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 March 31, 2001

                                       or

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

         For the transition period from ______________ to ______________


                         Commission File Number 0-18672


                             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 May 11, 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 March 31, 2001
               and December 31, 2000                                          3

           Consolidated Statements of Operations for the Three
               Months Ending March 31, 2001 and 2000                          4

           Consolidated Statements of Cash Flows for the Three
               Months Ending March 31, 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


Part II.   Other Information


   Item 6. Exhibits and Reports on Form 8-K                                  13

           Signatures                                                        14



<PAGE>


PART I - FINANCIAL INFORMATION

                      ZOOM TELEPHONICS, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

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

     Assets
                                                                     03/31/01       12/31/00
                                                                   (Unaudited)      (Audited)
                                                                   -----------      ---------
Current assets:
    Cash and cash equivalents                                   $  5,075,502    $  2,906,270
    Accounts receivable, net of reserves for doubtful
    accounts, returns, and allowances of $3,082,568 at
    3/31/01 and $3,127,455 at 12/31/00                             5,738,810       7,923,967
    Inventories                                                   17,272,360      21,896,883
    Net deferred tax assets                                        5,812,844       5,812,844
    Prepaid expenses and other current assets                      1,112,955         678,271
                                                                ------------    ------------
             Total current assets                                 35,012,471      39,218,235
                                                                ------------    ------------

Property, plant and equipment, net                                 4,618,405       4,580,634
Goodwill, net of accumulated amortization of $2,033,013 at
   3/31/01 and $1,827,459 at 12/31/00                              2,870,670       3,076,224
Other assets                                                          90,187          84,902
                                                                ------------    ------------


              Total assets                                      $ 42,591,733    $ 46,959,995
                                                                ============    ============




     Liabilities and Stockholders' Equity

Current liabilities:
    Current portion of long-term debt                           $    131,356    $       --
    Accounts payable                                               3,181,346       7,428,832
    Accrued expenses                                               1,684,615       2,414,917
                                                                ------------    ------------
             Total current liabilities                             4,997,317       9,843,749
                                                                ------------    ------------


 Long-term debt                                                    5,844,950            --

 Other non-current liabilities                                       340,422         368,800
                                                                ------------    ------------

             Total liabilities                                    11,182,689      10,212,549
                                                                ------------    ------------

Stockholders' equity:
   Common stock, no par value.  Authorized 25,000,000 shares;
   issued and outstanding 7,860,866 shares at March 31, 2001
   and at December 31, 2000                                       28,170,335      28,145,375
   Retained earnings                                               3,479,595       8,694,230
   Accumulated other comprehensive loss                             (240,886)        (92,159)
                                                                ------------    ------------


             Total stockholders' equity                           31,409,044      36,747,446
                                                                ------------    ------------

             Total liabilities and stockholders' equity         $ 42,591,733    $ 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>

                                              Three   Months  Ending   March 31,
                                              ----------------------------------
                                                  2001                   2000
                                               ----------             ----------
Net sales                                    $ 10,264,833           $ 14,033,190
Costs of goods sold                             9,874,715              9,652,377
                                                ---------              ---------

         Gross profit                             390,118              4,380,813

Operating expenses:
         Selling                                2,461,338              2,942,538
         General and administrative             1,635,545              1,345,922
         Research and development               1,479,092              1,591,544
                                                ---------              ---------


         Total operating expenses               5,575,975              5,880,004
                                                ---------              ---------


         Operating loss                        (5,185,857)            (1,499,191)

Other income (loss), net                          (28,778)               114,896
                                                  -------                -------

         Loss before income taxes              (5,214,635)            (1,384,295)

Income tax benefit                                   --                 (442,880)
                                             ------------           ------------

         Net loss                            $ (5,214,635)          $   (941,415)
                                             ============           ============


Net loss per common share:

         Basic                               $       (.66)          $       (.12)
                                             ============           ============


         Diluted                             $       (.66)          $       (.12)
                                             ============           ============

Weighted average common and common equivalent Shares:

         Basic                                  7,860,866              7,640,064
                                             ============            ===========

         Diluted                                7,860,866              7,640,064
                                             ============            ===========


</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>



                      ZOOM TELEPHONICS, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<S>                                                                                <C>                     <C>
                                                                                         Three Months Ending March 31,
                                                                                         -----------------------------
                                                                                           2001                   2000
                                                                                       -----------            ----------
Cash flows from operating activities:
      Net loss                                                                        $(5,214,635)          $  (941,415)
      Adjustments to reconcile net loss to net cash provided by
        (used in) operating activities:
       Depreciation and amortization                                                      409,210               378,364
       Amortization of restricted stock                                                    24,960                  --
       Deferred income taxes                                                                 --                (442,880)
       Equity in losses of affiliate                                                       69,714                20,000
       Changes in assets and liabilities:
            Accounts receivable                                                         2,185,156              (281,354)
            Inventories                                                                 4,624,523             2,421,575
            Prepaid expenses and other assets                                            (434,683)               44,603
            Accounts payable and accrued expenses                                      (4,977,788)           (1,084,430)
                                                                                      -----------           -----------
                     Net cash used in operating activities                             (3,313,543)              114,463
                                                                                      -----------           -----------

Cash flows from investing activities:
      Sale (purchase)of investment securities                                                  53              (124,836)
      Investment in affiliate                                                             (74,999)                 --
      Additions to property, plant and equipment                                         (269,804)             (144,820)
                                                                                      -----------           -----------
                                                                                         (344,750)             (269,656)
                                                                                      -----------           -----------


Cash flows from financing activities:
      Proceeds from long term debt                                                      6,000,000                  --
      Principal payments of long term debt                                                (23,695)                 --
      Proceeds from exercise of nonqualified stock options                                   --               1,035,255
                                                                                      -----------           -----------
                   Net cash provided by financing activities                            5,976,305             1,035,255
                                                                                      -----------           -----------

Effect of exchange rate changes on cash                                                  (148,780)               20,381
                                                                                      -----------           -----------


Net increase (decrease) in cash and cash equivalents                                    2,169,232               900,443

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

Cash and cash equivalents, end of period                                              $ 5,075,502           $ 8,118,943
                                                                                      ===========           ===========

Supplemental disclosures of cash flow information:
      Cash paid during the year for:
      Interest                                                                        $    74,893           $         0
                                                                                      ===========           ===========

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


</TABLE>

       See accompanying notes to consolidated financial statements.



<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 note 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 March 31, 2001, the consolidated
statements of operations for the three months ending March 31, 2001 and 2000,
and the consolidated statements of cash flows for the three months ending March
31, 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:

                                              Three Months Ending March 31,
                                             -----------------------------
                                              2001                   2000
                                       ------------------    -------------------
Basic:
   Net loss                               $(5,214,635)          $  (941,415)

Weighted average shares
   outstanding                              7,860,866             7,640,064
                                          -----------           -----------

Net loss per share
                                          $      (.66)          $      (.12)
                                          ===========           ===========

Diluted:
    Net loss                              $(5,214,635)          $  (941,415)

Weighted average shares
   outstanding                              7,860,866             7,640,064

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

Weighted average shares
   outstanding                              7,860,866             7,640,064
                                          -----------           -----------

Net loss per share
                                          $      (.66)          $      (.12)
                                          ===========           ===========

         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 5,644 and 725,416 shares of common stock at
March 31, 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



Inventories consist of the following:     March 31, 2001     December 31, 2000
                                          ---------------     -----------------
Raw materials                              $  8,884,355         $ 10,335,673
Work in process                               2,594,940            5,101,037
Finished goods                                5,793,065            6,460,173
                                            -----------          -----------

                                           $ 17,272,360         $ 21,896,883
                                            ===========          ===========



(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).

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

<TABLE>
<S>                                                      <C>                    <C>
                                                              Three Months Ending March 31,
                                                              -----------------------------
                                                               2001                      2000
                                                         ------------------     ------------------

                   Net loss                                   $(5,214,635)            $ (941,415)

                   Foreign currency translation
                     adjustment                                  (148,780)                 5,389


                   Net unrealized holding gain (loss)
                     on investment securities                          53                  2,959
                                                              -----------             ----------


                  Comprehensive loss                          $(5,363,362)             $(933,067)
                                                              ===========              =========

</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 March 31,  2001.  We have been
advised by our lender  that it desires to  terminate  this  facility.  We have a
commitment  letter for a replacement line of credit from an alternative  lender,
which should  provide us with greater  availability.  The  commitment  letter is
subject to customary  conditions  and we cannot  assure that it will result in a
consummated agreement.

         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 March 31, 2001 was
7.76%.


(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 period ending as of
March 31,  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  months  ended  March 31,  2001,  compared to
$442,880 in the first  quarter of fiscal 2000.  The Company did not meet its tax
projections in the first quarter of fiscal 2001. Based on this and the uncertain
timing of our return to tax  profitability,  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 first
quarter of fiscal 2001.


(7)      Segment and Geographic Information

         The Company's operations are classified into one reportable segment.
Substantially all of the Company's operations and long-lived assets reside
primarily in the United States. The Company's domestic net sales and
international sales for the three months ending March 31, 2001 and 2000,
respectively were comprised as follows:
<TABLE>
<S>          <C>                     <C>                   <C>           <C>                     <C>

                                      Three Months Ending                  Three Months Ending
                                        March 31, 2001       % of Total      March 31, 2000       % of Total
                                        --------------       ----------      --------------       ----------

               North America           $   6,438,150            63%        $    9,912,171            71%
               International               3,826,683            37%             4,121,019            29%
                                           ---------            --              ---------            --
                                       $  10,264,833           100%        $   14,033,190           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

     We recorded  net sales of $10.3  million and a net loss of $5.2 million for
our first  quarter  ending March 31, 2001 compared to net sales of $14.0 million
and a net loss of $0.9  million for the first  quarter  ending  March 31,  2000.
Earnings  per share  declined  to a loss of $0.66 for the first  quarter of 2001
from a loss of $0.12 for the first quarter of 2000.

     During the first quarter of 2001 we have reduced our  worldwide  staff from
330  employees on December  31, 2000 to 291  employees on March 31, 2001 and 248
employees on May 10, 2001, we have also  implemented a temporary wage freeze and
controls on discretionary spending.

     Net sales for the quarter  ending  March 31, 2001 were 26.9% lower than the
prior year's first quarter.  Unit volume and average selling price both declined
in our primary product category,  dial-up modems, and sales declined both inside
and outside North America,  reflecting  continuing weakness in the dial-up modem
market.  Our net sales for the quarter ending March 31, 2001 were also adversely
impacted by our decision to establish a reserve of  approximately $1 million for
the  expected  return of product from a retail  customer.  The  customer,  which
contributed  approximately  9% of our net sales last year,  advised us that they
plan to limit their  dial-up  modem shelf space to one supplier  starting in May
2001, and our dial-up modems are not included in their current shelf space plan.

     The major reason for our higher  operating loss in Q1 2001 over Q1 2000 was
$4 million lower gross profit. This was primarily  attributable to $3.77 million
lower net sales and a reduction in gross margin from 31.2% in the quarter ending
March 31, 2000 to 3.8% in the quarter ending March 31, 2001.  This large gross
margin  decrease was due primarily to additional  inventory  valuation  reserves
($2.6 million,  -25.5% of net sales) and the  under-absorption  of manufacturing
expenses as a result of lower  production  volumes  ($.8  million,  -7.7% of net
sales). We recorded the $2.6 million inventory reserve predominantly against our
inventory  relating  to  broadband  modems  and  wireless  networking  products,
primarily  reflecting our low sales for these products and the industry  decline
in component and finished goods prices for these categories.

     Selling  expenses in the first quarter of 2001 decreased in dollars to $2.4
million  or 24.0% of net sales  from $2.9  million  or 21.0% of net sales in the
first  quarter of 2000.  The dollar  decrease  was  predominantly  the result of
reduced advertising and promotion expense, primarily for cooperative advertising
programs by  resellers  of our modems and reduced  selling  expenses in our U.K.
office.

     General and administrative expenses were $1.6 million or 15.9% of net sales
in the first  quarter of 2001  compared to $1.3  million or 9.6% of net sales in
the first  quarter of 2000.  The increase was  primarily the result of bank fees
and legal expenses  associated  with real estate  activities,  SEC filings,  and
trademark  activities,  with a partial offset from reduced  expenses in our U.K.
office.

     Research and development  expenses  decreased in dollars to $1.5 million or
14.4% of net sales in the first  quarter  of 2001 from $1.6  million or 11.3% of
net sales in the first  quarter of 2000.  The  decrease was  primarily  due to a
reduction in expenses for industry and government product approvals.

     In the first quarter of 2001, we recorded  other net loss of  approximately
$29,000,  compared to other net income of $115,000 in the first quarter of 2001.
This loss is primarily related to interest expense of approximately $101,000 for
our new  mortgage  in the first  quarter of 2001 and the  reduction  in interest
income as the  result  of lower  cash  balances  in the  first  quarter  of 2001
compared to the first quarter of 2000.

     Income tax benefit  was zero for the three  months  ended  March 31,  2001,
compared to $442,880 in the first  quarter of fiscal  2000.  The Company did not
meet its tax projections in the first quarter of fiscal 2001.  Based on this and
the uncertain timing of our return to tax profitability,  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
first quarter of fiscal 2001.


Liquidity and Capital Resources

     We ended  the first  quarter  of 2001  with  stockholders'  equity of $31.4
million or $4.00 per share, with cash and cash equivalents of $5.1 million,  and
working capital of $30.0 million.

     Operating  activities used $3.3 million in cash during the first quarter of
2001.  Our use of cash  included a net loss of $5.2  million,  the  reduction of
accounts payable by $5.0 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 $4.6  million,  a decrease in accounts  receivable of $2.2 million,
and  depreciation  and  amortization of $0.4 million.  The reduction of accounts
payable was primarily  attributable  to our reduced  inventory  purchases in the
first quarter of 2001.  The decrease in inventories in the first quarter of 2001
reflected our reduced  inventory  purchases  following our inventory  buildup in
2000, as well as our additional $2.6 million inventory  valuation  reserve.  Our
decrease in accounts receivable primarily reflects our lower sales volume.

     Investing  activities  used  $345,000 in cash  during the first  quarter of
2001.  This cash was  primarily  used to fund  Zoom's  capital  expenditures  of
$270,000,  which  consisted  primarily  of  the  continuing  renovation  of  our
headquarters,  purchases of equipment  and  tooling,  and  purchases of computer
hardware and  software.  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  first  quarter  of  2001,  we  received  cash  from  financing
activities of $6.0 million  primarily from the proceeds of long term  borrowings
for the mortgage of our  headquarters  for $6,000,000.  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.  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. On March 31, 2001 the dollar amount that could be borrowed under this
line of credit, which is based on accounts  receivable,  was $2.2 million. As of
March 31, 2001 and the date of this report,  no amounts were  outstanding  under
this  facility.  The line of credit expires on April 1, 2003.  However,  we have
been advised by our lender that it desires to terminate this facility. We have a
commitment  letter for a replacement line of credit from an alternative  lender,
which should  provide us with greater  availability.  The  commitment  letter is
subject to customary  conditions  and we cannot  assure that it will result in a
consummated  agreement.  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 in the second half of this
year.


Euro Conversion

     On January 1, 1999,  11 of the 15 member  countries of the  European  Union
established a fixed conversion rates between their existing sovereign currencies
and the  euro.  As of  January  1,  2002,  the  transition  to the euro  will be
complete.  We have  significant  operations  within  the  European  Union and is
currently  preparing  for the  euro  conversion.  The euro  may  impact  general
economic  conditions  such as interest  and foreign  exchange  rates  within the
participating  countries or in other areas where the Company operates. We are in
the process of analyzing  the impact of the euro with a view to  minimizing  the
effects on the Company's operations. We do not expect the costs of upgrading its
systems to be material.

     A  portion  of our  revenues  are  subject  to the  risks  associated  with
international sales.  Although most of our product prices are denominated in the
United  States  currency,  customers  in foreign  countries  generally  evaluate
purchases of products such as those sold by us on the purchase  price  expressed
in the customer's  currency.  As a result, the impact of and economic conditions
relating to the euro (including fluctuations in foreign currency exchange rates,
particularly with respect to the U.S. dollar) may have a material adverse affect
on the demand for our products as well as on our business,  financial  condition
and results of operations.

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
period ended March 31, 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.
The  Company is required  to and will adopt the  guidance  outlined in Issue No.
00-14 for the second fiscal quarter of 2001, 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 reported revenues and sales and marketing expenses based
on the  application  of the  guidance  in Issue No.  00-14.  There is no current
quarter or historical impact on the Company's balance sheets.

Quarter ending March 31,                    2000                      2001
                                           -----                     -----
Revenues:
As previously reported          $      14,033,190        $       10,264,833
As reclassified                        13,620,189                10,026,687

Selling expenses:
As previously reported          $       2,942,538        $        2,461,338
As reclassified                         2,529,537                 2,223,192

     In September  2000, the FASB Emerging Issues Task Force discussed 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.  In April 2001, the EITF reached a consensus on Issue No. 00-25,  which
is required to be  implemented  no later than the first fiscal  quarter of 2002.
The Company is currently  evaluating the impact of Issue 00-25, which may result
in a reclassification of certain costs within our income statement, but which is
not expected to have a material impact on our financial  condition or results of
operations.


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 includes debt
instruments that are primarily United States government bonds and high grade
corporate bonds of less than three years in duration. These bonds are subject to
interest risk, and could decline in value if interest rates fluctuate. The
Company's investment portfolio also consists of certain commercial paper, which
is also 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 6 - Exhibits and reports on Form 8-K


   (a) Exhibit               Description                                Page
       -------               -----------                                ----

       10.1    Mortgage, Security Agreement and Assignment between
               Zoom Telephonics, Inc. and Wainwright Bank &
               Trust Company.                                          15 - 33

       10.2    Commercial Real Estate Promissory Note, between Zoom
               Telephonics, Inc. and Wainwright Bank & Trust
               Company.                                                34 - 40

   (b) No reports on Form 8-K were filed by the Company  during the
        quarter  ending  March 31, 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: May 15, 2001                      By:   /s/ Frank Manning
                                       -----------------------------------
                                       Frank B. Manning, President



Date: May 15, 2001                      By:   /s/ Robert Crist
                                       -----------------------------------
                                       Robert Crist, Vice President of Finance
                                       and Chief Financial Officer
                                      (Principal Financial and Accounting
                                       Officer)