SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:

|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

Telebyte, Inc.
(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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|_| Fee paid previously with preliminary materials

|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, Schedule or Registration Statement no.:

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(3) Filing Party:

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(4) Date Filed:

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[LOGO] TELEBYTE INC.

270 Pulaski Road
Greenlawn, New York 11740

- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 26, 2002
- --------------------------------------------------------------------------------

To the Stockholders of Telebyte, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Telebyte, Inc., a Delaware corporation (the "Company"), will be
held at the Company's executive offices at 270 Pulaski Road, Greenlawn, New York
11740 on August 26, 2002 at 10:00 a.m., local time, for the following purposes:

(1) To elect a Board of four directors.

(2) To transact such other business as may properly come before the
Meeting.

Only stockholders of record at the close of business on July 8, 2002 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.

By Order of the Board of Directors

Kenneth S. Schneider
Chairman
Greenlawn, New York

July 23, 2002

================================================================================
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE URGE YOU TO
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS OF TELEBYTE, INC., AND RETURN IT IN THE PRE-ADDRESSED ENVELOPE
PROVIDED FOR THAT PURPOSE. A STOCKHOLDER MAY REVOKE HIS PROXY AT ANY TIME BEFORE
THE MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING A SUBSEQUENTLY DATED
PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
================================================================================

[LOGO] TELEBYTE INC.

270 Pulaski Road
Greenlawn, New York 11740

PROXY STATEMENT

SOLICITING, VOTING AND REVOCABILITY OF PROXY

This Proxy Statement is being mailed to all stockholders of record of
Telebyte, Inc. (the "Company") at the close of business on July 8, 2002 in
connection with the solicitation by the Board of Directors (the "Board") of
Proxies to be voted at the Annual Meeting of Stockholders (the "Meeting") to be
held at the Company's executive offices at 270 Pulaski Road, Greenlawn, New York
11740 on August 26, 2002 at 10:00 a.m., local time, or any adjournment thereof.
The Proxy and this Proxy Statement were mailed to stockholders on or about July
23, 2002.

All shares represented by Proxies duly executed and received will be voted
on the matters presented at the Meeting in accordance with the instructions
specified in such Proxies. Proxies so received without specified instructions
will be voted FOR the nominees named in the Proxy to the Company's Board of
Directors. The Board does not know of any other matters that may be brought
before the Meeting nor does it foresee or have reason to believe that Proxy
holders will have to vote for substitute or alternate nominees to the Board. In
the event that any other matter should come before the Meeting or any nominee is
not available for election, the persons named in the enclosed Proxy will have
discretionary authority to vote all Proxies not marked to the contrary with
respect to such matters in accordance with their best judgment.

The total number of shares of Common Stock of the Company ("Common
Shares") outstanding and entitled to vote as of July 8, 2002 was 1,253,631. The
Common Shares are the only class of securities of the Company entitled to vote
on matters presented to the stockholders of the Company, each share being
entitled to one non-cumulative vote. A majority of the Common Shares outstanding
and entitled to vote as of July 8, 2002, or 626,816 Common Shares, must be
present at the Meeting in person or by proxy in order to constitute a quorum for
the transaction of business. Only stockholders of record as of the close of
business on July 8, 2002 will be entitled to vote.

With regard to the election of directors, votes may be cast in favor or
withheld. Directors shall be elected by a plurality of the votes cast. Votes
withheld in connection with the election of one or more of the nominees for
director will not be counted as votes cast for such individuals.

Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
However, neither abstentions nor broker non-votes will be counted for the
purpose of determining whether a particular proposal has been approved. Under
Delaware law, stockholders are not entitled to dissenter's rights of appraisal
with respect to the election of directors.

Any person giving a Proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise. The Proxy may be
revoked by filing with the Company written notice of revocation or a fully
executed Proxy bearing a later date. The Proxy may also be revoked by
affirmatively electing to vote in person while in attendance at the Meeting.
However, a stockholder who attends the Meeting need not revoke a Proxy given and
vote in person unless the stockholder wishes to do so. Written revocations or
amended Proxies should be sent to the Company at 270 Pulaski Road, Greenlawn,
New York 11740, Attention: Corporate Secretary. The Company's Board of Directors
is soliciting the Proxy. The Company will bear the cost of the solicitation of
Proxies, including the charges and expenses of brokerage firms and other
custodians, nominees and fiduciaries for forwarding proxy materials to
beneficial owners of the Company's shares. Solicitations will be made primarily
by mail, but certain directors, officers or employees of the Company may solicit
Proxies in person or by telephone, telecopier or telegram without special
compensation.

Executive Compensation

The following table provides summary information concerning the cash and certain
other compensation paid or accrued by the Company during the last three fiscal
years to the executive officers of the Company whose cash compensation exceeded
$100,000. The table includes Company contributions on the officer's behalf to
the Company's 401(k) Plan.

Summary Compensation Table

- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term
Name and Other Annual Restricted Stock Incentive All Other
Principal Year Salary Bonus Compensation Stock Awards Options/SARs Payout Compensation
Position ($) ($) ($) (No.) (No.) ($) ($)
- -----------------------------------------------------------------------------------------------------------------------------------

Kenneth S 2001 $151,259 0 0 0 0 $4,080(3) $ 4,437
Schneider ----------------------------------------------------------------------------------------------------------------
Chairman, CEO, 2000 $136,836 0 0 0 0 $4,080(3) $ 5,110
Secretary & ----------------------------------------------------------------------------------------------------------------
Director 1999 $125,685 0 0 0 0 $4,080(3) $ 5,112
(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Joel A 2001 0 0 0 0 0 0 0
Kramer
(Former)
President, CEO &
Director
----------------------------------------------------------------------------------------------------------------
2000 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------
1999 $10,574 0 $1,726(2) 0 0 0 $95,243(4)
(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Michael 2001 $100,000 0 0 0 0 0 $ 6,537
Breneisen
President,
COO, CFO,
Treasurer & ----------------------------------------------------------------------------------------------------------------
Director 2000 $ 85,577 0 0 0 0 0 $ 6,503
----------------------------------------------------------------------------------------------------------------
1999 $ 75,000 $15,000 0 0 0 0 $ 3,251
- -----------------------------------------------------------------------------------------------------------------------------------

(1) Mr. Kramer left the employ of the Company in January 1999, at which
time Dr. Schneider was elected the Chief Executive Officer by the
Board of Directors, and at which time he dropped the title of Vice
President.

(2) Commissions-Mr. Kramer received a 2.5% commission of net sales to
customers not located within the United States.

(3) Deferred Compensation - see Long-Term Incentive Plans Table below.

(4) Consulting services and fringes.

Long-Term Incentive Plans - Awards in Last Fiscal Year

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Estimated Future Payouts under
Non-Stock Price-Based Plans
-----------------------------------------------------
Number of Performance or
Shares, Units Other Period
or Other Until Maturation Threshold Target Maximum
Name Rights (#) Or Payout ($) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------

Kenneth S. Schneider -- April 16, 2010 $26,667(1) $26,667(1) $26,667(1)
Chairman, CEO,
Secretary & Director
- ---------------------------------------------------------------------------------------------------------------------

(1) In 1990, the Company entered into a deferred compensation agreement
with Kenneth S. Schneider, pursuant to which he will receive a
defined amount, approximately 30% of his 1990 base salary, each year
for a period of 10 years after reaching age 65. The deferred
compensation plan is funded through life insurance and is being
provided for currently. The expense charged to operations in 2001
for such future obligations was $4,080.

Aggregate Option Grants in Last Fiscal Year

- ---------------------------------------------------------------------------------------------------------------------
% of Total Options Exercise or
Number of Options Granted to Employees Base Price Expiration
Name Granted in Fiscal Year 2001 ($/Share) Date
- ---------------------------------------------------------------------------------------------------------------------

Michael Breneisen 0 -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Kenneth S. Schneider 0 -- -- --
- ---------------------------------------------------------------------------------------------------------------------

The following table sets forth information concerning each exercise of stock
options during fiscal 2001 by each of the named executive officers and fiscal
year-end value of unexercised options:

Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values

- ---------------------------------------------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised
Shares Acquired on Value Realized Options at In-the-Money Options at
Name Exercise (#) ($) December 31, 2001 December 31, 2001 (1)
- ---------------------------------------------------------------------------------------------------------------------

Michael Breneisen 0 0 210,000(2) $0
- ---------------------------------------------------------------------------------------------------------------------
Kenneth S. Schneider 0 0 205,000(2) $0
- ---------------------------------------------------------------------------------------------------------------------

(1) Calculation based upon the closing price of the Company's common
stock ($0.81 per share) as reported by Nasdaq Trading and Market
Services on December 31, 2001.

(2) 60,000 option shares vest June 30, 2004, and 100,000 option shares
vest January 1, 2005; subject, however, to accelerated events if
certain targets are met.

Compensation Plans and Other Compensation

The Company's Board of Directors, with the approval of the stockholders, has
adopted a Stock Option Plan (the "2001 Plan") and has reserved for issuance
thereunder 500,000 shares of the Company's common stock. As of December 31,
2001, there were 500,000 shares available for grants under the 2001 Plan.
Pursuant to the 2001 Plan, the Company may grant options under the 2001 Plan
which are intended either to qualify as "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") ("Incentive Stock Options"), or not to qualify ("Nonstatutory Stock
Options").

The 2001 Plan provides for its administration by the Board of Directors or by a
committee (the "Stock Option Committee") consisting of at least one director
chosen by the Board of Directors. The Board of Directors or the Stock Option
Committee has authority (subject to certain restrictions) to select from the
group of eligible employees, non-employee directors, consultants and advisors
the individuals or entities to whom options will be granted, and to determine
the times at which and the exercise price for which options will be granted.

The exercise price of shares underlying an Incentive Stock Option may not be
less than the fair market value (as such term is defined in the 2001 Plan) of
the common stock on the date upon which such option is granted. In addition, in
the case of a recipient of an Incentive Stock Option who, at the time the option
is granted, owns more than 10% of the total combined voting power of all classes
of stock of the Company or of a parent or subsidiary corporation of the Company
(a "10% Stockholder"), the exercise price of the shares subject to such option
must be at least 110% of the fair market value of the common stock on the date
upon which such option is granted.

The exercise price of shares underlying a Nonstatutory Stock Option will be
determined by the Board of Directors or the Stock Option Committee at the time
of grant and need not be equal to or greater than the fair market value of the
Company's common stock.

The Company's Board of Directors, with the approval of the stockholders, has
adopted a Stock Option Plan (the "1999 Plan") and has reserved for issuance
thereunder 500,000 shares of the Company's common stock. As of December 31,
2001, options to purchase an aggregate of 454,000 shares have been granted and
there were 46,000 shares available for grants under the 1999 Plan. Pursuant to
the 1999 Plan, the Company may grant options under the 1999 Plan which are
intended either to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
("Incentive Stock Options"), or not to qualify ("Nonstatutory Stock Options").

The 1999 Plan provides for its administration by the Board of Directors or by a
committee (the "Stock Option Committee") consisting of at least one director
chosen by the Board of Directors. The Board of Directors or the Stock Option
Committee has authority (subject to certain restrictions) to select from the
group of eligible employees, non-employee directors, consultants and advisors
the individuals or entities to whom options will be granted, and to determine
the times at which and the exercise price for which options will be granted.

The exercise price of shares underlying an Incentive Stock Option may not be
less than the fair market value (as such term is defined in the 1999 Plan) of
the common stock on the date upon which such option is granted. In addition, in
the case of a recipient of an Incentive Stock Option who, at the time the option
is granted, owns more than 10% of the total combined voting power of all classes
of stock of the Company or of a parent or subsidiary corporation of the Company
(a "10% Stockholder"), the exercise price of the shares subject to such option
must be at least 110% of the fair market value of the common stock on the date
upon which such option is granted.

In 1994 the Company adopted the 1993 Stock Option Plan (the "1993 Plan") under
which options to purchase 100,000 shares of the common stock were reserved. All
directors, officers or other key employees of the Company are eligible to
participate in the 1993 Plan, which is administered by the Board of Directors of
the Company. As of December 31, 2001, there were options to purchase 32,050
shares available under the 1993 Plan. Pursuant to the 1993 Plan, the Company is
permitted to issue incentive stock options.

In 1987, the Company adopted a plan, which provided for grants to officers and
key employees of the Company, of incentive stock options to purchase up to an
aggregate of 250,000 shares of the Company's common stock. Options to purchase
10,000 shares are outstanding.

In 2001, the Company adopted the Employee Stock Purchase Plan, which was
approved by our stockholders on July 12, 2001. In accordance with Section 423 of
the Internal Revenue Code, eligible employees may authorize payroll deductions
of their salary to purchase shares of the Company's common stock at the lower of
85% of the fair market value of common stock on the first or last day of the
offering period. An eligible employee may purchase up to 2,000 shares of stock
during any single offering period. No shares were purchased under the 2001
Employee Stock Purchase Plan during the year ended December 31, 2001. The
Company expects the first offering period to begin on January 1, 2003 and end on
June 30, 2003. The maximum number of shares offered under the 2001 Employee
Stock Purchase Plan is 400,000 shares.

The Company has an informal bonus plan in which officers and other key personnel
participate. The bonus award, if any, is fixed annually by the Board of
Directors. There were no bonuses paid under this plan during fiscal year 2001.

The Company maintains a deferred compensation plan under Internal Revenue Code
Section 401(k). All employees are eligible to participate; the Company
contributes 50% of the first 2% deferred by the employee. Each employee may
voluntarily contribute up to 15% of annual compensation, or the maximum allowed
as determined by the Internal Revenue Code.

During 2000, the Company renewed, for an additional three-year term, the
employment agreement with Kenneth S. Schneider. The employment agreement
provides that Dr. Schneider would receive a minimum salary of $151,259 per
annum. During the employment period, Dr. Schneider is entitled upon termination
or expiration of the agreement under certain circumstances (including a change
of control) to certain severance benefits.

During 1999, the Company entered into a three year employment agreement with
Michael Breneisen. The employment agreement provides that Mr. Breneisen will
receive a minimum salary of $100,000 per annum. During the employment period Mr.
Breneisen is entitled upon termination or expiration of the agreement under
certain circumstances (including a change of control) to certain severance
benefits. During 2001, the Board of Directors voted to extend this agreement for
an additional three years when it comes up for renewal.

Except for life and medical insurance benefit programs, which are available to
all employees, the Company has no other compensation plans.

The outside directors do not receive a per meeting fee, but do receive
reimbursement of expenses for attending each meeting and is eligible to receive
stock options.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth as of December 31, 2001 information concerning
(i) the shares held by each person or group known to own beneficially more than
5% of the outstanding shares of common stock, (ii) shares owned by the Chief
Executive Officer (iii) shares owned by all executive officers and directors as
a group.

- ----------------------------------------------------------------------------------------------------------
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Owner Class
- ----------------------------------------------------------------------------------------------------------

Common Kenneth S. Schneider 328,037(1) 23.6%
270 Pulaski Road
Greenlawn, NY 11740
- ----------------------------------------------------------------------------------------------------------
Common Michael Breneisen 81,900(2) 5.9%
270 Pulaski Road
Greenlawn, NY 11740
- ----------------------------------------------------------------------------------------------------------
Common Jamil Sopher 44,230(3) 3.2%
270 Pulaski Road
Greenlawn, NY 11740
- ----------------------------------------------------------------------------------------------------------
Common Jonathan D. Casher 6,000(4) 0.4%
270 Pulaski Road
Greenlawn, NY 11740
- ----------------------------------------------------------------------------------------------------------
All executive officers and 460,167 33.1%
directors
As a group (4 in number)
- ----------------------------------------------------------------------------------------------------------

(1) Includes 45,000 shares issuable upon exercise of stock options
granted under the Company's 1999 Stock Option Plan. Does not include
160,000 shares issuable upon exercise of stock options under the
1999 Plan. Of such options 60,000 option shares vest June 30, 2004,
and the remaining 100,000 option shares vest January 1, 2005;
subject, however, to acceleration if certain targets are met.

(2) Includes 5,000 shares issuable upon exercise of stock options
granted under the Company's 1987 Stock Option Plan. Includes 45,000
shares issuable upon exercise of stock options granted under the
Company's 1999 Stock Option Plan. Does not include 160,000 shares
issuable upon exercise of stock options under the 1999 Plan. Of such
options 60,000 option shares vest June 30, 2004, and the remaining
100,000 option shares vest January 1, 2005; subject, however, to
acceleration if certain targets are met.

(3) Includes 20,000 shares issuable upon exercise of stock options
granted under the Company's 1993 Stock Option Plan. Includes 15,000
shares issuable upon exercise of stock options granted under the
Company's 1999 Stock Option Plan.

(4) Includes 1,000 shares issuable upon exercise of stock options
granted under the Company's 1993 Stock Option Plan. Includes 5,000
shares issuable upon exercise of stock options granted under the
Company's 1999 Stock Option Plan.

Includes 15,000 shares issuable upon exercise of stock options granted under the
Company's 1993 Stock Option Plan.

Certain Relationships and Related Transactions

Effective January 20, 1999, Joel A. Kramer, then the Chairman of the Board,
President and Chief Executive Officer of the Company, resigned such positions.
However, it was intended that Mr. Kramer would serve as a consultant to the
Company through January 19, 2002 for an aggregate consideration of $165,000 plus
reimbursement for certain expenses. In addition, the Company purchased all of
the shares of common stock of the Company owned by Mr. Kramer and Mr. Kramer
agreed to cancel options to purchase 10,000 shares of common stock of the
Company for an aggregate consideration of $1,075,190, of which $867,510 was for
such shares, $17,680 was for the cancellation of such options and $190,000 was
in exchange for Mr. Kramer's restrictive covenant. In addition, Mr. Kramer
agreed not to compete with the business of the Company until January 19, 2003
and released the Company from certain potential claims relative to his previous
employment. The Company transferred a life insurance policy to Mr. Kramer,
previously maintained for Mr. Kramer's benefit and having a cash value of
approximately $80,000.

In December 1999, the Company received information indicating that Mr. Kramer
had breached certain of the non-competition provisions of the Consulting
Agreement entered into by Mr. Kramer and the Company and also of the Stock
Purchase Agreement and the Termination Agreement entered into by Mr. Kramer and
the Company. In response to this information the Company asserted its rights
under the Consulting Agreement and cancelled it for cause on January 12, 2000,
and ceased making payments thereunder. The Company is considering what further
legal action it may take if any with respect to this situation as warranted
under the circumstances.

Effective January 20, 1999 Dr. Kenneth S. Schneider was elected as Chairman of
the Board and Chief Executive Office and Michael Breneisen as President and
Chief Operating Officer of the Company. Dr. Schneider was a co-founder of the
Company and has served as a Senior Vice President, Secretary, Treasurer and
Director. Mr. Breneisen has served as Vice President and Chief Financial
Officer; he will also continue to serve as Chief Financial Officer and act as a
Director.

PROPOSAL 1: ELECTION OF DIRECTORS

Four directors are to be elected at the Meeting to serve until the next
annual meeting of stockholders and until their respective successors have been
elected and have qualified, or until their earlier resignation or removal. If
for some unforeseen reason one or more of the nominees is not available as a
candidate for director, the Proxies may be voted for such other candidate or
candidates as may be nominated by the Board.

Nominees for Director

All four of the nominees are currently directors of the Company. The
following table sets forth the positions and offices presently held with the
Company by each nominee, his age as of July 8, 2002 and the year in which he
became a director. Proxies not marked to the contrary will be voted in favor of
each such nominee's election. The Board recommends a vote FOR all nominees.

Positions and Offices
Presently Held with Director
Name Age the Company Since
- --------------------------------------------------------------------------------

Kenneth S. Schneider 57 Chairman of the Board of 1983
Directors, Chief Executive
Officer, Secretary and Director

Michael Breneisen 37 President, Chief Operating and 1999
Financial Officer, Treasurer and
Director

Jamil Sopher 58 Director 1996

Jonathan D. Casher 57 Director 2000

Dr. Schneider has served as Chairman of the Board and Chief Executive
Officer of the Company since January 1999. He has also served as Secretary since
March 1991. Dr. Schneider served as Vice President and Treasurer of the company
from August 1983 to January 1999. He was elected a Director on July 12, 2001 for
a term of one year or until the next annual meeting of shareholders.

Mr. Breneisen has served as President and Chief Operating Officer of the
Company since January 1999 and Chief Financial Officer since January 1997. Mr.
Breneisen has also served as Treasurer since March 2000. He served as Controller
of the Company from July 1992 to January 1999 and Vice President from January
1997 to January 1999. He was elected a Director on July 12, 2001 for a term of
one year or until the next annual meeting of shareholders.

Mr. Sopher currently is an independent consultant. Mr. Sopher worked for
Unisphere Inc. from September 2000 to March 2001. Mr. Sopher worked for the
World Bank where he was employed from 1980 to 2000. Mr. Sopher received a
Bachelor of Science Degree and M. Eng. (Elect.) Degree from Cornell University
and an MBA from Harvard University. He was elected a Director on July 12, 2001
for a term of one year or until the next annual meeting of shareholders.

Mr. Jonathan D. Casher is the founder, Chairman and CEO of RECAP, Inc. and
has worked for RECAP since 1989. Mr. Casher received a Bachelor Degree in
Operations Research from Cornell University and a Masters Degree from the MIT
Sloan School of Management. He was elected a Director on July 12, 2001 for a
term of one year or until the next annual meeting of shareholders.

Meetings and Compensation

During the fiscal year ended December 31, 2001, the Board of Directors
held seven meetings. All Directors attended all of the meetings.

The Company does not have a standing nominating committee of the Board of
Directors or a committee performing similar functions. The Board as a whole
currently performs these functions.

The Board of Directors formed a Compensation Committee in 1999 for the
purpose of recommending to the Board the compensation for corporate officers for
the ensuing year. Members of the Compensation Committee are Mr. Sopher and Mr.
Casher. The full Board of Directors reviews the Committee's recommendations
regarding executive compensation. The Committee held one meeting in 2001. No fee
is paid to such committee members.

The Board of Directors formed an Audit Committee in 2001 to meet and
review with the Company's independent auditors the plan, scope and results of
its audits. Members of the Audit Committee are Mr. Sopher, Mr. Casher and Dr.
Schneider. There was one meeting of the Audit Committee during the fiscal year
ended December 31, 2001. No fee is paid to such committee members.

Audit Committee

Audit Committee members, Messrs. Casher and Sopher, are "independent" for
purposes of Rule 4200(a)(14) of The National Association of Securities Dealers'
("NASD") listing standards. That is, the Company's Board of Directors has
determined that neither of them has a relationship with the Company that might
interfere with their independence from the Company and its management. For
purposes of NASD Rule 4200(a)(14), Dr. Schneider's service as a member of the
Audit Committee is not considered "independent" given that Dr. Schneider is
employed by and serves as a director of the Company.

Audit Committee Report

The Audit Committee of the Board of Directors is comprised of three
directors: Mr. Sopher, Dr. Schneider and Mr. Casher.

The Audit Committee assists the Board of Directors in fulfilling its
oversight responsibilities by reviewing the Company's consolidated financial
reports, its internal financial and accounting controls, and its auditing,
accounting and financial reporting processes generally. In 2001, the Board of
Directors approved and adopted a written Audit Committee Charter.

In discharging its oversight responsibilities regarding the audit process,
the Audit Committee reviewed and discussed the audited consolidated financial
statements of the Company as of and for the year ended December 31, 2001, with
Company management and Grant Thornton LLP ("Grant"), the independent auditors.
The Audit Committee received the written disclosures and the letter from Grant
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, discussed with Grant any relationships which
might impair that firm's independence from management and the Company, and
satisfied itself as to the auditors' independence. The Audit Committee reviewed
and discussed with Grant all communications required by generally accepted
auditing standards, including Statement on Auditing Standards No. 61,
Communications with Audit Committees, as amended.

Based upon these reviews and discussions, the Audit Committee recommended
to the Board of Directors that the Company's audited consolidated financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2001 for filing with the Securities and Exchange
Commission.

/s/ Mr. Sopher
/s/ Mr. Casher
/s/ Dr. Schneider

The foregoing Audit Committee Report shall not be deemed "filed" with the
Securities and Exchange Commission or subject to the liabilities of Section 18
of the Securities Exchange Act of 1934.

Independent Accountants

At the recommendation of the Company's Audit Committee, on July 16, 2002,
the Company's Board of Directors terminated the engagement of Grant Thornton LLP
as the Company's independent public accountants and engaged Holtz Rubenstein &
Co., LLP to serve as the Company's independent public accountants for its fiscal
year ending December 31, 2002. The decision to change independent public
accountants was made by the Company's Board of Directors on July 15, 2002.

The report of Grant Thornton LLP for the Company's fiscal year ended
December 31, 2000 and December 31, 2001 does not contain an adverse opinion or a
disclaimer of opinion, or a qualification or modification as to uncertainty,
audit scope or accounting principles. In connection with the audit for the
Company's fiscal years ended December 31, 2000 and December 31, 2001 and
subsequent interim period, there were no disagreements with Grant Thornton LLP
on any matters of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved
to Grant Thornton's satisfaction, would have caused it to make reference to the
subject matter of the disagreement in connection with its report.

During the Company's two most recent fiscal years and subsequent interim
period prior to engaging Holtz Rubenstein & Co, LLP, neither the Company nor any
person acting on its behalf consulted with Holtz Rubenstein & Co., LLP regarding
either (i) the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on the Company's financial statements, where either a written report or
oral advice was provided that Holtz Rubenstein & Co., LLP concluded was an
important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue; or (ii) any matter that was
either the subject of a disagreement with Grant Thornton LLP or a reportable
event.

A representative from Holtz Rubenstein & Co., LLP is expected to attend
the annual meeting and to have the opportunity to make a statement at the
meeting if he or she desires to do so, and to be available to respond to
appropriate questions that may be raised at the meeting. Grant Thornton LLP will
not be represented at the meeting.

Principal Accounting Firm Fees

The following table sets forth the aggregate fees, including out-of-pocket
expenses, billed to the Company for the fiscal year ended December 31, 2001 by
the Company's principal accountants, Grant Thornton LLP.

Annual Audit Fees $37,000

Review of Quarterly Reports $ 5,750

Financial Information Systems
Design and Implementation Fees None

All Other Fees:
Tax Services $18,500(a)

Other Fees $ 3,250(a)
-------
$64,500

(a) The Audit Committee has considered whether the provision of these services
is compatible with maintaining the principal accountants' independence.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16 of the Securities Exchange Act of 1934, as amended ("Section
16"), requires that reports of beneficial ownership of Common Shares and changes
in such ownership be filed with the Securities and Exchange Commission (the
"SEC") by Section 16 "reporting persons," including directors, certain officers,
holders of more than 10% of the outstanding Common Shares and certain trusts of
which reporting persons are trustees. The Company is required to disclose in
this Proxy Statement each reporting person whom it knows to have failed to file
any required reports under Section 16 on a timely basis during the fiscal year
ended December 31, 2001. To the Company's knowledge, based solely on a review of
copies of Forms 4 and 5 furnished to it and written representations that no
other reports were required, during the fiscal year ended December 31, 2001, the
Company's officers, directors and 10% stockholders complied with all Section
16(a) filing requirements applicable to them.

STOCKHOLDER PROPOSALS

Stockholder proposals intended to be presented at the Company's 2003
Annual Meeting of Stockholders pursuant to the provisions of Rule 14a-8 of the
SEC, promulgated under the Securities Exchange Act of 1934, as amended, must be
received by the Secretary of the Company at the principal executive offices of
the Company by January 27, 2003 for inclusion in the Company's Proxy Statement
and form of Proxy relating to such meeting.

OTHER BUSINESS

While the accompanying Notice of Annual Meeting of Stockholders provides
for the transaction of such other business as may properly come before the
Meeting, the Company has no knowledge of any matters to be presented at the
Meeting other than the election of directors in the notice. However, the
enclosed Proxy gives discretionary authority in the event that any other matters
should be presented.

FORM 10-KSB

A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2001, as filed with the Securities and Exchange Commission
(excluding exhibits), has been furnished with this Proxy Statement to each
stockholder entitled to vote at the meeting.

By Order of the Board of Directors

Kenneth S. Schneider, Ph.D
Chairman of the Board and
Chief Executive Officer

Greenlawn, New York

July 23, 2002