SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549

FORM
10-QSB

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

For the quarterly period ended September 30, 2000.

OR

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

For
the transition period from  to .

Commission
file number 000-26213

ARC
COMMUNICATION INC.(Exact Name of Registrant as Specified in Its Charter)

|New Jersey                                                    | 22-3201557                         
|------------------------------------------------------------- | -----------------------------------
|(State or Other Jurisdictionof Incorporation or
Organization) | (IRS EmployerIdentification Number)



|788 Shrewsbury Avenue, Tinton Falls, New
Jersey | 07724     
|----------------------------------------------- | ----------
|(Address of Principal Executive Offices)        | (Zip Code)

Registrant's Telephone Number, Including
Area Code   732-219-1766

(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act of 1934  during the  preceding  12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.  Yes X     No __ .

Indicate the number of
shares outstanding of each of the registrants classes of common stock, as
of the latest practicable date: 13,713,122 shares of common stock, as of 
September 30, 2000.

---

ARC
COMMUNICATIONS INC.

TABLE OF
CONTENTS

|PART I.  | -       | FINANCIAL INFORMATION                                                                                
|-------- | ------- | -----------------------------------------------------------------------------------------------------
|         |         |                                                                                                      
|         | Item 1. | Financial Statements (Unaudited)                                                                     
|         |         |                                                                                                      
|         | a)      | Consolidated Balance Sheet as of September 30, 2000                                                  
|         |         |                                                                                                      
|         | b)      | Consolidated Statements of Operations for the Three
and Nine Months Ended September 30, 1999 and 2000
|         |         |                                                                                                      
|         | c)      | Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1999 and 2000          
|         |         |                                                                                                      
|         | d)      | Notes to Consolidated Financial Statements                                                           
|         |         |                                                                                                      
|         |         |                                                                                                      
|         | Item 2. | Management's Discussion andAnalysis of
Financial Conditionand Results of Operations                  
|         |         |                                                                                                      
|PART II. | -       | OTHER INFORMATION                                                                                    
|         |         |                                                                                                      
|         | Item 6. | Exhibits                                                                                             



---

PART I -
Financial Information

Item 1. - Financial Statements



ARC COMMUNICATIONS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
UNAUDITED

September
30, 2000

`ASSETS



                                                                                               September 30,
                                                                                                   2000
                                                                                             ------------------
CURRENT ASSETS

      Cash and Cash Equivalents                                                                $       338,000
      Accounts Receivable-Net of Allowances for Doubtful Accounts of $49,000                           847,000
      Inventory                                                                                          6,000
      Prepaid Expenses                                                                                  28,000
      Other Receivables                                                                                 28,000
                                                                                             ------------------
                Total Current Assets                                                                 1,247,000
                                                                                             ------------------

PROPERTY AND EQUIPMENT-NET                                                                             369,000

OTHER ASSETS
      Goodwill-Net                                                                                      69,000
      Security Deposits                                                                                 12,000
                                                                                             ------------------

                Total Other Assets                                                                      81,000
                                                                                             ------------------

TOTAL ASSETS                                                                                   $     1,697,000
                                                                                             ==================


                                     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
      Line of Credit                                                                           $       150,000
      Accounts Payable and Accrued Expenses                                                            341,000
      Billings in Excess of Costs                                                                      145,000
                                                                                             ------------------
                Total Current Liabilities                                                              636,000
                                                                                             ------------------

COMMITMENTS AND CONTINGENCIES

      Preferred Stock, Stated Value $.20; 5,000,000 Shares Authorized;
                720,000 Shares Issued and Outstanding in 2000                                          144,000
      Common Stock, $.001 Par Value, Authorized 45,000,000 Shares, Issued
                and Outstanding 13,713,122 in 2000                                                      14,000
      Additional Paid in Capital                                                                     1,412,000
      Retained Earnings (Accumulated Deficit)                                                         (509,000)
                                                                                             ------------------
STOCKHOLDERS' EQUITY                                                                                 1,061,000
                                                                                             ------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                     $     1,697,000
                                                                                             ==================`

---

ARC COMMUNICATIONS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONSUNAUDITED

September
30, 2000

`9 Months Ended     9 Months Ended      3 Months Ended      3 Months Ended
                                                 September 30,       September 30,      September 30,        September 30,
                                                      2000               1999               2000                 1999
                                                 ---------------    ----------------   ---------------     ----------------

NET SALES                                         $   3,418,000       $   2,827,000       $    903,000       $      987,000

COSTS AND EXPENSES
           Operating Costs                              519,000             434,000             95,000              183,000
           Selling, General and Administrative        2,539,000           1,923,000            901,000              722,000
           Depreciation and Amortization                113,000             114,000             33,000               40,000
                                                 ---------------    ----------------   ---------------     ----------------

                     Total Costs and Expenses         3,171,000           2,471,000          1,029,000              945,000
                                                 ---------------    ----------------   ---------------     ----------------

OTHER INCOME (EXPENSES)
           Interest Income                               11,000              10,000              3,000                4,000
           Interest Expense                             (24,000)            (40,000)            (1,000)             (19,000)
           Other Income                                       0                   0                  0               (2,000)
                                                 ---------------    ----------------   ---------------     ----------------

                     Total Other Expense                (13,000)            (30,000)             2,000              (17,000)
                                                 ---------------    ----------------   ---------------     ----------------


NET INCOME (loss)                                 $     234,000       $     326,000       $   (124,000)      $       25,000
                                                 ===============    ================   ===============     ================

BASIC AND DILUTED
INCOME (loss) PER COMMON SHARE                    $        0.02       $        0.02       $      (0.01)      $         0.00
                                                 ===============    ================   ===============     ================


Weighted Average Number of Shares Outstanding        13,712,000          13,751,000         13,713,000           13,751,000`

---

ARC COMMUNICATIONS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWSUNAUDITED

September
30, 2000

`September 30,        September 30,
                                                                                                2000                 1999
                                                                                          -----------------    -----------------
CASH FLOWS FROM OPERATING ACTIVITIES

           Net Income                                                                       $      234,000       $      326,000
           Adjustments to Reconcile Net Income or Loss to Net Cash
                     Provided by Operating Activities:
                               Depreciation and Amortization                                       113,000              114,000
                               Provision for doubtful accounts                                      21,000              (26,000)
                               Issuance of stock for services                                        3,000                    0

           Increase (Decrease) in Cash from Changes in:
                     Accounts Receivable                                                          (143,000)            (296,000)
                     Inventory                                                                       4,000                    0
                     Prepaid Expenses                                                              (24,000)               2,000
                     Due from Related Party                                                              0               (5,000)
                     Accounts Payable and Accrued Expenses                                          60,000               74,000
                     Billings in Excess of Cost                                                    124,000                    0
                                                                                          -----------------    -----------------

                               Total Adjustments                                                   158,000             (137,000)
                                                                                          -----------------    -----------------

                               Net Cash Provided by Operating Activities                           392,000              189,000
                                                                                          -----------------    -----------------


CASH FLOWS FROM INVESTING ACTIVITIES

           Expenditures for Property and Equipment                                                (113,000)             (60,000)
                                                                                          -----------------    -----------------

                               Net Cash Used in Investing Activities                              (113,000)             (60,000)
                                                                                          -----------------    -----------------


CASH FLOWS FROM FINANCING ACTIVITIES

           Repayment to Line of Credit                                                            (294,000)              54,000
                                                                                          -----------------    -----------------

                               Net Cash Provided by (Used by) Financing Activities                (294,000)              54,000
                                                                                          -----------------    -----------------

NET INCREASE (DECREASE) IN CASH                                                                    (15,000)             183,000

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                                   352,000              224,000
                                                                                          -----------------    -----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                  $      337,000       $      407,000
                                                                                          =================    =================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
           Cash Paid for Interest                                                                   24,000               40,000

See Notes to Consolidated Financial Statements.`

---

ARC COMMUNICATIONS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL
STATEMENTSUnaudited

September
30, 2000

1.    
Basis of Presentation

In the opinion of the
Company, the accompanying consolidated financial statements contain all
adjustments (consisting only of normal recurring adjustments) necessary to
fairly present the Companys financial position and its results of
operations and cash flows as of the dates and for the periods indicated.

Certain information and
footnote disclosures normally contained in financial statements prepared in
accordance with generally accepted accounting principles have been omitted.
These condensed consolidated financial statements should be read in conjunction
with the audited December 31, 1999 consolidated financial statements and related
notes included in the Companys year end certified financial statement. The
results of operations for the three months are not necessarily indicative of the
operating results for the full year.

Amounts  for the nine
months  ended  September  30, 1999 have been  reclassified  to conform  with the
September 30, 2000 presentation.

2.    
Principles of Consolidations

The consolidated financial
statements included the accounts of the Company and all of its subsidiaries in
which a controlling interest is maintained. All significant intercompany
accounts and transactions have been eliminated in consolidation.

3.    
Revenue Recognition

The Company recognized
revenue from sales at the date the product is shipped and as professional
services are performed.

---

ARC
COMMUNICATIONS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL
STATEMENTSUnaudited

September
30, 2000

4. 
   Segment Information

`9 Months Ended            9 Months Ended
                                                           September 30,             September 30,
                                                               2000                      1999
                                                        --------------------      --------------------

 Revenue

           Multi-Media                                  $         2,656,000       $         2,337,000
           Continuing professional education                        762,000                   500,000
                                                        --------------------      --------------------
                     Total Consolidated Revenue         $         3,418,000       $         2,837,000
                                                        --------------------      --------------------

 Net Income (Loss)
           Multi-Media                                  $           299,000       $           372,000
           Continuing professional education                        (65,000)                  (45,000)
                                                        --------------------      --------------------
                     Total Consolidated Net Income      $           234,000       $           327,000
                                                        --------------------      --------------------

 Assets
           Multi-Media                                  $         1,328,000       $         1,534,000
           Continuing professional education                        368,000                   220,000
                                                        --------------------      --------------------
                     Total Consolidated Net Assets      $         1,696,000       $         1,754,000
                                                        ====================      ====================`



---

This Form
1O-QSB  contains  forward-looking  statements  within  the  meaning of the "safe
harbor"  provisions under section 21E of the Securities and Exchange Act of 1934
and the Private Securities  Litigation  Act of 1995.  The Company uses forward
looking   statements   in  its   description   of  its  plans  and   objectives.
Forward-looking  terminology  includes the words "may",  "expects",  "believes",
"anticipates",  "intends", "forecasts", "projects", or similar terms, variations
of such terms or the negative of such terms.  These  forward-looking  statements
are based on management's  current  expectations  and are subject to factors and
uncertainties  which could cause actual results to differ  materially from those
described in such forward looking  statements.  The Company expressly  disclaims
any obligation or  undertaking  to release  publicly any updates or revisions to
any  forward-looking  statements  contained  in this Form  10-QSB to reflect any
change  in  its   expectations  or  any  changes  in  events,   conditions,   or
circumstances on which any forward-looking statement is based.

Item 2.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS         
      OF OPERATIONS

|Overview             
|---------------------
|                     
|                     
|                     
|                     
|                     
|                     
|                     
|Results of Operations
|                     
|                     
|                     
|                     
|                     
|                     
|                     
|                     
|                     
|                     
|                     
|                     



---



|Results of Operations - Continued
|---------------------------------
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 



---



|Liquidity and Capital Resources
|-------------------------------
|                               
|                               
|                               
|                               
|                               
|                               
|                               
|                               
|                               
|Business Strategies            
|                               
|                               
|                               
|                               



---



SIGNATURES

In  accordance
with  requirements  of the  Exchange  Act,  the Issuer  caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

|Date: November 9, 2000 |  | ARC COMMUNICATIONS INC.                                   
|---------------------- |  | ----------------------------------------------------------
|                       |  |                                                           
|                       |  | By:  /s/ Michael RubelMichael RubelChief Operating Officer







|PART II. |  | OTHER INFORMATION                   
|-------- |  | ------------------------------------
|         |  |                                     
|Item 6.  |  | Exhibits                            
|         |  |                                     
|a)       |  | Exhibit 27 - Financial Data Schedule