TELTRONICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

The accompanying notes are an integral part of these consolidated financial statements.

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TELTRONICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

			YEARS ENDED DECEMBER 31,
			2000	1999	1998
OPERATING ACTIVITIES:
	Net income (loss)		$ (1,485,181)	$ 1,243,624	$ 380,856
	Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
		Provision for doubtful accounts	89,199	129,876	84,957
		Provision for obsolete inventories	462,246	485,238	456,868
		Depreciation and amortization	1,924,974	1,348,258	1,015,963
		Amortization of intangibles	66,496	9,364	0
		Amortization of deferred financing costs	98,835	134,231	238,534
		Loss on write-off of asset	348,999	0	0
	Changes in operating assets and liabilities net of acquisitions and dispositions:
		Accounts receivable	(5,317,768)	(128,809)	(1,138,200)
		Inventories	(1,098,925)	(1,841,632)	(148,043)
		Prepaid expenses and other current assets	(228,597)	71,379	(113,525)
		Accounts payable	4,573,551	238,331	397,904
		Accrued expenses and other current liabilities	(90,939)	159,458	(20,796)
		Deferred income	570,565	575,099	0
Net cash provided by (used in) operating      activities			(86,545)	2,312,803	(94,120)
INVESTING ACTIVITIES:
	Acquisition of property and equipment		(778,010)	(652,995)	(950,261)
	Proceeds from sale of assets		500	0	1,000
	Decrease (increase) in other assets		143,953	260,152	(105,552)
	Proceeds from dispositions		0	111,614	150,000
	Acquisition of Cascade Technologies      Corporation		0	(57,500)	0
	Cash received in acquisition of Telident, Inc.		762,321	0	0
Net cash provided by (used in) investing activities			128,764	(338,729)	(904,813)
FINANCING ACTIVITIES:
	Net (repayment) proceeds from line of credit		642,285	(411,524)	1,160,623
	Principal repayments of loans, notes and leases		(1,462,976)	(529,520)	(1,591,918)
	Dividends on Preferred Series B Convertible      Stock		(151,500)	(219,257)	(250,000)
	Proceeds from issuance of common stock		10,500	0	0
	Loan proceeds		0	4,524	1,381,157
Net cash provided by (used in) financing activities			(961,691)	(1,155,777)	699,862
Net increase (decrease) in cash and cash      equivalents			(919,472)	818,297	(299,071)
Cash and cash equivalents - beginning of year			954,764	136,467	435,538
Cash and cash equivalents - end of year			$ 35,292	$ 954,764	$ 136,467

The accompanying notes are an integral part of these consolidated financial statements.

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TELTRONICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

		YEARS ENDED DECEMBER 31,
		2000		1999		1998
SUPPLEMENTAL NONCASH FINANCING AND INVESTING ACTIVITIES:
	Issuance of note in purchase of assets of Harris Communications Products Division		$6,884,355		$           0		$            0
	Issuance of common stock for purchase of assets of Telident, Inc.		$2,073,626		$           0		$            0
	Employer Stock Match 401(k)		$   130,707		$           0		$            0
	Accrued interest converted into note payable		$   212,268		$           0		$            0
	Lease of equipment		$   142,914		$  73,560		$ 862,212
	Issuance of common stock for purchase of assets of Cascade Technology Corporation		$              0		$181,865		$            0
	Issuance of non-interest bearing note in purchase of Cascade Technology Corporation		$             0		$  47,913		$            0
	Issuance of Preferred Series B Convertible Stock in exchange for long term debt		$             0		$           0		$2,500,000
	Cancellation of unpaid shares issued pursuant to Employee Stock Payment Plan		$             0		$            0		$1,191,500
	Issuance of warrants		$             0		$            0		$  569,600
	Issuance of note receivable		$             0		$            0		$  241,121
	Issuance of common stock for purchase of net assets of Shared Resource Exchange, Inc.		$             0		$            0		$  130,137
SUPPLEMENTAL DISCLOSURES:
	Interest paid		$1,318,832		$ 853,973		$  945,254

The accompanying notes are an integral part of these consolidated financial statements.

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000, 1999 and 1998

NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION

Teltronics, Inc. ("Teltronics" or "Company"), a Delaware corporation, designs, develops, manufactures and markets electronic hardware and application software products, and engages in contract manufacturing for the telecommunication industry. Through its majority owned subsidiary, Interactive Solutions, Inc. ("ISI") it has also engaged in the design and manufacturing of a small, Pentium® powered, multimedia computer for the mobile computer industry.

The accompanying consolidated financial statements include the accounts of the Company and is comprised of its wholly-owned subsidiaries TTG Acquisition Corp. and TELTRONICS/SRX, Inc., its 85% owned subsidiary Interactive Solutions, Inc. ("ISI") and its 80% formerly owned subsidiary AT Supply, Inc. ("AT Supply"). AT Supply was sold on March 6, 1998. All significant intercompany transactions and balances have been eliminated in consolidation.

For the years ended December 31, 2000, 1999 and 1998, losses applicable to the 15% minority interest of ISI exceeded the minority interest in the equity capital and the losses accordingly, are included in the determination of net income. However, to the extent of future earnings, if any, the Company shall be credited to the extent of such losses that were previously absorbed.

On February 19, 1999, the Company acquired certain assets and the technology of Cascade Technology Corporation ("Cascade"). The Company acquired all of Cascade's rights to and in certain technology for a DiscoveryMATE® panel link display, open sales orders and certain other assets. The display is sold to Ford Visteon, Chrysler, General Motors, Kelsey Hayes and other companies.

On May 18, 2000, the Company acquired substantially all of the assets and technology of Telident, Inc., including Telident's rights to and in certain technology for enhanced 911 technology hardware and software systems that communicate with public safety 911 contact points. The Company sells these products to a wide variety of businesses, and health and educational institutions.

On June 30, 2000, the Company acquired certain equipment, inventory and intellectual property rights relating to the 20-20® switching system and associated products of Harris Corporation. The 20-20® product is a digital switch capable of supporting up to 9,600 ports/desktops that the Company sells to large businesses, and health and educational institutions.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents - The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Concentration of Credit Risk - The Company's largest customer was 20%, 26% and 13% of sales in 2000, 1999 and 1998, respectively. In 2000, only the Company's largest customer accounted for more than 10% of the Company's sales. In 1999, one additional customer was 16% of sales. In 1998 three additional customers were 12%, 11% and 10% of sales. The Company's principal customers include

30

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Regional Bell Operating Companies, independent telephone companies, alternative service providers and telecommunication companies located throughout the United States.

Inventories - Inventories are stated at the lower of cost or market. Costs are determined principally on the weighted average method.

Property and Equipment - Property and equipment are stated at cost. Depreciation is provided over the estimated useful lives (three to ten years) of the respective assets using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes.

Goodwill and Other Intangible Assets - Goodwill, the excess of the purchase price of acquired businesses over the fair value of their respective net assets, and other intangible assets are amortized on the straight-line basis. The Company periodically reviews the value of its goodwill and other intangible assets if there are indicators of impairment. The Company assesses the potential impairment of recorded goodwill and other intangible assets by comparing the undiscounted value of expected future operating cash flows to their carrying costs. An impairment charge, if necessary, would be recorded based on the estimated fair value.

Income Taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by use of a valuation allowance.

Net Income (loss) Per Share - Basic net income (loss) per share is computed by dividing net income (loss), adjusted for preferred stock dividends, by the weighted average number of common shares outstanding during the applicable period. Diluted net income (loss) per share is computed by dividing net income (loss), adjusted for preferred stock dividends, by the weighted average number of common shares, adjusted for potential common shares. Potential common shares consist of convertible preferred stock, stock options (vested and unvested) and warrants and are computed using the treasury stock method. Potential dilutive options and warrants totaled 398,591.

Revenue Recognition - Revenues from product sales are recognized when the product is shipped. The Company recognizes revenue from software product sales in accordance with the American Institute of Certified Public Accountants' Statement of Position 97-2, Software Revenue Recognition ("SOP 97-2") as amended by Statement of Position 98-4, Deferral of the Effective Date of a Provision of SOP 97-2 and Statement of Position 98-9, Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions ("SOP 98-9"). Revenue is recognized from licenses of the Company's software products when the contract has been executed, the product(s) have been shipped, collectibility is probable and the software license fees are fixed or determinable. In the event that the contract provides for multiple elements (i.e., software products, upgrades/enhancements, postcontract customer support, consulting services, etc.), the total fee is allocated to these elements based on "vendor-specific objective evidence" of fair value. If any portion of the software license fees is subject to forfeiture, refund, or other contractual contingencies, the Company postpones revenue recognition until the contingency has been removed. Revenue from support and maintenance activities is recognized ratably over the term of the maintenance period and the unrecognized portion is recorded as deferred revenue.

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Derivatives - In June 1998, the Financial Accounting Standards Board issued Statement No. 133 (the "Statement"), Accounting of Derivative Instruments and Hedging Activities. The Company expects to adopt the new Statement effective January 1, 2001. The Statement will require the Company to recognize all derivatives on the balance sheet at fair value. The Company does not anticipate that the adoption of the Statement will have a significant effect on its results of operations or financial position.

Research and Development - Research and development costs are expensed as incurred.

Stock Based Compensation - The Company accounts for its stock based compensation under the provisions of Accounting Principles Board Opinion No. 25 ("APB No. 25"), Accounting for Stock Issued to Employees, and presents disclosures required by Statement of Financial Accounting Standards No. 123 ("SFAS No. 123") Accounting for Stock-Based Compensation.

Warranty - The Company provides currently for the estimated cost that may be incurred under product warranties. The Company provides a limited warranty on its products, for a period from 3 to 18 months (depending on the product), under which the Company agrees to repair or replace, in the Company's sole discretion, units defective in material or workmanship, provided the equipment has not been subjected to alteration or abuse.

Reclassifications - Certain prior year amounts have been reclassified to conform with the current year's presentation.

NOTE 3 - ACQUISITIONS

Cascade Technology Corporation

On February 19, 1999, the Company acquired certain assets and the technology of Cascade Technology Corporation ("Cascade"). The Company acquired all of Cascade's rights to and in certain technology for a DiscoveryMATE® panel link display, open sales orders and certain other assets. The display is sold to Ford Visteon, Chrysler, General Motors, Kelsey Hayes and other companies.

The Company delivered an aggregate of 126,383 restricted shares (including 52,117 shares in escrow for claims by the Company) of its voting common stock for selected assets of Cascade. The holders of these restricted shares have been granted certain registration rights under a Registration Rights Agreement which allows them to elect to have their shares registered if the Company proposes to register any of its securities under the Securities Act of 1933, as amended, in an offering for cash. In addition, the Company paid $57,500 at closing and issued a non-interest bearing note for $47,913 that was paid in June, 1999.

The acquisition has been accounted for using the purchase method of accounting and results of operations of Cascade are included from the date of acquisition. The purchase price has been assigned to the net assets acquired based on management's estimate of the fair value of such assets and liabilities at the date of acquisition as follows:

	Inventory		$100,000
	Fixed assets		71,000
	Goodwill and identifiable intangible assets		116,278
	Notes payable		(47,913)
		Net assets acquired	$239,365

The pro forma operating results for 1999 assuming this acquisition had been consummated as of January 1, 1999, would not be materially different from reported operating results.

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Telident, Inc.

On May 18, 2000, the Company acquired substantially all of the assets and assumed certain liabilities of Telident, Inc., a Minnesota corporation ("Seller") located in Minneapolis, Minnesota. The Company acquired all of the Seller's rights to and in certain technology for the identification or location of emergency 911 telephone calls.

The Company delivered 662,500 shares of its $.001 par value voting common stock for substantially all of the assets of the Seller.

The acquisition has been accounted for using the purchase method of accounting and operations of the acquired business are included in the Company's results of operations from the date of acquisition. The purchase price has been assigned to the net assets acquired based on management's estimate of the fair value of such assets and liabilities at the date of acquisition as follows:

	Cash			$  762,321
	Accounts receivable, net			610,998
	Inventory, net			260,757
	Prepaid expenses and other current assets			26,168
	Property and equipment, net			240,234
	Other assets			6,282
	Goodwill and identifiable intangible assets			514,299
	Accounts payable			(76,792)
	Accrued expenses and other current liabilities			(239,505)
	Deferred Income			(28,146)
	Long-Term debt			(2,990)
		Net assets acquired		$2,073,626

Harris Corporation 20-20 Switching Product Line

On June 30, 2000, the Company acquired certain equipment, inventory and intellectual property rights related to the 20-20® switching technology and associated products of Harris Corporation Communications Products Division located in Melbourne, Florida ("Harris"), under an Asset Sale Agreement dated June 30, 2000 ("Agreement").

Under the Agreement, the Company acquired the assets and assumed on-going support obligations for certain of Harris' Communications Products Division customers in consideration for $6,884,355 paid for with a promissory note with interest at 10.5% per annum ("Note"). The Note provided for interest at 12.5% per annum effective August 14, 2000. The Note is secured by a first lien on the Assets and a lien on the Company's other assets.

The Note was amended August 17, 2000 to extend the maturity to September 29, 2000 and was further amended October 30, 2000. Under this amendment, the principal and capitalized interest total was stated at $7,096,623, the due date was extended to December 31, 2000 and interest was changed to 10.5% effective October 4, 2000 and was to be paid monthly starting November 1, 2000.

In March, 2001, Harris and the Company verbally agreed to further amend the Note owed by the Company to Harris which contemplates partial payment of the existing principal of the Note and payment of the balance under the amended Note with interest only at a rate of 10.5% per annum during an initial period of six months and amortization of the adjusted principal balance in eighteen monthly installments

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

commencing seven months after execution of the amended Note. Management expects the amendment will be executed and the partial payment made to Harris simultaneously with the closing an equity private placement by the Company during the second quarter of 2001. There can be no assurance that the closing will occur or that it will close on the terms contemplated. Pending closing of the contemplated transaction, Harris and the Company have agreed that the principal of the Note has been increased by an additional amount of $2,642,941 to reflect the aggregate payables owed by the Company to Harris at December 31, 2000 for additional inventory and services provided and that interest only payments at a rate of 10.5% will commence on May 1, 2001.

The acquisition has been accounted for using the purchase method of accounting and results of operations of the acquired business are included in the Company's results of operations from the date of acquisition. The purchase price has been assigned to the net assets acquired based on management's estimate of the fair value of such assets and liabilities at the date of acquisition as follows:

	Inventory, net		$ 5,277,113
	Property and equipment, net		3,083,025
	Customer lists and patents		206,210
	Note payable		(6,884,355)
	Accrued expenses and other current liabilities		(1,629,993)
	Accounts payable		(52,000)
		Net assets acquired	$              0

Purchase price allocation is open for inventory and fixed asset valuation.

The unaudited pro forma results presented below include the effects of the acquisitions as if they had been consummated at the beginning of the year prior to acquisition. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisitions been consummated at the beginning of the year prior to acquisitions of Telident and Harris.

		Year Ended December 31,
		2000			1999
	Net sales	$	67,106,506		$	109,393,823
	Net loss	$	(44,909,028)		$	(23,328,556)
	Net loss available to      common shareholders	$	(45,060,528)		$	(23,547,813)
	Net loss per share -
	Basic	$	(9.53)		$	(6.13)
	Diluted	$	(9.53)		$	(6.13)

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 4 - DISPOSITIONS

On March 6, 1998, the Company sold the assets and liabilities of AT Supply, a majority owned subsidiary. The subsidiary was sold to the minority owners of the subsidiary for $424,836 in cash and a note receivable for $200,000. Interest on the note receivable was payable at 12% and principal and interest were due monthly over three years starting April 1, 1998. The note receivable was secured by a second lien on assets and was personally guaranteed by the principals of the buyer. The buyer paid $972,450 at closing to terminate all liens and security interests with the Company's principal lender. The buyer assumed responsibility for payment of all liabilities. The Company recognized a gain on the disposition of AT Supply of $1,148,250 during the year ended December 31, 1998. Revenues and net income for AT Supply were $1,278,000 and $6,000 respectively for the year ended December 31, 1998. The remaining balance of the $200,000 note receivable was paid in October, 1999.

On April 23, 1998, the Company sold the customer list and maintenance and support agreements for the ORBi-TEL for Windows and non-Unix call accounting product lines to MDR Telemanagement Limited. These product lines were sold for $100,000 in cash, and a contingent consideration payable in one year of $112,000. The Company recognized a gain of $100,000 and $112,000 during 1998 and 1999, respectively. Revenues for these product lines were $82,000 and $299,000 for the years ended December 31, 1998 and 1997, respectively.

NOTE 5 - GOODWILL AND OTHER INTANGIBLE ASSETS

The Company's goodwill and identifiable intangible assets are as follows:

		December 31,
		2000		1999		Life
	Customer List	$ 237,215		$  35,000		5 years
	Patent	273,922		35,000		14 years, 7 months
	Goodwill	316,286		46,278		15 years
	Total goodwill and other intangible          assets	827,423		116,278
	Less accumulated amortization	(66,496)		(9,364)
	Goodwill and other intangible assets,          net	$ 760,927		$  106,914

NOTE 6 - NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed by dividing net income (loss), adjusted for preferred stock dividends, by the weighted average number of issued common shares outstanding during the applicable period. Diluted net income (loss) per share is computed by dividing net income (loss), adjusted for preferred stock dividends, by the weighted average number of issued common shares, adjusted for potential common shares. Potential common shares consist of convertible preferred stock, stock options (vested and unvested) and warrants and are computed using the treasury stock method.

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table sets forth the computation of basic and diluted earnings per share:

		2000		1999		1998
Basic
Net income (loss)		$ (1,485,181)		$ 1,243,624		$ 380,856
Preferred dividends		(151,500)		(219,257)		(250,000)
	Income (loss) attributable to common shareholders	(1,636,681)		$ 1,024,367		$ 130,856
Weighted average shares outstanding		4,484,495		3,844,470		3,417,744
	Net income (loss) per share	$ (0.36)		$ 0.27		$ 0.04
Diluted
Net income (loss)		$ (1,485,181)		$ 1,243,624		$ 380,856
Preferred dividends		(151,500)		(219,257)		(250,000)
	Income (loss) attributable to common shareholders	$ (1,636,681)		$ 1,024,367		$ 130,856
Weighted average shares outstanding		4,484,495		3,844,470		3,417,744
Net effect of dilutive stock options using the      treasury stock method		0		145,049		72,719
Net effect of dilutive warrants using      the treasury stock method		0		123,573		31,891
	Dilutive potential common shares	4,484,495		4,113,092		3,522,354
	Net income (loss) per share	$ (0.36)		$ 0.25		$ 0.04

NOTE 7 - ACCOUNTS RECEIVABLE

Accounts receivable at December 31, 2000 and 1999 are as follows:

	December 31,
	2000		1999
Accounts receivable	$ 10,872,963		$ 4,964,896
Less provision for doubtful accounts	(278,500)		(210,000)
	$ 10,594,463		$ 4,754,896

The provision for doubtful accounts was $89,199, $129,876 and $84,957 for the years ended December 31, 2000, 1999 and 1998, respectively.

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 - INVENTORIES

The major classes of inventories at December 31, 2000 and 1999 are as follows:

		December 31,
		2000		1999
Raw materials		$ 8,794,585		$ 2,604,478
Work-in-process		1,276,872		1,931,809
Finished goods		1,422,857		783,478
		$11,494,314		$ 5,319,765

Provision for obsolete inventories were $462,246, $485,238 and $456,868 for the years ended December 31, 2000, 1999 and 1998, respectively.

NOTE 9 - PROPERTY AND EQUIPMENT

The major classifications of property and equipment at December 31, 2000 and 1999 are as follows:

		December 31,
		2000		1999
Machinery and equipment		$ 4,804,949		$ 2,917,324
Furniture, fixtures and computers		2,619,671		3,168,627
Equipment under capital lease		2,765,667		2,622,753
Software		2,203,551		379,029
Leasehold improvements		334,970		307,191
		12,728,808		9,394,924
Accumulated depreciation and amortization		(6,887,080)		(5,522,906)
		$ 5,841,728		$ 3,872,018

Depreciation and amortization expense was $1,924,974, $1,348,258 and $1,015,963 for the years ended December 31, 2000, 1999 and 1998, respectively.

NOTE 10 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities at December 31, 2000 and 1999 are as follows:

		December 31,
		2000		1999
Payroll		$1,125,730		$ 702,386
Other		1,290,884		278,644
		$2,416,614		$ 981,030

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11 - DEBT

Debt at December 31, 2000 and 1999 consists of the following:

	December 31,
	2000	1999
Bank line of credit - On December 22, 1998, the Company's principal lender, The CIT Group/Credit Finance, Inc. ("CIT") entered into an Amendment to the Company's existing Line of Credit Facility and Term Loan. Under the Amendment, the interest rate is 2.0% above prime rate, maximum availability is $5,500,000 and a prepayment penalty is assessed at 1.5%. On October 28, 2000, the Line of Credit Facility was extended to October 28, 2002. Substantially all of the Company's present and future assets, except for fixed assets, are pledged as collateral with borrowings limited to certain gross availability formulas based on accounts receivable and inventory as defined in the agreement. The facility provides for minimum loan fees, unused line fees and renewal term fees. The outstanding borrowings are classified as a current liability. The Company incurred renewal loan fees of $55,000 during 1999. A director of the Company has personally guaranteed a portion of the facility. At December 31, 2000 and 1999, the Company had $1,271,570 and $1,913,855 available respectively, pursuant to this facility. The availability of this unused line of credit is restricted based on availability formulas.	$4,228,430	$3,586,145
Subordinated Secured Debentures - payable initially in quarterly interest payments only at 12%. An aggregate $1,000,000 of principal was paid during 2000 and the remaining $750,000 was paid during the first quarter of 2001. Collateralized by a first lien on property and equipment and a second lien on all other assets.	750,000	1,750,000
Senior Secured Loan - payable in quarterly interest payments at 12% and initially due April 30, 2000. In May, 2000, the Company amended and restated the loan to revise the maturity date to February 13, 2002. Collateralized by a first lien on property and equipment and a second lien on all other assets.	1,000,000	1,000,000
Senior Secured Loan	0	120,886
Notes payable - officer, payable upon demand with interest accruing at 8% per annum.	64,035	59,128
Total	6,042,465	6,516,159
Less current portion	5,042,465	5,266,159
Long-term portion	$1,000,000	$1,250,000

On February 25, 1998, the Company issued $1,750,000 of Subordinated Secured Debentures (the "Debentures"). The Debentures were initially due February 13, 2002. The Debentures do not have a prepayment penalty and are collateralized by a first lien on fixed assets and a second lien on all other assets. The Holder of the Debentures received 525,000 warrants to purchase the Company's Common Stock at an exercise price of $2.75 per share. These warrants are exercisable in whole, or in part, at any time during a five-year period beginning on the date of issuance. The Debentures contain certain financial covenants, including restrictions which could affect future funding of ISI by the Company.

On May 12, 2000 and June 30, 2000, the Company amended and restated the $1,750,000 of Subordinated Secured Debentures Agreement. The Company repaid $750,000 of the Debentures on September 29, 2000 and $250,000 on October 31, 2000 and the remaining $750,000 was paid during the first quarter 2001.

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On February 25, 1998, the Company entered into senior Secured Loans ("Loans") for $1,000,000 and $280,000. Interest was initially paid quarterly starting May 15, 1998. On May 12, 2000, the Company amended and restated the $1,000,000 Loan Agreement originally entered into on February 25, 1998 and originally due February 25, 1999. The Loan Agreement has a revised maturity of February 13, 2002. The interest rate is 12%. The Holder of the Loans received 365,000 warrants to purchase the Company's Common Stock at an exercise price of $2.75 per share. These warrants are exercisable in whole, or in part, at any time during a five-year holding period beginning on the date of issuance. The Loans contain certain financial covenants, including restrictions which could effect future funding of ISI by the Company.

Future maturities as of December 31, 2000 are as follows:

	Total		Bank Line of Credit		Other Debt
2001	$ 5,042,465		$ 4,228,430		$   814,035
2002	1,000,000		0		1,000,000
	$ 6,042,465		$ 4,228,430		$ 1,814,035

The covenants in the Loan and Security Agreement and the Senior Secured Loans restrict certain sales of assets; mergers and acquisitions; borrowings and guarantees; dividends and redemptions; creation of liens; investments; issuance of subsidiary shares; and transactions with affiliates. The Company is in compliance with the terms of the above covenants.

NOTE 12 - CAPITAL LEASE OBLIGATIONS

Leased assets include machinery and equipment. The present value of future minimum lease payments pursuant to the leases and the corresponding liability have been recorded in the financial statements as property and equipment under capital lease obligations. Interest on these obligations ranges from approximately 8% to 12%.

Leased property under capital leases at December 31, 2000 and 1999 consists of the following:

			December 31,
			2000		1999
Machinery and equipment cost			$2,765,667		$2,622,753
Less: accumulated depreciation			(1,740,967)		(1,464,342)
	Net book value		$1,024,700		$1,158,411

The future minimum lease payments under capital leases together with the present value of the net minimum lease payments at December 31, 2000 are as follows:

Fiscal Year
	2001		$337,833
	2002		75,632
Total minimum lease payments			413,465
	Less: amount representing interest		(28,233)
Present value of minimum lease payments			385,232
	Less: current portion		(313,370)
Long-term capital lease obligations			$71,862

39

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 13 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Cash, accounts receivable, accounts payable and accrued liabilities are reflected in the financial statements at their carrying amount which approximates fair value because of the short-term maturity of those instruments. The carrying amount of long-term debt approximates fair value because these instruments bear interest at floating rates which reflect current market conditions.

NOTE 14 - EMPLOYEE BENEFIT PLANS

The Company sponsors a savings plan ("401(k) plan") which covers substantially all employees of the Company. Prior to 2000, the 401(k) plan did not require the Company to match participant contributions and no contributions were made duirng 1999 and 1998. Beginning in 2000, the 401(k) plan requires the Company to make matching contributions by issuance of shares of the common stock of the Company. During 2000, the Company issued an aggregate of 38,269 shares with a fair value of $130,707 in connection with the plan.

The Company also sponsors an employee stock purchase plan ("Purchase Plan") under which employees of the Company and its subsidiaries are given an opportunity to purchase Company Common Stock at a price equal to approximately 85% of fair market value. The Purchase Plan is intended to qualify under the Internal Revenue Code of 1986, as amended and the 500,000 shares of common stock funding the Plan have been registered on Form S-8. No shares of Common Stock had been purchased by employees at December 31, 2000.

NOTE 15 - COMMITMENTS AND CONTINGENCIES

(A)     Employment Agreements - The Company is party to employment agreements with several of its officers that provide for annual base salaries, target bonus levels, severance pay under certain conditions, and certain other benefits.

(B)     Operating Leases - The Company leases its manufacturing facilities, including land and building, under a 15 year operating lease expiring August 31, 2005.

The terms of the lease provide the Company with an option at any time during the lease term to purchase the property at the greater of its fair market value or $4,320,000. The Company has the option to renew the lease for up to two additional five-year periods. The Company is responsible for paying all taxes, insurance and maintenance cost relating to the leased property. The lease provides for an adjustment in the annual rent based on changes in the Consumer Price Index, limited to a minimum of the prior year's rent and a maximum of 6%. The Company also leases offices in several locations under leases expiring at various dates.

The Company also leases various equipment under operating leases expiring in one to two years.

Future minimum lease payments for all noncancellable operating leases at December 31, 2000 are as follows:

2001	$2,086,287
2002	1,886,340
2003	1,798,113
2004	1,492,651
2005	1,194,05
Thereafter	11,718
	$8,469,814

40

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Rental expense for operating leases totaled approximately $1,250,000, $763,000 and $744,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

(C)     Legal Proceedings - From time to time, the Company is a party to litigation, which arises, in the normal course of business. There is no litigation pending, or to the Company's knowledge, threatened that, if determined adversely, would have a material adverse effect upon the business or financial condition of the Company.

In August, 1999, a former employee commenced an action against Teltronics in the Circuit Court, Twelfth Judicial Circuit, Sarasota County, Florida seeking damages for alleged violations of the Florida Worker's Compensation Law and the Family and Medical Leave Act. An answer with affirmative defenses was served and the action is being defended.

In September, 1999, Teltronics and its subsidiary, ISI, were served with a counterclaim in connection with litigation commenced in July, 1998, by Teltronics and ISI in the United States District Court for the Middle District of Florida against two former employees and entities they control. Teltronics' and ISI's complaint sought damages and equitable relief against the defendants for breach of fiduciary duties and contract obligations; fraud; conversion; theft of trade secrets; interference with contracts and business relations; and violations of federal and state anti-fraud statutes. During the trial in May, 2000, certain claims of Teltronics and ISI against the defendants and the counterclaims made by the defendants against Teltronics and ISI were withdrawn. After trial of the remaining claims of Teltronics and ISI against the defendants, the jury rendered a verdict that awarded Teltronics and ISI approximately $16 million from the defendants. In August, 2000, the Court ordered a new trial of the damages owed to Teltronics and ISI.

In November, 2000, Teltronics, ISI and the defendants entered into a Settlement Agreement under which the defendants agreed to pay Teltronics $700,000 in cash and deliver restricted shares of the voting common stock of Intelliworxx in escrow ("Intelliworxx Shares") which could result in Teltronics receiving an additional $4,550,000 over two years upon resale of the Intelliworxx Shares based upon the price of Intelliworxx Shares at the time of resale. The Settlement payments are conditioned upon closing of a private equity placement by Intelliworxx which has not occurred. If the private placement is not consummated, it could result in a new trial in May, 2001 of the damages owed to Teltronics and ISI by the defendants. There can be no assurance that the Intelliworxx private placement will occur or if it occurs that Teltronics will be successful in collecting the Settlement payments agreed to be paid by the defendants.

In May, 2000, Teltronics was named in an action commenced in the Circuit Court for the County of St. Clair, Michigan by two former shareholders of Cascade Technology Corporation ("Cascade") seeking release of 52,117 shares of Teltronics' common stock held in escrow ("Escrow Stock") and damages, interest and attorneys fees. The Escrow Stock was issued in February, 1999 and placed in escrow to secure indemnification rights of Teltronics under its purchase of certain rights and technology from one of the former shareholders of Cascade. Teltronics served an Answer with affirmative defenses and a counterclaim seeking delivery of the Escrow Stock to Teltronics.

NOTE 16 - SHAREHOLDERS' EQUITY

The total number of shares of all classes of capital stock which the Company has the authority to issue is 50,000,000 shares divided into three classes of which 5,000,000 shares, par value $.001 per share are designated Preferred stock, 40,000,000 shares, par value $.001 per share are designated Common stock and 5,000,000 shares, par value $.001 per share, are designated Non-Voting Common stock.

41

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(A)     Preferred Stock - On February 16, 1998, the Company reduced the number of authorized shares designated as Preferred Series A Stock from 250,000 to 100,000 such shares.

On February 16, 1998, the Company authorized 25,000 shares of Preferred Series B Convertible Stock at a par value of $.001 per share.

On February 25, 1998, the Company issued 25,000 shares of Preferred Series B Convertible Stock for $2,500,000. The Preferred Series B Convertible Stock provides for a $12 per share annual dividend, payable quarterly starting May 15, 1998. The dividend increases to $20 after four years. Fees paid in connection with this Preferred Stock totaled $12,500. The holder of the Preferred Series B Convertible Stock has the right at its option to convert to the Company's Common Stock at $2.75 per share. The Preferred Series B Convertible Stock cannot be called for two years and after two years, only if the twenty-day average bid price of the Company's common stock exceeds $5.50 per share. After four years, the Company has the right to redeem the Preferred Series B Convertible Stock in full at 100% of the face value plus accrued and unpaid dividends. The Preferred Series B Convertible Stock contains certain financial covenants.

(B)     Warrants - On February 25, 1998, the Company issued 890,000 warrants to purchase the Company's common stock at an exercise price of $2.75 per share. These warrants are exercisable in whole, or in part, at any time during a five year period beginning on the date of issuance. The fair value of the warrants was recorded as deferred financing costs and totaled $569,600. This amount is being amortized to financing expense over the life of the Subordinated Secured Debentures and Senior Secured Loans.

(C)     Incentive Stock Option Plan - The Company adopted an Incentive Stock Option Plan ("Plan") to enhance the Company's ability to retain the services of outstanding personnel and encourage such employees to have a greater financial investment in the Company. The Plan will terminate August 8, 2005 unless terminated earlier by the Board of Directors or extended by the Board with approval of the stockholders. The Plan authorizes the Board to grant stock options intended to qualify as incentive stock options under the Internal Revenue Code of 1986, as amended, to key employees of the Company or its subsidiaries, and is limited to 2,500,000 shares of the Company's common stock. The term of an option shall be fixed by the Board. The option price shall not be less than the fair market value of the Company's Common Stock on the date of grant, unless the grantee is the holder of more than 10% of the voting power of all classes of stock of the Company, in which case the option price shall not be less than 110% of the fair market value of the stock on the date of grant.

The following table summarizes certain weighted average data for options outstanding and currently exercisable as of December 31, 2000:

		Outstanding			Exercisable
		Weighted Average
Exercise Price Range	Shares	Exercise Price	Remaining Contractual Life		Shares	Weighted Average Exercise Price
$1.63 - $3.03	735,000	$2.05	8.1		253,600	$1.81
$3.50	66,000	3.50	5.9		66,000	3.50
$5.50	550,000	5.50	5.6		550,000	5.50
	1,351,000		7.0		869,600

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The per share weighted average fair value of options granted during the years ended December 31, 2000, 1999 and 1998 were $2.29, $1.21 and $1.99, respectively. All options were granted at not less than the fair market value at date of grant. All options are exercisable over periods ranging from five to ten years from the date of grant unless employment is terminated. Options totaling 1,139,000 shares were available for grant at December 31, 2000. The Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation". Accordingly, no compensation cost has been recognized for the Plan. Had compensation costs for the Plan been determined based on the fair value at the grant dates for the awards consistent with the provisions of SFAS No. 123, the Company's net income (loss) and net income (loss) per share would have been adjusted to the pro forma amounts indicated below.

For purposes of pro forma disclosures, the fair value for options was estimated at the date of grant using the Black-Scholes option pricing model. Information regarding the Company's Stock Option Plan is summarized below:

Weighted Average Assumptions:

		2000		1999		1998
Risk-free interest rates		6.4%		6.5%		6.4%
Weighted average expected life of the options		5.0 years		5.0 years		5.0 years
Volatility factor of the expected market price      of the Company's Common Stock		87%		83%		85%
Dividend yield		None		None		None
Net income (loss) as reported		$(1,485,181)		$1,243,624		$380,856
Pro forma net income (loss)		$(1,546,648)		$1,226,273		$275,038
Pro forma net income (loss) per share:
	Basic	$(0.38)		$0.26		$0.01
	Diluted	$(0.38)		$0.24		$0.01

Weighted average exercise prices for option activity:

		Number of Shares		Weighted Average Exercise Price
Outstanding, December 31, 1997		871,000		$4.27
	Granted	50,000		2.84
	Exercised	0		.00
	Forfeited	(20,000)		1.66
	Expired	0		.00
Outstanding, December 31, 1998		901,000		$4.24
	Granted	167,000		1.72
	Exercised	0		.00
	Forfeited	(56,000)		2.59
	Expired	0		.00
Outstanding, December 31, 1999		1,012,000		$3.93
	Granted	368,000		2.24
	Exercised	(6,000)		1.75
	Forfeited	(23,000)		1.88
	Expired	0		.00
Outstanding, December 31, 2000		1,351,000		$3.52
Exercisable, December 31, 2000		869,600		$4.27

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The pro forma information is based on options granted which varies from year-to-year and is not necessarily indicative of pro forma information for future periods.

NOTE 17 - RELATED PARTY TRANSACTIONS

The following is a summary of transactions with related parties:

(A)     Prepaid Lease Guarantee - A Director personally guaranteed a portion of the Company's obligations to the lessor over the term of the lease. The Company agreed to pay 6% of the total future value of the lease payments, excluding executory costs, as consideration for this guarantee. This amount was paid during 1991. The cost of the guarantee to the Company, 6% of $7,000,000 or $420,000 has been deferred as a financing cost (prepaid lease guarantee) in the accompanying financial statements and is amortized on a straight line basis over the term of the lease. Accumulated amortization of this amount at December 31, 2000 and 1999 was $291,708 and $262,908, respectively.

(B)     Office Sublease - A company owned by a Director and principal shareholder of the Company rents offices from the Company and was billed $37,200, $39,200 and $51,721 in 2000, 1999 and 1998, respectively.

NOTE 18 - INCOME TAXES

The components of the income tax provision are as follows:

	Years ended December 31,
	2000		1999		1998
Current:
Federal	$  28,390		$     0		$     0
State	$  17,948		0		0
	46,338		0		0
Deferred:
Federal	0		0		0
State	0		0		0
	0		0		0
	$  46,338		$     0		$     0

The following is a reconciliation of income tax expense recognized to that computed by applying the federal statutory rate of 34% in 2000, 1999 and 1998 to income before income taxes:

	Years ended December 31,
	2000		1999		1998
Federal tax at the statutory rate	$(489,207)		$422,832		$129,491
State income taxes net of federal tax benefit	(47,872)		48,493		24,558
Change in valuation allowance for deferred      tax asset	512,016		(415,769)		(229,842)
Other items	71,401		(55,556)		75,793
	$   46,338		$          0		$          0

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Significant components of the Company's deferred tax assets and liabilities are as follows:

		Years ended December 31,
		2000		1999		1998
Deferred tax assets:
	Net operating loss carryforward	$2,646,804		$2,892,758		$3,255,488
	Accrued vacation	88,444		142,948		118,420
	Inventory	738,052		423,247		499,668
	Alternative minimum tax credit	33,688		0		0
	Other	8,082		1,335		0
	Bad debt reserve	95,392		83,267		41,393
	Accrued expenses	119,424		71,497		29,163
		3,829,886		3,615,052		3,944,132
	Valuation allowance	(3,779,510)		(3,267,495)		(3,683,264)
Deferred tax liabilities:
	Fixed assets	50,376		(335,350)		(232,991)
	Software costs	0		(12,207)		(27,877)
	Net deferred tax asset	$             0		$             0		$             0

During the years ended December 31, 2000 and 1999, the Company recorded a valuation allowance on its deferred tax assets to reduce the total to an amount that management believes will be realized. Realization of deferred tax assets is dependent upon sufficient taxable income during the period that temporary differences and carryforwards are expected to be available to reduce taxable income.

At December 31, 2000, for federal income tax purposes, the Company had a net operating loss carryforward of approximately $6,900,000 and a Florida state net operating loss carryforward of approximately $8,000,000, which will expire in the years 2009 through 2020. Such net operating losses are available to offset future taxable income.

NOTE 19 - SEGMENT INFORMATION

The Company's operations are classified into two reportable segments, Teltronics and ISI. Each reportable segment is staffed separately, requires different technology and marketing strategies and sells to different customers.

The accounting policies of the Segments are the same and are described in the Summary of Significant Accounting Policies. Intersegment sales and transfers are recorded at Teltronics' cost plus a normal margin for electronic manufacturing. Corporate overhead is allocated between Teltronics and ISI based on usage for administration expenses and net investment for interest. Company management evaluates performance based on segment profit, which is net income or (loss) before taxes, excluding nonrecurring gains or losses.

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TELTRONICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents information about reportable segment operations and assets.

		Year ending December 31,
		2000	1999	1998
Net Sales
Teltronics:
	Telecommunications	$42,248,000	$32,683,000	$25,012,000
	AT Supply distribution (1)	0	0	1,278,000
ISI		956,000	35,000	739,000
Elimination of Intersegment sales		0	(73,000)	(234,000)
	Total sales	$43,204,000	$32,645,000	$26,795,000
Depreciation and Amortization
Teltronics:
	Telecommunications	$1,410,000	$825,000	$739,000
	AT Supply distribution (1)	0	0	1,000
ISI		515,000	523,000	276,000
	Total depreciation and amortization	$1,925,000	$1,348,000	$1,016,000
Interest and Financing Costs
Teltronics:
	Telecommunications	$1,299,000	$688,000	$817,000
	AT Supply distribution (1)	0	0	32,000
ISI		325,000	499,000	499,000
	Total interest and financing costs	$1,624,000	$1,187,000	$1,348,000
Segment Profits
Teltronics:
	Telecommunications	$555,000	$4,340,000	$997,000
	AT Supply distribution (1)	0	0	6,000
ISI		(2,040,000)	(3,208,000)	(1,870,000)
	Total	(1,485,000)	1,132,000	(867,000)
Gain on dispositions		0	112,000	1,248,000
	Net Income (loss) after taxes	$(1,485,000)	$1,244,000	$381,000
Segment Assets
Teltronics:
	Telecommunications	$29,337,000	$14,874,000	$13,086,000
	AT Supply distribution (1)	0	0	0
ISI		194,000	921,000	1,345,000
	Total segment assets	$29,531,000	$15,795,000	$14,431,000
Acquisition of Property and Equipment
Teltronics:
	Telecommunications	$752,000	$498,000	$409,000
	AT Supply distribution (1)	0	0	0
ISI		26,000	155,000	541,000
	Total acquisition of property and equipment	$778,000	$653,000	$    950,000
(1)	AT Supply was sold on March 6, 1998. See Note 4 of the consolidated financial statements.

Information on major customers is discussed in the Summary of Significant Accounting Policies. Sales to foreign countries were insignificant. All assets are located in the United States.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

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PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors and Executive Officers

     The following table sets forth the names, ages and positions of all directors and executive officers of the Company.

Name (1)	Age	Position
Ewen R. Cameron	48	Director, President, Chief Executive Officer and Assistant Secretary
William L. Hutchison	55	Executive Vice President, Chief Operating Officer and Assistant Secretary
Peter G. Tuckerman	54	Vice President Product Management
Robert B. Ramey	43	Vice President Electronic Manufacturing
Jeffrey L. Box	48	Vice President Development, Chief Technical Officer
Alan R. Place	51	Vice President Sales
Norman R. Dobiesz	53	Director and Senior Vice President Business Development
Carl S. Levine	54	Director
Gregory G. Barr	41	Director

________________

     (1)     Mark E. Scott served as Vice President Finance, Secretary and Treasurer of the Company until February 9, 2001.

     The Company's Directors will serve until the annual meeting of stockholders or until their successors are elected and qualified.

     Ewen R. Cameron has served as President and Chief Executive Officer since July 1993 and a Director since June 1994. Prior to that, Mr. Cameron served as Managing Director of SRH plc, a European telecommunications and computer maintenance company from 1989 to 1992. From January 1978 to December 1989, Mr. Cameron served as Managing Director of Systems Reliability Europe SA/NV, a wholly owned subsidiary of SRH plc based in Brussels, Belgium. Mr. Cameron has spent the last 29 years in the computer and telecommunications industry.

     William L. Hutchison, Executive Vice President of the Company has been involved in the telecommunications industry for 30 years having held various outside plant and engineering positions with the Bell System and United Telephone Company. He was a Product Manager for Pulsecom Division of Harvey Hubbell, Inc., from 1970 to 1974 before leaving to form his own company, ComDev, Inc., where he worked from 1974 through 1985, which in 1990 was acquired by the Company. He served as President and CEO and was a founder of Voice Computer Technology from April 1984 through July 1990. He also served as Vice President of Marketing for Shared Resource Exchange from July 1989 through July 1992, Vice President of Marketing for Melita International July 1992 through December 1994, and Vice President for Computer Communications Systems from December 1994 through October 1996, both leaders in emerging computer-telephony integrated technology industries. Mr. Hutchison received an undergraduate degree from Texas Tech and holds an MBA from Emory University.

     Peter G. Tuckerman, Vice President Product Management, joined the Company in September of 1977. Since that time he has served in various R & D, Marketing and Product Management roles. Prior to joining the Company he was a principal in MicroWare, Inc., a developer of custom microcomputer software for telecommunications applications.

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     Robert B. Ramey joined the Company as Vice President, Manufacturing Operations in January 1995. Prior to joining the Company Mr. Ramey served twelve years with Loral Data Systems, a Defense and Commercial electronic equipment manufacturer. Mr. Ramey has held diverse management positions including, Manufacturing Engineering, Industrial Engineering, Program Management, Telecommunications Production, Surface Mount Assembly and Total Quality Management. Mr. Ramey has been in the electronics industry over 16 years.

     Jeffrey L. Box, Vice President of Development and Chief Technical Officer, joined the Company in November of 1996. In 1983, Mr. Box was one of the founders of Shared Resource Exchange, Inc. (SRX), where he served as vice president until the acquisition by Teltronics in 1996. At SRX, he was the original architect of the switching platforms that have evolved into the present Teltronics Vision® product line. Prior to 1983, he held various engineering & management positions with Vought Corp., Arthur A. Collins, Inc., Rockwell International, and United Technologies. Mr. Box hold B.S.E.E. and M.S.E.E. degrees from Southern Methodist University and is a registered professional engineer in Texas.

     Alan R. Place, Vice President of Sales, joined the Company in April of 1999. Prior to this, Mr. Place was with Norstan Communications, Inc. for 12 years. Mr. Place served in various sales 1994 through 1997 and as Vice President/Central US geography until joining the company. Mr. Place was with the Dictaphone division of Pitney Bowes Corporation from 1982 to 1988 and served in various sales and management positions, including Branch Manager and District Manager. Mr. Place has spent the last 21 years in the computer and telecommunications industries. Mr. Place holds an A.S. degree from Corning College, Corning, NY and a B.A. degree from the Ohio State University.

     Norman R. Dobiesz has served as a Director of the Company since October 25, 1991 and is the Company's Senior Vice President, Business Development. Mr. Dobiesz has developed substantial financial and general management experience as a principal stockholder and executive of a group of privately held companies controlled by Mr. Dobiesz. Mr. Dobiesz is a principal stockholder of the Company.

     Carl S. Levine has served as a Director of the Company since July 27, 1988. Mr. Levine is an attorney who has been engaged in private practice in New York, New York from 1977 to 1981, and in Garden City, New York from 1981 to June 1985. Mr. Levine is presently the senior partner in the law firm of Carl S. Levine & Associates, Roslyn, New York. He specializes primarily in the practice of energy, environmental and tax law. Prior to entering private practice, Mr. Levine was employed as counsel for New York Regional Office of the United States Department of Energy.

     Gregory G. Barr is currently Area President of Gulf Coast National Bank, Fort Myers, Florida. Prior to that, Mr. Barr was employed as Senior Vice President, Senior Lender for SouthTrust Bank. From 1987 to 1997 Mr. Barr was employed by Barnett Bank, Inc. as Senior Vice President and Commercial Banking Manager for Manatee County. Mr. Barr has experience in Commercial Banking, Finance, Accounting and Capital Markets transactions. He is a graduate of Salem State College, Salem, Massachusetts holding a Bachelor of Science in accounting. Mr. Barr has served as a Director of the Company since June 4, 1999.

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Item 11. EXECUTIVE COMPENSATION

Summary Compensation

     The following table sets forth the annual and long-term compensation paid by the Company during the years indicated to the Chief Executive Officer and its five (5) other, most highly paid executive officers whose total salary and bonus exceeded $100,000 for the year ended December 31, 2000 (collectively, the "Named Officers").

		Annual Compensation				Long Term Compensation
						Awards		Payouts
Name and Principal Position	Year	Salary		Bonus	Other Annual Compen- sation (1)	Restricted Stock Awards	Securities Underlying Options/ SARs(#)	LTIP Payouts	All Other Compen- sation
Ewen R. Cameron President & CEO	2000 1999 1998	$352,574 377,704 287,532	(2) (2)	--- --- ---	--- --- ---	--- --- --	--- --- ---	--- --- ---	--- --- ---
Norman R. Dobiesz Senior Vice President Business Development	2000 1999 1998	$352,574 377,704 287,209	(2) (2)	--- --- ---	--- --- ---	--- --- ---	--- --- ---	--- --- ---	--- --- ---
William L. Hutchison Executive Vice President & COO	2000 1999 1998	$215,000 208,740 183,986	(3)	$15,000 15,000 ---	--- --- --	--- --- ---	15,000 10,000 ---	--- --- ---	--- --- $7,828
Jeffrey L. Box Vice President Development & CTO	2000 1999 1998	$136,322 129,654 126,545		--- $15,000 ---	--- --- ---	--- --- ---	5,000 5,000 ---	--- --- ---	--- --- ---
Alan R. Place Vice President Sales	2000 1999	$191,892 142,836	(4)	--- ---	--- ---	--- ---	--- 20,000	--- ---	--- $36,723
Mark E. Scott Vice President Finance Secretary & Treasurer	2000 1999 1998	$134,945 112,967 103,524	(5) (5) (5)	--- $15,000 7,000	--- --- ---	--- --- ---	10,000 --- ---	--- --- ---	--- --- $14,879

(1)	Certain personal benefits that aggregate less than ten percent (10%) of the total cash compensation of any of the executive officers or which cannot be readily ascertained are not included.
(2)	Salary for 1999 for Messrs. Cameron and Dobiesz includes $50,000 total accrued, but not paid during both 1998 and 1997.
(3)	All other compensation consists of relocation expenses.
(4)	Alan R. Place was hired April 12, 1999. All other compensation consists of relocation expenses.
(5)	Mark E. Scott served as the Company's Vice President, Finance, Secretary and Treasurer until February 9, 2001. Mr. Scott's options to purchase Common Stock of the Company were cancelled on February 9, 2001.

Employment Agreements

     The Company entered into five (5) year employment agreements with Ewen Cameron, President, Chief Executive Officer and Assistant Secretary, and Norman R. Dobiesz, Senior Vice President, Business Development commencing May 1, 1999. Both agreements were amendments and restatements of prior agreements which the employees entered into with the Company as of January 1, 1995. Each employment agreement is renewable for an additional five (5) year period at the employees' option and provides for a base annual salary of $325,000 subject to annual increases of $25,000 per year. Either of the Company or the employee may terminate the employment agreements upon the occurrence of certain events. If the

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Company terminates the employment of Mr. Cameron or Mr. Dobiesz, the terminated employee will be entitled to severance equal to one year's base salary.

     On October 14, 1996, the Company entered into a three (3) year employment agreement with William L. Hutchison, the Company's Executive Vice President, Chief Operating Officer and Assistant Secretary. The employment agreement provides for an annual salary of $207,000 and is terminable prior to expiration of its stated term upon the occurrence of certain events. If Mr. Hutchison's employment agreement is terminated prior to its scheduled expiration without cause or for failure to adequately perform, in the Company's judgment, the services, duties and responsibilities assigned by the Company, whether or not such failure is intentional, Mr. Hutchison will be entitled to severance equal to six (6) month's salary.

Employee Stock Purchase Plan

     On October 23, 2000, the Shareholders ratified adoption of an Employee Stock Purchase Plan ("ESPP") under which employees of the Company and its subsidiaries are provided the opportunity to acquire common stock of the Company under the Internal Revenue Code of 1986, as amended, at 85% of fair market value. An aggregate of 500,000 common shares are available under the ESPP. The ESPP became effective on June 19, 2000 upon adoption by the Company's Board of Directors. As of the date of this Annual Report on Form 10-K, no employees have purchased common shares under the Plan.

1995 Incentive Stock Option Plan

     The Company adopted an Incentive Stock Option Plan, as amended ("Plan") to enhance the Company's ability to retain the services of outstanding personnel and encourage such employees to have a greater financial investment in the Company. The Plan authorizes the Board of Directors to grant incentive stock options under the Internal Revenue Code of 1986, as amended, to key employees of the Company or its subsidiaries. At the date of this Form 10-K there are approximately ninety employees eligible to participate in the Plan. The Plan is administered by the Board of Directors which has full power and authority to designate Participants, to determine the terms and provisions of respective option agreements (which need not be identical) and to interpret the provisions of the Plan. The Plan became effective May 16, 1995, was amended July 30, 1996 and will terminate August 8, 2005 unless earlier terminated by the Board of Directors or extended by the Board with approval of the stockholders.

     An aggregate of 2,490,000 shares of the Company's Common Stock may be issued or transferred to grantees under the Plan. If there is a stock split, stock dividend or other relevant change affecting the Company's shares, appropriate adjustments will be made in the number of shares that may be issued or transferred in the future and in the number of shares and price of all outstanding grants made before such event. The option price shall not be less than the fair market value of the Company's Common Stock on the date of grant, unless the grantee is the holder of more than 10% of the voting power of all classes of stock of the Company, in which case the option price shall not be less than 110% of the fair market value of the stock on the date of grant. The Company has registered all of shares issuable under this Plan on Form S-8.

     Options may be exercised solely by the Participant or his or her legal representative during his or her employment with the Company, or any subsidiary, or after his or her death by the person or persons entitled thereto under his or her will or the laws of descent and distribution. In the event of termination of employment for any reason other than death, permanent disability as determined by the Board, or retirement with the consent of the Company, Options may not be exercised by the Participant or his or her legal representative and shall lapse effective upon the earlier to occur of (i) notice of employment termination or (ii) last day of employment with the Company or any Subsidiary.

     During 2000, the Company issued options to purchase 318,000 shares to non-executive employees and 50,000 shares to executive employees. During 2000, the Company canceled options previously granted to non-executive employees to purchase 23,000 shares of common stock. In each case, unless

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the recipient of a grant was the holder of more than 10% of the Company's issued and outstanding Common Stock, the fair market value of the Common Stock on the date of grant determined the exercise price.

Option/SAR Grants in Last Fiscal Year

Name	Number of Securities Underlying Options/SARs Granted (#) (1)	% of Total Options/SARs Granted to Employees in Fiscal Year (1)	Exercise or Base Price ($/Sh)	Expiration Date
William L. Hutchison	15,000	4.1%	$1.00	2010
Mark E. Scott (2)	10,000	2.7%	$1.00	2010
Jeffrey L. Box	5,000	1.4%	$1.00	2010

________________________________

(1)	Represents options only. No SARs have been granted.
(2)	Mark E. Scott served until February 9, 2001. Effective that date Mr. Scott's options were cancelled.

Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

			Number of Securities Underlying Unexercised Options/SARs at FY-Ended (#)	Value of Unexercised In-the-Money Options/SARs at FY-End ($)
Name	Shares Acquired on Exercise (#)	Value Realized ($)	Exercisable/ Unexercisable	Exercisable/ Unexercisable
Ewen R. Cameron	0 0	0 0	30,000/0 400,000/100,000	$0/$0 (1) $0/$0 (1)
Norman R. Dobiesz	0	0	30,000/0	$0/$0 (2)
William L. Hutchison	0 0 0 0	0 0 0 0	24,000/6,000 12,000/8,000 2,000/8,000 0/15,000	$0/$0 (3) $0/$0 (3) $0/$0 (3) $0/$945
Jeffrey L. Box	0 0 0	0 0 0	16,000/4,000 1,000/4,000 0/5,000	$0/$0 (4) $0/$0 (4) $0/$315
Alan R. Place	0	0	4,000/16,000	$0/$0 (5)
Mark E. Scott	0 0	0 0	18,000/12,000 0/10,000	$0/$0 (6) $0/$630

(1)	None of the options granted to Mr. Cameron in 1995 and 1996 to purchase an aggregate of 530,000 shares were in-the-money at December 31, 2000 because they are exercisable at prices greater than the fair market value of the Company's Common Stock on such date.
(2)	None of the options granted to Mr. Dobiesz in 1995 to purchase an aggregate of 30,000 shares were in-the-money at December 31, 2000 because they are exercisable at prices greater than the fair market value of the Company's Common Stock on such date.

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(3)	None of these options granted to Mr. Hutchison in 1996, 1997 and 1999 to purchase an aggregate of 60,000 shares were in-the-money at December 31, 2000 because they are exercisable at prices greater than the fair market value of the Company's Common Stock on such date.
(4)	None of these options granted to Mr. Box in 1996 and 1997 to purchase an aggregate of 25,000 shares were in-the-money at December 31, 2000 because they are exercisable at prices greater than the fair market value of the Company's Common Stock on such date.
(5)	None of these options granted to Mr. Place in 1999 to purchase an aggregate of 20,000 shares were in-the-money at December 31, 2000 because they are exercisable at prices greater than the fair market value of the Company's Common Stock on such date.
(6)	None of these options granted to Mr. Scott in 1997 to purchase an aggregate of 30,000 shares were in-the-money at December 31, 2000 because they are exercisable at prices greater than the fair market value of the Company's Common Stock at such date. Mr. Scott's options were cancelled February 9, 2001.

Director Compensation

     On August 12, 1996, the Company adopted a policy to compensate members of its Board of Directors in the amount of $2,500 for each meeting and reimburse expenses for attending meetings of the Board of Directors.

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Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information with respect to the beneficial ownership of all of the Company's outstanding voting securities by each person owning five percent (5%) or more of such shares, by each director, by each executive officer listed in Item 10 of this Report on Form 10-K, and by all directors and officers as a group as of March 16, 2001. Unless otherwise indicated, it is assumed that all shares are directly owned and that the holders thereof have sole voting and investment power with respect thereto.

Name of Beneficial Owner and Address	Title of Class	Amount and Nature of Beneficial Ownership (1)	Percentage of Class (1)
Directors and Officers
Norman R. Dobiesz       (2)(3)(4) 2150 Whitfield Industrial Way Sarasota, Florida 34243	Common Stock Preferred Series A Stock	1,277,197    100,000	26.9% 100%	(10)
Carl S. Levine                 (2) 1800 Northern Blvd. Roslyn, New York 11576	Common Stock	6,690	---	(5)(6)(10)
Ewen R. Cameron          (2)(4) 2150 Whitfield Industrial Way Sarasota, Florida 34243	Common Stock	13,360	---	(5)(7)(10)
William L. Hutchison       (4) 2150 Whitfield Industrial Way Sarasota, Florida 34243	Common Stock	14,000	---	(8)
Gregory G. Barr              (2) P. O. Box 60299 Ft. Myers, Florida 33906-6299	Common Stock	2,000	---	(5)(11)
Mark E. Scott                  (4) 2150 Whitfield Industrial Way Sarasota, Florida 34243	Common Stock	0	---	(9)
Alan R. Place                  (4) 2150 Whitfield Industrial Way Sarasota, Florida 34243	Common Stock	5,000	---	(12)
Jeffrey L. Box                  (4) 2150 Whitfield Industrial Way Sarasota, Florida 34243	Common Stock	11,329	---	(13)
All Directors and Officers as a Group (11 persons)	Common Stock	1,331,496	27.6%
Greater than 5% Ownership    (14)
Finova Mezzanine Capital Corp. (15) 500 Church Street, Suite 200 Nashville, Tennessee 37219	Preferred Series B      Convertible Stock Common Stock	12,625    293,400	100% 6.6%
Famco III Limited Liability Company 701 Xenia Avenue South, Suite 200 Golden Valley, Minnesota 55416	Common Stock	269,953	5.6%

(1)

Does not include (i) an aggregate of 2,490,000 shares of Common Stock which may be issued upon exercise of incentive stock options granted or which could be granted under the Company's 1995 Incentive Stock Option Plan; (ii) possible issuance of up to 1,349,091 shares of Common Stock subject to adjustment, which may be issued upon: (a) conversion of the Preferred Series B Stock, and (b) the exercise of 890,000 Warrants issued to Finova Mezzanine Capital exercisable at a price of $2.75 per share, subject to adjustment; and (iii) an aggregate of 500,000 shares of Common Stock which may be issued under the Company's 2000 Employee Stock Purchase Plan. See BUSINESS - GENERAL.

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(2)	Director of the Company.
(3)	Includes 56,000 shares owned by virtue of 100% ownership of H & N Management Co., Inc. ("H&N"), 1,140,000 shares owned by virtue of 100% ownership of W&D Consultants, Inc., and 4,455 shares owned by virtue of 67% ownership of Whitfield Capital of Sarasota, Inc. Excludes: (i) 100,000 shares of Preferred Series A Stock owned by Mr. Dobiesz, each such share entitling the holders to cast 400 votes, in any matter submitted for vote of the holders of common stock, and (ii) 30,000 shares issuable under incentive stock options exercised by Mr. Dobiesz in May 2000.
(4)	Executive Officer of the Company named in Item 11 of this Report on Form 10-K.
(5)	Beneficially owns less than 1% of the Company's outstanding Common Stock.
(6)	Includes: (i) 2,000 shares held by Mr. Levine's wife; and (ii) 950 shares held by Mr. Levine's wife, as custodian for Mr. Levine's children, respecting which shares Mr. Levine disclaims beneficial ownership. Does not include up to 100,000 shares which may be issued upon exercise of incentive stock options by Mr. Levine.
(7)	Does not include up to 1,030,000 shares which may be issued upon exercise of incentive stock options by Mr. Cameron.
(8)	Does not include up to 75,000 shares which may be issued upon exercise of incentive stock options by Mr. Hutchison. Includes 4,000 shares held by Mr. Hutchison's wife in her IRA respecting which shares Mr. Hutchison disclaims beneficial ownership.
(9)	Does not include up to 40,000 shares formerly issuable under incentive stock options cancelled February 9, 2001.
(10)	Does not include 5% minority ownership in ISI.
(11)	Includes 2,000 shares owned jointly with Mr. Barr's wife. Does not include up to 10,000 shares which may be issued upon exercise of incentive stock options by Mr. Barr.
(12)	Does not include up to 20,000 shares which may be issued upon exercise of incentive stock options by Mr. Place.
(13)	Does not include up to 30,000 shares which may be issued upon exercise of incentive stock options by Mr. Box.
(14)	The information concerning these 5% or greater stockholders is based solely on information contained in Schedule 13D filings each of them made with the SEC.
(15)	Does not include possible issuance of up to 1,349,091 shares of Common Stock issuable upon Finova's (i) conversion of the Preferred Series B Stock, and (ii) the exercise of 890,000 Warrants exercisable at a price of $2.75 per share, subject to adjustment.

Change of Control. The holders of the Preferred Convertible Series B Stock have the right to elect a majority of the Board of Directors of the Company if and whenever four quarterly dividends (whether or not consecutive) payable on the Preferred Convertible Series B Stock shall be in arrears.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Effective May 1, 1999 the Company entered into five (5) year employment agreements with Ewen Cameron, President & CEO, and Norman R. Dobiesz, Senior Vice President Business Development. See EXECUTIVE COMPENSATION - Employment Agreements.

     The Company has an outstanding note payable to an officer, which is payable on demand with interest accruing at 8% per annum. The balance at December 31, 2000 and 1999 was $64,035 and $59,128, respectively.

     A Director personally guaranteed a portion of the Company's obligations to the lessor over the term of the lease. The Company agreed to pay 6% of the total future value of the lease payments, excluding executory costs, as consideration for this guarantee. This amount was paid during 1991. The cost of the guarantee to the Company, 6% of $7,000,000 or $420,000 has been deferred as a financing cost (prepaid

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lease guarantee) in the accompanying financial statements and is amortized on a straight line basis over the term of the lease. Accumulated amortization of this amount at December 31, 2000 and 1999 was $291,708 and $262,908, respectively.

     A company owned by a Director and principal shareholder of the Company rents offices from the Company and was billed $37,200, $39,200 and $51,721 in 2000, 1999 and 1998.

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PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)	The following documents are filed as a part of this report:
	(1)	Financial Statements:
		The financial statements filed as part of this report are listed on the Index to Consolidated Financial Statements on Page 23.
	(2)	Financial Statement Schedules:
		Schedule II - Valuation and Qualifying Accounts is on page 56.
		All other consolidated financial statement schedules have been omitted because the required information is shown in the consolidated financial statements or notes thereto or they are not applicable.
(b)	Reports on Form 8-K:
	No Reports on Form 8-K were filed during the fourth quarter of fiscal year ended December 31, 2000.

(c)	Exhibits:
3.1	Restated Certificate of Incorporation of Registrant, as amended. Filed as Exhibit 3.1 to Teltronics' Definitive Proxy Statement filed June 24, 1996.
3.2	By-Laws of the Registrant, as amended. Filed as Exhibit 3.2 to Teltronics' Annual Report on Form 10-KSB for the fiscal year ended December 31, 1996.
3.3	Certificate of Designations of Preference of Series A Preferred Stock of Teltronics, Inc. filed with the Delaware Secretary of State on August 19, 1996. Filed as Exhibit 3.3 to Teltronics' Form 8-K filed October 4, 1996.
3.4	Certificate of Designations Establishing Series of Shares and Articles of Amendment of Teltronics, Inc., filed with the Delaware Secretary of State on February 24, 1998. Filed as Exhibit 3.4 to Teltronics' Form 8-K filed March 9, 1998.
3.5	Amended Designation of Teltronics, Inc. filed with the Delaware Secretary of State on February 25, 1998. Filed as Exhibit 3.5 to Teltronics' Form 8-K filed March 9, 1998.
10.1	Loan and Security Agreement between Sirrom Capital Corporation and Teltronics, Inc. and its Subsidiaries dated February 25, 1998. Filed as Exhibit 10.164 to Teltronics' Form 8-K filed March 9, 1998.
10.2	Registration Rights Agreement dated February 25, 1998 between Teltronics, Inc. and Sirrom Capital Corporation. Filed as Exhibit 10.169 to Teltronics' Form 8-K filed March 9, 1998.
10.3	Secured Senior Promissory Note of Teltronics, Inc. in the principal amount of $280,000 dated February 26, 1998 delivered to Sirrom Capital Corporation. Filed as Exhibit 10.166 to Teltronics' Form 8-K filed March 9, 1998.
10.4	Common Stock Purchase Warrant covering 525,000 shares of Common Stock of Teltronics, Inc. issued to Sirrom Capital Corporation dated February 26, 1998. Filed as Exhibit 10.167 to Teltronics' Form 8-K filed March 9, 1998.
10.5	Common Stock Purchase Warrant covering 365,000 shares of Common Stock of Teltronics, Inc. issued to Sirrom Capital Corporation dated February 26, 1998. Filed as Exhibit 10.168 to Teltronics' Form 8-K filed March 9, 1998.

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10.6	Secured Senior Subordinated Promissory Note of Teltronics, Inc. in the principal amount of $1,000,000 dated February 28, 1998 delivered to Sirrom Capital Corporation. Filed as Exhibit 10.165 to Teltronics' Form 8-K filed March 9, 1998.
10.7	Agreement of Sale dated March 5, 1998 between AT Supply, Inc. and AT2 Communications, Incorporated. Filed as Exhibit 10.170 to Teltronics' Form 8-K filed March 19, 1998.
10.8	Amendment dated December 22, 1998, to Ninth Amendment to Loan and Security Agreement and First Note Modification Agreement dated July 23, 1997 between The CIT Group/Credit Finance, Inc. and Teltronics, Inc., AT Supply, Inc. and Interactive Solutions, Inc. Filed as Exhibit 10.1 to Teltronics' Annual Report on Form 10-K filed March 31, 1999.
10.9	Lease Rider No. 990325 dated March 25, 1999, between Teltronics, Inc. and SunShore Leasing Corporation. Filed as Exhibit 10.4 to Teltronics' Form 10-Q filed May 14, 1999.
10.10	Global Amendment dated March 29, 1999 between Sirrom Capital Corporation and Teltronics, Inc. and its Subsidiaries. Filed as Exhibit 10.1 to Teltronics' Form 10-Q filed May 14, 1999.
10.11	Amended and Restated Senior Secured Promissory Note in the amount of $1,000,000.00 dated and delivered March 29, 1999 by Teltronics, Inc. to Sirrom Capital Corporation. Filed as Exhibit 10.2 to Teltronics' Form 10-Q filed May 14, 1999.
10.12	Amended and Restated 12% Subordinated Secured Debenture Due February 13, 2002 dated and delivered March 29, 1999 by Teltronics, Inc. to Sirrom Capital Corporation. Filed as Exhibit 10.3 to Teltronics' Form 10-Q filed May 14, 1999.
10.13	Amended and Restated Employment Agreement between Teltronics, Inc. and Ewen R. Cameron dated May 3, 1999. Filed as Exhibit 10.1 to Teltronics' Form 10-Q filed August 2, 1999.
10.14	Amended and Restated Employment Agreement between Teltronics, Inc. and Norman R. Dobiesz dated May 3, 1999. Filed as Exhibit 10.2 to Teltronics' Form 10-Q filed August 2, 1999.
10.15	Agreement of Sale dated December 31, 1999 between Teltronics, Inc. and Telident, Inc. Filed as Exhibit 10.1 to Teltronics' Form 8-K filed January 14, 2000.
10.16	Amendment to Agreement of Sale dated February 16, 2000 between Teltronics, Inc., and Telident, Inc. Filed as Exhibit 10.1 to Teltronics' Form 8-K/A filed February 24, 2000.
10.17	Asset Sale Agreement dated June 30, 2000 by and between Teltronics, Inc. and Harris Corporation. Filed as Exhibit 10.1 to Teltronics' Form 8-K filed July 12, 2000.
10.18	Amended Agreement dated October 30, 2000 between Harris Corporation and Teltronics, Inc. Filed as Exhibit 10 to Teltronics' Form 10-Q filed November 13, 2000.
21*	List of Subsidiaries.
23*	Consent of Certified Public Accountants, Ernst & Young, LLP.
____ (*)	Filed as an Exhibit to this Annual Report on Form 10-K for the fiscal year ended December 31, 2000.

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SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

Description		Balance at Beginning of Period	Additions Charged to Costs and Expenses	Additions Charged to Other Accounts	Writeoffs		Balance at End of Period
Provision for doubtful accounts:
	Year ended December 31, 2000	$210,000	$89,199	$ 0	$(20,699)		$278,500
	Year ended December 31, 1999	110,000	129,876	0	(29,876)		210,000
	Year ended December 31, 1998	679,927	84,957	0	(654,884)	(1)	110,000

(1) Relates to the sale of AT Supply on March 6, 1998.

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SIGNATURES

           Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TELTRONICS, INC.
Dated: April 17, 2001	By: /s/ Ewen R. Cameron Ewen R. Cameron President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant in the capacities on the dates indicated.

SIGNATURES		TITLE	DATE
/s/ Ewen R. Cameron Ewen R. Cameron		Director, President and Chief Executive Officer	April 17, 2001
/s/ Norman R. Dobiesz Norman R. Dobiesz		Director	April 17, 2001
/s/ Carl S. Levine Carl S. Levine		Director	April 17, 2001
/s/ Gregory G. Barr Gregory G. Barr		Director	April 17, 2001

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