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

                                    FORM 10-Q


(Mark One)
[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

           For the quarterly period ended March 31, 1998

                                       or

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

           For the transition period from ______________ to ______________


                         Commission File Number 0-18672
                                                -------

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


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


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


     1200 Royal Center
     1055 West Georgia Street, Vancouver, B.C.                    V6E 3P3
     -----------------------------------------                    -------
     (Address of Principal Executive Offices in Canada)           (Zip Code)
     
          Registrant's Telephone Number, Including Area Code: (617) 423-1072
                                                              ----- --------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

YES  [ X ]    NO [    ]


The number of shares  outstanding of the registrant's  Common Stock, 
No Par Value, as of May 14, 1998 was 7,474,871 shares.



<PAGE>


                             ZOOM TELEPHONICS, INC.
                                      INDEX


                                                                      Page

Part I. Financial Information

  Item 1.  Consolidated Balance Sheets as of March 31, 1998
               and December 31, 1997                                    3

           Consolidated Statements of Operations for the Three
               Months Ending March 31, 1998 and 1997                    4

           Consolidated Statements of Cash Flows for the Three
               Months Ending March 31, 1998 and 1997                    5

           Notes to Consolidated Financial Statements                   6

  Item 2.  Management Discussion and Analysis of
               Financial Condition and Results of Operations       7 - 10


Part II.   Other Information

   Item 1. Legal Proceedings                                           10

   Item 6.  Exhibits and Reports on Form 8-K                           10

           Signatures                                                  11


<PAGE>


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

                             ZOOM TELEPHONICS, INC.
                           Consolidated Balance Sheets

                                                     3/31/98            12/31/97
ASSETS                                             (Unaudited)         (Audited)

Current assets:

 Cash and cash equivalents                        $ 9,023,581       $ 11,281,337
 Accounts receivable, net of reserves for 
 doubtfulaccounts, returns and allowances of
 $6,145,878 at3/31/98 and $4,518,206 at 12/31/97   12,581,123         13,365,413
 Inventories                                       12,235,200         12,034,349
 Recoverable income taxes                           3,793,963          3,793,963
 Deferred income taxes                              2,265,103          2,388,189
 Prepaid expenses and other assets                    252,509            212,989
                                                 ------------         ----------

                     Total current assets          40,151,479         43,076,240

Property and equipment, net                         3,844,483          3,967,767
Goodwill, net of accumulated amortization           1,356,482          1,393,874
Other non-current assets                               31,619             77,392
                                                 ------------        -----------

                                                  $45,384,063       $ 48,515,273
                                                 ============       ============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable                               2,358,794          6,204,370
     Accrued expenses                               2,302,783          1,808,308
                                                -------------       ------------

                     Total current liabilities      4,661,577          8,012,678
                                                -------------       ------------

Stockholders' equity:

 Common stock, no par value.  25,000,000 
 shares authorized;7,474,871 shares issued 
 and outstanding at March 31, 1998
 and 7,472,371 at December 31, 1997                25,190,579         25,170,267
     Retained earnings                             15,531,907         15,332,328
                                                -------------       ------------

                    Total stockholders' equity     40,722,486         40,502,595
                                                -------------       ------------

                                                 $ 45,384,063       $ 48,515,273
                                                =============       ============


<PAGE>


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

                                                  Three Months Ending March  31,
                                                    1998                 1997
                                                    ----                 ----
Net sales                                       $ 18,758,702        $ 17,950,711
Costs of goods sold                               13,557,817          14,692,200
                                                -------------       ------------

     Gross profit                                  5,200,885           3,258,511

Operating expenses:
     Selling                                       2,844,025           2,805,891
     General and administrative                    1,266,057           1,056,266
     Research and development                        967,496           1,043,344
                                                -------------        -----------

         Total operating expenses                  5,077,578           4,905,501
                                                -------------        -----------

     Income (loss) from operations                   123,307         (1,646,990)

Other income, net                                    199,358             129,087
                                                -------------        -----------

     Income (loss) before income taxes               322,665         (1,517,903)

Income tax expense (benefit)                         123,086           (561,624)
                                                -------------        -----------

     Net income (loss)                          $    199,579        $  (956,279)
                                                ============        ============

Income (loss) per common share:

     Basic                                      $        .03        $      (.13)
                                                ============        ============

     Diluted                                    $        .03        $      (.13)
                                                ============        ============

Weighted average number of common
   shares outstanding:

     Basic                                         7,472,873           7,457,717
                                                ============        ============

     Diluted                                       7,483,799           7,457,717
                                                ============        ============




<PAGE>


                             ZOOM TELEPHONICS, INC.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                            Three Months Ending March 31,
                                                                                             1998                  1997
<S>                                                                                   <C>                   <C>

Cash flows from operating activities:
     Net income (loss)                                                                $     199,579         $    (956,279)
     Adjustments to reconcile net income to net cash
      used in operating activities:
       Depreciation and amortization                                                        254,611               210,715
       Deferred income taxes                                                                123,086                   -
      Changes in assets and liabilities:
        Accounts receivable                                                                 784,290             2,764,099
        Inventories                                                                        (200,851)               45,761
        Recoverable income taxes                                                               
                                                                                               -                  307,071
        Prepaid expenses and other assets                                                     6,253               220,636
        Accounts payable and accrued expenses                                            (3,351,101)           (2,799,096)
        Tax benefit from exercise of non-qualified
            stock options                                                                      -                   78,675
                                                                                      -------------         -------------

             Net cash used in operating activities                                       (2,184,133)             (128,418)
                                                                                      -------------         -------------

Cash flows from investing activity:
      Additions to property, plant and equipment                                            (93,935)             (277,929)
                                                                                      -------------         -------------

                  Net cash used in investing activity                                       (93,935)             (277,929)
                                                                                      -------------         -------------

Cash flows from financing activity:
     Proceeds from exercise of stock options                                                 20,312               204,232
                                                                                      -------------         -------------

             Net cash provided by financing activity                                         20,312               204,232
                                                                                      -------------         -------------

Net decrease in cash and cash equivalents                                                (2,257,756)             (202,115)

Cash and cash equivalents, beginning of period                                           11,281,337             9,172,186
                                                                                      -------------         -------------

Cash and cash equivalents, end of period                                              $  9,023,581           $  8,970,071
                                                                                      =============          ============


Supplemental disclosures of cash flow information:

    Cash paid during the period for:

      Interest                                                                        $           -         $           -
                                                                                      =============         =============
      Income taxes                                                                                -                     -
                                                                                      =============         =============
</TABLE>


<PAGE>


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


(1) Basis of Presentation

         The consolidated  financial statements of Zoom Telephonics,  Inc., (the
"Company")  presented  herein  have been  prepared  pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-Q and do not
include  all of the  information  and note  disclosures  required  by  generally
accepted accounting  principles.  These statements should be read in conjunction
with the consolidated financial statements and notes thereto for the year ending
December 31, 1997 included in the Company's 1997 Annual Report on Form 10-K.
         The  consolidated  balance sheet as of March 31, 1998, the consolidated
statements  of income for the three months  ending March 31, 1998 and 1997,  and
the consolidated  statements of cash flows for the three months ending March 31,
1998 and 1997 are  unaudited,  but,  in the opinion of  management,  include all
adjustments  (consisting of normal,  recurring adjustments) necessary for a fair
presentation of results for these interim periods.
         The results of  operations  for the three months  ending March 31, 1998
are not  necessarily  indicative  of the results to be  expected  for the entire
fiscal year ending December 31, 1998.

<TABLE>


<CAPTION>
(2) Inventories


         Inventories consist of the following:                             3/31/98               12/31/97

<S>                                                                      <C>                    <C>        
                  Raw materials                                           $ 6,363,489            $ 7,261,914
                  Work in process                                           2,917,791              2,542,260
                  Finished goods                                            2,953,920              2,230,175
                                                                       --------------          -------------

                                                                         $ 12,235,200           $ 12,034,349
                                                                       ==============           ============
</TABLE>





<PAGE>


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

Results of Operations

            Zoom Telephonics,  Inc. ("Zoom" or "the Company") recorded net sales
of $18,758,702 and net income of $199,579 for the Company's first quarter ending
March 31, 1998 compared to sales of  $17,950,711  and a net loss of $956,279 for
the first quarter  ending March 31, 1997.  Earnings per share  improved to $0.03
for the first  quarter  of 1998 from a loss of $0.13  for the first  quarter  of
1997.

            Net sales for the  quarter  ending  March 31,  1998 were 4.5% higher
than the prior year,  reflecting  an increase  in the average  selling  price of
faxmodems  which  offset a decline in total units sold.  The increase in average
selling  price  compared to the quarter  ending March 31, 1997 was the result of
the marked  shift of sales to 56 kbps modems and away from  33.6 kbps modems and
other slower speed modems. The increase in 56K modem sales was triggered by wide
deployment  of  K56flex(TM)  by Internet  Service  Providers  in late 1997.  The
definition of the V.90 56K modem  standard in February 1998 also  contributed to
increased  56K  sales,  but  was  also  responsible  for  lower  prices,   price
protection,  and stock  rotation for 33.6K and  pre-standard  56K modems.  These
issues are expected to continue in the second quarter of 1998.  Zoom's decreased
unit volume during the quarter compared to the same period in 1997 was primarily
due to reduced sales of 33.6K modems worldwide.

      The overall  increase of net sales of 4.5% compared to the quarter  ending
March 31, 1997 was comprised of a sales increase of 13.7% in North America and a
decline of 26.8% in international  markets outside North America.  The 56K modem
products  have been slower to gain  acceptance in due to slower 56K central 
site deployment.

         Gross margin  increased  to 27.7% in the quarter  ending March 31, 1998
from 18.2% in the quarter  ending  March 31, 1997.  The primary  reason for this
increase in gross margin was the sales mix shift to 56K modem speeds. as well as
cost reductions on key  components.  The Company cannot make assurances that the
gross margin is  sustainable  because of the potential  product  returns,  price
declines and related price protection credits mentioned above. In addition, unit
costs could be negatively impacted if volumes decline.

         Selling expenses during the first quarter of 1998 increased slightly to
$2,844,025  or 15.2% of net sales from  $2,805,891  or 15.6% of net sales in the
first quarter of 1997, reflecting an increase in international sales personnel.

              General and administrative expenses were $1,266,057 or 6.7% of net
sales during the first  quarter of 1998  compared to  $1,056,266  or 5.9% of net
sales in the first quarter of 1997.  The increase was primarily due to increased
provisions for bad debt expense.

          Research and development  expenses  decreased  slightly to $967,496 or
5.2% of net sales during the first  quarter of 1998 from  $1,043,344  or 5.8% of
net sales in the first  quarter of 1997.  The decrease in expenses was primarily
due to the reduction in expenses for government approvals.

            The  Company  realized a net profit of $199,579 or 1.1% of net sales
during the first  quarter of 1998  compared to a net loss of $956,279 or 5.3% of
net sales in the first quarter of 1997. The  improvement  was primarily due to a
more  favorable  sales  mix of more  current  technology  products  and the cost
reduction of key components.


<PAGE>


Liquidity and Capital Resources

             Zoom ended the first quarter of 1998 with a strong  balance  sheet,
with stockholders' equity of $40,722,486 or $5.45 book value per share, cash and
cash equivalents of $9,023,581, and working capital of $35,489,902. In addition,
the Company has a $5 million secured line of credit. As of March 31, 1998,
$300,000 was outstanding under this line to cover a letter of credit.

              Operating  activities  used  $2,184,133  in cash  during the first
three  months of 1998,  comprised  mainly of a decline in  accounts  payable and
accrued expenses of $3,351,101, offset by a decrease in receivables of $784,290.

              Zoom's  capital  expenditures  of $93,935  during the first  three
months  of  1998  included   purchases  of  computer  equipment  and  continuing
renovation  of  its  headquarters.  Although  the  Company  does  not  have  any
significant  capital  commitments,  it  anticipates  that it will  continue with
modest investments in equipment and in improvements to its facilities during the
year.

         During the first three months of 1998,  financing  activities  provided
the Company with $20,312 from the exercise of employee stock options.

          The Company  believes  that its  existing  cash,  together  with funds
generated from operations and available sources of financing, will be sufficient
to meet normal working  capital  requirements  for the rest of 1998.  Additional
financing  may be  needed  in  the  event  sales  increase  substantially  or if
significant losses are incurred.

Year 2000 Date Conversion

         The  Company  has  implemented  a  comprehensive   Enterprise  Resource
Planning System which is fully year 2000 date  compliant.  The Company is in the
process of making sure that all other  systems are year 2,000  ready.  All major
conversions  are complete  and the  implementation  schedule  for minor  systems
anticipates  a  complete  conversion  prior to  January  1,  2000.  The  Company
presently  believes  that,  with  the  completed   conversions  and  anticipated
conversions  to new software,  the year 2000 problem will not pose a significant
operational problem to the Company.  However, there can be no assurance that the
systems  of other  parties  upon  which  the  Company's  businesses  also  rely,
including  but not limited to the  Company's  customers  and  suppliers  will be
converted on a timely basis. The Company's  business,  financial  condition,  or
results of operations could be materially  adversely  affected by the failure of
its systems or those of other parties to operate or properly manage dates beyond
1999.

Other

         A portion of the Company's revenues are subject to the risks associated
with  international  sales.  Although most of the Company's  product  prices are
denominated  in the United  States  currency,  customers  in  foreign  countries
generally  evaluate  purchases of products  such as those sold by the Company on
the purchase price expressed in the customer's currency.  Therefore,  changes in
foreign  currency  exchange  rates  may  adversely  affect  the  demand  for the
Company's products.

<PAGE>



New Accounting Pronouncements

         In  December  1997,  the  Company  adopted  the  Financial   Accounting
Standards  Board  Statement  No.  128,  "Earnings  per Share."  (SFAS 128).  All
previously  reported  net income  (loss) per share  data have been  restated  to
conform to the  provisions of SFAS 128.  Under SFAS 128, basic net income (loss)
per  share is  computed  by  dividing  net  income  (loss)  available  to common
stockholders  by the weighted  average  number of common  shares for the period.
Diluted net income (loss) per share reflect the maximum dilution that would have
resulted  from the assumed  exercise  and share  repurchase  related to dilutive
stock  options and are  computed by dividing  net income  (loss) by the weighted
average number of common shares and all dilutive securities outstanding.

         In June 1997, the Financial Accounting Standards Board issued Statement
130 (SFAS 130),  "Reporting  Comprehensive  Income," which establishes standards
for reporting and display of  comprehensive  income and its components in a full
set of general-purpose  financial statements.  Under this concept, all revenues,
expenses,  gains and losses recognized during the period are included in income,
regardless of whether they are considered to be the results of operations of the
period.  The  Company  adopted  SFAS  130 in  March  1998  and it did not have a
material impact on the consolidated financial statements of the Company.

         In June 1997, the Financial Accounting Standards Board issued Statement
131 (SFAS  131),  "Disclosures  about  Segments  of an  Enterprise  and  Related
Information,"  which  establishes  standards  for the way that  public  business
enterprises  report  selected  information  about  operating  segments in annual
financial  statements  and  requires  that  those  enterprises  report  selected
information   about  operating   segments  in  interim   financial   reports  to
shareholders.  It also  establishes  standards  for  related  disclosures  about
products and services,  geographic  areas and major  customers.  SFAS 131, which
becomes  effective  for the Company in its year ending  December  31,  1998,  is
currently not expected to have a material  impact on the Company's  consolidated
financial  statements  and  disclosures  as the Company  does not have  multiple
reportable operating segments.

         In March 1998, the American  Institute of Certified Public  Accountants
issued  Statement  of  Position  98-1,  "Accounting  for the  Costs of  Computer
Software  Developed or Obtained for Internal Use" (SOP 98-1),  which establishes
guidelines  for the costs of all  computer  software  developed  or obtained for
internal use. SOP 98-1 is effective for the Company in 1999, and is not expected
to have a material impact on the Company's financial statements.


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

         Forward-looking statements in this report, including without limitation
statements relating to the adequacy of the Company's resources are made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that such forward-looking statements involve risks
and uncertainties,  including without limitation: overall product demand for 56K
modems, the rate of increase of deployment of K56flex or V.90 compatible central
site equipment by Internet Service Providers, the ability of the company to meet
the  financial  covenants  in it's  $5M  credit  line,  the  ability  to  obtain
additional  financing,  if required,  at favorable  terms, if at all,  potential
quarterly fluctuations in the Company's operating results, seasonality of sales,
rapid  technological  change,  competition,  the  concentration of the Company's
customers,  the  Company's  dependence  upon a principal  supplier for its modem
chipsets  and  on  first-party  assemblers,   risks  associated  with  inventory
management,  risk of product returns and price-protection,  sales channel risks,
risks associated with international  sales, the ability of the Company to manage
its growth,  the Company's  reliance on key  employees,  risks  associated  with
proprietary technology, and other risks and uncertainties indicated from time to
time in the Company's filings with the Securities and Exchange Commission.


 PART II - OTHER INFORMATION

ITEM 1. - Legal Proceedings

               No material developments in the quarter ended March 31, 1998.



ITEM 6 - Exhibits and reports on Form 8-K

  (a) Exhibit             Description                             Page
     -------         --------------------------                   ----
       11                 Statement Re: Computation of             11
                          Per Share Income (Loss)

  (b)  27.                Financial Data Schedule                  12
       27.1               Financial Data Schedule 1997             13
       27.2               Financial Data Schedule 1996             14

  (c) No  reports  on Form 8-K were  filed by the  Company  during the
      quarter ending March 31, 1998



<PAGE>


                             ZOOM TELEPHONICS, INC.

                        FINANCIAL INFORMATION NOT AUDITED


The preceding  financial  information,  with the  exception of the  consolidated
balance  sheet at December  31,  1997,  has not been  audited.  However,  in the
opinion of  management,  all  material  adjustments,  consisting  only of normal
recurring  accruals  necessary  to present a fair  statement  of the results for
these  periods,  have been  reflected.  The  results  for these  periods are not
necessarily indicative of the results for the full fiscal year.




                                     SIGNATURES

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

                                     ZOOM TELEPHONICS, INC.


Date: May 14, 1998                   By: /s/ Frank Manning
                                     --------------------------
                                     Frank B. Manning, President



Date: May 14, 1998                   By: /s/ Robert Crist
                                     -------------------------
                                     Robert Crist, Vice President of Finance
                                     and Chief Financial Officer
                                    (Principal Financial and Accounting Officer)