN INDICATION OF ANY TREND OR DEFLATING
SALES FACTOR AS EVIDENCED BY THE CURRENT BACKLOG. LARGER SHIPMENTS REQUIRING
SINGLE SHIPMENTS MAY OCCUR. BACKLOG AT DECEMBER 31, 2002 WAS $2,892,000 AS
COMPARED TO $766,000 FOR THE SAME PERIOD A YEAR AGO. NOT INCLUDED IN THIS
BACKLOG IS PROJECTED ORDERS ON CONTRACTS RECEIVED IN FISCAL 1999 AND 2000 IN
EXCESS OF $19,000,000 OVER A FIVE YEAR PERIOD. APPROXIMATELY $6,000,000 IN
ORDERS ON THESE CONTRACTS WAS SHIPPED IN FISCAL 2000 THROUGH THE CURRENT PERIOD.

                                     - 9 -
<PAGE>

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

COST OF SALES WAS LOWER AT 52.1% OF SALES IN THE FIRST QUARTER OF FISCAL 2003 AS
COMPARED TO 65.1% OF SALES IN THE SAME PERIOD ONE YEAR AGO DUE PRIMARILY TO
REDUCED MANUFACTURING OVERHEADS AND INCREASED DIRECT LABOR. 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, 2002 WAS $159,940 HIGHER THAN SEPTEMBER 30, 2002 DUE
TO PURCHASES OF MATERIALS AND PRODUCTION TO MEET SCHEDULED SHIPMENTS IN FUTURE
PERIODS AS INDICATED BY CURRENT BACKLOG AT PERIOD END. NECESSARY INCREASES IN
INVENTORY WILL BE CLOSELY MONITORED. 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 $495,525 INCREASED $39,603 FROM
THE SAME PERIOD ONE YEAR AGO DUE PRIMARILY TO INCREASED PERSONNEL AND TRAVEL
EXPENSES IN THE SALES AND MARKETING AREA. HIGHER LEVELS IN THE DIRECT LABOR
FORCE CONTINUE IN ORDER TO REACH SUFFICIENT FINISHED GOODS LEVELS TO MEET
SCHEDULED DELIVERY ORDERS.

INTEREST INCOME INCREASED $15,071 ON INCREASED INVESTMENTS FOR THE FIRST THREE
MONTHS OF THE CURRENT FISCAL YEAR ALTHOUGH YIELDS CONTINUE TO BE EXTREMELY LOW.

THE COMPANY CONTINUES TO EXPERIENCE SUCCESS AS A TOTAL HIGH FREQUENCY (HF)
SOLUTION PROVIDER IN LIEU OF THE TRADITIONAL ORDERS FOR MANUFACTURED HARDWARE.
BACKLOG INCREASED FROM $360,000 AT SEPTEMBER 30, 2002 TO $2,892,000 FOR THE
FIRST QUARTER OF FISCAL 2003. THE MAJORITY OF SHIPMENTS AGAINST THE CURRENT
BACKLOG WILL OCCUR IN THE THIRD AND FOURTH QUARTERS OF THE CURRENT FISCAL YEAR.

INCREASED MARKETING EFFORTS HAVE QUALIFIED OUR SELECTION TO A SHORT LIST TO
DESIGN HARDWARE, DEVELOP SOFTWARE AND DELIVER SYSTEMS FOR AN HF COASTAL STATION
ON SEVERAL PROJECTS IN THE PACIFIC RIM WHICH HAVE BEEN IN DISCUSSION FOR OVER
THREE YEARS. OTHER SYSTEMS OPPORTUNITIES HAVE BEEN IDENTIFIED IN AUSTRALIA AND
TAIWAN WITH PLANS UNDERWAY TO DEMONSTRATE AND QUALIFY OUR PRODUCTS AND
CAPABILITIES IN OTHER COUNTRIES.

THE COMPANY WILL CONTINUE ITS EFFORTS TO EXPLOIT A NEW PERCEPTION OF THE
COMPANY'S ABILITIES TO DESIGN AND DELIVER UNIQUE AND SPECIALIZED HIGH FREQUENCY
SYSTEMS OPENING NEW OPPORTUNITIES FOR EXPANSION AND GROWTH.

                                     - 10 -
<PAGE>

ITEM 3. CONTROL AND PROCEDURES
------------------------------

(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. THE TERM "DISCLOSURE
CONTROLS AND PROCEDURES" IS DEFINED IN RULE 13A - 14(C) OF THE SECURITIES
EXCHANGE ACT OF 1934, OR THE EXCHANGE ACT. THIS TERM REFERS TO THE CONTROLS AND
PROCEDURES OF A COMPANY THAT ARE DESIGNED TO ENSURE THAT INFORMATION REQUIRED TO
BE DISCLOSED BY A COMPANY IN THE REPORTS THAT IT FILES UNDER THE EXCHANGE ACT IS
RECORDED, PROCESSED, SUMMARIZED AND REPORTED WITHIN REQUIRED TIME PERIODS. OUR
CHIEF EXECUTIVE OFFICER AND OUR CHIEF FINANCIAL OFFICER HAVE EVALUATED THE
EFFECTIVENESS OF OUR DISCLOSURE CONTROLS AND PROCEDURES AS OF A DATE WITHIN 90
DAYS BEFORE THE FILING OF THIS QUARTERLY REPORT, AND THEY HAVE CONCLUDED THAT AS
OF THAT DATE, OUR DISCLOSURE CONTROLS AND PROCEDURES WERE EFFECTIVE AT ENSURING
THAT REQUIRED INFORMATION WILL BE DISCLOSED ON A TIMELY BASIS IN OUR REPORTS
FILED UNDER THE EXCHANGE ACT.

(B) CHANGES IN INTERNAL CONTROLS. THERE WERE NO SIGNIFICANT CHANGES TO OUR
INTERNAL CONTROLS OR IN OTHER FACTORS THAT COULD SIGNIFICANTLY AFFECT OUR
INTERNAL CONTROLS SUBSEQUENT TO THE DATE OF THEIR EVALUATION BY OUR CHIEF
EXECUTIVE OFFICER AND OUR CHIEF FINANCIAL OFFICER, INCLUDING ANY CORRECTIVE
ACTIONS WITH REGARD TO SIGNIFICANT DEFICIENCIES AND MATERIAL WEAKNESSES.

                                     - 11 -
<PAGE>

PART II   OTHER INFORMATION


5.     OTHER INFORMATION

       NONE

6.     EXHIBITS AND REPORTS ON FORM 8-K

       (A) EXHIBITS

           99.1     CERTIFICATE OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION
                    906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

           99.2     CERTIFICATE OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION
                    906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

       (B) 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     FEBRUARY 13, 2003                /S/ JAMES E. LAURENT
     --------------------------           ----------------------------
                                          JAMES E. LAURENT, PRINCIPAL
                                          EXECUTIVE OFFICER


DATE     FEBRUARY 13, 2003                /S/ SYNNOTT B. DURHAM
     --------------------------           ----------------------------
                                          SYNNOTT B. DURHAM, PRINCIPAL
                                          ACCOUNTING OFFICER

                                     - 13 -

<PAGE>

                                  CERTIFICATION

I, James E. Laurent, Chief Executive Officer of the Company, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Sunair Electronics,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in the report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a) designed such disclosure controls and procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

     (c) presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     (a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     (b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

DATE: February 13, 2003

/s/ James E. Laurent
--------------------
James E. Laurent
President and Chief Executive Officer

                                     - 14 -
<PAGE>

                                  CERTIFICATION

I, Synnott B. Durham, Chief Financial Officer of the Company, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Sunair Electronics,
Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in the report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a) designed such disclosure controls and procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

     (c) presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     (a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     (b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

DATE: February 13, 2003

/s/ Synnott B. Durham
-------------------------------------
Synnott B. Durham
Treasurer and Chief Financial Officer

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