<PAGE>

                                   FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, DC 20549


(Mark One)

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


         For the quarterly period ended             March 31, 2001
                                        --------------------------------------

                                      OR

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


For the transition period from ______________________ to _______________________


Commission File Number                      0-13716
                        --------------------------------------------------------


                        NORTH PITTSBURGH SYSTEMS, INC.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


        Pennsylvania                                            25-1485389
----------------------------------                        ----------------------
   (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                         Identification No.)

             4008 Gibsonia Road, Gibsonia, Pennsylvania 15044-9311
--------------------------------------------------------------------------------
                   (Address of principal executive offices)
                                  (Zip Code)

                                 724-443-9600
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

                                   No Change
--------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report)


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

                               YES  X    NO_____
                                    -

                      APPLICABLE ONLY TO CORPORATE USERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                           Common Stock Outstanding
                           ------------------------

At April 23, 2001, the Registrant had 15,005,000 shares of common stock
outstanding, par value $.15625 per share, the only class of such stock issued.
<PAGE>

                                    PART I
                                    ITEM 1
                             FINANCIAL STATEMENTS
                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
                    (Thousands - Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                                                                   For the Three Months
                                                                                                      Ended March 31
                                                                                        ----------------------------------------

                                                                                             2001                       2000
                                                                                        -------------                -----------
<S>                                                                                     <C>                          <C>
Operating revenues:
     Local network services                                                             $       4,849                $     3,613
     Long distance and access services                                                         13,367                     12,896
     Directory advertising, billing & other services                                              591                        667
     Telecommunication equipment sales                                                            487                        601
     Other operating revenues                                                                   1,608                      1,275
                                                                                        -------------                -----------

         Total Operating Revenues                                                              20,902                     19,052


Operating expenses:
     Network and other operating expenses                                                      11,929                      9,393
     Depreciation and amortization                                                              4,476                      3,878
     State and local taxes                                                                        872                        931
     Telecommunication equipment expenses                                                         362                        556
                                                                                        -------------                -----------

         Total Operating Expenses                                                              17,639                     14,758
                                                                                        -------------                -----------

       Net Operating Revenues                                                                   3,263                      4,294


Other expense (income), net:
     Interest expense                                                                             890                        639
     Interest income                                                                             (337)                      (283)
     Sundry expense (income), net                                                                 147                       (247)
                                                                                        -------------                -----------

                                                                                                  700                        109
                                                                                        -------------                -----------

         Earnings before income taxes                                                           2,563                      4,185

Income taxes                                                                                    1,089                      1,749
                                                                                        -------------                -----------

         Net earnings                                                                   $       1,474                $     2,436
                                                                                        =============                ===========


Weighted average common shares outstanding                                                     15,005                     15,005
                                                                                        =============                ===========

Basic and diluted earnings per share of
     common stock                                                                       $         .10                $       .16
                                                                                        =============                ===========

Dividends per share of common stock                                                     $         .17                $       .16
                                                                                        =============                ===========
</TABLE>

    See accompanying notes to condensed consolidated financial statements.


<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                            (Thousands of Dollars)

<TABLE>
<CAPTION>
                                                                                   (Unaudited)
                                                                                     Mar. 31                    Dec. 31
                         ASSETS                                                       2001                       2000
                         ------                                                  ---------------           ---------------
<S>                                                                               <C>                       <C>
Current Assets:
     Cash and temporary investments                                               $      22,461             $      19,240
     Marketable securities available for sale                                             3,194                     5,026
     Accounts receivable:
       Customers, net of allowance for doubtful accounts of
         $366 and $559, respectively                                                      4,345                     5,077
       Access service settlements and other                                               8,573                     8,159
     Prepaid expenses                                                                       419                       462
     Inventories of construction and operating materials and
       supplies                                                                           4,231                     4,783
     Prepaid taxes other than income taxes                                                  873                         -
     Federal and state income taxes                                                           -                        16
     Deferred income tax                                                                      -                       933
                                                                                  -------------             -------------

         Total current assets                                                            44,096                    43,696
                                                                                  -------------             -------------

Property, plant and equipment:
     Land                                                                                   475                       475
     Buildings                                                                           13,257                    13,071
     Equipment                                                                          165,480                   173,293
     Assets held under capital lease                                                      9,051                     8,875
                                                                                  -------------             -------------

                                                                                        188,263                   195,714
     Less accumulated depreciation and amortization                                      90,718                    99,176
                                                                                  -------------             -------------

                                                                                         97,545                    96,538
     Construction in progress                                                             5,376                     7,540
                                                                                  -------------             -------------
         Total property, plant and equipment, net                                       102,921                   104,078

Investments                                                                              11,059                    11,170
Deferred financing costs                                                                    654                       675
Other assets                                                                              1,295                     1,335
                                                                                  -------------             -------------

                                                                                  $     160,025             $     160,954
                                                                                  =============             =============

         LIABILITIES AND SHAREHOLDERS' EQUITY
         ------------------------------------

Current liabilities:
     Current portion of long-term debt                                            $       3,668             $       3,519
     Obligation under capital lease                                                         768                       747
     Accounts payable                                                                     6,624                     6,992
     Dividend payable                                                                     2,551                     2,551
     Other accrued liabilities                                                            3,236                     3,318
     Federal and state income taxes                                                         485                         -
                                                                                  -------------             -------------

         Total current liabilities                                                       17,332                    17,127
                                                                                  -------------             -------------

Long-term debt                                                                           45,902                    45,377
Obligation under capital lease                                                            7,112                     7,137
Deferred income taxes                                                                     8,867                     9,645
Accrued pension and postretirement benefits                                               5,947                     5,781
Other liabilities                                                                         1,698                     1,693

Shareholders' equity:
     Capital stock/Common stock                                                           2,350                     2,350
     Capital in excess of par value                                                       2,215                     2,215
     Retained earnings                                                                   69,106                    70,183
     Less cost of treasury stock (2001 and 2000-35,000 shares)                             (508)                     (508)
     Accumulated other comprehensive income-unrealized gain
       (loss) on available for sale securities, net                                           4                       (46)
                                                                                  -------------             --------------

         Total shareholders' equity                                                      73,167                    74,194
                                                                                  -------------             -------------

                                                                                  $     160,025             $     160,954
                                                                                  =============             =============
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       2


<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                            (Thousands of Dollars)

<TABLE>
<CAPTION>
                                                                                      For the Three Months
                                                                                          Ended Mar. 31
                                                                                ------------------------------

                                                                                   2001                2000
                                                                                ----------           ---------
<S>                                                                             <C>                  <C>
Cash from operating activities:
     Net earnings                                                               $    1,474           $   2,436
     Adjustments to reconcile net earnings to net cash from
       operating activities:

         Depreciation and amortization                                               4,476               3,878
         Loss (gain) on sale of marketable securities                                   13                 (24)
         Equity losses (income) of affiliated companies                                 54                (205)
         Changes in assets and liabilities:
           Accounts receivable                                                         318                 305
           Inventories of construction and operating materials
              and supplies                                                             552                (427)
           Deferred financing costs, prepaid expenses and
              other assets                                                             104                 530
           Prepaid taxes                                                              (873)               (872)
           Accounts payable                                                           (368)                606
           Other accrued liabilities                                                   (77)                 82
           Accrued pension and postretirement benefits                                 166                 342
           Federal and state income taxes                                              501                 942
           Deferred income taxes                                                       119                   -
           Other, net                                                                  (14)                 (2)
                                                                                ----------           ---------
                  Total adjustments                                                  4,971               5,155
                                                                                ----------           ---------

                  Net cash from operating activities                                 6,445               7,591
                                                                                ----------           ---------

Cash used for investing activities:
     Expenditures for property and equipment                                        (3,131)             (9,890)
     Net salvage on retirements                                                          2                   9
                                                                                ----------           ---------

                  Net capital additions                                             (3,129)             (9,881)
                                                                                ----------           ---------

     Purchase of marketable securities available for sale                             (839)             (2,845)
     Proceeds from sale of marketable securities available for sale                  2,744               2,724
     Distributions from affiliated entities                                             57                 100
                                                                                ----------           ---------

                  Net cash used for investing activities                            (1,167)             (9,902)
                                                                                -----------          ---------

Cash used for financing activities:
     Cash dividends                                                                 (2,551)             (2,401)
     Principal payments under capital lease obligation                                (180)                  -
     Retirement of debt                                                               (878)               (654)
     Proceeds from issuance of new debt                                              1,552               2,323
                                                                                ----------           ----------

                  Net cash used for financing activities                            (2,057)               (732)
                                                                                ----------           ---------

Net increase (decrease) in cash and temporary investments                            3,221              (3,043)

Cash and temporary investments at beginning of period                               19,240              12,480
                                                                                ----------           ---------

Cash and temporary investments at end of period                                 $   22,461           $   9,437
                                                                                ==========           =========

Interest paid                                                                   $      870           $     618
                                                                                ==========           =========

Income taxes paid                                                               $      475           $     614
                                                                                ==========           =========
</TABLE>

Supplemental disclosure of noncash financing activities:

A capital lease obligation of $176 was incurred when a subsidiary of the
Registrant entered into a lease for new equipment during the first quarter of
2001.

    See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

                NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

(1)  GENERAL
     -------

     The condensed consolidated financial statements included herein have been
     prepared by the Registrant, without audit, pursuant to the rules and
     regulations of the Securities and Exchange Commission. Consolidated herein
     are the financial results of the Registrant's wholly-owned subsidiaries,
     North Pittsburgh Telephone Company (North Pittsburgh), Penn Telecom, Inc.
     (Penn Telecom) and Pinnatech, Inc. (Pinnatech). Certain information and
     footnote disclosures normally included in financial statements prepared in
     accordance with generally accepted accounting principles have been
     condensed or omitted pursuant to such rules and regulations. Nevertheless,
     the Registrant believes that its disclosures herein are adequate to make
     the information presented not misleading and, in the opinion of management,
     all adjustments (which consisted only of normal recurring accruals)
     necessary to present fairly the results of operations for the interim
     periods have been reflected. These condensed consolidated financial
     statements should be read in conjunction with the financial statements and
     the notes thereto included in the Registrant's latest Annual Report to the
     Securities and Exchange Commission on Form 10-K.

(2)  COMPREHENSIVE INCOME
     --------------------

     Statement of Financial Accounting Standards No. 130, "Reporting
     Comprehensive Income" (SFAS 130) establishes requirements for disclosure of
     comprehensive income. The objective of SFAS 130 is to report all changes in
     equity that result from transactions and economic events other than
     transactions with owners. Comprehensive income is the total of net income
     and all other non-owner changes in equity. The reconciliation of net income
     to comprehensive income is as follows (in thousands):

                                                     For the Three Months
                                                         Ended Mar. 31
                                                     --------------------
                                                       2001        2000
                                                       ----        ----

     Net income                                      $ 1,474      $ 2,436
     Unrealized gain on marketable securities
        including reclassification adjustments,
        net of tax                                        50          274
                                                     -------      -------

           Comprehensive income                      $ 1,524      $ 2,710
                                                     =======      =======


                                    PART I

                                    ITEM 2

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

The statements contained in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" which are not historical are
"forward-looking statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. These forward-looking statements represent the
Registrant's present expectations or beliefs concerning future events. The
Registrant cautions that such statements are qualified by important factors that
could cause actual results to differ materially from those in the forward-
looking statements. Thus, results actually achieved may differ materially from
expected results included in these statements.

Certain prior period amounts have been reclassified to conform to the current
period's presentation.

                                       4
<PAGE>

1.   Financial Condition
     -------------------

     (a)   Changes in Financial Condition
           ------------------------------

     There were no material changes in the Registrant's consolidated general
     financial condition from the end of its preceding fiscal year on December
     31, 2000 to March 31, 2001, the end of the three-month period reported
     herein.

     (b)   Liquidity and Capital Resources
           -------------------------------
                                                       March 31,    December 31,
                                                         2001           2000
                                                     -----------    ------------

     Cash and temporary investments                  $22,461,000     $19,240,000
     Working capital                                 $26,764,000     $26,569,000
     Long-term debt (including current maturities)   $49,570,000     $48,896,000

     Cash and temporary investments were $22,461,000 at March 31, 2001 as
     compared to $19,240,000 at December 31, 2000. The increase was due to the
     strong cash flows from operations of $6,445,000 for the three-month period
     ended March 31, 2001 as well as the liquidation of available for sale
     securities throughout the quarter, with the proceeds being reinvested into
     temporary investments. These temporary excess funds were invested in short-
     term cash equivalents with maturity dates scheduled to coincide with tax
     payment due dates, debt principal payments, etc. Management expects to
     continue the investment of such excess funds throughout 2001, which should
     enable the Registrant to satisfactorily meet all short-term obligations.

     Working capital levels at March 31, 2001 were consistent with December 31,
     2000.

     The increase in long-term debt was a result of $1,552,000 of funds advanced
     to finance capital additions, offset by the scheduled $878,000 of principal
     repayments in the three-month period ended March 31, 2001. In 1996, North
     Pittsburgh was granted approval for a loan from the Federal Financing Bank
     (FFB) guaranteed by the Rural Utilities Service in the maximum principal
     amount of $75 million. The maximum principal amount is to be advanced
     periodically over a five-year period, which began on January 2, 1997, for
     the purpose of furnishing or improving telephone service in rural areas.
     All advances have a maturity date of December 31, 2012. The total amount
     outstanding at March 31, 2001 to the FFB under this loan was $31,448,000.
     In addition, North Pittsburgh had principal payments outstanding of
     $18,122,000 at March 31, 2001 from loan advances made from 1977 through
     1987 from the Rural Telephone Bank (RTB). The advances from the RTB have
     maturity dates ranging from 2009 through 2019.

     The notes payable to the RTB are secured by a supplemental Mortgage
     Agreement executed by North Pittsburgh, which provides that substantially
     all of the property, plant and equipment of North Pittsburgh are subject to
     a lien or a security interest. Such agreement contains restrictions
     regarding dividends and other distributions by North Pittsburgh. Under
     these restrictions, unless certain working capital and net worth levels are
     maintained, North Pittsburgh is not permitted to pay dividends on its
     capital stock (other than in shares of capital stock), or to make any other
     distributions to its shareholders or purchase, redeem or retire any of its
     capital stock or make any investment in affiliated companies. As a result
     of these restrictions, $2,471,000 of North Pittsburgh's retained earnings
     were available for dividends to the Registrant as of March 31, 2001. Taking
     into consideration the North Pittsburgh restrictions, consolidated retained
     earnings of the Registrant of approximately $22,998,000 were available for
     dividends and other distributions to shareholders as of March 31, 2001.

     North Pittsburgh established a line of credit in 1994 in the amount of $10
     million with the Rural Telephone Finance Cooperative that is available for
     general business purposes. No borrowings have taken place against the line
     of credit.

     Consolidated capital expenditure commitments for the purchase and
     installation of communications and other equipment at March 31, 2001
     amounted to approximately $4,194,000, with such amount being part of the
     2001 construction program, which is expected to be in excess of $18
     million. At March 31, 2001, construction work in progress was $5,376,000.
     Funds for financing construction expenditures in the three-month period
     ended March 31, 2001 were generated from internal sources and debt
     financing. Based on its 2001 construction budget and projected cash flows,
     the Registrant anticipates that cash flows provided by operating activities
     and cash reserves in 2001 will be sufficient to service long-term debt, to
     pay dividends and to finance approximately 40% to 60% of capital additions.
     The

                                       5
<PAGE>

     balance of capital additions will be financed from debt financing available
     from the Rural Utilities Service.

     With North Pittsburgh's current loan advancement period from the FFB
     expiring on January 1, 2002, capital additions beyond 2001 are anticipated
     to be 100% internally financed, unless alternative external financing
     arrangements are made. The Registrant does not anticipate any difficulties
     in securing additional long-term financing under terms similar to its
     existing agreement in order to meet future business conditions.

     (c)    Regulatory/Competition
            ----------------------

     Until recently, North Pittsburgh was under Rate of Return (ROR) regulation
     within the intrastate jurisdiction. However, in July of 1998, North
     Pittsburgh joined with 18 other companies and filed for an alternative form
     of regulation to replace traditional rate base/rate-of-return regulation.
     In the filing, North Pittsburgh proposed a price cap plan whereby rates for
     noncompetitive services are allowed to be increased based on an index that
     measures general economy wide price increases. Under the proposed plan,
     services might also be declared competitive and thereby freed from
     fundamental ROR rate regulation. In return for regulation under the price
     cap plan, North Pittsburgh also proposed a network modernization plan. The
     Pennsylvania Public Utility Commission (PA PUC) entered a final Order on
     December 21, 2000 approving, with some modifications, including a
     productivity offset, North Pittsburgh's proposed Chapter 30 Price Cap Plan.
     On January 22, 2001, North Pittsburgh accepted the modifications proposed
     by the PA PUC and filed a revised plan. While there is no immediate impact
     to North Pittsburgh's operations and revenues under the price cap plan, it
     is North Pittsburgh's view that the plan as approved will aid North
     Pittsburgh in meeting competition in the future. Various parties to the
     proceeding have filed exceptions seeking minor modifications in the final
     plan. These exceptions remain pending.

     On September 30, 1999, the PA PUC issued an Order dealing with a variety of
     issues impacting Local Exchange Carriers in Pennsylvania. Referred to as
     the Global Proceeding, the Order dealt with certain issues that affected
     North Pittsburgh. Specifically, the Order allowed North Pittsburgh to
     rebalance and lower access charges in order to prepare North Pittsburgh to
     meet competition in its serving area. The reduction in access charges was
     offset by reimbursements from an interim state universal service fund that
     is funded by all telecommunication providers (excluding wireless) in the
     state. Because the rebalancing and reduction of access charges was offset
     by reimbursement from the fund, North Pittsburgh has not experienced any
     significant impact on operations or revenues in regard to the Global Order.

     Access charges concerning interstate services are regulated by the Federal
     Communications Commission (FCC). On January 5, 2001, the FCC released a
     Notice of Proposed Rulemaking regarding a combined universal service and
     access reform proposal that would be applicable to incumbent local exchange
     carriers such as North Pittsburgh, which are currently regulated under ROR.
     The proposed rules would allow a gradual and optional transition from ROR
     regulation to an incentive-based form of regulation over a five-year
     period. The goal of the plan is to accommodate the vast differences in size
     and competitive market threat experienced by rural companies while
     providing service and rate comparability between rural and urban areas.
     Because the final disposition of the proposed rulemaking is uncertain at
     this time, North Pittsburgh is unable to determine the final effect it will
     have on its operations and revenues.

     The FCC continues to work on Rulemakings that will further spell out the
     specifics of the Telecommunications Act of 1996 (the 1996 Act) as it
     relates to Rural Telephone Companies. The PA PUC must then finalize its
     course of action to fully implement the 1996 Act, or to the extent possible
     and permissible, change the manner in which such regulations are
     implemented in Pennsylvania before the impact on North Pittsburgh, a Rural
     Telephone Company under the 1996 Act, can be fully understood and measured.
     However, the clear intent of the 1996 Act is to open up the
     telecommunication markets to competition. The 1996 Act appears to mandate,
     among other items, that North Pittsburgh, at some point in time, permit the
     resale of its local exchange services, provide number portability, if
     feasible, provide dialing parity, and provide interconnection to any
     requesting carrier for the transmission and routing of telephone exchange
     service and exchange access. The 1996 Act further mandates that North
     Pittsburgh, at some point in time, must provide resale of its local
     exchange service at wholesale rates and provide access to network
     elements to the extent that the provision of such services is not unduly
     burdensome, is technically feasible and does not jeopardize universal
     service. North Pittsburgh, along with 17 other rural companies in
     Pennsylvania, has been granted a temporary suspension of the Section
     251(b) and (c) interconnection requirements in the 1996 Act. The most
     recent suspension expires on July 10, 2001. On March 1, 2001, North
     Pittsburgh filed a petition for an additional one-year suspension of the

                                       6
<PAGE>

     Section 251(b) and (c) interconnection requirements until July 10, 2002.
     The PA PUC decision on the petition is expected in the second quarter of
     2001.

     On April 19, 2000, AT&T Communications Pennsylvania, Inc. (AT&T) and its
     affiliate, TCG Pittsburgh (TCG) filed for a Certificate of Authority with
     the PA PUC to provide facilities-based competitive local exchange service
     in the service area of eight (8) telephone companies in Western
     Pennsylvania, including North Pittsburgh, using cable TV facilities. The PA
     PUC, in an order entered April 10, 2001, granted AT&T/TCG authority to
     provide local dial tone services as a facilities based Competitive Local
     Exchange Carrier (CLEC) in the North Pittsburgh service area. North
     Pittsburgh expects that, as AT&T/TCG begins offering local dial tone
     services in its service area, the Company might experience some loss of
     access lines and a reduction in toll, access and local service revenue
     streams due to the AT&T/TCG facilities based competition.

     The 1996 Act, FCC and PA PUC regulatory proceedings and the evolution
     towards a more competitive marketplace have created some uncertainty in
     respect to the levels of North Pittsburgh's revenue growth in the future.
     However, its unique location in a growing commercial/residential suburban
     traffic corridor to the north of the City of Pittsburgh, its state-of-the-
     art switching transmission and transport facilities and its extensive fiber
     network place North Pittsburgh in a solid position to meet competition
     and minimize any loss of revenues. At the same time, the Registrant
     through its Penn Telecom subsidiary is presently offering competitive
     local exchange service in the local exchange territories of Verizon and
     Sprint and presently has almost 10,450 access line equivalents. In
     addition, North Pittsburgh continues to make its network flexible and
     responsive to the needs of its customers in order to meet competitive
     threats. New services, access line growth and anticipated usage growth
     are expected to lessen or offset any reductions in North Pittsburgh's
     revenue sources.

2.   Results of Operations
     ---------------------

     Total operating revenues increased $1,850,000 (9.7%) in the three-month
     period ended March 31, 2001 over the comparable period in 2000. This
     increase was primarily the result of increases in local network services of
     $1,236,000 (34.2%), long distance and access services of $471,000 (3.7%)
     and other operating revenues of $333,000 (26.1%), offset partially by a
     decrease in telecommunication equipment sales of $114,000 (19.0%).
     Increased local network service revenues were attributable to customer
     growth for both the independent local exchange carrier (ILEC) and the CLEC,
     growth in second lines, expanded penetration of enhanced services and a
     rate band reclass effective in December of 2000. Higher long distance and
     access service revenues were attributable to an increase in the number of
     customers and minutes of use for both the ILEC and CLEC, an increase in
     both wholesale and retail digital subscriber lines (DSL) and an increase in
     high capacity circuits sold. The increase in other operating revenues was
     primarily due to the growth of Internet access customers. Telecommunication
     equipment sales decreased as a result of lower key system, private branch
     exchange and additional equipment sales.

     Total operating expenses for the three-month period ended March 31, 2001
     increased $2,881,000 (19.5%) over the comparable period in 2000. That
     change was primarily the result of increases in network and other operating
     expenses of $2,536,000 (27.0%) and depreciation and amortization expenses
     of $598,000 (15.4%), offset partially by a decrease in telecommunication
     equipment expenses of $194,000 (34.9%). The increase in network and other
     operating expenses was due to several factors. First, there was an increase
     in personnel and operating costs due to an expansion of the existing ILEC
     business to service the needs of North Pittsburgh's territory which is
     located within a growing commercial and residential market. CLEC operating
     expenses also grew larger with an increase in personnel and other expenses
     due to start-up activities associated with the growth of the CLEC in its
     foothold north of the city of Pittsburgh as well as an expansion into the
     city of Pittsburgh and surrounding areas. The expansion was facilitated
     through the implementation of a long-term strategic relationship with an
     electric utility to lease fiber optic loops throughout the entire
     Pittsburgh region. The operating expenses of Pinnatech also increased as a
     result of the expansion in its Internet-related activities. However, with
     the closure of the Nauticom Sports Network (NSN) in the fourth quarter of
     2000, the operating margin for Pinnatech for the three-month period ended
     March 31, 2001 improved $32,000 from the comparable period in 2000.
     Advertising expense to promote the expansion efforts described above for
     all companies of the Registrant increased approximately $395,000 for the
     three-month period ended March 31, 2001 from the comparable period in 2000.
     Finally, the Registrant incurred a charge of $318,000 to reduce inventory
     to the lower of cost or market during the three-month period ended March
     31, 2001. As the Registrant has successfully upgraded the majority of its
     network with twenty-first century state-of-the-art equipment, substantial
     retirements of legacy equipment were made in the first quarter of 2001. In
     conjunction with these retirements,

                                       7
<PAGE>

     inventory on hand, which the Registrant maintains to support or serve as
     backup parts for the legacy equipment, was evaluated and adjusted to the
     lower of cost or market.

     The growth in depreciation and amortization expenses of $598,000 (15.4%)
     was the direct result of the growth in fixed assets to service current and
     future customer needs. The Registrant has made gross property additions of
     $103 million over the past five years to implement state-of-the-art
     switching transmission and transport facilities, an extensive fiber network
     and broadband capability via DSL technology to 96% of North Pittsburgh's
     lines and to support the build-out of the CLEC operations.

     The decrease in telecommunication and equipment expense of $194,000 (34.9%)
     was a direct result of the decrease in telecommunication equipment sales of
     19.0% and improved margins recognized on current year sales. Overall, the
     increase in total operating revenues of $1,850,000 discussed above, coupled
     with the increase in total operating expenses of $2,881,000, resulted in a
     24.0% decrease in net operating revenues for the three-month period ended
     March 31, 2001 compared to the comparable period in 2000.

     Interest expense increased $251,000 due to increased debt borrowings.
     Sundry income, net decreased $394,000 due to decreased levels of equity
     income from partnerships as well as slight losses on the sale of marketable
     securities as compared to gains in the prior period. The decrease in net
     operating revenues for the three-month period ended March 31, 2001, in
     conjunction with the increase in interest expense and decrease in Sundry
     income, net, resulted in a decrease of $1,622,000 (38.8%) in earnings
     before income taxes.

3.   NSN Restructuring
     -----------------

     As described in the Registrant's Annual Report on Form 10-K for the year
     ended December 31, 2000, a pretax charge of $972,000 was recorded in
     network and other operating expenses to cover the restructuring costs
     associated with the shut down of the Nauticom Sports Network (NSN) in the
     fourth quarter of 2000.

     The business restructuring charge of $972,000 included restructuring
     liabilities of $671,000 and asset impairments of $301,000. The
     restructuring liabilities consisted of $432,000 for employee severance
     payments and related taxes for 30 people who were involuntarily terminated,
     $122,000 for future operating lease expense associated with a leased
     facility under contract which will no longer be used and $117,000 for other
     charges associated with the restructuring. As of December 31, 2000, all
     employees had been terminated and all severance payments and related taxes
     had been paid, making the remaining restructuring accrual liability
     $239,000 as of December 31, 2000.

     In the first quarter of 2001, payments in the amount of $72,000 were made
     in accordance with lease obligations and other charges, reducing the
     remaining restructuring accrual liability to $167,000 as of March 31, 2001.
     No additions or reversals to the accrual were made during the first quarter
     of 2001.



                                    PART I


                                    ITEM 3

                   QUANTITATIVE AND QUALITATIVE DISCLOSURES

                               ABOUT MARKET RISK

1.   There have been no material changes in reported market risks faced by the
     Registrant since December 31, 2000.

                                       8
<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.

                                          NORTH PITTSBURGH SYSTEMS, INC.
                                          ------------------------------
                                                    (Registrant)






Date  May 9, 2001                  /s/ H. R. Brown
    --------------------           --------------------------------------
                                   H. R. Brown, President






Date  May 9, 2001                  /s/ A. P. Kimble
    --------------------           --------------------------------------
                                   A. P. Kimble, Vice President,
                                   Treasurer and Chief Accounting Officer

                                       9
<PAGE>

                                    PART II

                               OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K
          --------------------------------

          (a)  Exhibits - Exhibit Index for Quarterly Reports on Form 10-Q.
               --------

<TABLE>
<CAPTION>
Exhibit
Number                         Subject                               Applicability
------                         -------                               -------------
<S>            <C>                                          <C>
(2)            Plan of acquisition, reorganization,         Not Applicable
               arrangement, liquidation or
               succession

(3) (i)        Articles of Incorporation                    Provided in Quarterly Report on
                                                            Form 10-Q for the quarter ended
                                                            June 30, 1996 and Incorporated
                                                            Herein by Reference.

(3) (ii)       By-Laws                                      Provided in Annual Report on
                                                            Form 10-K for the year ended
                                                            December 31, 1998 and
                                                            Incorporated Herein by
                                                            Reference.

(4)            Instruments defining the rights of           Provided in Registration of
               security holders including indentures        Securities of Certain Successor
                                                            Issuers on Form 8-B filed on
                                                            June 25, 1985 and Incorporated
                                                            Herein by Reference.

(10)           Material Contracts                           Provided in Quarterly Report on
                                                            Form 10-Q for the quarter ended
                                                            September 30, 1999 and
                                                            Incorporated Herein by
                                                            Reference.

(11)           Statement of computation of earnings         Attached Hereto
               per share

(15)           Letter re unaudited interim financial        Not Applicable
               information

(18)           Letter re change in accounting               Not Applicable
               principles

(19)           Report furnished to security holders         Not Applicable

(22)           Published report regarding matters           Not Applicable
               submitted to a vote of security holders

(23)           Consents of experts and counsel              Not Applicable

(24)           Power of attorney                            Not Applicable

(99)           Additional exhibits                          Not Applicable
</TABLE>

          (b)  Reports on Form 8-K - No reports on Form 8-K were filed during
               -------------------
               the quarter ended March 31, 2001.

                                       10