**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

| [                X                ]                                  | QUARTERLY                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934.  |
|----------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|
|                                                                 |                                                                                                                                   |
| **For                the Quarterly Period Ended September 30, 2006** |
|                                                                 |                                                                                                                                   |
| [                  ]                                       | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934. |

**COMMISSION      FILE NUMBER: 0-17893**

| **TELTRONICS,                INC.**                                                          |
|----------------------------------------------------------------------------------------------|
| (Exact                name                of registrant as specified in its charter)         |
|                                                                                         |
| **Delaware**                                                                                 | **59-2937938** |
| (State                or                other jurisdiction of Incorporation or organization) | (IRS                Employer                Identification Number) |
|                                                                                         |
| **2150                Whitfield Industrial Way, Sarasota, Florida                34243**     |
| (Address                of                principal executive offices including zip code)    |
|                                                                                         |
| **(941)                753-5000**                                                            |
| Issuer's                telephone number, including area                code                 |

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**TABLE      OF      CONTENTS**

|                                                                   |                                                                                                                                                                         | **PAGE** |
|------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| **PART                I**                                              | **FINANCIAL                INFORMATION**                                                                                                                                |     |
|        ITEM                1.       | FINANCIAL                STATEMENTS                                                                                                                                          |     |
|                                                                   | Condensed                Consolidated Balance Sheets at September 30, 2006(Unaudited)                and December 31, 2005                                                   | 1        |
|                                                                   |  Condensed                Consolidated Income Statement (Unaudited)for                the Three                months and Nine months ended September 30, 2006 and 2005 | 2        |
|                                                                   |  Condensed                Consolidated Statement of Cash Flows (Unaudited)for                the Nine                months ended September 30, 2006 and 2005           | 3        |
|                                                                   |  Notes                to                Condensed Consolidated Financial Statements (Unaudited)                                                                         | 4        |
|                        ITEM 2.      |  MANAGEMENT’S                DISCUSSION AND ANALYSIS OFFINANCIAL                CONDITION AND RESULTS OF OPERATIONS                                               | 5        |
|         ITEM                3. |  QUANTITATIVE                AND QUALITATIVE DISCLOSURES ABOUT MARKET                RISK                                                                               | 8        |
|         ITEM                4. |  CONTROLS                AND                PROCEDURES                                                                                                                  | 8        |
|  **PART                II**                                       |  **OTHER                INFORMATION**                                                                                                                                   |
|                        ITEM 1.      |  LEGAL                PROCEEDINGS                                                                                                                                       | 9        |
|         ITEM                3. |  DEFAULTS                UPON                SENIOR SECURITIES                                                                                                          | 9        |
|         ITEM                6. |  EXHIBITS                AND                REPORTS ON FORM 8-K                                                                                                         | 9        |
|  **SIGNATURES**                                                   | 10                                                                                                                                                                           |
|  **EXHIBIT                INDEX**                                 | 11                                                                                                                                                                           |
|                                                                   |                                                                                                                                                                         |     |

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**PART      I -      FINANCIAL INFORMATION**

**ITEM      1.  FINANCIAL STATEMENTS **

**TELTRONICS,      INC. AND SUBSIDIARIES**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

*In      thousands,      except shares and per share amounts*

| **ASSETS**                                                                                                                                                                               |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                     |   |   |   |
|                                                                                                                                                                                     | **September                30,** |   | **December                31,** |
|                                                                                                                                                                                     | **2006** |   | **2005** |
|                                                                                                                                                                                     | (Unaudited) |   |   |
| **Current                assets:**                                                                                                                                                       |   |   |   |
|                     Cash and cash equivalents                                                                                                                        | $ | 1,059  |   | $ | 1,150  |
|                     Accounts receivable, net of allowance for doubtful                accounts                                                                       |   | 8,491  |   |   | 6,568  |
|                     Costs and estimated earnings in excess of billings                         on uncompleted contracts |   | 214  |   |   | 418  |
|                     Inventories, net                                                                                                                                 |   | 5,391  |   |   | 5,970  |
|                     Other current assets                                                                                                                             |   | 736  |   |   | 953  |
|                          Total current assets                                                                                               |   | 15,891  |   |   | 15,059  |
|                                                                                                                                                                                     |   |   |   |   |   |
| **Property                and equipment, net**                                                                                                                                           |   | 778  |   |   | 967  |
| **Other                assets**                                                                                                                                                          |   | 846  |   |   | 954  |
|                                                                                                                                                                                     |   |   |   |   |   |
|                          Total assets                                                                                                       | $ | 17,515  |   | $ | 16,980  |
|                                                                                                                                                                                     |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ DEFICIENCY**                                                                                                                        |
|                                                                                                                                                                                     |   |   |   |
| **Current                liabilities:**                                                                                                                                                  |   |   |   |   |   |
|                     Line of credit                                                                                                                                   | $ | 5,479  |   | $ | 5,112  |
|                     Current portion of long-term debt and capital                         lease obligations             |   | 819  |   |   | 855  |
|                     Accounts payable                                                                                                                                 |   | 5,527  |   |   | 5,630  |
|                     Deferred dividends                                                                                                                               |   | 1,400  |   |   | ---  |
|                     Other current liabilities                                                                                                                        |   | 4,101  |   |   | 3,788  |
|                          Total current liabilities                                                                                          |   | 17,326  |   |   | 15,385  |
| **Long-term                liabilities:**                                                                                                                                                |   |   |   |   |   |
|                     Deferred dividends                                                                                                                               |   | ---  |   |   | 1,100  |
|                     Long-term debt and capital lease obligations, net of                         current portion        |   | 2,494  |   |   | 3,081  |
|                          Total long-term liabilities                                                                                             |   | 2,494  |   |   | 4,181  |
| **Commitments                and contingencies**                                                                                                                                         |   |   |   |   |   |
| **Shareholders'                deficiency:**                                                                                                                                             |   |   |   |   |   |
|                     Capital stock                                                                                                                                    |   | 9  |   |   | 9  |
|                     Additional paid-in capital                                                                                                                       |   | 24,697  |   |   | 24,658  |
|                     Accumulated deficit and other comprehensive loss                                                                                                 |   | (27,011) |   |   | (27,253) |
|                          Total shareholders' deficiency                                                                                     |   | (2,305) |   |   | (2,586) |
|                                                                                                                                                                                     |   |   |   |   |   |
|                          Total liabilities and shareholders' deficiency                                                                     | $ | 17,515  |   | $ | 16,980  |

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**TELTRONICS,      INC. AND SUBSIDIARIES**

**UNAUDITED      CONDENSED CONSOLIDATED INCOME STATEMENT**

*In      thousands,      except shares and per share amounts*

|                                                                                                                  | **Three                Months****Ended                September 30,** |         | **Nine                Months****Ended                September 30,** |
|-----------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------|--------------|----------------------------------------------------------------------|
|                                                                                                                  | **2006**                                                              |         | **2005**                                                             |   | **2006** |   | **2005** |
|                                                                                                                  |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
| **Net                sales**                                                                                          |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
|                     Product sales and installation                                                | $                                                                     | 9,034   |                                                                 | $ | 7,599  |   | $ | 23,969  |   | $ | 24,011  |
|                     Maintenance and service                                                       |                                                                  | 3,183   |                                                                 |   | 3,186  |   |   | 10,036  |   |   | 9,510  |
|                                                                                                                  |                                                                  | 12,217  |                                                                 |   | 10,785  |   |   | 34,005  |   |   | 33,521  |
| Cost                of goods                sold                                                                      |                                                                  | 7,143   |                                                                 |   | 6,457  |   |   | 19,867  |   |   | 19,328  |
| **Gross                profit**                                                                                       |                                                                  | 5,074   |                                                                 |   | 4,328  |   |   | 14,138  |   |   | 14,193  |
| **Operating                expenses:**                                                                                |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
|                     General and administrative                                                    |                                                                  | 1,383   |                                                                 |   | 1,549  |   |   | 3,750  |   |   | 4,218  |
|                     Sales and marketing                                                           |                                                                  | 1,722   |                                                                 |   | 1,836  |   |   | 5,595  |   |   | 5,571  |
|                     Research and development                                                      |                                                                  | 958     |                                                                 |   | 1,039  |   |   | 2,800  |   |   | 3,044  |
|                     Depreciation                                                                  |                                                                  | 65      |                                                                 |   | 120  |   |   | 253  |   |   | 431  |
|                                                                                                                  |                                                                  | 4,128   |                                                                 |   | 4,544  |   |   | 12,398  |   |   | 13,264  |
| Income                (loss)                from operations                                                           |                                                                  | 946     |                                                                 |   | (216) |   |   | 1,740  |   |   | 929  |
|                                                                                                                  |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
| **Other                income (expense):**                                                                            |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
|                     Interest                                                                      |                                                                  | (470)        |                                                                 |   | (241) |   |   | (1,084) |   |   | (984) |
|                     Other                                                                         |                                                                  | 22      |                                                                 |   | 3,958  |   |   | 57  |   |   | 4,519  |
|                                                                                                                  |                                                                  | (448)        |                                                                 |   | 3,717  |   |   | (1,027) |   |   | 3,535  |
| **Income                before income taxes**                                                                         |                                                                  | 498     |                                                                 |   | 3,501  |   |   | 713  |   |   | 4,464  |
| **Income                taxes**                                                                                       |                                                                  | 3       |                                                                 |   | 17  |   |   | 23  |   |   | 25  |
| **Net                income**                                                                                         |                                                                  | 495     |                                                                 |   | 3,484  |   |   | 690  |   |   | 4,439  |
| **Dividends                on Preferred Series B and****                    C Convertible stock** |                                                                  | 163     |                                                                 |   | 163  |   |   | 489  |   |   | 485  |
| **Net                income available to****                    common shareholders**             | $                                                                     | 332     |                                                                 | $ | 3,321  |   | $ | 201  |   | $ | 3,954  |
|                                                                                                                  |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
| **Net                income per share:**                                                                              |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
|                     Basic                                                                         | $                                                                     | 0.04    |                                                                 | $ | 0.42  |   | $ | 0.02  |   | $ | 0.50  |
|                     Diluted                                                                       | $                                                                     | 0.04    |                                                                 | $ | 0.32  |   | $ | 0.02  |   | $ | 0.36  |
|                                                                                                                  |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
| **Weighted                average shares outstanding:**                                                               |                                                                  |         |                                                                 |   |   |   |   |   |   |   |   |
|                     Basic                                                                         | 8,636,539                                                        |         | 7,880,806                                                       |   | 8,636,539  |   | 7,874,143  |
|                     Diluted                                                                       | 9,286,768                                                        |         | 10,874,280                                                      |   | 9,094,402  |   | 10,883,415  |

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**TELTRONICS,      INC. AND SUBSIDIARIES**

**UNAUDITED      CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS**

*In      thousands,      except shares and per share amounts*

|                                                                                        | **Nine                Months Ended****September                30,** |
|---------------------------------------------------------------------------------------------|----------------------------------------------------------------------|
|                                                                                        | **2006**                                                             |   | **2005** |
|                                                                                        |                                                                 |   |   |
| **NET                CASH FLOWS PROVIDED BY (USED IN) OPERATING                ACTIVITIES** | $                                                                    | 531  |   | $  | (2,455) |
|                                                                                        |                                                                 |   |   |   |   |
| **INVESTING                ACTIVITIES - NET**                                               |                                                                 | (263) |   |   | 260  |
|                                                                                        |                                                                 |   |   |   |   |
| **FINANCING                ACTIVITIES:**                                                    |                                                                 |   |   |   |   |
|                     Net borrowings on line of credit                    |                                                                 | 367  |   |   | 2,617  |
|                     Other                                               |                                                                 | (769) |   |   | (1,707) |
| Net                cash                flows (used in) provided by financing activities     |                                                                 | (402) |   |   | 910  |
|                                                                                        |                                                                 |   |   |   |   |
| Effect                of                exchange rate changes on cash                       |                                                                 | 43  |   |   | (58) |
|                                                                                        |                                                                 |   |   |   |   |
| Net                decrease                in cash and cash equivalents for the period      |                                                                 | (91) |   |   | (1,343) |
|                                                                                        |                                                                 |   |   |   |   |
| Cash                and cash                equivalents - Beginning of Period               |                                                                 | 1,150  |   |   | 1,580  |
|                                                                                        |                                                                 |   |   |   |   |
| Cash                and cash                equivalents - End of Period                     | $                                                                    | 1,059  |   | $ | 237  |

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**TELTRONICS,      INC. AND SUBSIDIARIES**

**NOTES      TO      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

*In      thousands,      except shares and per share amounts*

**(Unaudited)**

**NOTE      1 -      BASIS OF PRESENTATION**

**NOTE      2 -      COMPREHENSIVE INCOME**

|                                        | **Three                Months Ended****September                30,** |   | **Nine                Months Ended****September                30,** |
|---------------------------------------------|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|
|                                        | **2006**                                                              |   | **2005**                                                             |   | **2006** |   | **2005** |
|                                        |                                                                  |   |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                   | $                                                                     | 495    |                                                                 |   | $ | 3,484  |   |   | $ | 690 |   |   | $ | 4,439 |   |
| Foreign                currency translation |                                                                  | 25     |                                                                 |   |   | (28) |   |   |   | 43 |   |   |   | (57) |   |
| Total                comprehensive income   | $                                                                     | 520    |                                                                 |   | $ | 3,456  |   |   | $ | 733 |   |   | $ | 4,382 |   |

**NOTE      3 -      NET INCOME PER SHARE**

|                                                                                      | **Three                Months Ended****September                30,** |       | **Nine                Months Ended****September                30,** |
|-------------------------------------------------------------------------------------------|-----------------------------------------------------------------------|------------|----------------------------------------------------------------------|
| **Net                income per share**                                                   | **2006**                                                              |       | **2005**                                                             |   | **2006** |   | **2005** |
| **Basic**                                                                                 |                                                                  |       |                                                                 |   |   |   |   |
| Net                income                                                                 | $                                                                     | 495   |                                                                 | $ | 3,484  |   | $ | 690  |   | $ | 4,439  |
| Preferred                dividends                                                        |                                                                  | (163)      |                                                                 |   | (163) |   |   | (489) |   |   | (485) |
|                                                                                      | $                                                                     | 332   |                                                                 | $ | 3,321  |   | $ | 201  |   | $ | 3,954  |
|                                                                                      |                                                                  |       |                                                                 |   |   |   |   |
| Weighted                average shares                    outstanding | 8,636,539                                                        |       | 7,880,806                                                       |   | 8,636,539  |   | 7,874,143  |
|  Net                income                per share                                  | $                                                                     | 0.04  |                                                                 | $ | 0.42  |   | $ | 0.02  |   | $ | 0.50  |

----

|                                                                                              | **Three                    Months Ended****September                    30,** |       | **Nine                    Months Ended****September                    30,** |
|---------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------|
| **Net                    income per share**                                                       | **2006**                                                                      |       | **2005**                                                                     |   | **2006** |   | **2005** |
|  **Diluted**                                                                                 |                                                                          |       |                                                                         |   |   |   |   |
| Net                    income                                                                     | $                                                                             | 495   |                                                                         | $ | 3,484  |   | $ | 690  |   | $ | 4,439  |
| Preferred                    dividends                                                            |                                                                          | (163)      |                                                                         |   | ---  |   |   | (489) |   |   | (485) |
| Interest                                                                                          |                                                                          | ---   |                                                                         |   | 32  |   |   | ---  |   |   | ---  |
|                                                                                              | $                                                                             | 332   |                                                                         | $ | 3,516  |   | $ | 201  |   | $ | 3,954  |
|                                                                                              |                                                                          |       |                                                                         |   |   |   |   |
| Weighted                    average shares                        outstanding | 9,286,768                                                                |       | 10,874,280                                                              |   | 9,094,402  |   | 10,883,415  |
|  Net                    income                    per share                                  | $                                                                             | 0.04  |                                                                         | $ | 0.32  |   | $ | 0.02  |   | $ | 0.36  |

**NOTE      4 -      INVENTORIES**

|   |                          | **September                30, 2006** |   | **December                31, 2005** |
|--------|-------------------------------|---------------------------------------|--------|--------------------------------------|
|   |                          | **(Unaudited)**                       |   |                                 |
|   |                          |                                  |   |                                 |
|   | Raw                materials  | $                                     | 2,999  |                                 |   | $ | 3,325 |   |
|   | Work-in-process               |                                  | 959    |                                 |   |   | 1,168 |   |
|   | Finished                goods |                                  | 1,433  |                                 |   |   | 1,477 |   |
|   |                          | $                                     | 5,391  |                                 |   | $ | 5,970 |   |

**ITEM      2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION      AND**

**                    RESULTS OF OPERATIONS  **
*In      thousands,      except shares and per share amounts)*

**FORWARD-LOOKING      STATEMENTS**

*References      in      this report to the “Company,” “Teltronics,” “we.” or “us” mean Teltronics, Inc.      together with its subsidiaries, except where the context otherwise requires.      A      number of statements contained in this Quarterly Report on Form 10-Q are      forward-looking statements, which are made pursuant to the safe harbor      provisions of the Private Securities Litigation Reform Act of 1995. These      forward-looking statements can generally be identified as such because the      context of the statement will include words such as we “believe,” “anticipate,”“expect,” or words of similar import. Similarly, statements that describe our      future plans, objectives, strategies or goals are also forward-looking      statements. These forward-looking statements involve a number of risks and      uncertainties that may materially adversely affect the *

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*anticipated      results. Such risks and uncertainties include, but are not limited to, the      timely development and market acceptance of products and technologies,      competitive market conditions, successful integration of acquisitions, the      ability to secure additional sources of financing, the ability to reduce      operating expenses, and other factors described in the Company’s filings with      the Securities and Exchange Commission. Shareholders, potential investors and      other readers are urged to consider these factors carefully in evaluating the      forward-looking statements made herein and are cautioned not to place undue      reliance on such forward-looking statements. The forward-looking statements      made      herein are only made as of the date of this Form 10-Q and we disclaim any      obligation to publicly update such forward-looking statements to reflect      subsequent events or circumstances.*

**RESULTS      OF OPERATIONS**

**Net      Sales and Gross Profit Margin**

**Operating      Expenses**

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**Other      Income (Expense)**

**LIQUIDITY      AND CAPITAL RESOURCES**

**Seasonality**

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**ITEM      3.**
**QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**ITEM      4.  CONTROLS AND PROCEDURES**

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**PART      II -      OTHER INFORMATION**

**ITEM      1.   LEGAL PROCEEDINGS**

**ITEM      3.   DEFAULTS UPON SENIOR SECURITIES**

**ITEM      6(a).  **
**EXHIBITS**

| 31.1 |   | Certification                by the Chief Executive Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002.                                                                                        |
|------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.2 |   | Certification                by the Chief Financial Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002.                                                                                        |
| 32   |   | Certification                of Periodic Financial Report by the Chief Executive Officer and Chief                Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act                of                2002. |

**ITEM      6(b).  **
**REPORTS      ON      FORM 8-K**

| **Date                Filed**                 | **Item                Reported On**                                                                                                                              |
|-----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                          |                                                                                                                                                             |
| August                16,                2006 | Item                2.02:                Results of Operations and Financial ConditionItem                9.01:                Financial Statements and Exhibits |

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**SIGNATURES**

|                                   | **TELTRONICS,                INC.** |
|----------------------------------------|-------------------------------------|
|                                   |                                |   |
| Dated:                November 8, 2006 | By:                                 | /s/                Ewen                R.                Cameron                            Ewen                R.                CameronPresident                & Chief Executive Officer |
|                                   |                                |   |
| Dated:                November 8, 2006 | By:                                 | /s/                Russell R. Lee                III                                            Russell                R.                Lee IIIVice                President and Chief Financial                Officer |

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**EXHIBIT      INDEX**

| **Exhibit****Number** |  **Description**                                                                                                                                                                                                        |
|-----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                         |
|                  |                                                                                                                                                                                                                         |
| 31.1*                 | Certification                by the Chief Executive Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002.                                                                                        |
| 31.2*                 | Certification                by the Chief Financial Officer pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002.                                                                                        |
| 32*                   | Certification                of Periodic Financial Report by the Chief Executive Officer and Chief                Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act                of                2002. |
|                  |                                                                                                                                                                                                                         |
| _______               |                                                                                                                                                                                                                         |
| (*)                   | Filed                as an                Exhibit to this Report on Form 10-Q for the period ended September                30,                2006.                                                                         |

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