<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               September 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 November 2, 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 Nine Months
                                                              Ended Sept. 30            Ended Sept. 30
                                                           --------------------      -------------------

                                                             2001        2000          2001       2000
                                                           --------     -------      --------    -------
<S>                                                        <C>          <C>          <C>         <C>
Operating revenues:
  Local network services                                    $ 5,107     $ 3,862       $14,931    $11,257
  Long distance and access services                          14,720      13,536        41,272     40,261
  Directory advertising, billing & other services               566         678         1,763      2,093
  Telecommunication equipment sales                             724         537         1,842      1,671
  Other operating revenues                                    1,823       1,322         5,363      3,927
                                                           --------     -------      --------    -------

     Total Operating Revenues                                22,940      19,935        65,171     59,209


Operating expenses:
  Network and other operating expenses                       11,298      11,837        33,803     32,274
  Depreciation and amortization                               4,306       4,355        13,000     12,352
  State and local taxes                                         607         813         2,273      2,581
  Telecommunication equipment expenses                          794         467         1,786      1,549
                                                           --------     -------      --------    -------

     Total Operating Expenses                                17,005      17,472        50,862     48,756
                                                           --------     -------      --------    -------

   Net Operating Revenues                                     5,935       2,463        14,309     10,453


Other expense (income), net:
  Interest expense                                              951         912         2,794      2,245
  Interest income                                              (277)       (413)         (922)      (980)
  Sundry income, net                                           (290)       (114)          (77)    (2,714)
                                                           --------     -------      --------    -------

                                                                384         385         1,795     (1,449)
                                                           --------     -------      --------    -------
     Earnings before income taxes                             5,551       2,078        12,514     11,902

Income taxes                                                  2,324         920         5,253      5,032
                                                           --------     -------      --------    -------

     Net earnings                                           $ 3,227     $ 1,158       $ 7,261    $ 6,870
                                                           ========     =======      ========    =======


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

Basic and diluted earnings per share of
  common stock                                              $   .22     $   .08       $   .48    $   .46
                                                           ========     =======      ========    =======

Dividends per share of common stock                         $   .17     $   .17       $   .51    $   .50
                                                           ========     =======      ========    =======
</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)
                                                                Sept. 30     Dec. 31
              ASSETS                                               2001       2000
              ------                                             --------   --------
<S>                                                            <C>          <C>
Current Assets:
  Cash and temporary investments                                 $ 32,855   $ 19,240
  Marketable securities available for sale                            245      5,026
  Accounts receivable:
   Customers, net of allowance for doubtful accounts of
     $418 and $559, respectively                                    5,241      5,077
   Access service settlements and other                             8,042      8,159
  Prepaid expenses                                                    614        462
  Inventories of construction and operating materials and
   supplies                                                         2,959      4,783
  Prepaid taxes other than income taxes                               438          -
  Federal and state income taxes                                        -         16
  Deferred income tax                                                   -        933
                                                                 --------   --------

     Total current assets                                          50,394     43,696
                                                                 --------   --------

Property, plant and equipment:
  Land                                                                475        475
  Buildings                                                        13,486     13,071
  Equipment                                                       170,402    173,293
  Assets held under capital lease                                  10,009      8,875
                                                                 --------   --------
                                                                  194,372    195,714
  Less accumulated depreciation and amortization                   95,716     99,176
                                                                 --------   --------
                                                                   98,656     96,538
  Construction in progress                                          3,510      7,540
                                                                 --------   --------
     Total property, plant and equipment, net                     102,166    104,078

Investments                                                        11,608     11,170
Deferred financing costs                                              612        675
Other assets                                                        1,187      1,335
                                                                 --------   --------

                                                                 $165,967   $160,954
                                                                 ========   ========

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

Current liabilities:
  Current portion of long-term debt                              $  4,109   $  3,519
  Obligation under capital lease                                      880        747
  Accounts payable                                                  5,884      6,992
  Dividend payable                                                  2,551      2,551
  Other accrued liabilities                                         3,820      3,318
  Federal and state income taxes                                    1,491          -
                                                                 --------   --------

     Total current liabilities                                     18,735     17,127
                                                                 --------   --------

Long-term debt                                                     48,239     45,377
Obligation under capital lease                                      7,527      7,137
Deferred income taxes                                               9,538      9,645
Accrued pension and postretirement benefits                         6,300      5,781
Other liabilities                                                   1,835      1,693
                                                                 --------   --------

     Total liabilities                                             92,174     86,760
                                                                 --------   --------

Shareholders' equity:
  Capital stock/Common stock                                        2,350      2,350
  Capital in excess of par value                                    2,215      2,215
  Retained earnings                                                69,791     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                              (55)       (46)
                                                                 --------   --------

     Total shareholders' equity                                    73,793     74,194
                                                                 --------   --------

                                                                 $165,967   $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 Nine Months
                                                                            Ended Sept. 30
                                                                          -------------------

                                                                            2001       2000
                                                                          --------   --------
<S>                                                                       <C>        <C>
Cash from operating activities:
  Net earnings                                                             $ 7,261   $  6,870
  Adjustments to reconcile net earnings to net cash from
   operating activities:

     Depreciation and amortization                                          13,000     12,352
     Gain on sale of marketable securities                                     (55)    (2,161)
     Equity income of affiliated companies                                    (495)      (494)
     Changes in assets and liabilities:
      Accounts receivable                                                      (47)       (50)
      Inventories of construction and operating materials
       and supplies                                                          1,824        359
      Deferred financing costs, prepaid expenses and
       other assets                                                             59        646
      Prepaid taxes                                                           (438)      (774)
      Accounts payable                                                      (1,108)    (1,013)
      Other accrued liabilities                                                644        704
      Accrued pension and postretirement benefits                              519        515
      Federal and state income taxes                                         1,507       (305)
      Deferred income taxes                                                    833        560
      Other, net                                                                29        (90)
                                                                           -------   --------
          Total adjustments                                                 16,272     10,249
                                                                           -------   --------

          Net cash from operating activities                                23,533     17,119
                                                                           -------   --------

Cash used for investing activities:
  Expenditures for property and equipment                                   (9,734)   (19,564)
  Net salvage on retirements                                                  (249)       141
                                                                           -------   --------

          Net capital additions                                             (9,983)   (19,423)
                                                                           -------   --------

  Purchase of marketable securities available for sale                      (1,045)    (6,580)
  Proceeds from sale of marketable securities available for sale             5,865     14,778
  Investments in affiliated entities                                             -     (1,003)
  Distributions from affiliated entities                                        57        272
                                                                           -------   --------

          Net cash used for investing activities                            (5,106)   (11,956)
                                                                           -------   --------

Cash used for financing activities:
  Cash dividends                                                            (7,653)    (7,353)
  Principal payments under capital lease obligation                           (611)      (812)
  Retirement of debt                                                        (2,801)    (2,130)
  Proceeds from issuance of new debt                                         6,253      9,366
                                                                           -------   --------

          Net cash used for financing activities                            (4,812)      (929)
                                                                           -------   --------

Net increase in cash and temporary investments                              13,615      4,234

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

Cash and temporary investments at end of period                            $32,855   $ 16,714
                                                                           =======   ========

Interest paid                                                              $ 2,728   $  2,036
                                                                           =======   ========

Income taxes paid                                                          $ 2,974   $  6,013
                                                                           =======   ========

</TABLE>

Supplemental disclosure of noncash financing activities:

A capital lease obligation of $1,134 and $8,875 was incurred when a subsidiary
of the Registrant entered into a lease for new equipment during the nine-month
periods ended September 30, 2001 and September 30, 2000, respectively.

    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 Nine Months
                                       Ended Sept. 30         Ended Sept. 30
                                    ---------------------  ---------------------
                                        2001        2000       2001       2000
                                        ----        ----       ----       ----
<S>                                 <C>            <C>        <C>       <C>
     Net income                        $3,227      $1,158     $7,261    $ 6,870
     Unrealized loss on
      marketable securities
      including reclassification
      adjustments, net of tax              (2)         51         (9)    (1,006)
                                       ------      ------     ------    -------

        Comprehensive income           $3,225      $1,209     $7,252    $ 5,864
                                       ======      ======     ======    =======
</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 September 30, 2001, the end of the nine-month period reported
     herein.


     (b)  Liquidity and Capital Resources
          -------------------------------

                                                       Sept. 30,   December 31,
                                                         2001          2000
                                                      -----------  ------------

     Cash and temporary investments                   $32,855,000   $19,240,000
     Working capital                                  $31,659,000   $26,569,000
     Long-term debt (including current maturities)    $52,348,000   $48,896,000

     Cash and temporary investments were $32,855,000 at September 30, 2001 as
     compared to $19,240,000 at December 31, 2000.  The increase was due to the
     strong cash flows from operations of $23,533,000 for the nine-month period
     ended September 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 September 30, 2001 increased $5,090,000 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, an increase in the
     current portion of long-term debt and an increase in federal and state
     income taxes payable.

     The increase in long-term debt was a result of $6,253,000 of funds advanced
     to finance capital additions, offset by the scheduled $2,801,000 of
     principal repayments in the nine-month period ended September 30, 2001.  In
     1996, North Pittsburgh was granted approval for a loan from the Federal
     Financing Bank (FFB) guaranteed by the Rural Utilities Service (RUS) 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 September 30, 2001 to the FFB under this loan
     was $34,709,000.  In addition, North Pittsburgh had principal payments
     outstanding of $17,639,000 at September 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, $3,173,000 of North Pittsburgh's retained earnings
     were available for dividends to the Registrant as of September 30, 2001.
     Taking the North Pittsburgh restrictions into consideration, consolidated
     retained earnings of the Registrant of approximately $21,811,000 were
     available for dividends and other distributions to the Registrant's
     shareholders as of September 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.

                                       5
<PAGE>

     Consolidated capital expenditure commitments for the purchase and
     installation of communications and other equipment at September 30, 2001
     amounted to approximately $3,191,000, with such amount being part of the
     2001 construction program, which is expected to range between $3 million to
     $5 million for the fourth quarter of 2001.  At September 30, 2001,
     construction work in progress was $3,510,000.  Funds for financing
     construction expenditures in the nine-month period ended September 30, 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 and to pay dividends.  It is
     also the Registrant's intent to fund all capital additions through December
     31, 2001 through internally generated cash flows and cash reserves.  During
     the first quarter of 2002, the Registrant intends to convert those
     qualifying RUS expenditures, which are expected to be between 40% to 60% of
     the fourth quarter capital additions, into long term financing via its
     current loan agreement with the FFB.  Although North Pittsburgh's current
     loan advancement period from the FFB expires on January 1, 2002, qualifying
     capital expenditures made during 2001 can be submitted and loan funds
     advanced during 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.  With the significant level of investment that North Pittsburgh has
     made over the past five years, currently 97% of all lines are broadband
     capable via DSL technology.

     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 as a rural non-price cap incumbent local exchange
     carrier.  On October 11, 2001, the FCC adopted an Order that implements a
     new interstate access charge and universal service regime for rate-of-
     return local exchange carriers based on a proposal originally filed by the
     Multi Association Group (MAG).  The FCC's action was designed to carry out
     the universal service policies embodied in the Federal Telecommunications
     Act of 1996 (1996 Act).  According to the FCC, the Order seeks to
     accomplish three specific goals:

     1.   Align interstate access rate structures more closely with the manner
          in which costs are incurred by driving per minute access charges
          towards lower, more cost based levels.

     2.   Remove implicit support for universal service with explicit support
          that is portable to all eligible telecommunications carriers on a
          competitively neutral basis.  The FCC believes that this will provide
          a more equal footing for competitors in the local and long distance
          markets.

     3.   Provide certainty and stability for the small and mid-sized local
          telephone companies serving rural and high-cost areas by permitting
          these carriers to continue to set rates based on a rate-of-return of
          11.25%, thereby encouraging investment in rural America.

                                       6
<PAGE>

     As of the date of this report, the FCC had not yet released the actual
     Order, so North Pittsburgh is unable to determine the full extent of the
     Order on its operations and revenues.  In addition, the FCC, in conjunction
     with the MAG Order, adopted a Further Notice of Proposed Rulemaking (FNPRM)
     that seeks additional comment on the MAG proposal regarding an incentive
     regulation plan and other means of providing opportunities for rate-of-
     return carriers to increase their efficiency and competitiveness.  The
     final outcome of this FNPRM and its effect on North Pittsburgh is unknown
     at this time.

     The telecommunications industry is continuing to undergo other fundamental
     changes as a result of the passage and implementation of the 1996 Act.  The
     clear intent of the 1996 Act was 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 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 is also taking advantage of the opportunities provided by the
     evolution to a more competitive market place and is offering, through its
     Penn Telecom subsidiary, is presently offering CLEC service in the
     territories of Verizon and Sprint and presently has approximately 15,100
     access line equivalents (ALEs) in service, or an increase of approximately
     9,750 ALEs from December 31, 2000.


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


     (a)  Nine Months Ended September 30, 2001 and 2000
          ---------------------------------------------

     Total operating revenues increased $5,962,000 (10.1%) in the nine-month
     period ended September 30, 2001 over the comparable period in 2000.  This
     increase was primarily the result of increases in local network services of
     $3,674,000 (32.6%), long distance and access services of $1,011,000 (2.5%)
     and other operating revenues of $1,436,000 (36.6%), offset partially by a
     decrease in directory advertising, billing and other services of $330,000
     (15.8%).

     Increased local network service revenues were attributable to customer
     growth for both the Registrant's Independent Local Exchange Carrier (ILEC)
     and CLEC operations, expanded penetration of enhanced services and a rate
     band reclass which received PA PUC approval and became effective in
     December of 2000.  The increases in long distance and access services were
     attributable to increases in high capacity circuits sold at both the ILEC
     and CLEC as well as growth in both Penn Telecom's long distance and CLEC
     access revenues as the CLEC continues to expand its customer base.  These
     increases were partially offset by lower rates charged for terminating
     cellular calls and a decrease in the ILEC intralata toll revenues. 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.  In addition, intralata toll revenues have continued to
     decrease with the falling rates for toll calls.  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. 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 directory advertising, billing and other services was
     mostly attributable to a decrease in carrier billing and collection
     revenues.  North Pittsburgh has contracts with several

                                       7
<PAGE>

     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 nine-month period ended September 30, 2001
     increased $2,106,000 (4.3%) over the preceding year.  That change is a
     result of increases in network and other operating expenses of $1,529,000
     (4.7%), depreciation and amortization expenses of $648,000 (5.2%) and
     telecommunication equipment expenses of $237,000 (15.3%), offset by a
     decrease in state and local taxes of $308,000 (11.9%). The increase in
     network and other operating expenses was due to increased expenses at the
     Registrant's CLEC operations, partially offset by decreases in expenses at
     the ILEC and Pinnatech. CLEC personnel and operating costs grew larger in
     order to support the revenue growth of the CLEC in its foothold north of
     the city of Pittsburgh as well as the continued expansion via an edge-out
     strategy into the city of Pittsburgh and all surrounding areas.

     Network and other operating expenses for the ILEC decreased for the nine-
     month period ended September 30, 2001 from the comparable prior year period
     due to a cost reduction program instituted in the first quarter of 2001.
     As mentioned under the "Regulated Industry" section of this report, 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 efficiencies as well as reduce inventory
     levels.  In addition, with the recent completion of the five-year
     modernization of the ILEC network during 2001, maintenance expense has
     decreased from prior year levels as legacy equipment has been upgraded
     and/or replaced.

     Another matter impacting the results of the nine-month period was the shut
     down of 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
     nine-month period ended September 30, 2001 has improved by over $1.1
     million from the comparable period in 2000.

     The growth in depreciation and amortization expenses of $648,000 (5.2%) for
     the nine-month period ended September 30, 2001 over the comparable period
     for the preceding year was the direct result of the growth in fixed assets
     over the past several years to service current and future customer needs.
     In this regard, it is significant that the Registrant has made gross
     property additions of $101 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 97%
     of North Pittsburgh's lines and to support the build-out of the CLEC
     operations.

     The growth in telecommunication equipment expenses of $237,000 (15.3%) for
     the nine-month period ended September 30, 2001 over the comparable period
     for the preceding year was a direct result of the increase in
     telecommunication equipment sales of $171,000.  Margins have also decreased
     from the prior year due to the mix of equipment sales.

     The decrease in state and local taxes of $308,000 (11.9%) for the nine-
     month period ended September 30, 2001 over the comparable period for the
     preceding year was mostly attributable to a reduction in public utility
     realty tax assessment (PURTA) expense from a settled prior year overpayment
     as well as a decrease in Pennsylvania capital stock tax expense due to a
     reduction in millage rates from the prior year.

     Interest expense increased $549,000 (24.4%) for the current nine-month
     period due to increased debt borrowings and interest expense associated
     with the capital lease for fiber optic loops.  Sundry income, net,
     decreased $2,637,000 for the period, due mostly to an approximate
     $2,100,000 decrease in gains on available for sale securities and a
     $154,000 increase in non-operating expense associated with tax adjustments
     to prior years cellular partnerships' returns.

     Although the net operating revenues of the Registrant increased $3,856,000
     (36.9%) for the nine-month period ended September 30, 2001, the increase in
     interest expense and decrease in Sundry income, net, resulted in a more
     modest increase of $612,000 (5.1%) in earnings before income taxes.

                                       8
<PAGE>

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

     Fluctuations in the revenue and expenses for the three-month period ended
     September 30, 2001, as compared to the same quarterly period in 2000, are
     generally attributable to the same reasons discussed in the nine-month
     comparisons above with the exception of network and other operating
     expenses which decreased $539,000 (4.6%) for the third quarter of 2001 from
     the comparable period in 2000.  Although network and other operating
     expenses actually increased $2,106,000 (4.3%) for the nine-month period
     ended September 30, 2001 from the comparable prior year nine-month period,
     the increase was a result of higher first quarter 2001 costs.  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 and third quarters of 2001.  Network and other operating
     expenses for North Pittsburgh for the third quarter of 2001 decreased
     approximately $520,000 from the comparable quarter in 2000.  Expenses also
     decreased from the prior year third quarter as a result of the closure of
     the NSN.  These reductions were partially offset by growing personnel and
     network 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 payments and related taxes
     had been paid, making the remaining restructuring accrual liability
     $239,000 as of December 31, 2000.

     In the nine-month period ended September 30, 2001, payments in the amount
     of $167,000 were made in accordance with lease obligations and other NSN
     restructuring charges, reducing the remaining restructuring accrual
     liability to $72,000 as of September 30, 2001.  No additions or reversals
     to the accrual were made during the nine-month period ended September 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
     September 30, 2001, the Registrant had a net book value of $568,000 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.

     In June, 2001, the Financial Accounting Standards Board issued SFAS No.
     143, "Accounting for Asset Retirement Obligations".  The pronouncement is
     effective for the Registrant's year beginning January 1, 2003.  The
     Registrant does not expect this pronouncement will have a significant
     impact on the consolidated financial statements.

     In August, 2001, the Financial Accounting Standards Board issued SFAS No.
     144, "Accounting for the Impairment or Disposal of Long-Lived Assets".  The
     pronouncement is effective for the Registrant's year beginning January 1,
     2002.  The Registrant does not expect this pronouncement will have a
     significant impact on the consolidated financial statements.

                                       9
<PAGE>

                                    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.

                                       10
<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 November 8, 2001               /s/ H. R. Brown
     -----------------              ------------------------------------------
                                    H. R. Brown, President



Date November 8, 2001               /s/ A. P. Kimble
     -----------------              ------------------------------------------
                                    A. P. Kimble, Vice President, Treasurer
                                    and Chief Accounting Officer

                                       11
<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.
          --------


Exhibit
Number             Subject                             Applicability
------             -------                             -------------


 (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
<PAGE>

Exhibit
Number             Subject                             Applicability
------             -------                             -------------


 (23)      Consents of experts and counsel        Not Applicable


 (24)      Power of attorney                      Not Applicable


 (99)      Additional exhibits                    Not Applicable



      (b) Reports on Form 8-K - No reports on Form 8-K were filed during the
          -------------------
          quarter ended September 30, 2001.