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 ending March 31, 2003

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


            Delaware                                         51-0448969
            --------                                         ----------
(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)                      (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 [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). YES [ ] NO [ X ]

The number of shares  outstanding  of the  registrant's  Common Stock,  $.01 Par
Value, as of May 2, 2003 was 7,852,466 shares.
<PAGE>
                     ZOOM TECHNOLOGIES, INC. AND SUBSIDIARY
                                      INDEX

Part I. Financial Information                                              Page

  Item 1.      Consolidated Balance Sheets as of March 31, 2003
                      and December 31, 2002 (unaudited)                     3

               Consolidated Statements of Operations for the three
                      Months Ending March 31, 2003 and 2002
                      (unaudited)                                           4

               Consolidated Statements of Cash Flows for the three
                      Months Ending March 31, 2003 and 2002
                      (unaudited)                                           5

               Notes to Consolidated Financial Statements                 6 - 10

  Item 2.      Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                10 - 21

  Item 3.      Quantitative and Qualitative Disclosures About Market
                      Risk                                                  21

  Item 4.      Controls and Procedures                                      21


Part II. Other Information

   Item 5.      Other Events                                                21

   Item 6.      Exhibits and Reports on Form 8-K                            21

                Signatures                                                  22

                Certifications                                           23 - 24

                Exhibit Index                                               25
<PAGE>
PART I - FINANCIAL INFORMATION

                                    ZOOM TECHNOLOGIES, INC. AND SUBSIDIARY
                                           Consolidated Balance Sheets
                                                   (unaudited)
<TABLE>
<CAPTION>
                                                                March 31, 2003   December 31, 2002
                                                                --------------   -----------------
<S>                                                             <C>              <C>

   Assets

Current assets:
    Cash and cash equivalents                                   $   7,690,027    $   7,612,274
    Accounts receivable, net of reserves for doubtful
       accounts, returns, and allowances of $2,668,034 at
       March 31, 2003 and $2,646,408 at December 31, 2002           3,215,394        3,714,202
    Inventories, net                                                6,197,599        6,782,550
    Prepaid expenses and other current assets                         492,176        1,037,733
                                                                   ----------       ----------
             Total current assets                                  17,595,196       19,146,759

    Property, plant and equipment, net                              3,341,171        3,485,911
                                                                   ----------       ----------
             Total assets                                       $  20,936,367    $  22,632,670
                                                                   ==========       ==========

   Liabilities and Stockholders' Equity

Current liabilities:
    Current portion of long-term debt                           $     217,423    $     191,550
    Accounts payable                                                1,720,839        2,406,843
    Accrued expenses                                                1,107,445        1,207,724
                                                                   ----------       ----------
             Total current liabilities                              3,045,707        3,806,117

 Long-term debt                                                     5,264,381        5,342,057
                                                                   ----------       ----------
             Total liabilities                                      8,310,088        9,148,174
                                                                   ----------       ----------
Stockholders' equity:
  Common stock, $0.01 par value. Authorized 25,000,000
    shares; issued 7,860,866 shares, outstanding 7,852,466
    and 7,858,266 shares at March 31,2003 and December 31,
    2002, respectively                                                282,452          282,452
  Additional paid-in capital                                       27,962,763       27,962,763
  Retained earnings (accumulated deficit)                         (15,609,846)     (14,770,278)
  Accumulated other comprehensive income (loss)                        (1,768)          11,755
  Treasury stock                                                       (7,322)          (2,196)
                                                                   ----------       ----------
             Total stockholders' equity                            12,626,279       13,484,496
                                                                   ----------       ----------

             Total liabilities and stockholders' equity         $  20,936,367    $  22,632,670
                                                                   ==========       ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
                                   ZOOM TECHNOLOGIES, INC. AND SUBSIDIARY
                                    Consolidated Statements of Operations
                                                (Unaudited)
<TABLE>
<CAPTION>
                                                                    Three Months Ending
                                                                          March 31,
                                                               -----------------------------
                                                                    2003            2002
                                                                    ----            ----
<S>                                                             <C>             <C>
Net sales                                                       $  7,538,513    $  8,973,517
Costs of goods sold                                                5,393,719       7,183,327
                                                                ------------    ------------
                      Gross profit                                 2,144,794       1,790,190

Operating expenses:
         Selling                                                   1,361,768       1,572,616
         General and administrative                                  957,796         910,647
         Research and development                                    752,204       1,075,934
                                                                ------------    ------------
                      Total operating expenses                     3,071,768       3,559,197
                                                                ------------    ------------
                      Operating income (loss)                       (926,974)     (1,769,007)

Other income (expense):
         Interest income                                              21,311          31,529
         Interest (expense)                                          (54,812)        (88,376)
         Equity in losses of affiliate                                     -         (30,000)
         Other, net                                                  120,907         121,843
                                                                ------------    ------------
                      Total other income (expense), net               87,406          34,996
                                                                ------------    ------------
                      Income (loss) before income tax
                        expense and extraordinary item              (839,568)     (1,734,011)

Income tax expense (benefit)                                               -       2,012,844
                                                                ------------    ------------
                      Income (loss) before extraordinary
                        item                                        (839,568)     (3,746,855)
                      Extraordinary gain on elimination
                        of negative goodwill                               -         255,287
                                                                ------------    ------------
                      Net income (loss)                         $   (839,568)   $ (3,491,568)
                                                                ============    ============

Earnings (loss) per common share before extraordinary item:

                      Basic                                     $      (0.11)   $      (0.47)
                                                                ============    ============
                      Diluted                                   $      (0.11)   $      (0.47)
                                                                ============    ============


Extraordinary gain on elimination of negative goodwill
                      Basic and diluted                         $          -    $       0.03
                                                                ============    ============
Earnings (loss) per common share:

                      Basic                                     $      (0.11)   $      (0.44)
                                                                ============    ============
                      Diluted                                   $      (0.11)   $      (0.44)
                                                                ============    ============
Weighted average common and common equivalent shares

                      Basic                                        7,853,382       7,860,866
                                                                ============    ============
                      Diluted                                      7,853,382       7,860,866
                                                                ============    ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>

                                ZOOM TECHNOLOGIES, INC. AND SUBSIDIARY
                                 Consolidated Statements of Cash Flows
                                              (Unaudited)
<TABLE>
<CAPTION>
                                                                         Three Months Ending
                                                                              March 31,
                                                                      2003               2002
                                                                -----------------------------------
<S>                                                             <C>                  <C>
Cash flows from operating activities:
    Net income (loss)                                           $    (839,568)       $ (3,491,568)
    Adjustments to reconcile net income (loss) to net cash
      provided by (used in) operating activities:
      Non-operating gain on refund of deposit                         (40,237)                  -
      Extraordinary gain on elimination of negative
        goodwill                                                                         (255,287)
      Depreciation and amortization                                   145,334             233,527
      Write-off of net deferred tax assets                                  _           2,012,844
      Equity in losses of affiliate                                         _              30,000
      Changes in operating assets and liabilities:
        Accounts receivable, net                                      486,589             611,269
        Inventories, net                                              584,951           3,074,336
        Prepaid expenses and other assets                             585,794             (66,534)
        Accounts payable and accrued expenses                        (786,283)           (169,410)
                                                                    ---------           ---------
           Net cash provided by (used in) operating activities        136,580           1,979,177
                                                                    ---------           ---------
Cash flows from investing activities:
Additions to property, plant and equipment                               (594)            (12,986)
                                                                    ---------           ---------
           Net cash provided by (used in) investing activities           (594)            (12,986)
                                                                    ---------           ---------
Cash flows from financing activities:
    Principal payments on long-term debt                              (51,803)            (38,714)
    Purchase of Treasury stock                                         (5,126)                  -
                                                                    ---------           ---------
           Net cash provided by (used in) financing activities        (56,929)            (38,714)
                                                                    ---------           ---------
Effect of exchange rate changes on cash                                (1,304)            (40,303)
                                                                    ---------           ---------
Net increase (decrease) in cash                                        77,753           1,887,174

Cash beginning of period                                            7,612,274           5,252,058
                                                                    ---------           ---------
Cash end of period                                              $   7,690,027        $  7,139,232
                                                                    =========           =========
Supplemental disclosures of cash flow information:

    Cash paid during the period for:
    Interest                                                    $      58,090        $     88,376
                                                                    =========           =========
    Income taxes                                                $           -        $          -
                                                                    =========           =========
</TABLE>
   See accompanying notes to consolidated financial statements.
<PAGE>
                     ZOOM TECHNOLOGIES, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

(1)  Summary of Significant Accounting Policies

     (a) Basis of Presentation and Principles of Consolidation

     The  consolidated  financial  statements  of Zoom  Technologies,  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 accounting
principles generally accepted in the United States of America.  These statements
should be read in conjunction with the audited consolidated financial statements
and  notes  thereto  for the year  ending  December  31,  2002  included  in the
Company's 2002 Annual Report on Form 10-K.

     The  consolidated  balance  sheet as of March 31,  2003,  the  consolidated
statements  of  operations  for the three months ending March 31, 2003 and 2002,
and the consolidated  statements of cash flows for the three months ending March
31, 2003 and 2002 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 consolidated  financial  statements include the accounts and operations
of the Company's  wholly-owned  subsidiary,  Zoom Telephonics,  Inc., a Delaware
Corporation.  All significant  intercompany  accounts and transactions have been
eliminated in consolidation

     The results of operations  for the periods  presented  are not  necessarily
indicative of the results to be expected for the entire year ending December 31,
2003.

     (b) Stock-Based Compensation

     The Company  accounts for its stock option plans under the  recognition and
measurement  principles  of  Accounting  Principles  Board (APB) Opinion No. 25,
"Accounting  for Stock Issued to  Employees,  and Related  Interpretations."  No
stock-based compensation cost is reflected in net income (loss) for these plans,
as all options  granted  under  these  plans had an exercise  price equal to the
market value of the underlying  common stock on the date of grant. The following
table  illustrates  the effect on net loss and loss per share if the Company had
applied the fair value recognition  provisions of Financial Accounting Standards
Board (FASB) Statement No. 123,  "Accounting for Stock Based  Compensation",  to
stock based compensation (in thousands, except per share data):
<TABLE>
<CAPTION>
                                                                     FOR THE THREE MONTHS
                                                                        ENDED MARCH 31,
                                                                          (UNAUDITED)
                                                                ----------------------------
                                                                     2003           2002
                                                                -------------   ------------
<S>                                                             <C>             <C>
Net loss, as reported..................................         $   (839,568)   $(3,491,568)
Deduct:  Total stock-based employee compensation
 expense determined under fair value based method
 for all awards, net of related tax effects............             (117,259)      (270,945)
                                                                -------------   ------------
Pro forma net loss.....................................         $   (956,827)   $(3,762,513)
                                                                =============   ============
Loss per share:
Basic and diluted - as reported........................         $      (0.11)   $     (0.44)
Basic and diluted - pro forma..........................         $      (0.12)   $     (0.48)
</TABLE>
The fair value of each stock option is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions:
                                                 FOR THE THREE
                                                  MONTHS ENDED
                                                    MARCH 31,
                                            ----------------------
                                             2003            2002
                                            ------         -------
Risk-free interest rate..............        2.26%           3.48%
Expected dividend yield..............        0.00%           0.00%
Expected volatility..................      136.59%         100.63%
Expected life (years)................        2.47            2.04
Weighted-average fair value of
options granted during the period....      $ 0.52          $ 1.10

(c) Recent Accounting Pronouncements

     In June 2002, the FASB issued Statement of Financial  Accounting  Standards
(SFAS)  No.  146,  "Accounting  for  Costs  Associated  with  Exit  or  Disposal
Activities"  (SFAS  146).  SFAS  146  requires   companies  to  recognize  costs
associated  with exit or disposal  activities when they are incurred rather than
at the date of a  commitment  to an exit or disposal  plan.  This  statement  is
effective for restructuring  activities  commencing after December 31, 2002. The
adoption  of  SFAS  146  did  not  have  a  material  impact  on  the  Company's
consolidated financial statements.

     In  November  2002,  the  FASB  issued  Interpretation  No.  45  (FIN  45),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect Guarantees of Indebtedness of Others",  which clarifies  disclosure and
recognition/measurement   requirements   related  to  certain  guarantees.   The
disclosure  requirements  are effective for  financial  statements  issued after
December 15, 2002 and the recognition/measurement  requirements are effective on
a prospective  basis for guarantees  issued or modified after December 31, 2002.
The application of the  requirements of FIN 45 did not have a material impact on
the Company's financial position or results of operations.

     In December 2002, the FASB issued SFAS No. 148  "Accounting for Stock-Based
Compensation -- Transition and Disclosure"  (SFAS 148). SFAS 148 amends SFAS No.
123 "Accounting for Stock Based Compensation", to provide alternative methods of
transition  for a voluntary  change to the fair value based method of accounting
for  stock-based  employee  compensation.  In  addition,  SFAS  148  amends  the
disclosure  requirements  of SFAS 123 to require  prominent  disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results.  The transition  guidance and annual disclosure  provisions of SFAS 148
are  effective  for fiscal  years ending  after  December 15, 2002.  The interim
disclosure  provisions are effective for financial reports containing  financial
statements for interim periods beginning after December 15, 2002. As the Company
did not make a voluntary change to the fair value based method of accounting for
stock-based employee compensation in 2002, the adoption of SFAS 148 did not have
a material impact on the Company's financial position and results of operations.

     In January 2003, the FASB issued  Interpretation No. 46,  "Consolidation of
Variable  Interest  Entities"  ("VIEs").   This  Interpretation   addresses  the
consolidation of variable  interest  entities in which the equity investors lack
one or more of the essential characteristics of a controlling financial interest
or where the  equity  investment  at risk is not  sufficient  for the  entity to
finance  its  activities  without  subordinated  financial  support  from  other
parties.  The Interpretation  applies to VIEs created after January 31, 2003 and
to VIEs in which an  interest  is acquired  after that date.  Effective  July 1,
2003, it also applies to VIEs in which an interest is acquired  before  February
1,  2003.  The  Company  may  apply  the  Interpretation  prospectively,  with a
cumulative  effect  adjustment  as of July 1, 2003,  or by restating  previously
issued  financial  statements  with a  cumulative  effect  adjustment  as of the
beginning  of  the  first  year  restated.  The  Company  is in the  process  of
evaluating the effects of applying  Interpretation  No. 46 in 2003. Based on its
preliminary  analysis,   the  Company  does  not  anticipate  that  adoption  of
Interpretation No. 46 will have a material effect on the Company's  consolidated
financial statements.

(2)   Liquidity

     On December 31, 2002, Zoom had cash of approximately $7.6 million.  For the
three months ending March 31, 2003, the Company's net cash provided by operating
activities  was $0.1  million,  and net cash  used in  investing  and  financing
activities was $0.1 million.  On March 31, 2003, Zoom had cash of approximately
$7.7 million. Currently, the Company does not have a debt facility from which it
can  borrow,  and it does not expect to obtain one on  acceptable  terms  unless
there is improvement in the Company's operating performance.

     To conserve cash and manage its liquidity,  the Company implemented expense
reductions  throughout  2002 and continued  these  reductions in the first three
months of 2003. The employee  headcount was 215 at December 31, 2001, and 176 at
March 31,  2003.  The Company will  continue to assess its cost  structure as it
relates  to its  revenues  and  cash  position  in 2003,  and may  make  further
reductions if these actions are deemed necessary.

     During the past several years the Company has experienced  declining demand
for  its  dial-up  modem   products.   Trends   including  the  bundling  by  PC
manufacturers  of dial-up modems into computers and the increased  popularity of
broadband  modems lower the total  available  market through the Company's sales
channels.  Because of this,  the  Company's  dial-up modem sales are unlikely to
grow unless the  Company's  market share grows,  or  promotions  by the Internet
Service  Providers  of their  V.92 and V.44  modem  implementations  and/or  the
availability of new web acceleration techniques grow sales through the Company's
channels. If the Company's dial-up modem sales do not grow, the Company's future
success will depend in large part on its ability to  successfully  penetrate the
broadband modem, and dialer markets.

     Management  believes  it has  sufficient  resources  to  fund  its  planned
operations  over the next 12  months.  However,  if the  Company  is  unable  to
increase its revenues,  reduce its  expenses,  or raise  capital,  the Company's
longer-term  ability to  continue as a going  concern  and achieve its  intended
business objectives could be adversely affected.

(3) Earnings Per Share

     The  reconciliation  of the  numerators and  denominators  of the basic and
diluted net earnings (loss) per share  computations  for the Company's  reported
net income (loss) is as follows:
<TABLE>
<S>                                  <C>               <C>
                                          Three Months Ending
                                                March 31,
                                     ------------------------------
                                         2003              2002
                                     ------------      ------------
Basic:
  Net income (loss)                  $  (839,568)      $(3,491,568)

Weighted average shares
  outstanding                          7,853,382          7,860,866
                                     -----------       -----------
Net earnings (loss) per share        $     (0.11)       $     (0.44)
                                     ===========       ===========

Diluted:
  Net income (loss)                  $  (839,568)       $(3,491,568)
Weighted average shares
  outstanding                          7,853,382          7,860,866

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

Weighted average shares
  outstanding                          7,853,382          7,860,866
                                     -----------        -----------
Net earnings (loss) per share         $    (0.11)       $     (0.44)
                                     ===========        ============
</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 2,147 and 2,008 shares of common stock at March
31,  2003 and 2002,  respectively,  were  outstanding  but not  included  in the
computation  of diluted  earnings per share for the three months ended March 31,
2003 and 2002, as their effect would be antidilutive.

(4)   Inventories
<TABLE>
<S>                                                     <C>                     <C>
      Inventories consist of the following:               March 31, 2003        December 31, 2002
                                                        ------------------      -----------------
      Raw materials                                       $   2,905,919           $  2,808,421
      Work in process                                           618,716                673,275
      Finished goods                                          2,672,964              3,300,854
                                                             ----------             ----------
                                                          $   6,197,599           $  6,782,550
                                                             ==========             ==========
</TABLE>
     During the three  months  ending  March 31, 2003 and  December 31, 2002 the
Company  recorded  lower of cost or market  write-downs of $237,715 and $174,905
related to broadband and wireless inventory, respectively.

(5)   Comprehensive Income

     Statement of Financial  Accounting  Standards ("SFAS") No. 130,  "Reporting
Comprehensive  Income"  establishes  rules  for the  reporting  and  display  of
comprehensive income (loss) and its components; however, it has no impact on the
Company's  net income  (loss).  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 income (loss), net of tax, are as follows:
<PAGE>
<TABLE>
<CAPTION>
                                         Three Months Ending
                                             March 31,
                                    ----------------------------
                                        2003            2002
                                    ------------    ------------
<S>                                 <C>             <C>
 Net income (loss)                  $ (839,568)   $   (3,491,568)

 Foreign currency translation
  adjustment                           (13,523)          (40,303)
                                   -----------    --------------
Comprehensive income (loss)         $ (853,091)    $  (3,531,871)
                                   ===========    ==============
</TABLE>

6)   Long-Term Debt

     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 with a five-year balloon due January
10, 2006. 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 rate was adjusted to
3.81% on January 10, 2003.  On September 24, 2002 the Company paid an additional
principal payment of $178,761 in compliance with a mortgage covenant.

(7)  Commitments

     During the three  months  ending  March 31,  2003,  there were no  material
changes to the capital  commitments and  contractual  obligations of the Company
from those  disclosed  in the Form 10-K for the fiscal year ending  December 31,
2002.

     In March 2002,  following the termination of discussions  pursuant to which
Zoom proposed to purchase a ground lease for a manufacturing facility located at
27 Drydock Avenue, Boston,  Massachusetts (the "Drydock Building"), Zoom pursued
an  arrangement  to  purchase  the  Drydock  Building  in  partnership  with the
following individuals: Frank B. Manning, President and a director of Zoom; Peter
R. Kramer,  Executive  Vice  President and a director of Zoom;  Bruce M. Kramer,
Peter  Kramer's  brother;  and a third  party.  Under  this  arrangement,  these
individuals,  either  directly or through  entities  controlled by them,  joined
together  with the  Company  as of March 29,  2002 to form the Zoom Group LLC, a
Massachusetts  limited  liability company ("Zoom Group") to purchase the Drydock
Building. The Company and each of the investors owned a 20% interest in the Zoom
Group.

     In August,  2002,  the Zoom Group  purchased  the  Drydock  Building  for a
purchase  price of $6.1  million.  The Zoom Group  obtained  a mortgage  of $4.2
million,  less  closing  costs and legal  fees.  Each  member of the Zoom  Group
contributed  $482,577 for their share of the  investment  plus  initial  working
capital.  These initial capital contributions include each member's share of the
deposit.

     Under the Zoom Group Operating Agreement, the Company had both the right to
sell its  interest  in the Zoom Group to the other  members of the Zoom Group by
January 5, 2003 for the  Company's  original  purchase  price,  and the right to
purchase the other members' entire  interests in the Zoom Group through December
31, 2005 in accordance with a predetermined formula. In December 2002, a special
committee  of  Zoom's  board of  directors,  appointed  to  review  the  Drydock
transactions,  determined  that is was advisable and in the best interest of the
Company  to  exercise  its right to sell its  interest  in the Zoom Group to the
remaining Zoom Group LLC members.  Accordingly,  effective  January 5, 2003, the
Company exercised its right to sell and assign its interest in the Zoom Group to
the remaining  members of the Zoom Group for  approximately  $482,000.  In March
2003,  Zoom  received  the  proceeds  from  the  sale of its  interest  from the
remaining  members of the Zoom  Group.  This  action  was taken to  improve  the
Company's  liquidity  position  and to reduce its  exposure  to the Boston  real
estate market.

(8) Segment and Geographic Information

     The Company's  operations are classified into one reportable  segment.  The
Company's domestic and international net sales for the three months ending March
31, 2003 and 2002, respectively, were comprised as follows:

<TABLE>
<CAPTION>
                Three Months             Three Months
                   Ending       % of        Ending       % of
                Mar 31, 2003    Total    Mar 31, 2002    Total
               -------------    -----   -------------    -----
<S>              <C>             <C>      <C>             <C>
United States    $ 4,579,123      61%     $ 5,509,321      61%
International      2,959,390      39%       3,464,196      39%
                 -----------     ---      -----------      ---
Total            $ 7,538,513     100%     $ 8,973,517     100%
                 ===========     ===      ===========      ===
</TABLE>
(9) Extraordinary Gain

     In the quarter ending March 31, 2002 the Company  recorded an extraordinary
gain of  $255,287,  upon  the  adoption  of SFAS No.  142  "Goodwill  and  Other
Intangible  Assets" (SFAS 142).  The gain resulted from the  elimination  of the
remaining negative goodwill on the Company's  consolidated balance sheet related
to a previous acquisition, and was recorded in accordance with the provisions of
SFAS 142.

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 and the risk factors contained herein and set forth in
our Annual  Report on Form 10-K for the fiscal year ending  December  31,  2002.
Readers should also be cautioned  that results of any reported  period are often
not indicative of results for any future period.

Critical Accounting Policies

     The  following  is a  discussion  of what we view as our  more  significant
accounting  policies.  These  policies  are also  described  in the notes to our
consolidated  audited financial statements included in our annual report on Form
10-K for the year ending  December 31,  2002.  As  described  below,  management
judgments and estimates must be made and used in connection with the preparation
of our consolidated  financial statements.  Material differences could result in
the amount  and timing of our  revenue  and  expenses  for any period if we made
different judgments or used different estimates.

     Revenue  Recognition.  We sell  hardware  products  to our  customers.  The
products include dial-up modems, embedded modems, cable modems, PC cameras, ISDN
and ADSL modems, telephone dialers, and wireless and wired networking equipment.
We generally do not sell software or services. We earn a small amount of royalty
revenue.  We derive our revenue primarily from the sales of hardware products to
three types of customers:

o     computer peripherals retailers,
o     computer product distributors, and
o     original equipment manufacturers (OEMs).

     We recognize revenue for all three types of customers at the point when the
customers take legal ownership of the delivered products. Legal ownership passes
from Zoom to the customer based on the contractual FOB point specified in signed
contracts  and purchase  orders,  which are both used  extensively.  Many of our
customer contracts or purchase orders specify FOB destination. Since it would be
impractical to verify ownership  change for each individual  delivery to the FOB
destination  point, we estimate the day the customer  receives delivery based on
our ship date and the  carrier's  published  delivery  schedule  specific to the
freight class and location.

     Our revenues  are reduced by certain  events  which are  characteristic  of
hardware  sales to  computer  peripherals  retailers.  These  events are product
returns,  price protection refunds, store rebates, and consumer mail-in rebates.
Each of these is  accounted  for as a  reduction  of  revenue  based on  careful
management  estimates,  which are reconciled to actual  customer or end-consumer
refunds and credits on a monthly or quarterly  basis.  The estimates for product
returns  are  based on recent  historical  trends  plus  estimates  for  returns
prompted by new product  introductions,  announced  stock  rotations,  announced
customer store closings,  etc. Management  analyzes historical returns,  current
economic  trends,  and changes in customer demand and acceptance of our products
when evaluating the adequacy of sales return allowances. Our estimates for price
protection refunds require a detailed understanding and tracking by customer and
by sales program.  Estimated price  protection  refunds are recorded in the same
period  as the  announcement  of a pricing  change.  Information  from  customer
inventory-on-hand  reports or from direct  communications  with the customers is
used to estimate  the refund,  which is recorded as a reserve  against  accounts
receivable and a reduction of current period revenue. Our estimates for consumer
mail-in  rebates are comprised of actual  rebate claims  processed by the rebate
redemption  centers  plus an accrual for an  estimated  lag in  processing.  Our
estimates for store  rebates are  comprised of actual  credit  requests from the
eligible customers.

     In the quarter ending March 31, 2002, we adopted FASB Emerging  Issues Task
Force Issue No. 00-14  "Accounting  for Certain Sales  Incentives" and 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." The application of the
guidance in Issue No. 00-14 and No. 00-25  resulted in a change in the manner in
which we record  certain types of discounts  and sales and marketing  incentives
that  are  provided  to  our  customers.  We  had  historically  recorded  these
incentives as marketing  expenses.  Under Issue No. 00-14 and No. 00-25,  we are
now  recording  these  incentives  as  reductions of revenue for the current and
prior periods,  which in turn,  reduced gross  margins.  The offset was an equal
reduction  of  selling   expenses.   EITF  Issue  No.  01-9,   "Accounting   for
Consideration  Given by a Vendor to a  Customer  (Including  a  Reseller  of the
Vendor's Products),"  subsequently  codified the guidance in Issue No. 00-14 and
00-25.  There was no change in net income  (loss)  for either of the  historical
periods restated.

     To  ensure  that the  discounts  and  sales and  marketing  incentives  are
recorded in the proper period, we perform extensive  tracking and documenting by
customer,  by period,  and by type of marketing  event.  This tracking  includes
reconciliation  to the accounts  receivable  records for deductions taken by our
customers for these discounts and incentives.

     Accounts  Receivable  Valuation.  We establish accounts receivable reserves
for product returns,  store rebates,  consumer mail-in rebates, price protection
refunds,  and bad debt.  These  reserves  are drawn down as actual  credits  are
issued  to the  customer's  accounts.  Our  bad-debt  write-offs  have  not been
significant in recent years.

     Inventory  Valuation  and Cost of Goods  Sold.  Inventory  is  valued  on a
standard cost basis where the material  standards are  periodically  updated for
current  material  pricing.  Reserves for obsolete  inventory are established by
management  based on usability  reviews  performed  each  quarter.  Our reserves
against this inventory range from 0% to 100%, based on management's  estimate of
the  probability  that the material will not be consumed.  In the second half of
2000, when industry  expectations  were very high for expansion of the broadband
and wireless markets,  we purchased parts to support our aggressive forecast for
a  ramp-up  of sales of cable  modems,  ADSL  modems,  and  wireless  networking
products.  The  subsequent  slow down in the industry  resulted in a significant
excess inventory  position of materials.  During 2001, the market selling prices
for the broadband and wireless  products  declined  significantly  because of an
industry-wide  oversupply.  Starting in 2001 and to a lesser extent in 2002, the
sales prices for some of the products  dropped below our cost and,  accordingly,
we then valued our inventory on a "lower of cost or market" basis. Our valuation
process is to compare our cost to the selling  prices each  quarter,  and if the
selling  price  of a  product  is  less  than  the  "if  completed"  cost of our
inventory,  we write-down the inventory on a "lower of cost or market" basis. In
each of Q1 2002 and Q1 2003,  we  recorded  charges  against  inventory  of $0.2
million as a result of lower of cost of market valuation.

     We have entered into supply  arrangements with suppliers of some components
that include price and other concessions,  including no-charge  components,  for
meeting certain purchase requirements or commitments.  Under these arrangements,
we have agreed to  purchase  approximately  $8.0  million of  components  over a
period of  approximately  30-months that commenced on January 1, 2002,  provided
that those  components  were  offered at  competitive  terms and prices.  We are
required to purchase either a minimum percentage,  as measured by unit purchases
or  dollar  amount  of  components,  from  a  supplier  over a  two-year  period
commencing on January 1, 2002, and we are currently  exceeding that  percentage.
In connection  with these  arrangements,  we became entitled to receive at least
$3.0 million of no-charge components, based upon the supplier's market price for
the components in late 2001 and early 2002, and other pricing  concessions based
on our purchase volumes. We received $1.2 million of these no-charge  components
in the fourth  quarter of 2001.  We  received  the  remainder  of the  no-charge
components  in the  first  quarter  of 2002.  The  favorable  impact of the free
components is being  recognized  on a delayed basis as a purchase  discount over
the total number of components acquired through the 30 month supply agreement.

     Valuation and Impairment of Intangible  Assets. We assess the impairment of
our goodwill assets whenever  events or changes in  circumstances  indicate that
the carrying value may not be recoverable.  In the quarter ending March 31, 2002
the Company  recorded an  extraordinary  gain of $255,287,  upon the adoption of
SFAS No.  142  "Goodwill  and Other  Intangible  Assets"  (SFAS  142).  The gain
resulted  from  the  elimination  of  the  remaining  negative  goodwill  on the
Company's consolidated balance sheet related to a previous acquisition,  and was
recorded in accordance with the provisions of SFAS 142.

     Valuation and Impairment of Deferred Tax Assets.  As part of the process of
preparing our consolidated  financial statements we are required to estimate our
income taxes.  This process  involves the  estimation of our actual  current tax
exposure together with assessing temporary  differences resulting from differing
treatment of items for tax and accounting purposes.  These differences result in
deferred  tax assets and  liabilities,  which are  included in our  consolidated
balance sheet.  We must then assess the likelihood  that our deferred tax assets
will be recovered  from future  taxable income and to the extent we believe that
recovery is not likely, we must establish a valuation  allowance.  To the extent
we establish a valuation  allowance or increase this  allowance in a period,  we
must include an expense within the tax provision in the statement of operations.

     Significant  management  judgment is required in determining  our provision
for income taxes and any valuation  allowance  recorded against our net deferred
tax assets.  In 2001, we recorded a $3.8 million income tax charge to reflect an
additional increase in our deferred tax asset valuation allowance.  Management's
decision  to  record  the  valuation   allowance  was  based  on  the  uncertain
recoverability  of our  deferred  tax asset  balance.  At December  31,  2001, a
portion of our net deferred tax asset was supported by our specific tax planning
strategy to sell our appreciated  headquarters building in Boston. The amount of
the  projected  tax benefit  from this sale was used to support the $2.0 million
deferred tax asset that  remained on our balance  sheet as of December 31, 2001.
In our first  quarter  ending March 31,  2002,  we recorded an  additional  $2.0
income tax charge and  valuation  reserve,  which  reduced our net  deferred tax
asset  balance to zero.  This  additional  reserve  reflected  our  decision  to
discontinue our specific tax planning strategy to sell our headquarters building
in Boston in light of the less favorable market  conditions for the sale of such
building. As of March 31, 2003 our deferred tax asset balance was zero.

Results of Operations

     We recorded  net sales of $7.5 million for our first  quarter  ending March
31, 2003, down 16.0% from $9.0 million in the first quarter of 2002. We reported
an operating loss of $0.9 million for the first quarter of 2003,  compared to an
operating  loss of $1.8 million in the first  quarter of 2002. We reported a net
loss of $0.8 million for our first  quarter  ending March 31, 2003 compared to a
net loss of $3.5 million for the first quarter  ending March 31, 2002.  Earnings
per share  improved  as we  reported a loss of $0.11  per diluted  share for the
first  quarter of 2003  compared  to a loss of $0.44 per  diluted  share for the
first quarter of 2002.

     Our total  net  sales  decrease  of 16% from Q1 2002 was  primarily  due to
decreased dial-up modem sales.  Dial-up modem sales declined  primarily due to a
decrease  of 8% in dial-up  modem  unit sales and a 6% decline in dial-up  modem
average  selling prices.  In Q1 2003 net sales in our broadband  categories more
than doubled  compared to Q1 2002,  with our strongest  quarter sales to date of
ADSL modems.

     Our gross profit  increased to $2.1 million in Q1 2003 from $1.8 million in
Q1 2002. Our gross profit percentage of net sales improved from 19.9% in Q1 2002
to 28.5% of net sales in Q1 2003. The  improvement  resulted  primarily from our
cost  reductions,  which  outpaced  the  continuing  market-driven  reduction in
average selling prices,  and lower inventory  charges for obsolescence and lower
of cost or market valuations.

     Our operating expenses decreased by $0.5 million to $3.1 million in Q1 2003
from $3.6  million in Q1 2002.  The  decrease of $0.5  million was  comprised of
lower  selling  expenses of $0.2  million  and lower  research  and  development
expenses  of  $0.3   million,   partially   offset  by  increased   general  and
administrative  expenses of $0.05 million.  We have reduced our worldwide  staff
from 198 employees on March 31, 2002 to 176 employees on March 31, 2003. We also
continue to maintain a temporary wage freeze and tight controls on discretionary
spending.

     Selling expenses in Q1 2003 decreased to $1.4 million or 18.1% of net sales
from $1.6 million or 17.5% of net sales in Q1 2002.  Selling expenses were lower
primarily because of reduced personnel costs, commissions, rent, and freight and
distribution  costs  relating  primarily  from lower sales.  These lower selling
expenses were slightly offset by higher marketing costs.

     General and administrative expenses were $1.0 million or 12.7% of net sales
in Q1 2003  compared to $0.9  million or 10.1% of net sales in Q1 2002.  General
and administrative  expenses changed primarily due to increased bad debt expense
resulting from a recovery of a previously  written-off balance in Q1 2002 versus
a small  charge  to bad  debt  expense  in Q1 2003, partially  offset  by  lower
depreciation and amortization, taxes, and other general support expenses.

     Research and  development  expenses were $0.8 million or 10.0% of net sales
in Q1 2003  compared to $1.1 million or 12.0% of net sales in Q1 2002.  Research
and  development  costs  decreased  primarily  as a result of reduced  personnel
costs, facility occupancy costs, and equipment rental expenses, partially offset
by increased purchased services. Development and support continues on all of our
major product lines.

     Other income (expense) net improved from income of $0.03 million in Q1 2002
to income of $0.09  million in Q1 2003.  Included in other income  (expense) are
interest income, interest expense, and other, net.

o    Interest income. Interest income decreased to $0.02 million in Q1 2003 from
     $0.03  million in Q1 2002.  The decrease was the result of our lower earned
     interest rate partially  offset by the interest  earned on a higher average
     invested  cash  balance  during Q1 2003  compared  to Q1 2002.  The average
     interest  rate earned was  approximately  34 basis  points lower in Q1 2003
     than in Q1 2002.
o    Interest  expense.  Interest expense  decreased to $0.05 million in Q1 2003
     from $0.09  million in Q1 2002.  The  interest  expense  decrease is due to
     lower  interest  expense on our $6.0 million  mortgage taken out in January
     2001 on our  headquarters  building.  The interest rate and the outstanding
     balance  were  both  lower in Q1 2003  compared  to Q1 2002.  The  mortgage
     interest rate is adjusted annually in January of each year.
o    Equity in losses of affiliate.  Our losses in affiliates  decreased to $0.0
     million in Q1 2003 from $0.03 million in Q1 2002. Our affiliate investments
     are fully written down to zero at March 31, 2003.
o    Other,  net.  The total was $0.12 million in Q1 2002 and Q1 2003.

     We did not record any net tax  benefit to offset our $0.8  million  pre-tax
loss in Q1 2003.  In Q1 2002,  we recorded a $2.0  million  income tax charge to
increase  our  valuation  allowance  against  our net  deferred  tax asset.  The
accounting  treatment with respect to our net deferred tax asset is described in
further detail under the caption "Critical Accounting Policies" above.

Liquidity and Capital Resources

     On March 31, 2003, we had working capital of $14.5 million,  including $7.7
million in cash and cash equivalents.

     In Q1 2003  operating  activities  generated  $0.1 million in cash. Our net
loss in Q1 2003 was $0.8  million.  Sources of cash from  operations  included a
reduction of inventory of $0.6  million,  a decrease in accounts  receivable  of
$0.5 million,  and a reduction of prepaid expenses of $0.6 million. The decrease
in  inventory  and  accounts  receivable  was  primarily  the  result of reduced
consecutive  quarter  to  quarter  sales and  improved  inventory  turnover  and
improved  collection of accounts  receivable.  The reduction of prepaid expenses
resulted  primarily  from the receipt of a payment of $0.48 million for the sale
of our  interest  in the Zoom  Group to the other  members  of the Zoom Group in
connection  with the  termination of our  participation  in the ownership of the
Drydock building.  The Drydock  transaction is discussed in further detail under
the caption "Commitments and Related Party Transaction" below. Uses of cash from
operations included a decrease of accounts payable of $0.8 million.

     In Q1 2003 our net cash used in investing activities was $0.001 million. We
anticipate  that we will  continue with modest  investments  in equipment and in
improvements to our facilities during the year.

     In Q1  2003  we  used  cash  for  financing  activities  of  $0.06  million
consisting  primarily  of $0.05  million for monthly  principal  payments on the
mortgage on our headquarters facility. Our mortgage is a 5-year balloon mortgage
that is  amortized  on a 20-year  basis and  matures on January  10,  2006.  The
interest rate is adjusted  annually in January of each year based on the Federal
Home Loan Bank rate plus 2.5 % per annum.  In 2002, the interest rate was 4.97%.
As of January 10, 2003, the rate of interest was changed to 3.81%.

     Currently we do not have a debt facility  from which we can borrow,  and we
do not expect to obtain one on acceptable  terms unless there is an  improvement
in our  operating  performance.  However,  we believe we would be able to obtain
funds, if and when required, by factoring accounts receivable. We do not plan to
put a  factoring  arrangement  in place until and unless it is  necessary  since
there would be an up-front cost to finalize the arrangement.

     To  conserve  cash  and  manage  our  liquidity,   we  implemented  expense
reductions  throughout  2002 and in the  first  quarter  of 2003.  Our  employee
headcount  was 215 at December 31, 2001,  which has been reduced to 176 at March
31,  2003.  We will  continue to assess our cost  structure as it relates to our
revenues and cash  position in 2003,  and we may make further  reductions if the
actions are deemed necessary.

     Trends  including the bundling by PC  manufacturers  of dial-up modems into
computers  and the  increased  popularity  of  broadband  modems lower the total
available  market  through the Company's  sales  channels.  Because of this, the
Company's  dial-up modem sales are unlikely to grow unless the Company's  market
share grows, or promotions by the Internet  Service  Providers of their V.92 and
V.44 modem  implementations  and/or  the  availability  of new web  acceleration
techniques grow sales through the Company's  channels.  If the Company's dial-up
modem sales do not grow, the Company's  future success will depend in large part
on its ability to successfully penetrate the broadband modem and dialer markets.

     Management  believes  it has  sufficient  resources  to  fund  its  planned
operations  over the next 12 months.  However,  if we are unable to increase our
revenues,  reduce our expenses,  or raise capital,  our  longer-term  ability to
continue as a going concern and achieve our intended  business  objectives could
be adversely  affected.  See "Risk Factors" below, for further  information with
respect to events and  uncertainties  that  could harm our  business,  operating
results, and financial condition.

Commitments and Related Party Transaction

     During the three  months  ending  March 31,  2003,  there were no  material
changes to the capital  commitments and  contractual  obligations of the Company
from those disclosed in the Form 10-K for the year ending December 31, 2002.

     In March 2002,  following the termination of discussions  pursuant to which
Zoom proposed to purchase a ground lease for a manufacturing facility located at
27 Drydock Avenue, Boston,  Massachusetts (the "Drydock Building"), Zoom pursued
an  arrangement  to  purchase  the  Drydock  Building  in  partnership  with the
following individuals: Frank B. Manning, President and a director of Zoom; Peter
R. Kramer,  Executive  Vice  President and a director of Zoom;  Bruce M. Kramer,
Peter  Kramer's  brother;  and a third  party.  Under  this  arrangement,  these
individuals,  either  directly or through  entities  controlled by them,  joined
together  with  us  as of  March  29,  2002  to  form  the  Zoom  Group  LLC,  a
Massachusetts  limited  liability company ("Zoom Group") to purchase the Drydock
Building. Zoom and each of the investors owned a 20% interest in the Zoom Group.
The managers of the Zoom Group are Peter Kramer and the third party.

     In August, 2002,  the Zoom  Group  purchased  the  Drydock  Building  for a
purchase  price of $6.1  million.  The Zoom Group  obtained  a mortgage  of $4.2
million,  less  closing  costs and legal  fees.  Each  member of the Zoom  Group
contributed  $482,577 for their share of the  investment  plus  initial  working
capital.  These initial capital contributions include each member's share of the
deposit.

     Under the Zoom Group Operating Agreement, the Company had both the right to
sell its  interest  in the Zoom Group to the other  members of the Zoom Group by
January 5, 2003 for the  Company's  original  purchase  price,  and the right to
purchase the other members' entire  interests in the Zoom Group through December
31, 2005 in accordance with a predetermined formula.  Effective January 5, 2003,
we  exercised  our  right to sell our  interest  in the Zoom  Group to the other
members of the Zoom Group. In March 2003, we received the proceeds from the sale
of our interest from the remaining  members of the Zoom Group,  LLC to the value
of $.48  million,  which  represents  the Company's  investment  amount less the
non-refundable  deposit  and the  negotiated  share of losses in the Zoom Group,
plus interest earned on the Company's original deposit. This action was taken to
improve  the  Company's  liquidity  position  and to reduce its  exposure to the
Boston real estate market.

     On April 25, 2003, we agreed to purchase  substantially all of modem assets
of SONICblue  Incorporated,  including  the trade names  Diamond and Supra,  for
approximately $495,000, subject to adjustment, and certain end-user obligations,
including  customer  support  and  firmware  upgrades.   SONICblue,  a  consumer
electronics   manufacturer,   is  currently  involved  in  voluntary  bankruptcy
proceedings  filed under Chapter 11 of the  Bankruptcy  Code.  Our obligation to
purchase  the  assets is still  subject to  approval  of the  bankruptcy  court,
overbids in the bankruptcy court, and customary closing conditions.

Recently Issued Accounting Standards

     In June 2002, the FASB issued Statement of Financial  Accounting  Standards
(SFAS)  No.  146,  "Accounting  for  Costs  Associated  with  Exit  or  Disposal
Activities"  (SFAS  146).  SFAS  146  requires   companies  to  recognize  costs
associated  with exit or disposal  activities when they are incurred rather than
at the date of a  commitment  to an exit or disposal  plan.  This  statement  is
effective for restructuring  activities  commencing after December 31, 2002. The
adoption  of  SFAS  146  did  not  have  a  material  impact  on  the  Company's
consolidated financial statements.

     In  November  2002,  the  FASB  issued  Interpretation  No.  45  (FIN  45),
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect Guarantees of Indebtedness of Others",  which clarifies  disclosure and
recognition/measurement   requirements   related  to  certain  guarantees.   The
disclosure  requirements  are effective for  financial  statements  issued after
December 15, 2002 and the recognition/measurement  requirements are effective on
a prospective  basis for guarantees  issued or modified after December 31, 2002.
The application of the  requirements of FIN 45 did not have a material impact on
the Company's financial position or results of operations.

     In December 2002, the FASB issued SFAS No. 148  "Accounting for Stock-Based
Compensation -- Transition and Disclosure"  (SFAS 148). SFAS 148 amends SFAS No.
123 "Accounting for Stock Based Compensation", to provide alternative methods of
transition  for a voluntary  change to the fair value based method of accounting
for  stock-based  employee  compensation.  In  addition,  SFAS  148  amends  the
disclosure  requirements  of SFAS 123 to require  prominent  disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results.  The transition  guidance and annual disclosure  provisions of SFAS 148
are  effective  for fiscal  years ending  after  December 15, 2002.  The interim
disclosure  provisions are effective for financial reports containing  financial
statements for interim periods beginning after December 15, 2002. As the Company
did not make a voluntary change to the fair value based method of accounting for
stock-based employee compensation in 2002, the adoption of SFAS 148 did not have
a material impact on the Company's financial position and results of operations.

     In January 2003, the FASB issued  Interpretation No. 46,  "Consolidation of
Variable  Interest  Entities"  ("VIEs").   This  Interpretation   addresses  the
consolidation of variable  interest  entities in which the equity investors lack
one or more of the essential characteristics of a controlling financial interest
or where the  equity  investment  at risk is not  sufficient  for the  entity to
finance  its  activities  without  subordinated  financial  support  from  other
parties.  The Interpretation  applies to VIEs created after January 31, 2003 and
to VIEs in which an  interest  is acquired  after that date.  Effective  July 1,
2003, it also applies to VIEs in which an interest is acquired  before  February
1,  2003.  The  Company  may  apply  the  Interpretation  prospectively,  with a
cumulative  effect  adjustment  as of July 1, 2003,  or by restating  previously
issued  financial  statements  with a  cumulative  effect  adjustment  as of the
beginning  of  the  first  year  restated.  The  Company  is in the  process  of
evaluating the effects of applying  Interpretation  No. 46 in 2003. Based on our
preliminary  analysis,   the  Company  does  not  anticipate  that  adoption  of
Interpretation No. 46 will have a material effect on the Company's  consolidated
financial statements.

"Safe Harbor"  Statement under the Private  Securities  Litigation Reform Act of
1995

     Some  of the  statements  contained  in  this  report  are  forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933 and
Section 21E of the Securities  Exchange Act of 1934.  These  statements  involve
known and unknown risks,  uncertainties and other factors which may cause our or
our industry's  actual  results,  performance or  achievements  to be materially
different  from any future  results,  performance or  achievements  expressed or
implied by the forward-looking  statements.  Forward-looking statements include,
but are not limited to  statements  regarding:  Zoom's plans,  expectations  and
intentions, including statements relating to Zoom's prospects and plans relating
to sales of our dial-up,  cable and ADSL modems,  the anticipated  benefits Zoom
will  receive as a result of V.92 rollout and the  consolidation  in the dial-up
modem markets, the anticipated development of Zoom's markets and sales channels,
the level of demand for Zoom's  products,  the  anticipated  effect that the "no
charge"  components will have on Zoom's  liquidity,  the  anticipated  impact of
Zoom's  cost-cutting  initiatives,  and Zoom's financial condition or results of
operations.

     In some cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "could," "would,"  "expects,"  "plans,"  "anticipates,"
"believes,"   "estimates,"   "projects,"  "predicts,"  "potential"  and  similar
expressions intended to identify  forward-looking  statements.  These statements
are only  predictions  and involve known and unknown risks,  uncertainties,  and
other  factors  that  may  cause  our  actual   results,   levels  of  activity,
performance, or achievements to be materially different from any future results,
levels of activity,  performance,  or achievements  expressed or implied by such
forward-looking  statements.  Given  these  uncertainties,  you should not place
undue reliance on these forward-looking statements.  Also, these forward-looking
statements  represent our estimates and assumptions  only as of the date of this
report. We expressly  disclaim any obligation or undertaking to release publicly
any updates or  revisions  to any  forward-looking  statement  contained in this
report to  reflect  any  change in our  expectations  or any  change in  events,
conditions or circumstances on which any of our  forward-looking  statements are
based.  Factors  that could cause or  contribute  to  differences  in our future
financial results include those discussed in the risk factors set forth below as
well as those  discussed  elsewhere  in this report and in our filings  with the
Securities  and  Exchange  Commission.  We  qualify  all of our  forward-looking
statements by these cautionary statements.

RISK FACTORS

This  report  contains   forward-looking   statements  that  involve  risks  and
uncertainties,   such  as  statements  of  our  objectives,   expectations   and
intentions.  The  cautionary  statements  made in this report  should be read as
applicable  to all  forward-looking  statements  wherever  they  appear  in this
report.  Our actual results could differ materially from those discussed herein.
Factors  that  could  cause or  contribute  to such  differences  include  those
discussed below, as well as those discussed elsewhere in this report.

Our revenues have declined and we have incurred significant losses over the last
three years.

     We incurred a net loss of $0.8  million in Q1 2003,  $5.1  million in 2002,
$18.3 million in 2001,  and $3.1 million in 2000.  Our revenue has declined from
$57.7  million in 2000,  to $41.6  million in 2001 and to $37.3 million in 2002.
Our revenue was $7.5 million for the three months ending March 31, 2003.

     We  attribute  the decline of our  business  primarily  to a decline in the
retail  dial-up  modem  market  and  delays in the  roll-out  of the V.92  modem
standard.  We anticipate that we will continue to incur significant expenses for
the foreseeable future as we:

o    continue to develop and seek  appropriate  approvals for our dial-up modem,
     broadband access, Internet gateway, and dialer products; and
o    continue to make efforts to expand our sales channels internationally,  and
     into new channels appropriate to our new product areas.

     Although we have reduced our operating  expense levels  significantly,  our
revenues must increase or we will probably  continue to incur operating  losses.
We cannot  guarantee that our  expenditure  reductions  will continue or that we
will be able to halt the decline in our  revenues.  Although we believe  that we
have sufficient  resources to fund our planned operations over the next year, if
we fail to increase our revenues,  our  longer-term  ability to stay in business
and to achieve our intended business objectives could be adversely effected. Our
continuing  losses and use of cash could also  adversely  affect our  ability to
fund the growth of our business should our strategies prove successful.

To stay in business we may require  future  additional  funding  which we may be
unable to obtain on favorable terms, if at all.

     Over the next twelve months,  we may require  additional  financing for our
operations either to fund losses beyond those we anticipate or to fund growth in
our inventory and accounts  receivable  should growth occur. We currently do not
have a debt facility from which we can borrow and we do not expect to obtain one
on  acceptable  terms  unless our  operating  performance  improves.  Additional
financing  may not be  available  to us on a timely basis if at all, or on terms
acceptable  to us. If we fail to obtain  acceptable  additional  financing  when
needed,  we may be required to further  reduce  planned  expenditures  or forego
business  opportunities,  which could reduce our revenues,  increase our losses,
and harm our business.  Moreover,  additional  equity financing could dilute the
per  share  value  of our  common  stock  held by  current  shareholders,  while
additional   debt   financing   could  restrict  our  ability  to  make  capital
expenditures  or incur  additional  indebtedness,  all of which would impede our
ability to succeed.

Our existing  indebtedness could prevent us from obtaining  additional financing
and harm our liquidity.

     In  January  2001,  we  obtained a $6  million,  20-year  direct  reduction
mortgage from a bank, secured by our owned real estate in Boston, Massachusetts.
Our  outstanding  indebtedness  could  adversely  affect  our  ability to obtain
additional financing for working capital,  acquisitions,  or other purposes. Our
existing  indebtedness  could also make us more vulnerable to economic downturns
and  competitive  pressures,  make it more difficult to obtain  additional  debt
financing, and adversely affect our liquidity. In the event of a cash shortfall,
we could be forced to reduce other  expenditures to meet our  requirements  with
respect to our  outstanding  debt. Our ability to meet our  obligations  will be
dependent  upon our future  performance,  which  will be  subject to  financial,
business and other factors  affecting our operations.  Many of these factors are
beyond our  control.  If we are  unable to  generate  sufficient  cash flow from
operations  in the future to service our debt,  we may be required to  refinance
all or a portion of these obligations or obtain additional financing in order to
stay in business.

Our revenues and operating  results have been  adversely  affected  because of a
decline in average  selling  prices for our  dial-up  modems and  because of the
decline in the retail market for dial-up modems.

     The dial-up  modem  industry has been  characterized  by declining  average
selling  prices and a declining  retail market.  The decline in average  selling
prices is due to a number of  factors,  including  technological  change,  lower
component costs,  and competition.  The decline in the size of the retail market
for dial-up  modems is primarily  due to the  inclusion  of dial-up  modems as a
standard feature contained in new PCs, and the advent of broadband products.  As
the market for cable and ADSL modems matures and  competition  between cable and
ADSL service  providers  intensifies,  it is likely that there will be increased
retail  distribution of cable and ADSL modems.  While  increased  retail sale of
broadband  modems could increase our sales of these  products,  it could further
reduce demand for our dial-up  modems.  Decreasing  average  selling  prices and
reduced  demand for our dial-up  modems would  result in  decreased  revenue for
dial-up modems, which has been our primary source of revenue.

We believe  that our future  success will depend in large part on our ability to
more  successfully  penetrate  the  broadband  modem  markets,  which  have been
challenging markets, with significant barriers to entry.

     With the shrinking of the dial-up modem market,  we believe that our future
success will depend in large part on our ability to more successfully  penetrate
the  broadband,   cable  and  ADSL,  modem  markets.  These  markets  have  been
challenging  markets,  with significant  barriers to entry,  that have adversely
affected  our sales to these  markets.  Although  some cable and ADSL modems are
sold at retail, the high volume purchasers of these modems are concentrated in a
relatively few large cable,  telecommunications,  and Internet service providers
which offer  broadband  modem  services  to their  customers.  These  customers,
particularly cable services  providers,  also have extensive and varied approval
processes for modems to be approved for use on their  network.  These  approvals
are expensive, time consuming, and continue to evolve.  Successfully penetrating
the broadband modem market therefore presents a number of challenges including:

o    the current limited retail market for broadband modems;
o    the  relatively  small  number of cable,  telecommunications  and  Internet
     service  provider  customers that make up a substantial  part of the market
     for broadband modems;
o    the significant bargaining power of these large volume purchasers;
o    the time consuming, expensive, uncertain and varied approval process of the
     various cable service providers; and
o    the strong relationships with cable service providers enjoyed by incumbents
     cable equipment providers like Motorola and Scientific Atlanta.

     Our initial sales of broadband products have been adversely affected by all
of  these  factors.  We  cannot  assure  that we  will  be able to  successfully
penetrate these markets.

Our customer base is  concentrated  and the loss of one or more of our customers
could harm our business.

     Relatively few customers  have  accounted for a significant  portion of our
net sales. In fiscal 2001,  approximately 53% of our net sales were attributable
to four customers, each of whom accounted for more than 10% of our net sales. In
2002, 43% of our net sales were  attributable to three  customers,  each of whom
accounted for 10% or more of our net sales. In Q1 2003, approximately 54% of our
net sales were  attributable to four customers,  each of whom accounted for more
than 10% of net sales. Because our customer base is concentrated,  a loss of one
or more of these  significant  customers  or a reduction or delay in orders or a
default in payment from any of our top customers could significantly  reduce our
sales which would  materially  harm our  business,  results of  operations,  and
financial condition.

Our  failure  to meet  changing  customer  requirements  and  emerging  industry
standards would adversely impact our ability to sell our products.

     The market for PC communications  products and high-speed  broadband access
products is characterized by aggressive pricing practices,  continually changing
customer  demand  patterns,  rapid  technological  advances,  emerging  industry
standards and short product life cycles.  Some of our product  developments  and
enhancements have taken longer than planned and have delayed the availability of
our products,  which adversely affected our sales and profitability in the past.
Any  significant  delays in the future may adversely  impact our ability to sell
our  products,  and our results of  operations  and  financial  condition may be
adversely  affected.  Our  future  success  will  depend in large  part upon our
ability to:

o    identify and respond to emerging technological trends in the market;
o    develop and  maintain  competitive  products  that meet  changing  customer
     demands;
o    enhance our products by adding innovative  features that  differentiate our
     products from those of our competitors;
o    bring products to market on a timely basis;
o    introduce products that have competitive prices;
o    manage  our  product   transitions,   inventory  levels  and  manufacturing
     processes efficiently; and
o    respond   effectively   to  new   technological   changes  or  new  product
     announcements by others.

     Our  product  cycles  tend  to be  short,  and  we  may  incur  significant
non-recoverable  expenses or devote  significant  resources to sales that do not
occur  when  anticipated.   Therefore,   the  resources  we  devote  to  product
development,  sales and marketing may not generate  material revenues for us. In
addition,  short product cycles have resulted in and may in the future result in
excess  and  obsolete  inventory,  which has had and may in the  future  have an
adverse affect on our results of operations.  In an effort to develop innovative
products  and  technology,  we  have  incurred  and  may  in  the  future  incur
substantial development, sales, marketing, and inventory costs. If we are unable
to recover these costs, our financial  condition and operating  results could be
adversely  affected.  In addition,  if we sell our products at reduced prices in
anticipation  of cost  reductions  and we still have  higher  cost  products  in
inventory,  our  business  would be harmed  and our  results of  operations  and
financial condition would be adversely affected.

Our operating  results have been adversely  affected because of price protection
programs.

     Our operating results have been adversely affected by reductions in average
selling  prices  because we gave credits to some of our customers as a result of
contractual price protection guarantees.  Specifically, when we reduce the price
for a product,  the customer  receives a credit for the  difference  between the
customer's most recent purchase price and our reduced price for the product, for
all unsold  product at the time of the price  reduction.  For fiscal 2002 and Q1
2003,  we recorded a  reduction  of revenue of $0.7  million and $0.05  million,
respectively, for customer price protection.

We  may  be  subject  to  product  returns  resulting  from  defects,   or  from
overstocking  of our  products.  Product  returns could result in the failure to
attain market acceptance of our products, which would harm our business.

     If our products contain undetected defects,  errors, or failures,  we could
face:

o    delays in the development of our products;
o    numerous product returns; and
o    other losses to us or to our customers or end users.

     Any of  these  occurrences  could  also  result  in the loss of or delay in
market  acceptance of our  products,  either of which would reduce our sales and
harm our business.  We are also exposed to the risk of product  returns from our
customers as a result of contractual stock rotation  privileges and our practice
of assisting some of our customers in balancing their inventories.  Overstocking
has in the past led and may in the future lead to higher than normal returns.

Our failure to  effectively  manage our inventory  levels could  materially  and
adversely affect our liquidity and harm our business.

     During fiscal 2000, in anticipation of future sales of our broadband access
products,  particularly  cable modems, we significantly  increased our inventory
for these products.  We also built up this inventory in response to shortages of
components for these products  earlier in that year. We have also had difficulty
in  generating  significant  orders  for  some  of  our  products,  particularly
broadband  products,  and as a result, we experienced a significant  increase in
our  inventory,  to $21.7  million on December 31, 2000.  During fiscal 2001, we
were able to reduce our inventory  levels to $11.1 million as a result of sales,
raw material  returns to suppliers,  and the  write-down of value of some of our
inventory.  At March 31, 2003, our inventory level was $6.2 million, a reduction
of $4.9  million  from  December  31,  2001  primarily  attributable  to reduced
inventory  purchases  attributable to the delivery of no-charge  components from
our key component  vendors,  lower inventory levels to support the reduced sales
activity in 2002 and the first  quarter of 2003,  improved  inventory  turnover,
inventory  write-downs for lower of cost or market adjustments and obsolescence,
and sales of excess broadband and wireless inventory. Our failure to effectively
manage our inventory  may adversely  affect our liquidity and increases the risk
of inventory obsolescence, a decline in market value of the inventory, or losses
from theft, fire, or other casualty.

We may be unable to produce  sufficient  quantities  of our products  because we
depend on third party manufacturers.  If these third party manufacturers fail to
produce quality products in a timely manner, our ability to fulfill our customer
orders would be adversely impacted.

     We use contract manufacturers to partially manufacture our products. We use
these third party  manufacturers  to help ensure low costs,  rapid market entry,
and  reliability.  Any  manufacturing  disruption  could  impair our  ability to
fulfill orders,  and failure to fulfill orders would adversely affect our sales.
Although  we  currently  use six  contract  manufacturers  for  the  bulk of our
purchases,  in some  cases a given  product  is  provided  by only  one of these
companies.  The  loss of the  services  of any of our  significant  third  party
manufacturers   or  a  material  adverse  change  in  the  business  of  or  our
relationships  with any of these  manufacturers  could harm our business.  Since
third  parties  manufacture  our  products and we expect this to continue in the
future,  our success will depend,  in part,  on the ability of third  parties to
manufacture our products cost  effectively and in sufficient  quantities to meet
our customer demand.

We are subject to the following risks because of our reliance on third party
manufacturers:

o    reduced management and control of component purchases;
o    reduced control over delivery schedules;
o    reduced control over quality assurance;
o    reduced control over manufacturing yields;
o    lack of adequate capacity during periods of excess demand;
o    limited warranties on products supplied to us;
o    potential increases in prices;
o    interruption  of supplies from  assemblers  as a result of a fire,  natural
     calamity, strike or other significant event; and
o    misappropriation of our intellectual property.

We may be unable to produce  sufficient  quantities  of our products  because we
obtain key components from, and depend on, sole or limited source suppliers.

     We obtain certain key parts, components, and equipment from sole or limited
sources of supply. For example, we purchase dial-up and broadband modem chipsets
from  Conexant  Systems and Agere  Systems.  Integrated  circuit  product  areas
covered by one or both companies  include  dial-up  modems,  ADSL modems,  cable
modems,  networking,  routers,  and gateways.  In the past, we have  experienced
delays in receiving  shipments of modem chipsets from our sole source suppliers.
We may experience  similar delays in the future. In addition,  some products may
have other components that are available from only one source.  If we are unable
to obtain a sufficient  supply of components from our current sources,  we could
experience  difficulties in obtaining alternative sources or in altering product
designs to use alternative components. Resulting delays or reductions in product
shipments could damage  relationships with our customers and our customers could
decide  to  purchase  products  from  our  competitors.  Inability  to meet  our
customers'  demand or a decision  by one or more of our  customers  to  purchase
products from our competitors could harm our operating results.

Our failure to satisfy minimum purchase requirements or commitments we have with
our sole  source  suppliers  could  have an  adverse  affect on our  results  of
operations.

     We have entered into supply  arrangements with suppliers of some components
that include price and other concessions,  including no-charge  components,  for
meeting minimum purchase  requirements or commitments.  Our business and results
of  operations  could be  harmed  if we fail to  satisfy  the  minimum  purchase
requirements or commitments contained in our supply arrangements.

The  market  for  high-speed  communications  products  and  services  has  many
competing  technologies  and,  as a result,  the  demand  for our  products  and
services is uncertain.

     The market for high-speed communications products and services has a number
of competing technologies. For instance, Internet access can be achieved by:

o    using a standard telephone line and appropriate service for dial-up modems,
     ISDN modems, or ADSL modems, possibly in combination;
o    using a cable modem with a cable TV line and cable modem service;
o    using a router and some type of modem to service the computers connected to
     a local area network; or
o    other approaches, including wireless links to the Internet.

     Although we currently  sell products that include these  technologies,  the
market for  high-speed  communication  products and services is  fragmented  and
still in its development  stage, and in the cases of cable and ADSL modems,  the
market  is  dominated  by large  cable  and  telephone  service  providers.  The
introduction of new products by competitors, market acceptance of products based
on new or alternative  technologies,  or the emergence of new industry standards
could  render and have in the past  rendered our products  less  competitive  or
obsolete.  If any of these events occur, we may be unable to sustain or grow our
business.  In addition,  if any of one or more of the  alternative  technologies
gain market share at the expense of another technology,  demand for our products
may be reduced, and we may be unable to sustain or grow our business.

We face significant competition,  which could result in decreased demand for our
products or services.

     We may be unable  to  compete  successfully.  A number  of  companies  have
developed,  or are  expected to develop,  products  that compete or will compete
with our products.  Furthermore,  many of our current and potential  competitors
have  significantly  greater  resources than we do. Intense  competition,  rapid
technological  change and evolving industry  standards could decrease demand for
our products or make our products  obsolete.  Our  competitors  by product group
include the following:

o    Dial-up modem competitors: Actiontec, Askey, Best Data, Creative Labs, GVC,
     Intel, Sitecom, and US Robotics.
o    Cable  modem  competitors:   Com21,  D-Link,  Linksys,  Motorola,  Netgear,
     Scientific Atlanta, SMC, Terayon, Thomson, and Toshiba.
o    ADSL  modem  competitors:   3Com,  Alcatel,   Siemens  (formerly  Efficient
     Networks), Thomson, US Robotics, and Westell.

Our business is dependent  on the Internet and the  development  of the Internet
infrastructure.

     Our success will depend on the continued  growth of the use of the Internet
by businesses, particularly for applications that utilize multimedia content and
that  require high  bandwidth.  The growth in the use of the Internet has caused
frequent  periods of performance  degradation.  This has required the upgrade of
routers,   telecommunications   links   and   other   components   forming   the
infrastructure   of  the  Internet  by  Internet  service  providers  and  other
organizations with links to the Internet.

     Any perceived  degradation  in the  performance  of the Internet as a whole
could undermine the benefits of our products.  Potentially increased performance
provided by our products and the products of others ultimately is limited by and
reliant  upon  the  speed  and  reliability  of the  Internet  backbone  itself.
Consequently,  the  emergence  and growth of the market  for our  products  will
depend on  improvements  being made to the  entire  Internet  infrastructure  to
alleviate overloading.

Changes in current or future laws or  governmental  regulations  that negatively
impact our products and technologies could harm our business.

     The  jurisdiction  of the Federal  Communications  Commission,  or the FCC,
extends  to the entire  United  States  communications  industry  including  our
customers and their  products and services that  incorporate  our products.  Our
products  are  also  required  to meet  the  regulatory  requirements  of  other
countries throughout the world where our products are sold. Obtaining government
regulatory  approvals is  time-consuming  and very costly.  In the past, we have
encountered  delays  in the  introduction  of our  products,  such as our  cable
modems, as a result of government certifications.  We may face further delays if
we are unable to comply with governmental regulations. Delays caused by the time
it takes to comply with regulatory  requirements  may result in cancellations or
postponements of product orders or purchases by our customers,  which would harm
our business.

Our  international  operations  are  subject  to a number of risks  inherent  in
international activities.

     Our international  sales accounted for approximately 30% in fiscal 2000 and
38% in fiscal 2001. In 2002 our international  sales accounted for approximately
40%  of  our  revenues.  In  Q1  2003  our  international  sales  accounted  for
approximately  39% of our revenues.  Currently our operations are  significantly
dependent on our international  operations,  and may be materially and adversely
affected by many factors including:

o    international   regulatory  and  communications   requirements  and  policy
     changes;
o    favoritism toward local suppliers;
o    local language and technical support requirements;
o    difficulties in inventory  management,  accounts receivable  collection and
     the management of distributors or representatives;
o    difficulties in staffing and managing foreign operations;
o    political and economic changes and disruptions;
o    governmental currency controls;
o    shipping costs;
o    currency exchange rate fluctuations; and
o    tariff regulations.

     We anticipate that our  international  sales will continue to account for a
significant  percentage of our revenues.  If foreign markets for our current and
future products develop more slowly than currently expected,  our future results
of operations may be harmed.

Fluctuations  in the  foreign  currency  exchange  rates in relation to the U.S.
dollar could have a material adverse effect on our operating results.

     Changes in currency  exchange rates that increase the relative value of the
U.S.  dollar  may  make  it  more  difficult  for  us to  compete  with  foreign
manufacturers  on price, or may otherwise have a material  adverse effect on our
sales and  operating  results.  A significant  increase in our foreign  currency
denominated  sales would  increase our risk  associated  with  foreign  currency
fluctuations.

Our future  success  will  depend on the  continued  services  of our  executive
officers and key research and  development  personnel with expertise in hardware
and software development.

     The loss of any of our executive  officers or key research and  development
personnel,  the inability to attract or retain qualified personnel in the future
or delays in hiring skilled  personnel could harm our business.  Competition for
skilled personnel is significant. We may be unable to attract and retain all the
personnel necessary for the development of our business.  In addition,  the loss
of Frank B. Manning, our president and chief executive officer, or Peter Kramer,
our executive vice  president,  some other member of the management  team, a key
engineer,  or  other  key  contributors,  could  harm  our  relations  with  our
customers, our ability to respond to technological change, and our business.

Our business may be harmed by acquisitions we may complete in the future.

     We may pursue  acquisitions of related  businesses,  technologies,  product
lines,  or  products.  Our  identification  of suitable  acquisition  candidates
involves risk inherent in assessing the values, strengths, weaknesses, risks and
profitability of acquisition  candidates,  including the effects of the possible
acquisition on our business,  diversion of our management's  attention,  risk of
increased  leverage,  shareholder  dilution,  risk associated with unanticipated
problems, and risks associated with liabilities we assume.

We may have difficulty protecting our intellectual property.

     Our  ability to compete is heavily  affected  by our ability to protect our
intellectual  property. We rely primarily on trade secret laws,  confidentiality
procedures,  patents,  copyrights,  trademarks,  and licensing  arrangements  to
protect our intellectual  property.  The steps we take to protect our technology
may be  inadequate.  Existing  trade secret,  trademark and copyright laws offer
only limited  protection.  Our patents could be invalidated or circumvented.  We
have more  intellectual  property assets in some countries than we do in others.
In addition, the laws of some foreign countries in which our products are or may
be developed,  manufactured or sold may not protect our products or intellectual
property rights to the same extent as do the laws of the United States. This may
make the  possibility of piracy of our  technology and products more likely.  We
cannot  assure  that the steps that we have taken to  protect  our  intellectual
property will be adequate to prevent misappropriation of our technology.

We could infringe the intellectual property rights of others.

     Particular  aspects of our  technology  could be found to  infringe  on the
intellectual  property rights or patents of others.  Other companies may hold or
obtain  patents on  inventions  or may  otherwise  claim  proprietary  rights to
technology  necessary to our business.  We cannot predict the extent to which we
may be  required  to seek  licenses.  We  cannot  assure  that the  terms of any
licenses we may be required to seek will be reasonable. We are often indemnified
by our suppliers  relative to certain  intellectual  property rights;  but these
indemnifications do not cover all possible suits, and there is no guarantee that
a relevant indemnification will be honored by the indemnifying company.

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.  The 20 year
mortgage of our headquarters  building is a variable rate loan with the interest
rate  adjusted  annually.  A 1% change in the  interest  rate would  result in a
decrease or increase of approximately $58,000 of interest expense per year.

Item 4.  Controls and Procedures.

     Within  the  90-day  period  prior to the date of this  report,  our  Chief
Executive  Officer and Chief  Financial  Officer  performed an evaluation of the
effectiveness of our disclosure  controls and procedures (as defined in SEC Rule
13a-14).  These  controls  and  procedures  have been  designed  to ensure  that
material information related to our company is timely disclosed. Based upon that
evaluation,  they  concluded that the  disclosure  controls and procedures  were
effective.

     Since the last  evaluation  of our  internal  controls and  procedures  for
financial  reporting,  Zoom has made no  significant  changes in those  internal
controls and procedures or in other factors that could significantly  affect our
internal controls and procedures for financial reporting.

PART II - OTHER INFORMATION

Item 5.  Other Events

Item 6.  Exhibits and reports on Form 8-K

(a)  Exhibits

     10.13 Agreement between Zoom and the members of the Zoom Group LLC.

     99.1  CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
           of 2002.

     99.2  CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
           of 2002.

(b)  No reports on Form 8-K were filed by the Company  during the quarter ending
     March 31, 2003.

<PAGE>


                     ZOOM TECHNOLOGIES, 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 TECHNOLOGIES, INC.


Date: May 8, 2003         By:  /s/ Frank B. Manning
                               ------------------------------------------
                               Frank B. Manning, President


Date: May 8, 2003         By:  /s/ Robert Crist
                               -------------------------------------------
                               Robert Crist, Vice President of Finance
                               and Chief Financial Officer (Principal
                               Financial and Accounting Officer)


<PAGE>
                                  CERTIFICATION

I, Frank B. Manning, Chief Executive Officer of Zoom Technologies, Inc., certify
that:

1. I have  reviewed  this  quarterly  report on Form 10-Q of Zoom  Technologies,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 8, 2003

/s/ Frank B. Manning,
-----------------------
Chief Executive Officer
<PAGE>
                                  CERTIFICATION

I, Robert Crist,  Chief Financial Officer of Zoom  Technologies,  Inc.,  certify
that:

1. I have  reviewed  this  quarterly  report on Form 10-Q of Zoom  Technologies,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 8, 2003

/s/ Robert Crist,
-----------------------
Chief Financial Officer
<PAGE>

                                   Exhibit List

         Exhibit No.       Description


         10.13             Agreement  between Zoom  and  the members of the Zoom
                           Group LLC.

         99.1              CEO  Certification  Pursuant to  Section  906 of  the
                           Sarbanes-Oxley Act of 2002

         99.2              CFO  Certification  Pursuant to  Section  906 of  the
                           Sarbanes-Oxley Act of 2002