<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             June 30, 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 Identification No.)
  incorporation or organization)

             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 August 3, 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                 For the Six Months
                                                                      Ended June 30                       Ended June 30
                                                                ----------------------------       ---------------------------

                                                                     2001            2000             2001             2000
                                                                 ----------       ----------       ---------         ---------
Operating revenues:
<S>                                                             <C>              <C>               <C>                <C>
     Local network services                                     $    4,976       $     3,782       $     9,825        $    7,395
     Long distance and access services                              13,304            13,935            26,552            26,727
     Directory advertising, billing & other services                   605               748             1,196             1,415
     Telecommunication equipment sales                                 631               533             1,118             1,134
     Other operating revenues                                        1,813             1,224             3,540             2,604
                                                                ----------       -----------       -----------        ----------

         Total Operating Revenues                                   21,329            20,222            42,231            39,275


Operating expenses:
     Network and other operating expenses                           10,640            11,042            22,505            20,437
     Depreciation and amortization                                   4,217             4,118             8,694             7,997
     State and local taxes                                             794               838             1,666             1,768
     Telecommunication equipment expenses                              567               528               992             1,083
                                                                ----------       -----------       -----------        ----------

         Total Operating Expenses                                   16,218            16,526            33,857            31,285
                                                                ----------       -----------       -----------        ----------

       Net Operating Revenues                                        5,111             3,696             8,374             7,990


Other expense (income), net:
     Interest expense                                                  954               694             1,843             1,333
     Interest income                                                  (309)             (284)             (646)             (567)
     Sundry expense (income), net                                       67            (2,353)              214            (2,600)
                                                                ----------       -----------       -----------        ----------

                                                                       712            (1,943)            1,411            (1,834)
                                                                ----------       ------------      -----------        ----------

         Earnings before income taxes                                4,399             5,639             6,963             9,824

Income taxes                                                         1,840             2,363             2,930             4,112
                                                                ----------       -----------       -----------        ----------

         Net earnings                                           $    2,559       $     3,276       $     4,033        $    5,712
                                                                ==========       ===========       ===========        ==========


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

Basic and diluted earnings per share of
     common stock                                               $      .17       $       .22       $       .27        $      .38
                                                                ==========       ===========       ===========        ==========

Dividends per share of common stock                             $      .17       $       .17       $       .34        $      .33
                                                                ==========       ===========       ===========        ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       1
<PAGE>

                 NORTH PITTSBURGH SYSTEMS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                             (Thousands of Dollars)

<TABLE>
<CAPTION>
                                                                             (Unaudited)
                                                                               June 30               Dec. 31
                         ASSETS                                                 2001                  2000
                         ------                                            ---------------      ---------------

Current Assets:
<S>                                                                        <C>                  <C>
     Cash and temporary investments                                         $      29,812        $      19,240
     Marketable securities available for sale                                         249                5,026
     Accounts receivable:
       Customers, net of allowance for doubtful accounts of
         $327 and $559, respectively                                                5,045                5,077
       Access service settlements and other                                         8,326                8,159
     Prepaid expenses                                                                 345                  462
     Inventories of construction and operating materials and
       supplies                                                                     3,784                4,783
     Prepaid taxes other than income taxes                                            500                    -
     Federal and state income taxes                                                     -                   16
     Deferred income tax                                                                -                  933
                                                                            -------------        -------------

         Total current assets                                                      48,061               43,696
                                                                            -------------        -------------

Property, plant and equipment:
     Land                                                                             475                  475
     Buildings                                                                     13,437               13,071
     Equipment                                                                    168,247              173,293
     Assets held under capital lease                                                9,935                8,875
                                                                            -------------        -------------

                                                                                  192,094              195,714
     Less accumulated depreciation and amortization                                91,843               99,176
                                                                            -------------        -------------

                                                                                  100,251               96,538
     Construction in progress                                                       3,701                7,540
                                                                            -------------        -------------
         Total property, plant and equipment, net                                 103,952              104,078

Investments                                                                        11,054               11,170
Deferred financing costs                                                              633                  675
Other assets                                                                        1,262                1,335
                                                                            -------------        -------------

                                                                            $     164,962        $     160,954
                                                                            =============        =============

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

Current liabilities:
     Current portion of long-term debt                                      $       4,093        $       3,519
     Obligation under capital lease                                                   857                  747
     Accounts payable                                                               6,405                6,992
     Dividend payable                                                               2,551                2,551
     Other accrued liabilities                                                      3,452                3,318
     Federal and state income taxes                                                   125                    -
                                                                            -------------        -------------

         Total current liabilities                                                 17,483               17,127
                                                                            -------------        -------------

Long-term debt                                                                     49,270               45,377
Obligation under capital lease                                                      7,686                7,137
Deferred income taxes                                                               9,490                9,645
Accrued pension and postretirement benefits                                         6,124                5,781
Other liabilities                                                                   1,791                1,693

Shareholders' equity:
     Capital stock/Common stock                                                     2,350                2,350
     Capital in excess of par value                                                 2,215                2,215
     Retained earnings                                                             69,114               70,183
     Less cost of treasury stock (2001 and 2000-35,000 shares)                       (508)                (508)
     Accumulated other comprehensive income-unrealized loss
       on available for sale securities, net                                          (53)                 (46)
                                                                            -------------        -------------

         Total shareholders' equity                                                73,118               74,194
                                                                            -------------        -------------

                                                                            $     164,962        $     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 Six Months
                                                                                               Ended June 30
                                                                                  ---------------------------------------
                                                                                      2001                       2000
                                                                                  -------------             -------------
<S>                                                                               <C>                       <C>
Cash from operating activities:
     Net earnings                                                                 $       4,033             $       5,712
     Adjustments to reconcile net earnings to net cash from
       operating activities:

         Depreciation and amortization                                                    8,694                     7,997
         Gain on sale of marketable securities                                              (55)                   (2,163)
         Equity losses (income) of affiliated companies                                      59                      (361)
         Changes in assets and liabilities:
           Accounts receivable                                                             (135)                     (963)
           Inventories of construction and operating materials
              and supplies                                                                  999                      (817)
           Deferred financing costs, prepaid expenses and
              other assets                                                                  232                       524
           Prepaid taxes                                                                   (500)                     (506)
           Accounts payable                                                                (587)                     (463)
           Other accrued liabilities                                                        232                        48
           Accrued pension and postretirement benefits                                      343                       396
           Federal and state income taxes                                                   141                       (78)
           Deferred income taxes                                                            783                       325
           Other, net                                                                      (128)                      109
                                                                                  -------------             -------------
                  Total adjustments                                                      10,078                     4,048
                                                                                  -------------             -------------

                  Net cash from operating activities                                     14,111                     9,760
                                                                                  -------------             -------------

Cash used for investing activities:
     Expenditures for property and equipment                                             (7,406)                  (14,405)
     Net salvage on retirements                                                              26                       106
                                                                                  -------------             -------------

                  Net capital additions                                                  (7,380)                  (14,299)
                                                                                  -------------             -------------

     Purchase of marketable securities available for sale                                (1,045)                   (6,103)
     Proceeds from sale of marketable securities available for sale                       5,865                    12,469
     Distributions from affiliated entities                                                  57                       142
                                                                                  -------------             -------------

                  Net cash used for investing activities                                 (2,503)                   (7,791)
                                                                                  -------------             -------------

Cash used for financing activities:
     Cash dividends                                                                      (5,102)                   (4,802)
     Principal payments under capital lease obligation                                     (401)                     -
     Retirement of debt                                                                  (1,786)                   (1,353)
     Proceeds from issuance of new debt                                                   6,253                     6,072
                                                                                  -------------             -------------

                  Net cash used for financing activities                                 (1,036)                      (83)
                                                                                  -------------             -------------

Net increase in cash and temporary investments                                           10,572                     1,886

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

Cash and temporary investments at end of period                                   $      29,812             $      14,366
                                                                                  =============             =============

Interest paid                                                                     $       1,794             $       1,294
                                                                                  =============             =============
Income taxes paid                                                                 $       1,800             $       4,615
                                                                                  =============             =============
</TABLE>

Supplemental disclosure of noncash financing activities:

A capital lease obligation of $1,060 was incurred when a subsidiary of the
Registrant entered into a lease for new equipment during the six-month period
ended June 30, 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):

<TABLE>
<CAPTION>
                                                        For the Three Months               For the Six Months
                                                            Ended June 30                    Ended June 30
                                                     -------------------------         --------------------------
                                                     2001                 2000         2001                  2000
                                                     ----                 ----         ----                  ----
         <S>                                         <C>           <C>                 <C>            <C>
         Net income                                  $     2,559   $     3,276         $     4,033    $     5,712
         Unrealized loss on
            marketable securities
            including reclassification
            adjustments, net of tax                          (57)       (1,331)                 (7)        (1,057)
                                                     -----------   -----------         -----------    -----------

               Comprehensive income                  $     2,502   $     1,945         $     4,026    $     4,655
                                                     ===========   ===========         ===========    ===========
</TABLE>



                                     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 June 30, 2001, the end of the six-month period
         reported herein.

         (b)      Liquidity and Capital Resources
                  -------------------------------
<TABLE>
<CAPTION>
                                                                      June 30,                   December 31,
                                                                        2001                         2000
                                                                 ------------------           -------------------
         <S>                                                     <C>                          <C>
         Cash and temporary investments                          $       29,812,000           $        19,240,000
         Working capital                                         $       30,578,000           $        26,569,000
         Long-term debt (including current maturities)           $       53,363,000           $        48,896,000
</TABLE>

         Cash and temporary investments were $29,812,000 at June 30, 2001 as
         compared to $19,240,000 at December 31, 2000. The increase was due to
         the strong cash flows from operations of $14,111,000 for the six-month
         period ended June 30, 2001 as well as the liquidation of available for
         sale securities throughout the period, 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 June 30, 2001 increased $4,009,000 from
         December 31, 2000. The increase was the result of strong cash flows
         from operations as well as a decrease in cash expended for property,
         plant and equipment, offset partially by lower inventory levels and an
         increase in the current portion of long-term debt.

         The increase in long-term debt was a result of $6,253,000 of funds
         advanced to finance capital additions, offset by the scheduled
         $1,786,000 of principal repayments in the six-month period ended June
         30, 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
         June 30, 2001 to the FFB under this loan was $35,481,000. In addition,
         North Pittsburgh had principal payments outstanding of $17,882,000 at
         June 30, 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, $1,131,000 of North Pittsburgh's retained earnings were
         available for dividends to the Registrant as of June 30, 2001. Taking
         the North Pittsburgh restrictions into consideration, consolidated
         retained earnings of the Registrant of approximately $20,826,000 were
         available for dividends and other distributions to the Registrant's
         shareholders as of June 30, 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 June 30, 2001
         amounted to approximately $3,183,000, with such amount being part of
         the 2001 construction program, which is expected to range between $7
         million to $10 million for the second half of 2001. At June 30, 2001,
         construction work in progress was $3,701,000. Funds for financing
         construction expenditures in the six-month period ended June 30, 2001
         were generated from internal sources and debt

                                       5
<PAGE>

         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 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)      Regulated Industry
                  ------------------

         North Pittsburgh is regulated by the Pennsylvania Public Utility
         Commission (PA PUC) in regard to its intrastate service offerings. As a
         result of an amendment to the Pennsylvania Public Utility Code passed
         in 1993 and filings in related proceedings pursuant thereto, North
         Pittsburgh, effective January 22, 2001, became subject to an
         alternative and streamlined form of regulation that utilizes a method
         of setting rates that differs from the historic method of rate of
         return regulation. Under this alternative form of regulation, referred
         to as Chapter 30, North Pittsburgh's rates are determined utilizing a
         price cap plan. The plan provides a price stability mechanism in which
         the Company's annual revenues from non-competitive services may be
         permitted to increase, based on the change reflected in the Gross
         Domestic Product Price Index, less a productivity offset, with no
         limitation on the earnings of the Company. In addition, under the plan,
         services may be declared competitive and thereby freed from price cap
         regulation.

         In order for North Pittsburgh to avail itself of the alternative price
         cap form of regulation, North Pittsburgh, as required by the Chapter 30
         rules, has committed to a network modernization plan that provides for
         the deployment of facilities that will support universal access to
         broadband services to all customers in the North Pittsburgh service
         area by the Year 2015.

         In regard to its interstate service offerings, North Pittsburgh is
         regulated by the Federal Communications Commission (FCC). In the
         interstate jurisdiction, North Pittsburgh remains subject to
         traditional rate of return regulation (ROR) as a rural non-price cap
         incumbent local exchange carrier. 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 telecommunications industry is continuing to undergo fundamental
         changes as a result of the passage and implementation of the Federal
         Telecommunications Act of 1996 (1996 Act). The clear intent of the 1996
         Act is to open up the telecommunications markets to competition. North
         Pittsburgh, however, has been granted a temporary suspension of the
         Section 251(b) and (c) interconnection requirements of the 1996 Act in
         regard to non-facilities-based competition until July 10, 2002.

         The PA PUC, in an order entered April 10, 2001, granted AT&T
         Communications and its affiliate, TCG Pittsburgh (AT&T/TCG) authority
         to provide local dial tone services as a facilities-based Competitive
         Local Exchange Carrier (CLEC) in the service areas of eight (8)
         telephone companies in Western Pennsylvania utilizing cable TV
         facilities. While AT&T/TCG is only authorized to operate in a small
         portion of the North Pittsburgh service area, North Pittsburgh believes
         that, as AT&T/TCG begins offering local dial tone services, 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
         toward 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, its extensive fiber network and its

                                       6
<PAGE>

         responsiveness to the needs of its customers through new service
         offerings 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 territories of Verizon and
         Sprint and presently has approximately 13,500 access line equivalents
         (ALEs), or an increase of approximately 8,150 ALEs from December 31,
         2000.


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

         (a)      Six Months Ended June 30, 2001 and 2000
                  ---------------------------------------

         Total operating revenues increased $2,956,000 (7.5%) in the six-month
         period ended June 30, 2001 over the comparable period in 2000. This
         increase was primarily the result of increases in local network
         services of $2,430,000 (32.9%) and other operating revenues of $936,000
         (35.9%), offset partially by a decrease in long distance and access
         services of $175,000 (0.7%) and in directory advertising, billing and
         other services of $219,000 (15.5%). Increased local network
         service revenues were attributable to customer growth for both the
         Registrant's Independent Local Exchange Carrier (ILEC) and CLEC
         operations, growth in second lines, expanded penetration of enhanced
         services, and a rate band reclass which received PA PUC approval and
         became effective in December of 2000. The increase in other operating
         revenues was primarily due to the growth of Internet access customers,
         especially for digital subscriber lines (DSL).

         The decrease in long distance and access services were attributable to
         several factors at North Pittsburgh. Cellular use has continued to make
         inroads into the traditional wireline business as more and more people
         make a greater percentage of their calls on the wireless networks. At
         the same time, intralata toll revenues have continued to decrease with
         the falling rates for toll calls. In addition, North Pittsburgh has
         responded to customer demand and the industry trend by offering several
         intralata toll calling packages. These packages offer both residents
         and businesses a flat monthly charge for a selected amount of intralata
         toll minutes, with the average rate per minute at a discount to the
         traditional per minute billings. Also contributing to the decrease in
         long distance and access services during the six-month period ended
         June 30, 2001, as compared to the corresponding period in 2000 were
         lower intralata settlements with other carriers and lower rates charged
         for terminating cellular calls. The decreases described above for North
         Pittsburgh were partially offset by increases in high capacity circuits
         sold as well as growth in both Penn Telecom's CLEC long distance and
         access revenues as the CLEC continues to expand its customer base.

         The decrease in directory advertising, billing and other services was
         mostly attributable to a decrease in carrier billing and collection
         revenues. North Pittsburgh has contracts with several interexchange
         carriers and other telecommunication companies in which it earns fees
         for performing billing and collection services on behalf of these
         companies. North Pittsburgh has seen the volume of services and calls
         billed on behalf of these companies decrease in the past year, mostly
         as a result of more companies bringing these functions in-house.

         Total operating expenses for the six-month period ended June 30, 2001
         increased $2,572,000 (8.2%) over the preceding year. That change was
         primarily the result of increases in network and other operating
         expenses of $2,068,000 (10.1%) and depreciation and amortization
         expenses of $697,000 (8.7%). The increase in network and other
         operating expenses was due to several factors. CLEC operating expenses
         grew larger with an increase in personnel and operating costs to
         support 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 all
         surrounding areas. This 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. Advertising expense also increased approximately $210,000 for
         the six-month period ended June 30, 2001 from the preceding year period
         to promote the expansion efforts described above for all companies of
         the Registrant. In addition, the Registrant incurred a charge of
         $318,000 to reduce inventory to the lower of cost or market during the
         first quarter of 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, inventory
         on hand, which the Registrant maintained to support or serve as backup
         parts for the legacy equipment, was evaluated and adjusted to the lower
         of cost or market.

         Another matter impacting the results of the six-month period was the
         Nauticom Sports Network (NSN) which, as discussed in section 3 below,
         Pinnatech terminated in December, 2000. With the closure of the NSN in
         the fourth quarter of 2000, the operating margin for Pinnatech for the

                                       7
<PAGE>

     six-month period ended June 30, 2001 has improved by 33.0 percentage points
     from the comparable period in 2000.

     Further impacting results for the six-months ended June 30, 2001 was a cost
     reduction program instituted in the first quarter of 2001. As mentioned
     under the "Regulated Industry" section of this document, the clear intent
     of the 1996 Act as well as some current FCC and PA PUC regulatory
     proceedings is to open up the telecommunications market to competition.
     Although North Pittsburgh has yet to see any material impact on its
     revenues or loss of access lines, it has adopted a pro-active approach to
     cost reduction. The cost reduction program involved not only the
     elimination of direct external expenses such as a large reduction in the
     use of outside contractors, but also involved improving operating
     procedures. Internal processes and procedures have been re-engineered to
     maximize both labor and material usage as well as inventory levels.

     The growth in depreciation and amortization expenses of $697,000 (8.7%) for
     the six-month period ended June 30, 2001 over the comparable period for the
     preceding year was the direct result of the growth in fixed assets to
     service current and future customer needs. In this regard, it is
     significant that the Registrant has made gross property additions of $104
     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.

     Interest expense increased $510,000 (38.3%) for the current six-month
     period due to increased debt borrowings and interest expense associated
     with the capital lease for fiber optic loops. Sundry income, net, decreased
     $2,814,000 for the period, due mostly to an approximate $2,100,000 decrease
     in gains on available for sale securities and $376,000 in decreased levels
     of equity income from partnerships.

     Although the net operating revenues of the Registrant increased $384,000
     (4.8%) for the six-month period ended June 30, 2001, the increase in
     interest expense and decrease in Sundry income, net, resulted in a decrease
     of $2,861,000 (29.1%) in earnings before income taxes.

     (b) Three-months ended June 30, 2001 and 2000
         -----------------------------------------

     Fluctuations in the revenue and expenses for the three-month period ended
     June 30, 2001, as compared to the same quarterly period in 2000, are
     generally attributable to the same reasons discussed in the six-month
     comparisons above with the exception of network and other operating
     expenses which decreased $402,000 (3.6%) for the second quarter of 2001
     from the comparable period in 2000. Although network and other operating
     expenses actually increased $2,068,000 (10.1%) for the six-month period
     ended June 30, 2001 from the comparable prior year six-month period, the
     increase was a result of higher first quarter 2001 costs. As described
     above, the first quarter of 2001 included a non-recurring $318,000 charge
     to reduce inventory to the lower of cost or market. In addition, many of
     the benefits of the cost reduction program which were conceived and
     instituted during the first quarter of 2001 for North Pittsburgh were not
     realized until the second quarter of 2001. Network and other operating
     expenses for North Pittsburgh for the second quarter of 2001 decreased
     approximately $1,180,000 from the comparable quarter in 2000. Expenses also
     decreased from the prior year second quarter as a result of the closure of
     the NSN. These reductions were partially offset by growing network and
     other operating expenses for CLEC operations in order to support its higher
     revenue and customer base.

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

                                       8
<PAGE>

     payments and related taxes had been paid, making the remaining
     restructuring accrual liability $239,000 as of December 31, 2000.

     In the six-month period ended June 30, 2001, payments in the amount of
     $92,000 were made in accordance with lease obligations and other NSN
     restructuring charges, reducing the remaining restructuring accrual
     liability to $147,000 as of June 30, 2001. No additions or reversals to the
     accrual were made during the six-month period ended June 30, 2001.

4.   New Accounting Pronouncements
     -----------------------------

     In July, 2001, the Financial Accounting Standards Board issued SFAS No.
     142, "Goodwill and Other Intangible Assets". The pronouncement is effective
     for the Registrant's year beginning January 1, 2002. As of June 30, 2001,
     the Registrant had a net book value of $579,000 in equity method goodwill
     (recorded under "Investments") as the result of the purchase of additional
     interest in the Pennsylvania RSA 6(II) Limited Partnership in September,
     2000. SFAS No. 142 discontinues the amortization of equity method goodwill
     and prescribes that the Registrant continues to test for impairment in
     accordance with Accounting Principles Board (APB) Opinion 18. As the annual
     amortization of the goodwill was $30,000, the Registrant does not believe
     that this pronouncement will have a significant impact on the consolidated
     financial statements.

                                    PART I

                                    ITEM 3

                   QUANTITATIVE AND QUALITATIVE DISCLOSURES

                               ABOUT MARKET RISK

There have been no material changes in reported market risks faced by the
Registrant since the end of the preceding fiscal year on December 31, 2000.

                                       9
<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 August 10, 2001                    /s/ H. R. Brown
    --------------------                --------------------------------------
                                        H. R. Brown, President


Date August 10, 2001                    /s/ A. P. Kimble
    --------------------                --------------------------------------
                                        A. P. Kimble, Vice President, Treasurer
                                        and Chief Accounting Officer
<PAGE>

                                    PART II

                               OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

         (a)    The 2001 Annual Meeting of Shareholders was held on May 18,
                2001.

         (b, c) The only matter voted upon at the Annual Meeting was the
                election of Directors. The vote tabulation in respect to each
                nominee to serve as a Director until the 2002 Annual Meeting of
                Shareholders is shown in the following table:

                                          Number of        Number of
                                           Shares           Shares
                      Name              Voted in Favor     Withheld
                      ----              --------------     --------

                 Nominees Elected:
                 ----------------

                 Harry R. Brown           12,146,099        417,531
                 Dr. Charles E. Cole      12,216,775        346,855
                 Allen P. Kimble          12,164,739        398,891
                 Stephen G. Kraskin       12,212,254        351,376
                 David E. Nelsen          11,818,786        744,844
                 Jay L. Sedwick           12,192,064        371,566
                 Charles E. Thomas, Jr.   12,221,060        342,570

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 Securities of Certain Successor
                      security holders including indentures          Issuers on Form 8-B filed on June 25, 1985 and Incorporated
                                                                     Herein by Reference.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
    Exhibit
    Number                         Subject                                                Applicability
    ------                         -------                                                -------------
<S>                   <C>                                              <C>
   (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 June 30, 2001.