UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


(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 0-18672


                             ZOOM TELEPHONICS, INC.
                             ----------------------
             (Exact Name of Registrant as Specified in its Charter)

                Canada                                      04-2621506
                ------                                      ----------
       (State or Other Jurisdiction of                 (I.R.S. Employer
        Incorporation or Organization)                  Identification No.)


        207 South Street, Boston, Massachusetts                  02111
        ---------------------------------------                  -----
       (Address of Principal Executive Offices in the U.S.)  (Zip Code)

       Registrant's Telephone Number, Including Area Code: (617) 423-1072

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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES  [ X ]    NO [    ]



The number of shares outstanding of the registrant's Common Stock, No Par Value,
as of August 13, 2001 was 7,860,866 shares.


<PAGE>


                      ZOOM TELEPHONICS, INC. AND SUBSIDIARY
                                      INDEX


                                                                          Page

Part I. Financial Information

  Item 1.  Consolidated Balance Sheets as of June 30, 2001
               and December 31, 2000                                         3

           Consolidated Statements of Operations for the Three
               Months and Six Months Ending June 30, 2001 and 2000           4

           Consolidated Statements of Cash Flows for the Six
               Months Ending June 30, 2001 and 2000                          5

           Notes to Consolidated Financial Statements                    6 - 8

  Item 2.  Management's Discussion and Analysis of
               Financial Condition and Results of Operations            9 - 13

  Item 3.  Qualitative and Quantitative Disclosures About
               Market Risk                                             13 - 14

Part II.   Other Information

  Item 4.  Submission of Matters to a Vote of Security Holders         14 - 15

  Item 6.  Exhibits and Reports on Form 8-K                                 16

           Signatures                                                       16



<PAGE>


PART I - FINANCIAL INFORMATION

                      ZOOM TELEPHONICS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<S>                                                           <C>             <C>

                                                               June 30, 2001   December 31, 2000
                                                                (Unaudited)      (Audited)
     Assets

Current assets:
    Cash and cash equivalents                                  $  5,386,518    $  2,906,270
    Accounts receivable, net of reserves for doubtful
        accounts, returns, and allowances of  $2,474,767 at
        June 30, 2001 and $3,127,455 at December 31, 2000         6,622,674       7,923,967
    Inventories                                                  13,774,283      21,896,883
    Net deferred tax assets                                       5,812,844       5,812,844
    Prepaid expenses and other current assets                     1,028,657         678,271
                                                               ------------    ------------
             Total current assets                                32,624,976      39,218,235
                                                               ------------    ------------

Property, plant and equipment, net                                4,473,370       4,580,634
Goodwill, net of accumulated amortization of $2,238,567 at
   June 30, 2001 and $1,827,459 at December 31, 2000              2,665,115       3,076,224
Other assets                                                         24,736          84,902
                                                               ------------    ------------


              Total assets                                     $ 39,788,197    $ 46,959,995
                                                               ============    ============



     Liabilities and Stockholders' Equity

Current liabilities:
    Current portion of long-term debt                          $    133,920    $       --
    Accounts payable                                              2,984,761       7,428,832
    Accrued expenses                                              1,771,305       2,414,917
                                                               ------------    ------------
             Total current liabilities                            4,889,986       9,843,749
                                                               ------------    ------------


 Long-term debt                                                   5,809,236            --

 Other non-current liabilities                                      312,044         368,800
                                                               ------------    ------------

             Total liabilities                                   11,011,266      10,212,549
                                                               ------------    ------------

Stockholders' equity:
   Common stock, no par value.  Authorized 25,000,000
     shares; issued and outstanding 7,860,866 shares at June
     30, 2001 and at December 31, 2000                           28,195,295      28,145,375
   Retained earnings                                                849,701       8,694,230
   Accumulated other comprehensive loss                            (268,065)        (92,159)
                                                               ------------    ------------


             Total stockholders' equity                          28,776,931      36,747,446
                                                               ------------    ------------

             Total liabilities and stockholders' equity        $ 39,788,197    $ 46,959,995
                                                               ============    ============

</TABLE>


See accompanying notes to consolidated financial statements.


<PAGE>



                      ZOOM TELEPHONICS, INC. AND SUBSIDIARY
                      Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<S>                                                    <C>              <C>             <C>             <C>
                                                        Three Months Ending June 30,     Six Months Ending June 30,
                                                       -----------------------------    --------------------------
                                                             2001            2000            2001             2000
                                                             ----            ----            ----             ----

Net sales                                               $ 10,825,482    $ 13,267,444    $ 21,090,316    $ 27,300,634
Costs of goods sold                                        8,091,107       8,681,976      17,965,823      18,334,353
                                                        ------------    ------------    ------------    ------------

         Gross profit                                      2,734,375       4,585,468       3,124,493       8,966,281

Operating expenses:
         Selling                                           2,392,335       2,852,086       4,853,674       5,794,624
         General and administrative                        1,502,951       1,454,477       3,138,496       2,800,399
         Research and development                          1,341,343       1,814,165       2,820,434       3,405,709
                                                        ------------    ------------    ------------    ------------

         Total operating expenses                          5,236,629       6,120,728      10,812,604      12,000,732
                                                        ------------    ------------    ------------    ------------

         Operating loss                                   (2,502,254)     (1,535,260)     (7,688,111)     (3,034,451)

Other income (expense), net                                 (127,640)        168,173        (156,418)        283,069
                                                        ------------    ------------    ------------    ------------

         Loss before income tax benefit                   (2,629,894)     (1,367,087)     (7,844,529)     (2,751,382)

Income tax benefit                                              --           430,090           --            872,970
                                                        ------------    ------------    ------------    ------------

         Net loss                                       $ (2,629,894)   $   (936,997)   $ (7,844,529)   $ (1,878,412)
                                                        ============    ============    ============    ============

Net loss per common share:

         Basic                                          $       (.33)   $       (.12)   $      (1.00)   $       (.24)
                                                        ============    ============    ============    ============


         Diluted                                        $       (.33)   $       (.12)   $      (1.00)   $       (.24)
                                                        ============    ============    ============    ============


Weighted average common and common equivalent shares:

         Basic                                             7,860,866       7,745,147       7,860,866       7,692,606
                                                        ============    ============    ============    ============

         Diluted                                           7,860,866       7,745,147       7,860,866       7,692,606
                                                        ============    ============    ============    ============

</TABLE>


See accompanying notes to consolidated financial statements.






<PAGE>



                      ZOOM TELEPHONICS, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<S>                                                                                  <C>                  <C>
                                                                                       Six Months Ending June 30,
                                                                                       --------------------------
                                                                                         2001                 2000
                                                                                      ---------             --------
Cash flows from operating activities:
      Net loss                                                                       $(7,844,529)         $(1,878,412)
      Adjustments to reconcile net loss to net cash
         used in operating activities:
            Depreciation and amortization                                                868,405              754,567
            Amortization of restricted stock                                              49,920                 --
            Deferred income taxes                                                           --               (873,145)
            Equity in losses of affiliate                                                135,165               70,000

            Changes in assets and liabilities:
               Accounts receivable                                                     1,301,293             (461,105)
               Inventories                                                             8,122,600            2,405,896
               Prepaid expenses and other assets                                        (350,386)            (397,373)
               Accounts payable and accrued expenses                                  (5,087,683)            (109,103)
                                                                                     -----------          -----------
                     Net cash used in operating activities                            (2,805,215)            (488,675)
                                                                                     -----------          -----------

Cash flows from investing activities:
      Sale (purchase) of investment securities                                              --             (1,341,168)
      Investment in affiliate                                                            (74,999)                --
      Additions to licenses                                                                 --                (15,000)
      Additions to property, plant and equipment                                        (406,789)            (504,815)
                                                                                     -----------          -----------

                     Net cash used in investing activities                              (481,788)          (1,860,983)
                                                                                     -----------          -----------


Cash flows from financing activities:
      Proceeds from long term debt                                                     6,000,000                 --
      Principal payments on long term debt                                               (56,843)                --
      Proceeds from exercise of nonqualified stock options                                  --              1,054,948
                                                                                     -----------          -----------
                   Net cash provided by financing activities                           5,943,157            1,054,948
                                                                                     -----------          -----------

Effect of exchange rate changes on cash                                                 (175,906)             117,807
                                                                                     -----------          -----------


Net increase in cash and cash equivalents                                              2,480,248           (1,176,903)


Cash and cash equivalents, beginning of period                                         2,906,270            7,218,500
                                                                                     -----------          -----------


Cash and cash equivalents, end of period                                             $ 5,386,518          $ 6,041,597
                                                                                     ===========          ===========


Supplemental disclosures of cash flow information:
      Cash paid during the year for:

      Interest                                                                       $   193,241          $         0
                                                                                     ===========          ===========

      Income taxes                                                                   $         0          $         0
                                                                                     ===========          ===========


       See accompanying notes to consolidated financial statements.
</TABLE>



<PAGE>


                      ZOOM TELEPHONICS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                                   (Unaudited)


(1) Basis of Presentation

         The consolidated financial statements of Zoom Telephonics, Inc., (the
"Company") presented herein have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-Q and do not
include all of the information and footnote disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the consolidated financial statements and notes thereto for the year ending
December 31, 2000 included in the Company's 2000 Annual Report on Form 10-K.
         The consolidated balance sheet as of June 30, 2001, the consolidated
statements of operations for the three months and six months ending June 30,
2001 and 2000, and the consolidated statements of cash flows for the six months
ending June 30, 2001 and 2000 are unaudited, but, in the opinion of management,
include all adjustments (consisting of normal, recurring adjustments) necessary
for a fair presentation of results for these interim periods.
         The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the entire fiscal year ending
December 31, 2001.


(2)      Earnings Per Share

         The reconciliation of the numerators and denominators of the basic and
diluted net loss per common share computations for the Company's reported net
loss is as follows:

<TABLE>
<S>                                 <C>               <C>               <C>               <C>
                                       Three Months Ending June 30,          Six Months Ending June 30,
                                       ----------------------------          --------------------------
                                        2001               2000             2001              2000
                                    ------------      -------------      ----------        -----------
Basic:
   Net loss                         $(2,629,894)      $  (936,997)      $(7,844,529)      $(1,878,412)


Weighted average shares
   outstanding                        7,860,866         7,745,147         7,860,866         7,692,606
                                    -----------       -----------       -----------       -----------

Net loss per share                  $      (.33)      $      (.12)      $     (1.00)      $      (.24)
                                    ===========       ===========       ===========       ===========

Diluted:
    Net loss                        $(2,629,894)      $  (936,997)      $(7,844,529)      $(1,878,412)


Weighted average shares
   outstanding                        7,860,866         7,745,147         7,860,866         7,692,606

Net effect of dilutive stock
   options based on the
   Treasury stock method using
   average market price                    --                --                --                --

Weighted average shares
   outstanding                        7,860,866         7,745,147         7,860,866         7,692,606
                                    -----------       -----------       -----------       -----------

Net loss per share                  $      (.33)      $      (.12)      $     (1.00)      $      (.24)
                                    ===========       ===========       ===========       ===========
</TABLE>

         Potential common shares for which inclusion would have the effect of
increasing diluted earnings per share (i.e., antidilutive) are excluded from the
computation. Options to purchase 6,171 and 568,361 shares of common stock at
June 30, 2001 and 2000, respectively, were outstanding, but not included in the
computation of diluted earnings per share as their effect would be antidilutive.


(3) Inventories
<TABLE>
<S>                                                    <C>                <C>

             Inventories consist of the following:     June 30, 2001      December 31, 2000
                                                       -------------       -----------------

                          Raw materials                 $ 7,768,079         $10,335,673
                          Work in process                 1,374,259           5,101,037
                          Finished goods                  4,631,945           6,460,173
                                                        -----------         -----------

                                                        $13,774,283         $21,896,883
                                                        ===========         ===========
</TABLE>


(4)      Comprehensive Income

         Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting
Comprehensive Income" establishes rules for the reporting and display of
comprehensive income and its components; however, it has no impact on the
Company's net income or shareholders' equity. SFAS No. 130 requires all changes
in equity from non-owner sources to be included in the determination of
comprehensive income (loss).
<TABLE>
<S>                                     <C>                  <C>                <C>                 <C>

         The components of comprehensive loss, net of tax, are as follows:

                                          Three Months Ending June 30,          Six Months Ending June 30,
                                          ----------------------------          --------------------------
                                              2001                 2000               2001                2000
                                        --------------       ---------------    --------------      ---------------

 Net loss                                 $(2,629,894)        $  (936,997)        $(7,844,529)        $(1,878,412)

 Foreign currency translation
   adjustment                                 (27,179)             35,433            (175,906)             40,822


 Net unrealized holding gain
   on investment securities                        --               7,102                  --              10,061
                                          -----------         -----------         -----------         -----------

Comprehensive loss                        $(2,657,073)        $  (894,462)        $(8,020,435)        $(1,827,529)
                                          ===========         ===========         ===========         ===========

</TABLE>


(5)      Bank Credit Facility and Mortgage

     The Company has a secured $5 million  line of credit that  expires on April
1, 2003. The line of credit bears interest at the bank's prime rate. The line of
credit is secured and contains certain financial and other covenants.  There are
no borrowings under this line of credit as of June 30, 2001.  However our lender
has  notified  us that it  considers  an event of default to have  occurred as a
result of our  operating  performance  variance to our  financial  plan. We have
contested the lender's  assertion and have  maintained an open dialogue with the
lender and as of the date of this report the line is still intact, but we cannot
assure  that  the  lender  will  make any  funding  available  to us under  this
facility.  We are  negotiating  with an  alternative  lender  for a  replacement
facility  that we expect will provide us with  greater  funds  availability.  We
cannot  assure that this  replacement  facility  will be  available on favorable
terms, if at all. As of the date of this report, we have in excess of $5 million
in cash and  investment  securities  with no  borrowings  other than our 20 year
mortgage.  However, if we are not able to obtain an alternative  facility we may
not be  able to  borrow  funds  under  our  existing  facility  and may  require
additional sources of cash to support our business going forward.

         On January 10, 2001, the Company obtained a mortgage for $6 million on
the real estate property located at 201 and 207 South Street, Boston,
Massachusetts. This is a 20-year direct reduction mortgage. The interest rate is
fixed for one year, based on the one-year Federal Home Loan Bank rate plus 2.5 %
per annum. The rate is adjusted on January 10th of each calendar year commencing
on January 10, 2002. The current rate of interest as of June 30, 2001 was 7.76%
and interest expense for the second quarter and six-months ending June 30, 2001
was $114,685 and $215,383, respectively.




(6)      Income Taxes

     The Company recorded a deferred tax asset valuation allowance equal to 100%
of the tax benefit  derived from the  quarterly  losses for the six month period
ending as of June 30,  2001.  The  Company has  recorded a  valuation  allowance
against  its  deferred  tax  assets in  accordance  with the  provisions  of the
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes."  Income tax benefit was zero for the three and six months ended June 30,
2001,  compared to $430,090  and $872,970 in the three and six months ended June
30, 2000. Based on the uncertain timing of our return to tax  profitability  and
recovery of the deferred tax asset, we recorded  valuation  reserves against the
deferred  federal and state tax benefit of the current  period  operating  loss,
resulting in zero tax benefit recorded for the first half of fiscal 2001.


(7)      Segment and Geographic Information

     The Company's  operations are classified into one reportable  segment.  The
Company's  domestic net sales and  international  sales for the three months and
six  months  ending  June 30,  2001 and 2000,  respectively  were  comprised  as
follows:
<TABLE>
<S>               <C>              <C>      <C>              <C>        <C>              <C>       <C>             <C>

                   Three Months             Three Months                 Six Months                 Six Months
                      Ending        % of        Ending         % of        Ending         % of         Ending        % of
                  June 30, 2001    Total    June 30, 2000     Total     June 30, 2001    Total     June 30, 2000    Total
                  -------------    -----    -------------     -----     -------------    -----     -------------    -----
North America      $ 6,906,561       64%      $ 9,134,692       69%      $13,344,712       63%      $19,046,863       70%
International        3,918,921       36%        4,132,752       31%        7,745,604       37%        8,253,771       30%
                   -----------      ---       -----------      ---       -----------      ---       -----------      ---
Total              $10,825,482      100%      $13,267,444      100%      $21,090,316      100%      $27,300,634      100%
                   ===========      ===       ===========      ===       ===========      ===       ===========      ===
</TABLE>



<PAGE>


     Item 2.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations

         The following discussion and analysis should be read in conjunction
with the "Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995, stated below, as well as the risk factors set forth in our Annual
Report on Form 10-K.

Results of Operations

     Our net sales were $10.8  million and our net loss was $2.6 million for the
second quarter ending June 30, 2001 compared to net sales of $13.3 million and a
net loss of $0.9 million for the second quarter  ending June 30, 2000.  Earnings
per share declined to a loss of $0.33 for the second quarter of 2001 from a loss
of $0.12 for the second  quarter of 2000.  Our net sales were $21.1  million and
our net loss was $7.8 million for the six months  ending June 30, 2001  compared
to net sales of $27.3  million and a net loss of $1.9 million for the six months
ending June 30, 2000. The net loss per share was $1.00 for the six months ending
on June 30, 2001 versus a net loss of $0.24 per share for the six months  ending
June 30, 2000.

         Net sales for the quarter ending June 30, 2001 were 18.4% lower than
the prior year's second quarter. Unit volume and average selling price both
declined in our primary revenue product category, dial-up modems, and revenues
declined both inside and outside North America, reflecting continuing weakness
in the dial-up modem market. We gained market share for dial-up modems at major
U.S. retailers tracked by PC Data. Based upon PC Data's information, our brands'
share of these revenues went from 11.6% in the second quarter ending June 30,
2000 to 16.1% in the second quarter ending June 30, 2001.

         Net sales for the six months ending June 30, 2001 were 22.7% lower than
the comparable period in the prior year. Unit volume and average selling price
both declined in our primary revenue product category, dial-up modems, and
revenues declined both inside and outside North America, reflecting continuing
weakness in the dial-up modem market.

     The major  reason for our $1.7  million  higher net loss in Q2 2001 over Q2
2000 was $1.9  million  lower gross  profit.  Gross  profit for the three months
ending June 30, 2001 was $2.7 million,  or 25.3% of net sales,  compared to $4.6
million,  or 34.6% of net sales,  for the three months ending June 30, 2000. The
$1.9 million decrease was primarily due to our inability to reduce manufacturing
expenses in line with the reduction of production volume and selling prices.

     The major reason for our $6.0 million  higher net loss in the first half of
2001 versus the first half of 2000 was $5.8 million  lower gross  profit.  Gross
profit as a percent of net sales  decreased  to 14.8% for the six months  ending
June 30, 2001  compared to 32.8% for the six months  ending June 30,  2001.  The
$5.8 million  decrease was  primarily  attributable  to an inventory  write-down
recorded in the first quarter of 2001 and our inability to reduce  manufacturing
expenses in line with the reduction of production volumes and selling prices. We
recorded a $2.6 million  inventory  write-down  in the quarter  ending March 31,
2001,  predominantly  against our  inventory  relating to  broadband  modems and
wireless networking  products,  reflecting both our low sales for these products
and the  industry  decline in  component  and  finished  goods  prices for these
categories.

         In order to reduce expenses, we have reduced our worldwide staff from
330 employees on December 31, 2000 to 234 employees on June 30, 2001. We have
also implemented a temporary wage freeze and controls on discretionary spending.

         Selling expenses in the second quarter ending June 30, 2001 decreased
in dollars to $2.4 million or 22.1% of net sales from $2.9 million or 21.5% of
net sales in the second quarter ending June 30, 2000. The dollar decrease was
mainly due to reduced advertising and promotion expense, primarily for
cooperative advertising programs by resellers of our modems, reduced commissions
and freight, and reduced selling expenses in our U.K. office.

         Selling expenses for the six months ending June 30, 2001 decreased in
dollars to $4.9 million or 23.0% of net sales from $5.8 million or 21.2% of net
sales in the six months ending June 30, 2000. The dollar decrease was mainly due
to reduced advertising and promotion expense, primarily for cooperative
advertising programs by resellers of our modems, reduced commissions and
freight, and reduced selling expenses in our U.K. office.

         General and administrative expenses were $1.5 million or 13.9% of net
sales in the second quarter ending June 30, 2001 compared to $1.45 million or
11.0% of net sales in the second quarter ending June 30, 2000. The slight dollar
increase was primarily the result of costs and legal expenses associated with
on-going negotiations for a new line of credit.

         General and administrative expenses for the six months ending June 30,
2001 increased in dollars to $3.1 million or 14.9% of net sales from $2.8
million or 10.3% of net sales in the six months ending June 30, 2000. The dollar
increase was predominantly the result of costs and legal expenses associated
with real estate and financing activities, with a partial offset from reduced
expenses in our U.K. office.

         Research and development expenses decreased in dollars to $1.3 million
or 12.4% of net sales in the second quarter ending June 30, 2001 from $1.8
million or 13.7% of net sales in the second quarter ending June 30, 2000. The
decrease was primarily due to reduced headcount and lower expenses for industry
and government product approvals.

         Research and development expenses for the six months ending June 30,
2001 decreased in dollars to $2.8 million or 13.4% of net sales from $3.4
million or 12.5% of net sales in the six months ending June 30, 2000. The
decrease was primarily due to reduced headcount and lower expenses for industry
and government product approvals.

         In the second quarter ending June 30, 2001 other net expense was
approximately $128,000, compared to other net income of $168,000 in the second
quarter ending June 30, 2000. This shift from other net income to other net
expense was primarily due to the reduction in interest income due to lower cash
balances in the second quarter of 2001 compared to the second quarter of 2000
and the fact that we had no bank debt until February, 2001 when we began to pay
interest on approximately $6 million in bank debt.

         In the six months ending June 30, 2001 other net expense was
approximately $156,000, compared to other net income of $283,000 in the second
quarter ending June 30, 2000 for the reasons stated above.

     Income tax benefit was zero for the second  quarter  ending June 30,  2001,
compared to $430,090 in the second  quarter  ending June 30, 2000.  Based on the
uncertain  timing of our return to tax  profitability  and the  recovery  of the
deferred  tax asset,  we  recorded  additional  valuation  reserves  against the
deferred  federal and state tax benefit of the current  period  operating  loss,
resulting in zero tax benefit recorded for the second quarter of fiscal 2001.


Liquidity and Capital Resources

         We ended the second quarter of 2001 with stockholders' equity of $28.8
million or $3.66 per share, cash and cash equivalents of $5.4 million, working
capital of $27.7 million, and a current ratio of 6.7.

     Operating activities used $2.8 million in cash during the six months ending
June  30,  2001.  Our use of cash  included  a net  loss  of $7.8  million,  the
reduction  of  accounts  payable by $5.1  million,  and the  decrease of prepaid
expenses and other assets of $0.4 million.  These uses were partially  offset by
the reduction of inventory of $8.1 million, a decrease in accounts receivable of
$1.3 million,  and depreciation and amortization of $0.9 million.  The reduction
of accounts payable was primarily due to our reduced inventory  purchases in the
first quarter of 2001.  The decrease in  inventories  in the first six months of
2001 reflected our reduced inventory  purchases  following the inventory buildup
in 2000,  our $2.6 million  inventory  write-down  recorded in Q1 2001,  and the
return of  inventories  to key  suppliers.  Our decrease in accounts  receivable
primarily reflected our lower sales volume.

         Investing activities used approximately $482,000 in cash during the six
months ending June 30, 2001. This cash was primarily used to fund the capital
expenditures of $407,000, which consisted primarily of the continuing build-out
and maintenance of our headquarters, purchases of equipment and tooling, and
purchases of computer hardware. We also made an additional $75,000 investment in
an affiliate. We do not have any significant capital commitments, and we
anticipate that we will continue with modest investments in equipment and in
improvements to our facilities during the year.

     During the six months ending June 30, 2001, we received cash from financing
activities  of $6.0  million  from the  proceeds  of a 20-year  mortgage  of our
headquarters  building.  Principal on the loan is amortized on a 20-year  basis.
The  interest  rate is  adjusted  annually  in January of each year based on the
one-year Federal Home Loan Bank rate plus 2.5 % per annum. The interest rate for
the current year is 7.76%.  We also have a $5 million  line of credit  facility.
The line of credit bears  interest at the bank's prime rate.  The line of credit
is secured and  contains  certain  financial  and other  covenants.  We have not
borrowed  under this line,  therefore  as of June 30,  2001 and the date of this
report no  amounts  were  outstanding  under this  facility.  The line of credit
expires on April 1, 2003. However,  our lender has notified us that it considers
an event of default to have  occurred as a result of our  operating  performance
variance to our  financial  plan. We have  contested the lender's  assertion and
have  maintained  an open  dialogue  with the  lender and as of the date of this
report the line is still intact,  but we cannot assure that the lender will make
any funding  available to us under this  facility.  We are  negotiating  with an
alternative  lender for a  replacement  facility  that we expect will provide us
with greater funds availability. We cannot assure that this replacement facility
will be available on favorable  terms,  if at all. At the date of this report we
have  in  excess  of $5  million  in  cash  and  investment  securities  with no
borrowings  other  than our  20-year  mortgage.  However,  if we are not able to
obtain an  alternative  facility  we may not be able to borrow  funds  under our
existing  facility  and may  require  additional  sources of cash to support our
business going forward.

Recently Issued Accounting Standards

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133
"). This statement was amended by the issuance of SFAS 137, "Deferral of the
Effective Date of FASB Statement No. 133", which changed the effective date of
SFAS 133 to all fiscal years beginning after June 15, 2000 (fiscal 2001 for us)
and requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if so, the type of
hedge transaction. The adoption of SFAS 133 on January 1, 2001 did not have a
material impact on our financial position or results of operations.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 expresses the view of the SEC staff in applying generally
accepted accounting principles to certain revenue recognition issues. We adopted
SAB 101 in the fourth quarter of 2000, and have adjusted previously reported
revenue, cost of revenue, accounts receivable and inventory balances related to
the manner in which we had historically recorded and reported sales returns
reserves. There was no net impact on our previously reported gross margins or
net income (loss). We have reclassified the statement of operations for the
periods ended June 30, 2000 to reflect this change.

         FASB Emerging Issues Task Force Issue No. 00-14 "Accounting for Certain
Sales Incentives" addresses the recognition, measurement, and income statement
classification for certain types of sales incentives. The application of the
guidance in Issue No. 00-14 will result in a change in the manner in which the
Company records certain types of discounts and sales and marketing incentives
that are provided to its customers. The Company has historically recorded
certain types of these incentives as marketing expenses. Under Issue No. 00-14,
the Company will record these discounts and incentives as reductions of revenue.
In April 2001, the FASB Emerging Issues Task Force reached a consensus on Issue
No. 00-25 "Accounting for Consideration from a Vendor to a Retailer in
Connection with the Purchase or Promotion of the Vendor's Products". Issue No.
00-25 addresses whether certain consideration offered by a vendor to a
distributor, including slotting fees, cooperative advertising arrangements and
"buy-down" programs, should be characterized as operating expenses or reductions
of revenue. Issue No. 00-14 and 00-25 are required to be implemented no later
than the first fiscal quarter of 2002, at which time prior period reported
amounts will be reclassified to conform to the new presentation. The pro forma
disclosures below reflect the reclassification of both previously reported as
well as current quarter and the six month reported revenues and sales and
marketing expenses based on the application of the guidance in Issue No. 00-14
and Issue No. 00-25. There is no current quarter or historical impact on the
Company's balance sheets.

<TABLE>
<S>                          <C>                 <C>                <C>                <C>

                               Three Months Ending June 30,             Six Months Ending June 30,
                             ------------------------------            ----------------------------

                                  2001                2000              2001              2000
                                  ----                ----              ----              ----
Revenues:

As previously reported        $10,825,482        $13,267,444        $21,090,316        $27,300,634

As reclassified                10,245,508         12,422,335         20,034,700         25,636,415

Selling expenses:

As previously reported        $ 2,392,335        $ 2,852,086        $ 4,853,674        $ 5,794,624

As reclassified                 1,812,361          2,006,977          3,798,058          4,130,405


</TABLE>

In June 2001, the FASB issued SFAS No. 141, "Business Combinations"
which addresses the financial accounting and reporting for business combinations
and supersedes Accounting Principles Board (APB) Opinion No. 16, "Business
Combinations," and SFAS No. 38, "Accounting for Pre-acquisition Contingencies of
Purchased Enterprises." SFAS No. 141 requires that all business combinations be
accounted for by a single method, the purchase method, modifies the criteria for
recognizing intangible assets, and expands disclosure requirements. The
provisions of SFAS No. 141 apply to all business combinations initiated after
June 30, 2001. We do not expect the adoption of SFAS No. 141 will have a
material effect on our results of operations or statements of financial
position.

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets" which addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No. 17,
"Intangible Assets." SFAS No. 142 addresses how intangible assets that are
acquired individually or with a group of other assets should be accounted for in
financial statements upon their acquisition and after they have been initially
recognized in the financial statements. SFAS No. 142 requires that goodwill and
intangible assets that have indefinite useful lives not be amortized but rather
tested at least annually for impairment, and intangible assets that have finite
useful lives be amortized over their useful lives. SFAS No. 142 provides
specific guidance for testing goodwill and intangible assets that will not be
amortized for impairment. In addition, SFAS No. 142 expands the disclosure
requirements about goodwill and other intangible assets in the years subsequent
to their acquisition. SFAS No. 142 is effective for our fiscal year 2002.
Impairment losses for goodwill and indefinite-life intangible assets that arise
due to the initial application of SFAS No. 142 are to be reported as resulting
from a change in accounting principle. However, goodwill and intangible assets
acquired after June 30, 2001 will be subject immediately to provisions of SFAS
142. We are in the process of determining the impact that adoption will have on
our consolidated financial statements.

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

         The Company owns financial instruments that are sensitive to market
risks as part of its investment portfolio. The investment portfolio is used to
preserve the Company's capital until it is required to fund operations,
including the Company's research and development activities. None of these
market-risk sensitive instruments are held for trading purposes. The Company
does not own derivative financial instruments in its investment portfolio. The
investment portfolio contains instruments that are subject to the risk of a
decline in interest rates.

Investment Rate Risk - The Company's investment portfolio consists entirely of
money market funds, which are subject to interest rate risk. Due to the short
duration and conservative nature of these instruments, the Company does not
believe that it has a material exposure to interest rate risk.


     "Safe Harbor" Statement under the Private Securities  Litigation Reform Act
of 1995
         This report contains forward-looking statements. The words "believe,"
"expect," "anticipate," "estimate," "may," "will," "plan," "intend," "could,"
"estimate," "is being," "goal" and other similar expressions which are
predictions of or indicate future events and trends and which do not relate to
historical matters identify forward-looking statements. These statements, which
include statements relating to the sufficiency of Zoom's cash, together with
funds generated from operations and available sources of financing, to support
Zoom's business for the remainder of fiscal year 2001 and Zoom's anticipated
investments in equipment and improvements to its facilities during fiscal year
2001, could cause Zoom's actual results to differ materially from those
anticipated. Actual results may be materially different than those expectations
as a result of known and unknown risks, including: Zoom's ability to obtain
additional financing when needed or on favorable terms; Zoom's incurrence of
substantial losses; Zoom's ability to effectively manage its inventory and
changing business; the uncertainty of new product development and introduction,
including budget overruns, project delays and the risk that newly introduced
products may contain undetected errors or defects or otherwise not perform as
anticipated; uncertainties inherent in financial projections that, by their
nature, are based upon assumptions, many of which are not in the control of
Zoom; Zoom's dependence on one or a limited number of suppliers for certain key
components; development and market acceptance of the cable and DSL data
communications markets, uncertainty of market growth of those markets; rapid
technological change; competition; and other risks set forth in Zoom's filings
with the Securities and Exchange Commission. Zoom cautions readers not to place
undue reliance upon any such forward-looking statements, which speak only as of
the date made. Zoom expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any such statements to reflect any change
in the Zoom's expectations or any change in events, conditions or circumstance
on which any such statement is based.



PART II - OTHER INFORMATION

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

         Zoom Telephonics, Inc. held its Annual Meeting of Shareholders on June
14, 2001. At the meeting, the shareholders approved (a) the re-election of the
Board of Directors of Zoom Telephonics, Inc. (b) an amendment to the 1991
Directors Stock Option Plan to extend the expiration date of the Plan from April
30, 2001 to April 30, 2011 and (c) the appointment of KPMG LLP as Zoom's
independent auditors for the year ending December 31, 2001.

         a)       Election of Directors:


     Nominee            For           Against            Abstain

Frank B. Manning     7,562,759           0               101,565
Peter R. Kramer      7,565,292           0                98,865
Bernard Furman       7,563,940           0               100,217
J. Ronald Woods      7,564,940           0                99,217
L. Lamont Gordon     7,568,840           0               100,317

         b) Amendment to 1991 Directors Stock Option Plan to extend the
expiration date from April 30, 2001 to April 30, 2011:

                        For           Against            Abstain
Approval             7,592,067        215,219             53,467


         c) Approval of the appointment of KPMG LLP as Zoom's  independent
auditors for the year ending December 31, 2001:

                        For           Against            Abstain
Approval             7,592,067         28,331             43,759



Item 6 - Exhibits and reports on Form 8-K


            (a) Exhibits - none.


            (b) No reports on Form 8-K were filed by the Company during the
                quarter ending June 30, 2001.


<PAGE>


                      ZOOM TELEPHONICS, INC. AND SUBSIDIARY



                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                               ZOOM TELEPHONICS, INC.


Date: August 14, 2001                 By:          /s/ Frank B. Manning
                                         ---------------------------------------
                                     Frank B. Manning, President



Date: August 14, 2001                 By:          /s/ Robert Crist
                                         ---------------------------------------
                                    Robert Crist, Vice President of Finance
                                    and Chief Financial Officer
                                   (Principal Financial and Accounting Officer)