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

                                    FORM 10-K


     /X/  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934


                   For the fiscal year ended December 31, 2003

     / /  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: 000-28602

                          Pro Tech Communications, Inc.
             (Exact Name of Registrant as Specified in its Charter)

          Florida                                            59-3281593
---------------------------------                   ----------------------------
 (State or Other Jurisdiction of                          (I.R.S. Employer
  Incorporation or Organization)                          Identification No.)

   4492 Okeechobee Rd
    Fort Pierce, Florida                                        34947
----------------------------------------            ----------------------------
(Address of Principal Executive Offices)                      (Zip Code)


       Registrant's Telephone Number, Including Area Code: (772) 464-5100.

Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $.001
par value

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant on June 28, 2003, was approximately $53,000 (based upon the last sale
price of $0.01  per  share on June 30,  2003,  on the  National  Association  of
Securities Dealers Automated Quotation System).

The number of shares outstanding of the registrant's common stock was 33,200,311
as of March 12, 2004.

                                       1
<PAGE>


                                     PART I

ITEM 1.  BUSINESS

A.       General

Pro Tech  Communications,  Inc.,  throughout  this document  referred to as "Pro
Tech,"  "we,"  "our," or "us," was  incorporated  in 1994  under the laws of the
State of Florida and has its principal  executive offices at 4492 Okeechobee Rd,
Fort Pierce, Florida. From its formation on August 30, 1991 to October 31, 1994,
the business was conducted by Pro Tech Systems, a limited partnership  organized
under the laws of the State of California.  Keith Larkin, the former Chairman of
the Board of Pro Tech, was general partner of Pro Tech Systems and there were 12
limited partners in the limited  partnership.  From August 1991 until June 1993,
the limited  partnership was involved in engineering  and designing  lightweight
telecommunications  headsets as well as  preliminary  marketing  efforts for the
products.  From June 1993 until  October  1994,  Pro Tech Systems was engaged in
limited  manufacturing and marketing activities for its products. On November 1,
1994,  all of the assets of Pro Tech  Systems  were  transferred  to Pro Tech as
consideration  for the issuance of  2,000,000  shares of our common  stock,  par
value $.001 per share. These shares were subsequently  distributed on a pro rata
basis to each of the partners of the partnership.  Effective  December 13, 1994,
Pro Tech Systems was formally  dissolved.  On September 13, 2000,  Pro Tech sold
23,702,750  shares  of  its  common  stock,  representing  approximately  83% of
outstanding  common stock, to NCT Hearing Products,  Inc., herein referred to as
"NCT Hearing," a wholly-owned  subsidiary of NCT Group, Inc., herein referred to
as "NCT," in exchange for exclusive  rights to certain NCT  technologies for use
in lightweight cellular, multimedia and telephony headsets.

Pro Tech operates mainly in the lightweight headset industry.  During the fiscal
year ended December 31, 2001, we expanded into the telecommunication integration
business  and the call  center  operations  business  (see  section L.  Business
Divisions for further discussion of these operations).

Pro Tech  presently  designs,  develops,  manufactures  and markets  lightweight
telecommunications  headsets.  Our  headsets  employ new  concepts  in  advanced
lightweight  design.  Our marketing  strategy  involves the sale of our products
directly to the  commercial  headset  market as a replacement  for  competitors'
products.  We presently sell to the commercial  headset market comprised of fast
food companies and other large quantity users of headset  systems.  Our products
include:

o   The ProCom Headset
o   The Apollo Headset
o   The Apollo Freedom Series Headset
o   The Gemini Amplifier (telephone)
o   The USB Adapter
o   The DSP Intelligent Microphone
o   The Manager's Headset
o   The A-10 Amplifier (telephone)
o   The A-27 Amplifier
o   The Active Series Headset
o   The Trinity Headset

There are two  components  to a  complete  telephone  headset.  The first is the
headset component that the user wears, consisting of a speaker and a microphone.
The second is the electronic  amplifier which is relatively  more complex,  time
consuming and costly to produce as it requires many variations to interface with
the wide variety of telephone  systems in the market and generates  higher labor
and material costs. The electronic  amplifier also generally offers lower profit
margins  than  the  headset  component.  As a  result,  we have  outsourced  the
production  of several  amplifiers  engineered  to our  specifications.  We will
continue to  concentrate  our efforts on the  production  of that portion of the
telephone headset that the user wears.

                                       2
<PAGE>


Pro Tech will  also  continue  to  concentrate  efforts  on the  production  and
distribution  of new headsets  designed to connect to and interface with various
electronic  amplifiers and telephone systems currently in use. We have adopted a
co-engineering product development strategy through the use of joint engineering
agreements with companies with  complimentary  engineering  patents.  We project
that this strategy  will greatly  decrease the product  development  cycle while
offering  far  superior  products to our  customers.  We have  continued to make
investments  in technology and have incurred  development  costs with respect to
engineering  prototypes,  pre-production models and field-testing of several new
products.  Management  believes that our investment in technology will result in
the improvement of the functionality, speed and cost of components and products.

B.       Industry Background

Designed   specifically   for  air  traffic   controllers  and  other  aerospace
applications,  the first lightweight headsets were intended as a replacement for
the heavy,  bulky  headsets  then in use.  Today,  while  lightweight  telephone
headsets  continue  to  be  used  for  such  purposes,  telephone  headsets  are
predominantly  used as a substitute to telephone  handsets.  These  headsets are
used by a wide variety of customers, including telephone operating companies and
telephone call centers (such as airline  reservations,  catalog sales and credit
collection  operations)  and, to a lesser extent,  by business persons and other
professionals whose occupations require extensive,  though not constant,  use of
the  telephone.  In  comparison to  speakerphones,  telephone  headsets  provide
greater  communication  clarity and security.  We believe that these  advantages
will lead to increased demand for telephone headsets.

Telephone  headsets also have other commercial  applications,  primarily two-way
radio  communication  systems,  such as those  used by fast food  attendants  to
communicate with patrons and other personnel. Personal computer applications for
telephone  headsets  include  audio  input and output via voice  command,  voice
dictation and integrated voice telephone functions.

C.       Existing Products

The ProCom.

Pro Tech's initial entry into the  lightweight  fast food headset market was the
ProCom.  Weighing less than 2 ounces,  the ProCom is worn over the head by means
of a  springsteel  wire  headband  and a  cushioned  earphone.  Attached  to the
earphone,  which may be worn over  either  ear,  is an  adjustable  boom,  which
connects to the ProCom's microphone. The ProCom headset connects to the wireless
belt-pack  system  with the use of various  plug types  offered by the  wireless
belt-pack providers and sold to many fast food franchises around the world.

The Apollo.

The Apollo headset is Pro Tech's most advanced,  lightweight headset design sold
for use with  telephone  users in the call center and small  office  market.  It
incorporates  the use of  advanced  microphone  and  speaker  components  and is
designed for  durability  and comfort over long periods.  The Apollo headset was
introduced on August 1, 2001 and since then has been sold  directly  through Pro
Tech's sales force and the Internet.  It has also been sold  indirectly  through
our established distributor base in the United States, Canada and Europe.

The Apollo Freedom Series Headset.

A headset with the exact form factor of the Apollo  headset,  the Apollo Freedom
Series  is  made  to  plug   directly  into  phone  systems  that  already  have
amplification  built into their  existing  handset.  Through the use of advanced
circuitry,   many  new  phone   systems  have  built-in  the  added  feature  of
amplification  of sound  inside each  handset  phone,  therefore  not  requiring
another  amplifier in order to use a headset with the phone  system.  The Apollo
Freedom  Series  headset adapts to all of these newer design phone systems using
sophisticated microphone technology and a direct connect phone cord.

                                       3
<PAGE>


The Gemini Amplifier.

Introduced on August 1, 2001, the Gemini amplifier is our latest  amplifier.  It
is a full feature  unit  designed to be used in nearly all phone and/or PC phone
configurations  in the call center and small  office  market.  The user has full
control of receive and  transmit  sound levels in addition to being able to work
directly with the latest multi-media  configurations employing analog or digital
technologies. This amplifier's circuitry has been awarded a patent by the United
States Patent and Trademark  Office.  The Gemini  amplifier was awarded "Best of
Show" in the category Best  Desktop/Agent  Productivity Tools at the 12th Annual
Call Center & CRM Solutions Conference & Exposition held in February 2002.

The USB Adapter.

The USB adapter is an adapter that allows the use of an amplifier and headset in
PC phone installations.  Several new applications such as Internet Protocol (IP)
telephony,  voice  recognition and auto attendant allow for the use of telephone
headsets,  which in most cases improve the performance of the  application.  The
USB adapter  allows the use of our headsets and  amplifiers  in these new market
niches.

The DSP Intelligent Microphone.

The DSP  Intelligent  microphone  is designed to serve those market niches where
the use of a headset is not wanted although the user still requires the need for
headset   functionality   such  as  speech   recognition   and  speech  enabling
input/output  PC gaming  applications.  This product allows for the receiving of
sound to be very focused in addition to eliminating  all background  noise.  Pro
Tech is currently directing a portion of our sales and marketing efforts towards
these emerging PC markets.

The Manager's Headset.

The manager's  headset is a lightweight  over-the-ear  fast food headset,  which
provides improved comfort to the fast food store manager  monitoring  drive-thru
activity.  It was introduced in February of 2000. We will continue to offer this
headset in our fast food product line for the year 2004.

The A-10 Amplifier.

The A-10  amplifier  is the first in a series  of  multi-line  amplifiers  being
offered  with each of our  headsets.  It is designed  for the small  office/home
office  market  and has been  engineered  to work with over 90% of all  existing
phone systems in the world.

The A-27 Amplifier.

The A-27 amplifier is the first in a series of amplifiers  specifically designed
for automatic  control  distributors  or phone  systems,  which use the standard
PJ-237  2-prong  plug as their  interface.  This  amplifier  will  employ  noise
suppression  technology  designed by Pro Tech. We received  patent  approval for
this  technology  during fiscal year 2001. The A-27 was introduced into the call
center market in 2000.

The Active Series Headset.

The Active Series Headset was  introduced in 2000.  This headset is designed for
the mobile headset user. Cellular phone users and automobile hands-free kits are
the primary market focus of this product.

The Trinity.

The Trinity was designed for users in noisy environments. Pro Tech completed the
development  of this  product  early in the 2000  calendar  year.  Unlike  other
currently   available   headsets,   the  Trinity  employs  a  light  (1/2-ounce)
"acoustical ear cup" which completely surrounds the user's ear. The perimeter of
this cup rests  lightly in a broad area of contact  around the ear,  rather than
against or in the ear itself,  which we believe  will allow the user to wear the
Trinity in comfort for extended  periods.  Moreover,  by enclosing  the

                                       4
<PAGE>


ear, the  acoustical ear cup reduces  background  noise,  thereby  significantly
improving the clarity and strength of reception  from the earphone.  The Trinity
has  been  designed  as a  comfortable  and  lightweight  alternative  to  bulky
commercial  sound  suppressant  headsets.  The Trinity  headset can be worn in a
single ear cup version or dual ear cup version.  Like the ProCom, the Trinity is
produced with a choice of adapters  capable of  interfacing  with the electronic
amplifiers and telephone systems of most major manufacturers.

D.       Marketing and Sales

Pro Tech presently intends to market products primarily through our officers and
staff,  utilizing  industry contacts and calling upon potential  purchasers.  We
also  supplement  the  marketing  efforts of our  employees by using  electronic
commerce  from our web site along with  independent  sales  representatives  and
strategic marketing agreements.

The following summarizes Pro Tech's key alliances:

--------------------------------------------------------------------------------
                             Date Relationship
  Key Marketing Alliances      Established               Applications
--------------------------  -------------------  -------------------------------
The McDonald's Corporation       April 1995       Aftermarket Fast Food Headsets
3M Corporation                   April 2000       Marketing Agreement
Muzak Corporation                July 2000        Marketing Agreement
--------------------------------------------------------------------------------

Pro Tech  markets  and will  continue  to market our  headsets  directly  to the
commercial  headset  market  as a  replacement  for our  competitors'  headsets.
Examples of such  purchasers  include fast food  companies and  franchisees  and
other large  quantity  users of commercial  headset  systems.  We entered into a
non-binding business relationship agreement with the McDonald's Corporation that
allows us to sell our products on a non-exclusive basis to McDonald's franchises
and company-owned restaurants.

As Pro Tech  expands,  we will  continue to direct  marketing  and sales efforts
toward: (1) telephone operating companies;  (2) telephone system  manufacturers;
(3) personal computer  manufacturers;  and (4) government agencies. To exploit a
developing market for telephone headsets, we have targeted  manufacturers of new
telephone systems and other  telecommunication  equipment that utilize headsets.
We will also  supplement the above  strategies with joint ventures and marketing
agreements with companies with complementary technologies. Although we presently
intend to sell our products to several large  telephone  users,  there can be no
assurance  that we will be  successful in such efforts.  Other  potential  large
volume  purchasers  of  headsets  are   manufacturers  of  personal   computers,
especially when headsets become a standard telephone accessory.  In addition, we
plan to market our products to  government  agencies.  Pro Tech's  headsets have
been  approved  for sale to  Boeing,  a prime  contractor  of  NASA,  for use by
astronauts  in space  travel.  To date,  we have had minimal sales to Boeing for
prototype headsets.  While profits from government  contracts are anticipated to
be minimal,  such sales enhance the  credibility  and reputation of the selected
headset and its manufacturer, especially within the telephone industry.

Finally,  Pro Tech's direct  marketing and sales efforts will be supplemented by
the distribution of products through established channels of distribution. These
include:  (1) specialized  headset  distributors that derive a majority of their
revenues  from the sale of headsets  to both end users and, to a lesser  extent,
resellers; and (2) large electronic wholesalers that offer hundreds of products,
including  headsets.  It is anticipated that a majority of sales of our headsets
to commercial  users such as credit card  companies and airlines will be through
such distributors.

In addition to marketing our technology through existing marketing  alliances as
described  above,  as of December 31, 2003,  Pro Tech had an internal  sales and
marketing force of 4 employees, and our executive officers and directors.

                                       5
<PAGE>


E.       Manufacturing

Pro Tech is currently  outsourcing  nearly all components  from several Far East
suppliers who build each component according to Pro Tech's  specifications.  Pro
Tech  will  continue  to  adhere to past  cost  reduction  policies  and will be
expanding  its  outsourced  Far East  manufacturing  operations  to support  the
current and future  projected sales volumes.  Pro Tech plans a full migration of
this  production  capacity from U.S.  operations  to offshore  operations as the
demand for its products increases.  An interruption in the supply of a component
for which Pro Tech is unable to readily  procure a  substitute  source of supply
could temporarily result in Pro Tech's inability to deliver products on a timely
basis,  which in turn could adversely  affect its operations.  To date, Pro Tech
has not experienced any shortages; however, in order to meet forecasted customer
requirements,  Pro Tech has under  contract  multiple  suppliers for several key
components in order to reduce the risk in a disruption  of the supply chain.  At
December 31, 2003, the value of our inventory was $493,555.

Pro Tech believes that its Fort Pierce,  Florida  facility  presently  possesses
sufficient  capacity for its current needs. In the event that sales volumes were
to exceed the  capabilities  of the Fort Pierce  location  or Pro Tech's  supply
chain from the Far East were to be disrupted,  Pro Tech would  immediately enter
into subcontracting  arrangements for products with other third parties. A delay
in establishing  such  arrangements,  if necessary,  could adversely  affect Pro
Tech's ability to deliver products on a timely basis to its customers,  which in
turn could adversely affect Pro Tech's operations.  Pro Tech, however,  believes
that subcontracting the manufacture of Pro Tech's products could be accomplished
on short notice given the simple design of Pro Tech's products.

F.       Concentrations of Credit Risk

Pro Tech sells  products and services to  distributors  and end users in various
industries  worldwide.  As outlined below, our three largest customers accounted
for approximately 35% of revenues during the fiscal year ended December 31, 2003
and 22% of gross  accounts  receivable  at December 31, 2003.  We do not require
collateral or other security to support customer receivables.

                                                 As of December 31, 2003,
                                                And for the year then ended
                                          --------------------------------------
                                              Accounts
         CUSTOMER                            Receivable              Revenue
  ------------------------                ----------------       ---------------

  Muzak                                   $       7,413          $   194,052
  3M Corporation                                  3,105              113,683
  McDonalds                                      16,410              101,611
  All Other                                      93,278              769,189
                                          ----------------       ---------------
                                Total     $     120,206          $ 1,178,535
                                          ================       ===============

Pro Tech regularly  assesses the  realizability  of our accounts  receivable and
performs a detailed analysis of aged accounts  receivable.  When quantifying the
realizability of accounts  receivable,  we take into  consideration the value of
past due receivables and the collectibility of such receivables, based on credit
worthiness.

Financial  instruments,  which potentially subject us to concentration of credit
risk,  consist  principally of cash and cash equivalents and trade  receivables.
Our cash equivalents  consist of commercial paper and other investments that are
readily  convertible  into cash and have original  maturities of three months or
less. We maintain our cash and cash equivalents primarily in one bank.

Pro Tech does not have a significant  foreign exchange  transaction risk because
non-U.S. revenue and purchases are denominated and settled in U.S. dollars.

                                       6
<PAGE>


G.       Competition

The  lightweight   telephone   headset   industry  is  highly   competitive  and
characterized by a few dominant manufacturers. We are aware of several companies
who   manufacture   telephone   headsets.   Primary  among  our  competitors  is
Plantronics,  Inc., the world's largest  manufacturer  of lightweight  telephone
headsets.  Mr.  Larkin,  Pro Tech's former  Chairman,  founded  Plantronics.  We
estimate  Plantronics'  share of the market to be  approximately  48% worldwide.
Plantronics  reported net sales from all of its products  (including  electronic
amplifiers and other headset  accessories  and services) of  approximately  $338
million for the fiscal year 2003. Our other major competitor is GN Netcom,  Inc.
In 1997, GN NetCom,  Inc.  purchased  UNEX  Corporation  and ACS Wireless and in
calendar year 2000  announced the purchase of Hello Direct.  Mr. Larkin  founded
ACS Wireless. We believe GN Netcom, Inc. has a market share of approximately 20%
worldwide.  These  companies are well  established and have  substantially  more
technical, financial, marketing, manufacturing and product development resources
than Pro Tech.

Pro Tech believes that in selecting telephone headsets, users primarily consider
price, quality, reliability, product design and features, and warranty terms. We
believe  that  our  headsets  are  superior  in  design  and  construction,  and
substantially  lower in price,  than the  models  currently  available  from our
competitors.  However,  we cannot  assure that our products will be perceived by
users and  distributors  as providing a  competitive  advantage  over  competing
headsets.  In addition,  we cannot assure that competing  technologies  will not
become  available  which are superior,  less costly or marketed by  better-known
companies. Also, certain customers may prefer to do business with companies that
have greater access to resources.

In addition to direct  competition  from other  companies  offering  lightweight
telephone  headsets,  Pro Tech may face indirect  competition from technological
advances  such as  interactive  voice  response  systems  which require no human
operators for certain  applications such as account balance inquiries or airline
flight information. We believe that this competition will be more than offset by
increased demand for headsets as voice telecommunication applications expand.

H.       Government Contracts

Pro Tech currently is a contract provider of headsets to the Boeing Corporation,
a prime contractor to NASA, for headsets to be used in the  international  space
station.  Government contracts provide for cancellation at the government's sole
discretion,  in which  event the  contractor  or  subcontractor  may recover its
actual costs up to the date of cancellation, plus a specified profit percentage.
Governmental  expenditures for defense are subject to the political  process and
to  rapidly  changing  world  events,  either  or both of which  may  result  in
significant reductions in such expenditures in the proximate future.  Government
contracts or contracts  with prime  government  contractors  are not viewed as a
significant part of Pro Tech's business.

I.       Environmental Regulation Compliance

Compliance with Federal,  state and local provisions regulating the discharge of
materials into the environment,  or otherwise  relating to the protection of the
environment,  does not have any material  effect upon the capital  expenditures,
earnings or competitive position of Pro Tech.

J.       Proprietary Protection

Pro Tech owns one  technology  patent,  which was granted in 2001.  We intend to
seek patent  protection on our inventions at the appropriate time in the future.
The process of seeking patent protection can be lengthy and expensive, and there
can be no assurance that patents will be issued,  that any patent issued will be
of sufficient scope or strength, provide meaningful protection or any commercial
advantage.  Pro Tech may be subjected to, or may initiate,  litigation or patent
office interference  proceedings,  which may require  significant  financial and
management  resources.  The failure to obtain  necessary rights or the advent of
litigation  arising out of any such claims could have a material  adverse effect
on our operations.

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<PAGE>


Pro  Tech  also  has  a  license  to  utilize  two  types  of   patent-protected
technologies  (described below) in the area of noise reduction,  which are owned
by NCT,  its  ultimate  parent  company.  NCT is  highly  experienced  in  noise
reduction technology and has developed  headphone,  headset and earmuff products
incorporating  noise reduction for a wide variety of applications.  The licensed
technologies are:

          Active Noise Reduction  ("ANR")  processes a correcting signal that is
          equal to but opposite  from an offending  noise.  The two sound fields
          cancel each other to give a greatly reduced noise level.

          ClearSpeech(TM)   noise  reduction  algorithm   electronically  strips
          background  noise  from  speech,  even  when the  noise is in the same
          frequency band as the speech and where there is no independent measure
          of the  interfering  noise.  This is  achieved  by noting  the  unique
          characteristics  of speech as compared to general noise and adaptively
          adjusting a  multitude  of complex  filters to let through  only those
          signal components that represent the wanted speech signal.

Certain of Pro Tech's  employees  involved in engineering  are required to enter
into confidentially agreements as a condition of employment. We do not currently
own any registered trademarks, although we intend to file trademark registration
applications in the future with respect to distinguishing marks.

K.       Employees

As of December 31, 2003,  Pro Tech had 10 full-time  and 4 part-time  employees,
including 5 employees in administration  and shipping,  4 in sales and marketing
and 5 in assembly and  production.  None of our employees are  represented  by a
collective bargaining unit. We believe our employee relationships are good.

L.       Business Divisions

Pro   Tech   operates   in   three   business   divisions:   headset   products,
telecommunication  integration, and call center operations. The headset division
encompasses the design, development,  manufacturing and marketing of lightweight
headsets for  commercial  use. The  telecommunication  integration  division was
launched in 2001 to sell and install simple to sophisticated analog, digital and
IP phone  systems.  The  call  center  operation  was  launched  in 2001 to take
advantage of an  expertise  in a  specialized  niche of the medical  market.  In
December  2001,   management  suspended  call  center  operations  due  to  poor
performing  contracts.  Pro Tech  reorganized  this division and resumed limited
operations  during  the  third  quarter  2002.  All of these  divisions  operate
predominantly within the North American geographic area.

M.       Available Information

We file  annual,  quarterly  and special  reports,  proxy  statements  and other
information with the Securities Exchange  Commission,  known as the SEC. You may
read  and  copy any  document  we file at the  SEC's  public  reference  room in
Washington, D.C. For further information, please call the SEC at 1-800-SEC-0330.
Our SEC  filings  are also  available  to the public  from the SEC's  Website at
"http://www.sec.gov."

ITEM 2.  PROPERTIES

Pro Tech's executive,  sales and manufacturing  facilities occupy  approximately
13,000 square feet of space located at 4492 Okeechobee Rd, Fort Pierce,  Florida
34947,  pursuant  to a lease  agreement  dated  March 1, 2001  which  expires in
February 2006 and provides for monthly rental of approximately $5,000 increasing
to approximately $8,000 over the five-year term.

ITEM 3.  LEGAL PROCEEDINGS

Pro Tech is not party to any legal proceeding.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                       8
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS


Pro Tech's  common stock began  trading on the NASD OTC Bulletin  Board on March
22,  1996.  Our stock is currently  being  traded  under the symbol  "PCTU." The
following  table  sets  forth  the high and low  prices of the  common  stock as
reported by the NASD's OTC Bulletin Board for each of the fiscal quarters during
the fiscal years ended December 31, 2002 and 2003. The market quotations reflect
inter-dealer prices, without retail mark-up, markdown, or commission and may not
represent actual transactions.

         Year ended December 31, 2002                 High           Low
         --------------------------------------    ----------    -----------
           First Quarter                             $0.070        $0.040
           Second Quarter                            $0.050        $0.020
           Third Quarter                             $0.035        $0.020
           Fourth Quarter                            $0.021        $0.010

         Year ended December 31, 2003                 High           Low
         --------------------------------------    ----------    -----------
           First Quarter                             $0.015        $0.005
           Second Quarter                            $0.018        $0.007
           Third Quarter                             $0.015        $0.008
           Fourth Quarter                            $0.018        $0.009


On March 12, 2004, the last reported sale of Pro Tech's common stock as reported
by the NASD OTC Bulletin  Board was $0.03.  As of March 12, 2004,  there were 56
record holders of the common stock,  representing  approximately  600 beneficial
owners.

Pro Tech has neither  declared nor paid any  dividends on shares of common stock
since our  incorporation  in October 1994 and we do not  anticipate  declaring a
cash  dividend in the  reasonably  foreseeable  future.  Any decisions as to the
future  payment of  dividends  will  depend on our  earnings  and our  financial
position and such other  factors as the Board of Directors  deems  relevant.  We
anticipate that we will retain earnings,  if any, in order to finance  expansion
of our operations.

See Notes to Financial Statements: Note 7 - Preferred Stock Subject to Mandatory
Conversion  into a Variable  Number of Shares  and Note 9 - Capital  Stock for a
description of our sales of unregistered securities within the last three fiscal
years.

                                       9
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

The  selected  consolidated  financial  data set forth below is derived from the
historical  financial  statements  of Pro  Tech.  The  data set  forth  below is
qualified  in its  entirety  by and should be read in  conjunction  with Item 8.
Financial  Statements  and  Item 7.  Management's  Discussion  and  Analysis  of
Financial  Condition  and Results of Operations  that are included  elsewhere in
this document.


<TABLE>
<CAPTION>


                                                          For the Year         For the Two                For the Year
                                                             Ended             Months Ended                  Ended
                                                           October 31,         December 31,               December 31,
                                                   --------------------------- ------------  ---------------------------------------
                                                       1999           2000         2000          2001          2002         2003
                                                   ------------  ------------- ------------  ------------  ------------  -----------
<S>                                                <C>           <C>           <C>           <C>           <C>           <C>

STATEMENTS OF OPERATIONS DATA:

Net sales                                          $ 1,090,551   $ 1,562,484   $   307,902   $ 2,175,306   $ 1,648,949   $1,178,535

Cost of goods sold                                     414,931       623,555       129,378       920,127       774,316      364,413
                                                   ------------  ------------- ------------  ------------  ------------  -----------

      Gross profit                                     675,620       938,929       178,524     1,255,179       874,633      814,122

Selling, general and administrative                    893,384     1,275,290       545,586     3,655,711     2,703,425    1,694,363
Impairment charge on intangible assets                       -             -             -             -    11,500,000            -
Provision for doubtful accounts                          3,771         7,990         1,574         9,958        29,800        6,591
                                                   ------------  ------------- ------------  ------------  ------------  -----------

      Loss from operations                            (221,535)     (344,351)     (368,636)   (2,410,490)  (13,358,592)    (886,832)
Other income (expense):
  Interest income (expense), net                         9,181       (31,715)       (8,713)      (20,262)      (51,290)     (90,966)
  Miscellaneous income                                     697         1,726         1,029         4,305         5,004        3,352
  Loss on disposal of fixed assets                      (9,408)            -             -        (2,945)            -            -
                                                   ------------  ------------- ------------  ------------  ------------  -----------

      Loss before income taxes                        (221,065)     (374,340)     (376,320)   (2,429,392)  (13,404,878)    (974,446)
Income tax expense (benefit)                               -             -             -             -             -            -

      Net loss                                        (221,065)     (374,340)     (376,320)   (2,429,392)  (13,404,878)    (974,446)
Less:
Preferred stock beneficial conversion                        -     3,569,000            -         79,190        45,810            -
Preferred stock embedded dividend                            -       375,000            -         62,661             -            -
Dividend accretion on preferred stock                        -         5,425        10,027        24,085        22,000       10,911
                                                   ------------  ------------- ------------  ------------  ------------  -----------

      Net loss attributable to common
           stockholders - as previously reported      (221,065)   (4,323,765)     (386,347)   (2,595,328)  (13,472,688)    (985,357)

Adjustment of beneficial conversion (3)                    -       2,444,000           -             -              -           -
                                                   ------------  ------------- ------------  ------------  ------------  -----------

      Net loss attributable to common
           stockholders - as adjusted                $(221,065)  $(1,879,765)  $  (386,347)  $(2,595,328)  $(13,472,688) $ (985,357)
                                                   ============  ============= ============  ============  ============= ===========

Basic and diluted net loss per share attributable
  to common stockholders - as previously reported        (0.05)        (0.57)        (0.01)        (0.08)        (0.41)       (0.03)

Adjustment of beneficial conversion (3)                    -            0.32           -             -             -            -
                                                   ------------  ------------- ------------  ------------  -------------  ----------

Basic and diluted net loss per share attributable
  to common stockholders - as adjusted                 $ (0.05)  $     (0.25)  $     (0.01)  $     (0.08)  $     (0.41)   $   (0.03)
                                                   ============  ============= ============  ============  =============  ==========

 Weighted average number
       of common shares outstanding (1)              4,254,000     7,537,855    28,248,438     32,281,034   33,200,311    33,200,311
                                                   ============  ============= ============  ============  =============  ==========


                                                                                                    December 31,
                                                   ---------------------------------------------------------------------------------
                                                       1999           2000         2000          2001          2002         2003
                                                   ------------  ------------- ------------  ------------  -------------  ----------
BALANCE SHEET DATA:
 Total assets                                          945,377    18,652,665    18,264,130    17,184,920     4,163,492    3,673,036
 Total current liabilities                             209,300       662,956       651,313     1,541,386       866,537    1,334,879
 Long-term debt                                          8,089         3,687         3,115        44,632     1,102,931    1,849,949
 Accumulated deficit                                  (413,284)     (787,624)   (1,163,944)   (3,593,336)  (16,998,214) (17,972,660)
 Stockholders' equity (2)                              727,988    17,986,022    17,609,702    14,965,464     1,540,586      488,208
 Working capital/(deficit)                             494,148     1,419,819     1,205,686      (320,525)     (19,543)     (647,747)

</TABLE>

Footnotes:
----------
(1)  Excludes  shares  issuable upon the exercise of outstanding  stock options,
     warrants  and  convertible  preferred  stock,  since their  effect would be
     antidilutive.
(2)  Pro Tech has never declared nor paid cash dividends on common stock.
(3)  Adjustment  to reflect  the  allocation  of  proceeds  to  multiple  equity
     instruments  (Series A  preferred  stock and  warrants)  and to adjust  the
     beneficial conversion feature.

                                       10
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

The  following  discussion  should  be read in  conjunction  with the  financial
statements and the notes thereto included herein.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
---------------------------------------------

The  Securities  and  Exchange  Commission   encourages  companies  to  disclose
forward-looking  information so that investors can better understand a company's
future prospects and make informed investment decisions.  This document contains
such  "forward-looking  statements" within the meaning of the Private Securities
Litigation  Reform  Act of 1995,  particularly  statements  anticipating  future
growth in revenues and cash flow.  Words such as  "anticipates,"  "  estimates,"
"projects,"  "intends,"  "plans,"  "believes," "will be," "will continue," "will
likely result," and words and terms of similar substance used in connection with
any  discussion  of future  operating or  financial  performance  identify  such
forward-looking  statements.  Those  forward-looking  statements  are  based  on
management's present expectations about future events. As with any projection or
forecast,  they  are  inherently  susceptible  to  uncertainty  and  changes  in
circumstances,  and Pro Tech is under no obligation to (and expressly  disclaims
any such obligation to) update or alter its  forward-looking  statements whether
as a result of such changes, new information, future events or otherwise.

In addition,  Pro Tech's overall  financial  strategy,  which  includes  growing
operations,  maintaining  financial ratios and  strengthening our balance sheet,
could be  adversely  affected  by  increased  interest  rates,  failure  to meet
earnings expectations,  significant acquisitions or other transactions, economic
slowdowns and changes in our plans, strategies and intentions.

Pro Tech operates in a highly  competitive and rapidly changing  environment and
in  business   divisions   that  are  dependent  on  our  ability  to:   achieve
profitability; achieve a competitive position in design, development, licensing,
production  and  distribution  of electronic  systems;  produce a cost effective
product  that  will gain  acceptance  in  relevant  consumer  and other  product
markets; increase revenues from products;  realize funding from product sales to
sustain  our current  level of  operation;  introduce,  on a timely  basis,  new
products; maintain satisfactory relations with our customers; attract and retain
key  personnel;  maintain and expand our  strategic  alliances;  and protect our
know-how and inventions.  Pro Tech's actual results could differ materially from
management's  expectations  because of changes in such factors. New risk factors
can  arise  and it is not  possible  for  management  to  predict  all such risk
factors,  nor can it assess the impact of all such risk  factors on our business
or the extent to which any factor,  or combination of factors,  may cause actual
results  to  differ  materially  from  those  contained  in any  forward-looking
statements.  Given these  risks and  uncertainties,  investors  should not place
undue reliance on forward-looking statements as a prediction of actual results.

Investors  should  also be aware that while Pro Tech  might,  from time to time,
communicate  with securities  analysts,  it is against our policy to disclose to
them any non-public  information or other confidential  commercial  information.
Accordingly, investors should not assume that Pro Tech agrees with any statement
or report issued by any analyst  irrespective of the content of the statement or
report.  Furthermore,  Pro Tech  has a  policy  against  issuing  or  confirming
financial  forecasts or projections  issued by others.  Thus, to the extent that
reports  issued by  securities  analysts  or  others  contain  any  projections,
forecasts or opinions, such reports are not the responsibility Pro Tech.

CRITICAL ACCOUNTING POLICES
---------------------------

Our  financial  statements  have been  prepared in  accordance  with  accounting
principles  generally  accepted in the United States of America.  As such,  some
accounting  policies  have a  significant  impact  on  amounts  reported  in the
financial statements.  A summary of those significant accounting policies can be
found in Notes to Financial  Statements:  Note 1 -  Organization  and Summary of
Significant  Accounting Policies. In

                                       11
<PAGE>


particular,  judgment is used in areas such as  determining  the  allowance  for
doubtful accounts,  adjustments to inventory  valuations,  asset impairments and
the accrual for warranty expense.


RESULTS OF OPERATIONS
---------------------

The Year Ended  December  31, 2003 As Compared  To The Year Ended  December  31,
2002:

Net  loss  for  the  year  ended  December  31,  2003  decreased   approximately
$12,430,000, or 93%, compared to the year ended December 31, 2002. This decrease
was due mainly to the recognition of an $11,500,000 intangible assets impairment
charge in 2002.  Also  included is the total  effect in 2003 of a  reduction  of
approximately  $254,000 in selling,  general and  administrative  expenses and a
reduction of approximately $756,000 in depreciation and amortization expense.

Total  revenue  generated  during the year ended  December  31,  2003  decreased
approximately  $470,000,  or 29%,  compared to the year ended December 31, 2002.
Pro Tech continued the sale of products through  distributors,  augmenting these
sales with direct sales from our own outbound  telemarketing  operation.  During
the year ended  December 31, 2003,  we sold  approximately  35,800  headsets and
headset related  products,  as compared to approximately  60,500 during the same
period 2002, a 41% decrease.

Revenue from the fast food market decreased  approximately  $313,000, or 28%, in
2003 as  compared  to the same  period  in 2002.  Net  unit  sales of fast  food
headsets  decreased  51% due mainly to reduced  purchases  by three of our major
distributors. This decrease was primarily the result of slowed demand from their
customer base.  Demand has decreased and we expect it to remain slow as a result
of two  factors:  (1)  the  announced  closures  of  several  hundred  McDonalds
franchises  worldwide;  and (2)  increased  market  competition  from  Far  East
competitors.

Revenue from the radio market decreased  approximately $100,000, or 97%, in 2003
compared to the same period in 2002.  After  evaluating the revenue and costs of
this market, we determined that it was not profitable for us and decided to exit
this market during 2002.

Revenue  from  the  telephone  market  remained  approximately  the same in 2003
compared  to the same  period in 2002.  We have  determined  that the  telephone
market is the growth market for our products and will focus our resources toward
expanding our presence in that market.  We have faced delays in  introduction of
new  products  for this  market  due to a lack of  working  capital.  We and NCT
Hearing are actively pursuing new capital with which to utilize the technologies
and other assets available to us to expand and improve our product line for this
market.

Cost of goods sold for the year ended December 31, 2003 decreased  approximately
$410,000,  or 53%,  compared to the same period in 2002.  This  decrease was due
mainly to the decrease in sales volume for 2003.  In  addition,  replacement  of
headsets in connection with a component  failure that we experienced  during the
second  quarter of 2001 was  completed as of September  30, 2002.  The number of
units  replaced  through  warranty  during  the year  ended  December  31,  2003
decreased  by  approximately   7,300  compared  to  the  same  period  in  2002,
representing  approximately  $54,000 in costs. Although these component failures
had been  corrected,  Pro Tech continued to honor the warranty  associated  with
these  headsets and  repaired or replaced the headsets for  customers as needed.
Also  contributing  to the  decrease in cost of goods sold was a $15,000  credit
from a vendor in settlement of disputed charges from prior years.

Gross margin  percent  increased from 53.0% for the year ended December 31, 2002
to 69.1% for the year ended  December 31, 2003.  This  increase was a result of:
(1) a favorable  change in the mix of customers;  (2) a decrease in the expenses
incurred to honor warranty replacements; and (3) a $15,000 credit from a vendor,
mentioned above.  The change in the mix of customers  resulted from the decrease
in sales to our three major distributors.  These distributors purchased in large
quantities  and,  therefore,  were given  discounted  prices  resulting in lower
profit  margins.  We are now selling more to retail  customers who do not buy in
large quantities. These customers do not receive discounts,  resulting in higher
profit  margins.

                                       12
<PAGE>


The decrease in expenses related to warranty is a result of fewer headsets being
replaced in connection with the component failure mentioned above.

Selling,  general and  administrative  expenses for the year ended  December 31,
2003  decreased  approximately  $254,000,  or 20%,  compared  to the year  ended
December 31, 2002.  Starting in 2002 and  continuing  throughout  2003, Pro Tech
implemented cost savings to reduce selling, general and administrative expenses.
These  cost  savings  included  a  reduction  of work  force in all areas of the
products  operations  and tighter  controls over  expenditures.  The decrease in
expenses was due mainly to a decrease of  approximately  $292,000 in payroll and
related  expenses  comprised  mainly of a $133,000  decrease  in health  benefit
expenses  and a  $121,000  decrease  in payroll  and  payroll  taxes  reflecting
reductions in force.

We did not have an  impairment  charge on  intangible  assets for the year ended
2003 as  compared to a charge of  $11,500,000  for the year ended  December  31,
2002. We are required to test the recoverability of our long-lived assets (which
include  our  intangible  assets)  whenever  events or changes in  circumstances
indicate  that  their  carrying  amount  may not be  recoverable.  We tested the
recoverability  of the intangible  assets as of December 31, 2003 and determined
that the  carrying  amount of such assets  were less than their fair  value.  No
impairment charge was necessary for the year ended December 31, 2003.

Interest  expense - related party for the year ended December 31, 2003 increased
approximately  $35,000,  or 168%,  compared  to the same  period in 2002.  These
charges were  incurred on the  outstanding  notes  payable to NCT  Hearing.  The
outstanding  notes payable  represents  amounts owed to NCT Hearing for services
provided  to Pro Tech by NCT Hearing and its  affiliated  companies,  as well as
cash  advances.  As of December 31, 2003, the balance of the  outstanding  notes
payable,  including  interest,  was $1,824,540,  as compared to $1,064,703 as of
December 31, 2002.

The Year Ended  December  31, 2002 As Compared  To The Year Ended  December  31,
2001:

Net  loss  for  the  year  ended  December  31,  2002  increased   approximately
$10,975,000,  or 452%,  compared  to the year  ended  December  31,  2001.  This
increase was due mainly to the recognition of an $11,500,000  intangible  assets
impairment  charge.   Also  included  is  the  net  effect  of  a  reduction  of
approximately $952,000 in selling, general and administrative  expenses,  offset
by a decrease of approximately $381,000 in gross profit margin.

Net  sales  generated   during  the  year  ended  December  31,  2002  decreased
approximately  $526,000,  or 24%,  compared to the year ended December 31, 2001.
Pro Tech continued the sale of products through  distributors,  augmenting these
sales with direct sales from our own outbound  telemarketing  operation.  During
the year ended December 31, 2002, we sold a total of 60,540 headsets and headset
related  products,  as compared to 70,803  during the same  period  2001,  a 14%
decrease.

Revenues from the fast food market decreased  approximately  $473,000 in 2002 as
compared  to the same  period  in 2001.  Net unit  sales of fast  food  headsets
decreased   23%  due  mainly  to  reduced   purchases  by  three  of  our  major
distributors. This decrease was primarily the result of slowed demand from their
customer  base.  In  addition,  a portion  of this  decrease  was  related  to a
component failure issue that we experienced with one of our suppliers during the
second  quarter  2001.  Although  this  component  issue has been  resolved,  we
continued to honor our customer  agreements  by  replacing  defective  headsets,
therefore  resulting in fewer new sales to these  customers.  These  replacement
agreements were completed as of September 30, 2002.

Revenues from the radio market decreased approximately $118,000 in 2002 compared
to the same period in 2001.  After  evaluating  the  revenues  and costs of this
market, we determined that it was not profitable for us and decided to exit this
market during the first quarter of 2002.

Revenues  from the  telephone  market  increased  approximately  $85,000 in 2002
compared  to the same  period in 2001.  We have  determined  that the  telephone
market is the growth market for our products and will focus our resources toward
expanding our presence in that market.  We have faced delays in  introduction of
new  products  for this  market  due to a lack of  working  capital.  We and NCT
Hearing are

                                       13
<PAGE>


actively pursuing new capital  investment with which to utilize the technologies
and other assets available to us to expand and improve our product line for this
market.

Cost of goods sold for the year ended December 31, 2002 decreased  approximately
$146,000,  or 16%,  compared to the same period in 2001.  This  decrease was due
mainly to the  decrease in sales  volume for 2002,  offset by  additional  costs
incurred to replace  headsets in connection  with the component  issue mentioned
above.

Gross margin  percent  decreased from 57.7% for the year ended December 31, 2001
to 53.0% for the year ended  December 31, 2002.  This decline was a result of an
increase in  production  costs due to the  increase in  domestic  production  to
facilitate  smaller  production  runs,  along with the additional cost effect of
replacing headsets in connection with the component issue mentioned above.

Selling,  general and  administrative  expenses for the year ended  December 31,
2002  decreased  approximately  $952,000,  or 26%,  compared  to the year  ended
December 31, 2001. In the first quarter 2002, Pro Tech  implemented cost savings
to reduce  selling,  general and  administrative  expenses.  These cost  savings
included  a  reduction  of work force in all areas of the  products  operations,
tighter controls over expenditures and the continued  reorganization of the call
center  operation.  The  decrease  in  expenses  was due mainly to a decrease of
approximately $636,000 in payroll and related expenses, combined with a decrease
of approximately $253,000 in marketing, advertising and public relations.

Impairment  charge on  intangible  assets  was  $11,500,000  for the year  ended
December 31, 2002. We are required to test the  recoverability of our long-lived
assets  (which  include our  intangible  assets)  whenever  events or changes in
circumstances indicate that their carrying amount may not be recoverable.  As of
December 31, 2002, we were not able to exploit the  technologies  underlying our
intangible assets due to the lack of available working capital during the fiscal
year 2002.  Although we and NCT  continued to try to obtain  sufficient  working
capital to produce the new products we  identified  and  developed  that use the
technology included in our intangible assets, we determined that, given our then
current situation,  recoverability testing was appropriate at December 31, 2002.
We  determined  that the carrying  amount of such assets were greater than their
fair value. Using the estimated discounted future cash flows attributable to the
new  products  utilizing  the  technology,  or the fair value of the assets,  we
determined  the  carrying  amount of the assets was  impaired  by  approximately
$11,500,000.

Interest  expense for the year ended December 31, 2002  increased  approximately
$30,000,  or 119%,  from the  comparable  year ended  December  31,  2001.  This
increase was due to interest charges of approximately  $21,000 from NCT Hearing.
These charges were incurred on the outstanding note payable to NCT Hearing.  The
outstanding  note  payable  represents  amounts owed to NCT Hearing for services
provided  to Pro Tech by NCT Hearing and its  affiliated  companies,  as well as
cash  advances.  As of December 31, 2002,  the balance of the  outstanding  note
payable, including interest, was $1,064,703.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

During the current  fiscal  year ended  December  31,  2003,  we funded  working
capital requirements with continued use of our short-term factoring  arrangement
and advances  from NCT (our  ultimate  parent  company) and its  affiliates.  In
addition,  NCT  Hearing  paid  expenses  on behalf  of Pro Tech,  which had been
allocated  to  them.  We  have  taken  steps  to  reduce  our  working   capital
requirements.  These steps  include the  reduction  of work force  levels in all
areas of product  operations and the  institution  of tighter  controls over all
expenditures.  Pro Tech received  approximately $278,000 in cash advances during
the first quarter 2004 from NCT Hearing to fund our working capital needs during
2004.   Management  believes  Pro  Tech  will  have  sufficient  funds  to  meet
anticipated working capital  requirements through December 31, 2004. In order to
maximize the potential of the  telephone  user market and to enable us to expand
into additional markets,  including  government agencies and personal computers,
we will require additional  capital. We are seeking and will continue to seek to
raise additional financing.

On June 27, 2003, we were able to roll the $159,938  outstanding note payable to
Westek  Electronics,  a  stockholder,  into a new  $159,938  note  payable  with
interest at 8.5% and  payment  terms of $3,500 due on

                                       14
<PAGE>


the last day of each month  starting on June 30, 2003  through May 31, 2004 with
the remaining balance due on June 27, 2004.

At December 31, 2003, cash and cash equivalents were $21,193.

The current ratio (current  assets to current  liabilities)  was 0.51 to 1.00 at
December  31, 2003,  as compared to 0.98 to 1.00 at December 31, 2002.  Pro Tech
had a working  capital  deficit of $647,747 at December 31, 2003 as opposed to a
deficit of $19,543 at  December  31,  2002.  This  $628,204  increase in working
capital  deficit  was due  mainly to the  adoption  of  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  150,  "Accounting  for  Certain  Financial
Instruments with  Characteristics  of both Liabilities and Equity." SFAS No. 150
required us to reclassify our Series A and Series B convertible  preferred stock
from the equity section to the current  liability  section on our balance sheet.
The total balance  outstanding of our Series A and Series B preferred  stock was
$742,459  as  of  December  31,  2003.   Offsetting  this  increase  in  current
liabilities was a decrease in our outstanding  accounts payable of approximately
$196,000.

Cash flows used in  operating  activities  were  $249,444  during the year ended
December 31, 2003. This use of funds was driven  primarily by the 2003 generated
net loss of  $974,446  and the  decrease of  approximately  $196,000 in accounts
payable.  These  uses of funds  were  offset by  depreciation  and  amortization
expense of  $338,071,  an  approximate  $454,000  increase in notes  payable for
services received,  a decrease in accounts  receivable of approximately  $68,000
and a decrease in inventories of approximately $104,000.

The net cash provided by financing activities was $264,319 during the year ended
December 31, 2003,  due mainly to  approximately  $306,000 in cash received from
NCT Hearing and its  affiliates,  offset by payments  made on notes  payable and
capital lease obligations.

Pro Tech has no lines of credit with banks or other lending institutions.

Capital Expenditures

There were no material  commitments for capital  expenditures as of December 31,
2003, and no material commitments are anticipated in the near future.

Contractual Obligations

The impact that our contractual obligations as of December 31, 2003 are expected
to have on our liquidity and cash flow in future periods is as follows:



<TABLE>
<CAPTION>

                                 Payments due by period
                               ----------------------------------------------------------------------
                                                                                              More
Contractual Obligations                          Less than                                    than 5
                                   Total          1 year         1-3 years     3-5 years      years
                               --------------  ------------   --------------  ----------   ----------
<S>                             <C>             <C>            <C>             <C>          <C>
Long-Term Debt                  $  1,831,001    $    2,385     $  1,828,616    $      -     $       -
Capital Leases                        36,582        13,109           23,473
Operating Leases                     208,671        95,924          112,747           -             -
Purchase Obligations                       -             -                -           -             -
Other Long-Term Liabilites                 -             -                -           -             -
                               --------------  ------------   --------------  ----------   ----------
  Total                         $  2,076,254    $  111,418     $  1,964,836    $      -     $       -
                               ==============  ============   ==============  ==========   ==========

</TABLE>


Off-Balance Sheet Arrangements

As of December 31, 2003, we did not have any off-balance sheet arrangements,  as
defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

                                       15
<PAGE>


ITEM 7A. QUANTITATIVE OR QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Pro Tech's primary market risk exposures are  fluctuations in interest rates and
foreign  exchange  rates.  We are exposed to  short-term  interest  rate risk on
certain debts and trade  accounts  receivable  sales.  We do not use  derivative
financial  instruments to hedge cash flows for such  obligations.  In the normal
course of business,  we employ  established  policies and  procedures  to manage
these risks.

Based upon a hypothetical 10% proportionate  increase in interest rates from the
average level of interest rates during the last twelve  months,  and taking into
consideration expected investment positions, commissions paid to selling agents,
growth of new business and the expected  borrowing level of variable-rate  debt,
the expected effect on net income related to our financial  instruments would be
immaterial.

ITEM 8.  FINANCIAL STATEMENTS

The Reports of the Independent Auditors,  Eisner LLP and Morgan,  Jacoby, Thurn,
Boyle & Associates,  P.A., and the financial  statements and accompanying  notes
are attached.

<TABLE>

                                                                                   Page
                                                                                   ----
<S>                                                                                  <C>
Independent Auditors' Report (Eisner LLP)                                          F-1

Independent Auditors' Report (Morgan, Jacoby, Thurn, Boyle & Associates, P.A.)     F-2

Balance Sheets as of December 31, 2002 and 2003                                    F-3

Statements of Operations for the years ended December 31, 2001; 2002; and 2003     F-4

Statements of Stockholders' Equity for the years ended December 31, 2001; 2002;    F-5
and 2003

Statements of Cash Flows for the years ended December 31, 2001; 2002; and 2003     F-6

Notes to Financial Statements                                                      F-7

</TABLE>


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

On June 4, 2002,  the Company  notified its  principal  independent  accountant,
Morgan,  Jacoby,  Thurn,  Boyle &  Associates,  P.A.  ("MJTB") that the auditing
services of MJTB would no longer be required.  MJTB's  dismissal was approved by
the Pro Tech's Board of Directors.

During Pro Tech's year ended December 31, 2001, there were no disagreements with
MJTB on any matters of accounting  principles or practices,  financial statement
disclosure,  or  auditing  scope or  procedure,  which  disagreement(s),  if not
resolved to the  satisfaction of MJTB, would have caused it to make reference to
the subject matter of the  disagreement(s)  in connection  with its report.  The
report of MJTB,  dated March 1, 2002, on Pro Tech's  financial  statements as of
and for the year ended  December  31,  2001,  included in Pro Tech's 2001 Annual
Report on Form 10-K, did not contain an adverse opinion and was not qualified or
modified as to audit scope or accounting principles.

On June 4, 2002, Pro Tech engaged the  accounting  firm of Eisner LLP ("Eisner")
as principal  independent  accountant to audit the  financial  statements of Pro
Tech for the fiscal year ending December 31, 2002. The engagement was authorized
by Pro Tech's  Board of  Directors.  During the year ended  December  31,  2001,
neither Pro Tech nor any person on Pro Tech's behalf  consulted Eisner regarding
either the  application  of accounting  principles  to a specified  transaction,
either  completed  or  proposed,  or the type of  audit  opinion  that  might be
rendered on Pro Tech's financial statements,  except for consultations regarding
consolidation  into NCT Group,  Inc.'s  (Pro  Tech's  ultimate  parent  company)
financial statements audited by Eisner.

                                       16
<PAGE>


ITEM 9A  CONTROLS AND PROCEDURES

(a)  Evaluation of disclosure controls and procedures.

Pro Tech's President and the Chief Financial Officer,  based on their evaluation
of our  disclosure  controls  and  procedures  (as defined in Exchange Act Rules
13a-15(e) and  15(d)-15(e))  as of the end of the period  covered by this Annual
Report on Form 10-K,  have  concluded  that Pro Tech's  disclosure  controls and
procedures are effective for ensuring that all material  information required to
be  disclosed  by Pro Tech in the  reports  that it files or  submits  under the
Securities Exchange Act of 1934 is recorded, processed,  summarized and reported
within the time periods specified in the SEC's rules and forms.

(b)  Changes in internal controls.

There were no changes in our internal  control  over  financial  reporting  that
occurred during Pro Tech's last fiscal quarter that have materially affected, or
are reasonably  likely to materially  affect,  Pro Tech's internal  control over
financial reporting.

                                       17
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the names,  ages,  positions and the offices held
by each of the  executive  officers  and  directors  of Pro Tech as of March 12,
2004.

   Name                         Age               Positions and Offices
   -------------------------   ------   ----------------------------------------
   Keith Larkin                  80     Director
   Richard Hennessey             44     President, Chief Operating Officer and
                                        Director
   Michael J. Parrella           56     Director
   Irene Lebovics                51     Chairman of the Board
   Cy E. Hammond                 49     Director
   Mark Melnick                  45     Secretary
   Debra Kirven                  39     Chief Financial Officer and Treasurer

Keith Larkin is the founder and currently  serves as a director of Pro Tech. Mr.
Larkin's   40-year   professional   career  has  been   devoted  to   designing,
manufacturing and marketing his new designs in lightweight  telephone  headsets.
In 1961,  Mr.  Larkin  founded  Plantronics,  the  current  industry  leader  in
lightweight  telephone headsets with annual sales of all its products (including
the  electronic  amplifier) in fiscal year 2003 of  approximately  $338 million.
From 1961 until he sold his interest in 1967, Mr. Larkin served as the President
and Chairman of Plantronics,  during which Plantronics established itself as the
main source of  lightweight  telephone  headsets to the  telephone  industry and
provided the headsets for NASA Mercury,  Gemini and Apollo moon flights.  In the
late  1970's,  Mr.  Larkin  conceived,  developed  and  patented a new design in
headsets  to  compete  against  Plantronics'  headsets.  With Mr.  Larkin as its
President,  ACS  Wireless  attained  $1  million  monthly  sales  figures to the
telephone  market  within  three years of operation  and  replaced  Plantronics'
headsets  on the NASA Space  Shuttle.  In 1986,  he left ACS  Wireless to become
involved in  Christian  children's  relief  programs in Haiti and Honduras for a
period of three years.  From January 1989 to August 1991,  Mr.  Larkin served as
the President of Advanced Recreational Technology, Inc., an engineering research
and development  company owned by Mr. Larkin. In August 1991, Mr. Larkin founded
Pro Tech Systems,  a California  limited  partnership that he managed as general
partner.  Pro Tech  Systems  was  formed  to  design,  manufacture,  and  market
lightweight  telephone  headsets.  Upon the transfer of all of the assets of Pro
Tech Systems to the company in November  1994, Mr. Larkin became the Chairman of
the Board of Directors,  Chief Executive Officer, President and Treasurer of Pro
Tech,  positions  which he held until  February  2, 1999,  when he  resigned  as
President  of Pro Tech then until  February  1, 2002,  when he resigned as Chief
Executive  Officer and Treasurer and until November 20, 2003 when he resigned as
Chairman of the Board, but retained his position as director.

Richard  Hennessey  joined Pro Tech as Director of  Marketing in August 1995 and
was appointed Vice President, Marketing on June 10, 1996. On August 4, 1998, Mr.
Hennessey was appointed Secretary and became a director of Pro Tech. On February
2, 1999, Mr.  Hennessey was appointed  President and Chief Operating  Officer of
Pro Tech.  On January 1, 2002,  Mr.  Hennessey  resigned  from the  position  of
Secretary but retained the positions of President and Chief  Operating  Officer.
From 1982 through 1984,  Mr.  Hennessey  was a salesman with the computer  sales
division of Lanier Business Products located in Boston, Massachusetts. From 1984
through  April 1994,  Mr.  Hennessey  held  various new venture  sales and sales
management positions with Digital Equipment Corporation.

Michael J. Parrella  currently serves as a director of Pro Tech. Mr. Parrella is
Chief Executive Officer and Chairman of the Board of Directors of NCT Group, the
ultimate  parent company of Pro Tech, and serves as Chairman of the Board of NCT
Hearing Products,  Inc., the direct parent company of Pro Tech. Mr. Parrella was
elected  Chairman of the Board of Directors  of NCT Group on April 21, 2000,  on
which date he relinquished the position of President.  From August 1995 to April
21, 2000,  Mr.  Parrella  served as NCT Group's  President  and Chief  Executive
Officer.  From November 1994 to July 1995, Mr. Parrella served as Executive Vice
President of NCT Group.  Prior to that,  from February 1988 until November 1994,
he served as President and Chief  Operating  Officer of NCT Group.  He initially
became a  director  of NCT  Group in 1986.  Mr.  Parrella  also  serves as Chief
Executive Officer and Acting President of NCT Audio

                                       18
<PAGE>


Products, Inc., a subsidiary of NCT Group, a position to which he was elected on
September  4, 1997.  He became a director  of NCT Audio on August 25,  1998.  On
January 5, 2001,  Mr.  Parrella was elected  Acting Chief  Executive  Officer of
Advancel  Logic  Corporation,  a  subsidiary  of NCT Group.  Mr.  Parrella  is a
director of Advancel  and serves as Chairman of the Board of  Distributed  Media
Corporation,  a  subsidiary  of NCT Group.  Mr.  Parrella  became a director  of
subsidiaries  acquired  directly or indirectly  by NCT Group in 2000,  including
Midcore Software,  Inc. and Pro Tech, and NCT Group subsidiaries formed in 2000,
including  DMC Cinema,  Inc.,  NCT Video  Displays,  Inc.,  DMC New York,  Inc.,
ConnectClearly.com,  Inc., DMC HealthMedia  Inc.,  Distributed Media Corporation
International  Limited,  Artera  Group,  Inc.  and  Artera  Group  International
Limited.

Irene Lebovics  currently  serves as Chairman of the Board of Pro Tech. She is a
director and  President  of NCT Group and director and  President of NCT Hearing
Products,  Inc. She served as Secretary  of NCT Group from  February  1999 until
September  2001. On April 25, 2001, Ms. Lebovics became a director of NCT Group.
On January 5, 2000, Ms. Lebovics was elected Acting Chief Marketing  Officer and
Secretary of Advancel Logic Corporation.  She joined NCT Group as Vice President
of NCT Group and President of NCT Medical Systems in July 1989. In January 1993,
she was appointed  Senior Vice  President of NCT Group.  In November  1994,  Ms.
Lebovics became  President of NCT Hearing  Products,  Inc. In 1999, Ms. Lebovics
was appointed as Executive Vice  President of NCT Group,  and in April 2000, she
became  President  of NCT  Group.  She has held  various  positions  in  product
marketing with  Bristol-Myers,  a consumer products company,  and in advertising
with McCaffrey and McCall. In addition to serving as a director of Pro Tech, Ms.
Lebovics serves as a director of various NCT Group subsidiaries as follows:  NCT
Hearing Products, Inc., Distributed Media Corporation, ConnectClearly.com, Inc.,
NCT Video Displays,  Inc., DMC New York, Inc., Artera Group,  Inc., Artera Group
International Limited, Midcore Software,  Inc., Advancel Logic Corporation,  DMC
HealthMedia Inc.,  Distributed Media Corporation  International  Limited and DMC
Cinema, Inc.

Cy E.  Hammond  currently  serves as a director  of Pro Tech.  He is Senior Vice
President, Chief Financial Officer, Treasurer and Assistant Secretary of NCT. He
joined NCT as Controller  in January 1990 and was appointed a Vice  President in
February  1994. On September 4, 1997, Mr. Hammond was elected to serve as Acting
Chief Financial Officer and Treasurer of NCT Audio Products,  Inc. On January 5,
2000, he was elected to serve as Acting Chief Financial  Officer,  Treasurer and
Assistant  Secretary for Advancel  Logic  Corporation.  On August 20, 2002,  Mr.
Hammond was elected to serve as President and Treasurer of DMC New York, Inc. He
also serves as Treasurer for the following NCT subsidiaries: Artera Group, Inc.,
Chaplin  Patents Holding  Company,  Inc.,  Distributed  Media  Corporation,  DMC
HealthMedia  Inc.,  Midcore  Software,  Inc.,  NCT Far East,  Inc.,  NCT Hearing
Products,  Inc., NCT Muffler, Inc., and NCT Video Displays, Inc. During 1989, he
was  Treasurer  and  Director  of Finance for  Alcolac,  Inc.,  a  multinational
specialty chemical producer.  Prior to 1989 and from 1973, Mr. Hammond served in
several senior finance  positions at the Research  Division of W.R. Grace & Co.,
the last of which  included  management of the  division's  worldwide  financial
operations.  Mr. Hammond also serves as a director of various NCT  subsidiaries,
as follows: Artera Group, Inc., ConnectClearly.com,  Inc., DMC Cinema, Inc., DMC
New York, Inc., NCT Video Displays,  Inc., Artera Group  International  Limited,
and Noise Cancellation Technologies (Europe) Ltd.

Mark Melnick  currently  serves as Secretary of Pro Tech,  the position which he
has held since January 1, 2002. Mr. Melnick is Vice  President,  General Counsel
and Secretary of NCT Group, Inc., positions he has held since September 2001. He
also serves as Secretary of Distributed Media Corporation, DMC Cinema, Inc., DMC
HealthMedia,  Inc., NCT Audio Products,  Inc., NCT Hearing  Products,  Inc., NCT
Medical Systems, Inc., ConnectClearly.com,  Inc., Midcore Software, Inc., Artera
Group,  Inc.,  Advancel Logic  Corporation,  NCT Muffler,  Inc., Chaplin Patents
Holding Company, Inc., NCT Far East, Inc. and NCT Video Displays, Inc. From 1989
to 2000,  Mr. Melnick was Counsel,  Senior  Counsel and then  Assistant  General
Counsel  of  CBS  Cable  and  its  predecessor-in-interest   Group  W  Satellite
Communications  (a  division of  Westinghouse  Broadcasting  Co.),  in the cable
television  field.  From 1984 to 1988,  he was an  associate  at the law firm of
Stults & Marshall (now known as Balber  Pickard  Battistoni  Maldonado & Van Der
Tuin,  PC) in New York,  NY. From 1982 to 1984,  he was an  associate at the law
firm of Seyfarth, Shaw, Fairweather & Geraldson (now known as Seyfarth Shaw LLP)
in New York, NY.

                                       19
<PAGE>


Debra Kirven  currently  serves as Chief Financial  Officer and Treasurer of Pro
Tech,  positions  she has held since  February 1, 2002.  Ms. Kirven is Assistant
Controller  of NCT Group Inc., a position she has held since  November 27, 2000.
From 1991 to 2000, Ms. Kirven held various accounting and finance positions with
Southern  New England  Telecommunications,  Inc. in New Haven,  CT. From 1986 to
1991,  Ms. Kirven was an accountant and then senior  accountant  with Deloitte &
Touche in New Haven, CT.

Section  16(a)  of the  Securities  Exchange  Act of 1934  requires  Pro  Tech's
directors,  executive officers and persons who own more than 10% of a registered
class of our equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership  in the Common  Stock.  Executive  officers,
directors and persons who own more than 10% of a registered  class of our equity
securities  are  required  by SEC  regulation  to furnish us with  copies of all
Section 16(a) forms they file with the SEC.

To Pro Tech's  knowledge,  based  solely on review of the copies of such reports
furnished to us and  representations  that no other reports were  required,  Pro
Tech  believes  that  all  filing  requirements   applicable  to  its  officers,
directors,  and greater  than 10%  shareholders  were  complied  with during the
period from January 1, 2003 to December 31, 2003.

Audit Committee  Composition - The entire Board of Directors stands as the Audit
Committee for Pro Tech. None of the members of the Audit Committee are deemed to
be  independent.  Pro Tech is not required to have  independent  Audit Committee
members as we are not a listed company.

Audit Committee Financial Expert - The Board of Directors has determined that in
its judgment, Mr. Hammond qualifies as an audit committee financial expert under
the Sarbanes-Oxley Act of 2002 and the rules of the SEC.

Code of Ethics - In February 2004, Pro Tech adopted a Code of Ethics (as defined
in Item 406 of Regulation S-K) that applies to our Chief  Executive  Officer (or
those  performing  similar  functions),  as well as any and all Senior Financial
Officers (including our Chief Financial Officer). The Code of Ethics is filed as
Exhibit 14 to this Annual Report on Form 10-K for the fiscal year ended December
31, 2003.

ITEM 11. EXECUTIVE COMPENSATION

The  following  table  sets forth the  aggregate  cash  compensation  paid to or
accrued by all persons  who served as Chief  Executive  Officer  during the last
calendar  year and by each  other  executive  officer  receiving  in  excess  of
$100,000  (the "Named  Executive  Officers")  for services  rendered to Pro Tech
during the fiscal years ended December 31, 2001; 2002; and 2003.

<TABLE>

                                                                                     Securities
                                                                       Other         Underlying          All
Name and                                                              Annual      Options/Warrants      Other
    Principal Position       Year      Salary             Bonus    Compensation       SARs(#)        Compensation
--------------------------  -------  ------------       ---------- -------------- ----------------- ---------------
<S>           <C>   <C>      <C>       <C>                                             <C>

Keith Larkin
  CEO through 02/01/02       2001     $  56,750             -              -           540,000               -
  Chairman of the Board      2002     $   7,500             -              -           250,000               -
      through 11/20/03       2003     $   4,200             -              -                 -               -
Richard Hennessey
  President                  2001     $ 142,896  (a)        -              -                 -               -
  (Principal Executive       2002     $ 151,667  (a)        -              -                 -               -
          Officer)           2003     $ 149,000  (a)        -              -                 -               -
</TABLE>

Footnote:
---------
(a)  The 2001 amount  includes  $21,250  accrued but not paid during 2001.  This
     amount was paid during  2002.  The 2002 amount does not include the $21,250
     accrued for in 2001, but does include  $62,500  accrued but not paid during
     2002. The 2003 amount does not include the $62,500 accrued for in 2002, but
     does  include  $87,500  accrued but not paid during  2003.  At December 31,
     2003,  Pro Tech owes Mr.  Hennessey  a total of  $87,500  relating  to 2003
     compensation.

                                       20
<PAGE>


Compensation Arrangements with Certain Officers
-----------------------------------------------

Pro Tech has no set salary  obligations  to Mr.  Larkin for his services for the
current or future fiscal years.  However, Mr. Larkin has agreed to assign to Pro
Tech all of his rights,  title and  interest  in and to any and all  inventions,
discoveries,  developments,  improvements,  processes, trade secrets, trademark,
copyright  and  patent  rights  of which he  conceives  during  his  tenure as a
director.

Pro Tech does not have a written employment agreement with Richard Hennessey.

In addition,  Messrs. Larkin and Hennessey have been granted stock options under
the 1998 Stock Option Plan as described below.

Compensation of Directors
-------------------------

On February 1, 2002, Pro Tech and Mr. Larkin entered into an agreement regarding
compensation  to Mr.  Larkin  for his  services  as  Chairman  of the  Board  of
Directors of Pro Tech. This agreement provides for the following:

1. Options to purchase 250,000 shares of Pro Tech common stock (described below)
2. Coverage  under the health  benefit plans then in effect for employees of Pro
   Tech
3. A nominal salary of $4,200 per annum included in the above noted compensation
   table.

On November 20, 2003, in connection with Mr. Larkin's resignation as Chairman of
the Board of Directors, this agreement was amended so that all of its provisions
remain in effect as long as Mr. Larkin is a director of Pro Tech.

No other directors of Pro Tech have received any fees for serving as a director.

                2003 Aggregated Option and Warrant Exercises and
                   December 31, 2003 Option and Warrant Values

The following table sets forth certain  information with respect to the exercise
of options and warrants to purchase  common stock during the year ended December
31, 2003 and the unexercised  options and warrants held and the value thereof at
that date, by each of Mr. Larkin and Mr. Hennessey.

<TABLE>
<CAPTION>

                                                         Number of Shares
                      Number of                             Underlying                     Value of Unexercised
                       Shares                           Unexercised Options                In-the-Money Options
                      Acquired                            and Warrants at                    And Warrants at
                         On            Value            December 31, 2003                   December 31, 2003
                                                   ----------------------------------  ------------------------------
       Name          Exercise (#)     Realized     Exercisable (#)  Unexercisable (#)  Exercisable      Unexercisable
------------------   ------------   -------------  ---------------  -----------------  ---------------  -------------
<S>                                                      <C>                             <C>              <C>
Keith Larkin                    -              -         790,000                  -      $       -        $        -

Richard Hennessey               -              -         450,000                  -      $       -        $        -

</TABLE>

During the fiscal years ended  December 31, 2001;  2002;  and 2003,  neither Mr.
Larkin nor Mr. Hennessey  exercised any stock options.  The fair market value of
Pro Tech's common stock as of December 31, 2003 was less than the exercise price
for both Mr.  Larkin  and Mr.  Hennessey's  stock  options.  Accordingly,  as of
December 31, 2003, Mr. Larkin and Mr. Hennessey's  unexercised stock options had
no value as indicated above.

1998 Stock Option Plan

On March 5, 1998, the Board of Directors  adopted the 1998 Stock Option Plan for
the benefit of directors, officers and employees of and consultants to Pro Tech.
The 1998 Plan  originally  authorized  the issuance of options to purchase up to
500,000  shares of common stock and was increased to 2,000,000  shares of common
stock on August 11, 2000. The  authorized  shares for this plan was increased to
30,000,000 on April 12, 2002 at Pro Tech's annual meeting of stockholders.

                                       21
<PAGE>


On August 4, 1998,  options to purchase  200,000 and 100,000 shares were granted
to officers  and  employees,  respectively,  at an exercise  price of $0.375 per
share.  The exercise  price was the fair market value of a share of common stock
at the date of the grant.  Of these,  150,000  options  were  granted to Richard
Hennessey and vested as follows:  50,000  immediately,  50,000 on August 4, 1999
and 50,000 on August 4, 2000.  The remaining  options  vested  immediately.  All
options are exercisable over a three-year period from the date of vesting.

On April 13,  1999,  200,000  options  were  granted to Richard  Hennessey at an
exercise price of $0.38 per share.  The exercise price was greater than the fair
market  value of a share of common  stock at the date of the grant.  The options
vested and were exercisable as follows: 100,000 immediately; 50,000 on April 13,
2000; and 50,000 on April 13, 2001. The options expire April 13, 2004.

On November 28, 2000, the Board of Directors authorized the issuance to Pro Tech
employees of options to purchase an aggregate of 500,000  shares of common stock
at an exercise price of $0.4375 per share,  the fair market value on the date of
grant.  Included in these grants was a grant to Mr. Hennessey to acquire 250,000
shares of common stock. The shares underlying Mr.  Hennessey's stock option vest
as follows:  25% (or 62,500  shares) on the date of grant and 25% on each of the
first,  second and third  anniversaries of the date of grant. The options expire
on November 28, 2007.

On June 1, 2001, the Board of Directors  granted  options to three  employees of
Pro Tech for the  purchase of an aggregate  of 940,000  shares of common  stock,
including  an option to Mr.  Larkin to  acquire  540,000  shares.  Mr.  Larkin's
options have an exercise price of $0.17 per share,  the fair market value on the
date of grant,  and vested on the date of grant.  The options  expire on June 1,
2008.

On February 1, 2002,  the Board of Directors  granted  options to Mr.  Larkin to
purchase up to 250,000  shares of common stock at an exercise price of $0.06 per
share,  the fair market  value on the date of grant.  The options  vested on the
date of grant. The options expire on February 1, 2009.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT

The following table sets forth information concerning the shares of common stock
beneficially owned as of March 12, 2004 by each person who: (1) to the knowledge
of Pro Tech,  was the holder of 5% or more of the common stock of Pro Tech as of
such date;  (2) serves as a  director  of Pro Tech;  (3) was among the five most
highly  compensated  executive  officers  of Pro Tech in the fiscal  year ending
December 31, 2003; and by all executive  officers and directors of Pro Tech as a
group.  Except as otherwise noted, each beneficial owner has sole investment and
voting power with respect to the listed shares.

<TABLE>

                                                   Amount and
                                                   Nature of                    Approximate
                                                   Beneficial                   Percentage
    Name of Beneficial Owner                       Ownership (1)                Of Class (1)
    --------------------------------------         --------------------         ------------------

<S>                                                          <C>        <C>                <C>
    Keith Larkin                                             1,550,000  (2)                4.5%
    Richard Hennessey                                          500,000  (3)                1.3%
    Michael J. Parrella                                              -  (4)                   -
    Irene Lebovics                                                   -  (4)                   -
    Cy E. Hammond                                                    -  (4)                   -
    Debra Kirven                                                25,000  (5)                0.1%
    NCT Hearing Products, Inc.                              27,102,174  (6)               81.6%
    Alpha Capital Aktiengesellschaft                        27,525,288  (7)               45.3%
    Zakeni Limited                                           2,368,708  (8)                6.7%
    All Executive Officers and Directors
       as a Group (7 persons)                                2,000,000                     5.7%

</TABLE>


                                       22
<PAGE>


(1)   Assumes the  exercise  of  currently  exercisable  options or  warrants to
purchase  shares of common stock and the conversion of  convertible  securities.
The percentage of class ownership is calculated separately for each person based
on the assumption  that the person listed on the table has exercised all options
and warrants currently  exercisable by that person and converted the convertible
securities held by that person,  but that no other holder of options or warrants
has exercised such options or warrants or converted such convertible securities.

(2)   Includes 790,000 shares of common stock underlying  stock options that are
presently  exercisable.  540,000 of such stock options are  exercisable at $0.17
per  share  and  expire on June 1,  2008;  250,000  of such  stock  options  are
exercisable  at $0.06 per share and expire on  February 1, 2009.  Also  includes
240,000  shares of common stock owned by The Seek  Foundation,  an  organization
described in Section 501(c)(3) of the Internal Revenue Code of 1954, as amended.
The  directors  of such  organization  are Keith  Larkin  and his wife,  Cynthia
Larkin. Excludes 40,000 shares held by Westek Electronics,  a company controlled
by Mr.  Larkin's son and 400 shares held by Mr. Larkin's  grandchildren,  shares
over which Mr. Larkin disclaims beneficial ownership.

(3)   Includes shares of common stock from stock option  agreements, as follows:
(1) 200,000 shares of common stock  underlying stock option  agreements,  all of
which are  presently  exercisable  and expire on August 13,  2004;  (2)  250,000
shares of common stock  underlying a stock  option  agreement,  all of which are
presently exercisable and expire on November 28, 2007; and (3) 200,000 shares of
common stock underlying a March 9, 2004 stock option agreement,  of which 50,000
are presently exercisable (the 200,000 options will expire on March 9, 2011).

(4)   Messrs. Parrella  and  Hammond,  and Ms. Lebovics are officers of, and Mr.
Parrella and Ms.  Lebovics  serve as  directors  of NCT Group.  NCT Hearing is a
wholly-owned  subsidiary  of NCT  Group.  Mr.  Parrella  and  Ms.  Lebovics  are
directors  of NCT Hearing and  disclaim  beneficial  ownership in respect of Pro
Tech's common stock held by NCT Hearing.

(5)   Represents 100,000  shares of  common  stock  from a March 9, 2004  option
agreement,  of which 25,000 are presently  exercisable (the 100,000 options will
expire on March 9, 2011).

(6)   The address of NCT Hearing Products, Inc. is 20 Ketchum Street,  Westport,
Connecticut 06880. Mr. Parrella,  Chairman of the Board of NCT Hearing Products,
Inc., has voting and  dispositive  control over Pro Tech shares on behalf of NCT
Hearing.

(7)   Alpha Capital Aktiengesellschaft's  business  address is Pradafant 7, 9490
Furstentums,  Vaduz,  Lichtenstein.  Konrad Ackermann,  Director, has voting and
dispositive control of Pro Tech's shares on behalf of Alpha Capital. In addition
to shares  owned,  includes  shares of common  stock that Alpha  Capital has the
right to acquire pursuant to the exercise of a currently exercisable warrant for
1,000,000  shares.  Also includes  shares of common stock that Alpha Capital has
the right to  acquire  pursuant  to its right to  convert  its 500 shares of our
Series B Convertible Preferred Stock for our common stock plus accretion thereon
at 4% per annum through March 12, 2004. Such  conversion  shares were determined
using 80% of an assumed  $0.026  price per share  five-day  average  closing bid
price of the 15-day trading period immediately preceding the assumed conversion.
Pursuant to a contractual  restriction between Pro Tech and Alpha Capital, Alpha
Capital is prohibited from holding in excess of 4.99% of our common stock at any
given time, subject to certain exceptions.

(8)   Includes shares of common stock that Zakeni Limited has the right to
acquire  pursuant  to its right to  convert  its 50 shares of Pro Tech  Series A
Convertible  Preferred  Stock for our common stock plus accretion  thereon at 4%
per annum through March 12, 2004. Such conversion  shares were determined  using
80% of an assumed $0.026 price per share five-day  average  closing bid price of
the 15-day  trading period  immediately  preceding the assumed  conversion.  The
business  address of Zakeni  Limited is 620 Wilson Avenue,  Suite 501,  Toronto,
Ontario,  Canada  MSK 1Z3.  Sheldon  Salcman,  Vice  President,  has  voting and
dispositive control of Pro Tech's shares on behalf of Zakeni Limited.

                                       23
<PAGE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following  table sets forth the  aggregate  fees paid or accrued by Pro Tech
for the audit and other  services  provided  by Eisner  LLP for the years  ended
December 31, 2002 and 2003:

                                          For the Year Ended December 31,
                                       ---------------- -- -----------------
                                            2002                 2003
                                       ----------------    -----------------
       Audit Fees                       $    57,300          $    52,500
       Audit Related Fees                         -                    -
       Tax Fees                               3,250                3,250
       All Other Fees                             -                    -
                                       ----------------    -----------------
            Total                       $    60,550          $    55,750
                                       ================    =================

Audit Fees - Represents fees for  professional  services  rendered in connection
with the audit and review of Forms 10-K and all other SEC regulatory filings.

Audit Related Fees - Represents fees for assurance and related services that are
reasonably  related to the  performance of the audit or review of Forms 10-K and
all other SEC regulatory filings.  Pro Tech did not incur any audit related fees
during the years ended December 31, 2002 and 2003.

Tax Fees - Represents  fees for  professional  services  rendered in conjunction
with Federal and State tax return preparation and other tax matters.

All Other Fees -  Represents  fees for  professional  services  other than those
reported  above.  Pro Tech did not incur any other fees  during the years  ended
December 31, 2002 and 2003.

Audit Committee Pre-Approval Policy

Pro Tech's Audit Committee  adopted an Audit Committee  Pre-Approval  Policy for
pre-approving all permissible audit and non-audit  services  performed by Eisner
once the final rules of the  Sarbanes-Oxley Act of 2002 pertaining to this issue
became  effective  on May 6,  2003.  For the 2003  audit,  the  Audit  Committee
specifically pre-approved the services performed by Eisner.

                                       24
<PAGE>


                                     PART IV

ITEM 15. Exhibits, Financial Statements Schedules and
                   Reports on Form 8-K

(a)   (1)   Financial Statements.  The following financial statements are filed
            as part of this Form 10-K.

          Independent Auditors' Report (Eisner LLP)

          Independent   Auditors'  Report  (Morgan,   Jacoby,   Thurn,  Boyle  &
          Associates, P.A.)

          Balance Sheets as of December 31, 2002 and 2003

          Statements of Operations for the years ended December 31, 2001;  2002;
          and 2003

          Statements of  Stockholders'  Equity for the years ended  December 31,
          2001; 2002; and 2003

          Statements of Cash Flows for the years ended December 31, 2001;  2002;
          and 2003

          Notes to Financial Statements

      (2) Financial   Statements   Schedules-   Schedules  are  omitted  as  not
          applicable or not required

      (3) Exhibits including those Incorporated by Reference.

          3(a)  Articles of Amendment to Articles of Incorporation  of Pro  Tech
                Communications,  Inc.,  as  adopted  by Pro Tech,  which  became
                effective upon acceptance by the Secretary of State of Florida
                on August 5, 2002.

          3(b)  By-laws of Pro Tech Communications, Inc., as amended to date.

          10(a) Exchange Rights and Release Agreement dated April 10, 2003 among
                NCT Group,  Inc., Pro Tech Communications,  Inc.,  Alpha Capital
                Aktiengesellschaft,  Austost Anstalt Schaan,  Balmore,  S.A. and
                Libra Finance, S.A., incorporated herein by reference to Exhibit
                10 (a) of Pro Tech's Form 10-Q filed on May 14, 2003.

          14    Code of Ethics for the CEO and Senior Financial Officers.

          16    Change  in  certifying   accountants,   dated   June  4,   2002,
                incorporated  herein by reference to Pro Tech's current report
                on Form 8-K filed on June 7, 2002.

          31(a) Certification of Chief Executive Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002 for the quarterly period ended
                June 30, 2003.

          31(b) Certification of Chief Financial Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002 for the quarterly period ended
                June 30, 2003.

          31(c) Certification of Chief Executive Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002 for the quarterly period ended
                September 30, 2003, incorporated  herein by reference to Exhibit
                31(a) of Pro Tech's Form 10-Q filed on November 18, 2003.

          31(d) Certification of Chief Financial Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002 for the quarterly period ended
                September 30, 2003, incorporated  herein by reference to Exhibit
                31(a) of Pro Tech's Form 10-Q filed on November 18, 2003.

          31(e) Certification of Chief Executive Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002 for the year ended December
                31, 2003.

          31(f) Certification of Chief Financial Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002 for the year ended December
                31, 2003.

                                       25
<PAGE>


          32(a) Certification of Form 10-Q for the quarterly  period ended March
                31, 2003 pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to Section 906 of the  Sarbanes-Oxley  Act of 2002, incorporated
                herein by  reference to Exhibit 99 of Pro Tech's Form 10-Q filed
                on May 14, 2003.

          32(b) Certification of Form 10-Q for the  quarterly  period ended June
                30, 2003 pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to Section 906 of the  Sarbanes-Oxley  Act of 2002, incorporated
                herein by  reference to Exhibit 99 of Pro Tech's Form 10-Q filed
                on August 8, 2003.

          32(c) Certification of  Form  10-Q  for  the  quarterly  period  ended
                September 30, 2003 pursuant to 18 U.S.C. Section 1350, as
                adopted  pursuant  to Section  906 of the Sarbanes-Oxley  Act of
                2002,  incorporated herein by reference to Exhibit  32(c) of Pro
                Tech's Form 10-Q filed on November 18, 2003.

          32(d) Certification of Form 10-K for the year ended  December 31, 2003
                pursuant to 18 U.S.C.  Section  1350,  as  adopted  pursuant  to
                Section 906 of the Sarbanes-Oxley Act of 2002.

(b)  Reports on Form 8-K.

     On April 4,  2003,  Pro Tech  filed a  report  on Form 8-K  announcing  its
     results of operations for the year ended December 31, 2002.

                                       26
<PAGE>


                                   SIGNATURES


     In accordance  with Section 13 or 15(d) of the  Securities  Exchange Act of
     1934, the  Registrant  caused this report to be signed on its behalf by the
     undersigned, thereunto duly authorized, on March 30, 2004.

                          PRO TECH COMMUNICATIONS, INC.
                               (Registrant)


                          By: /s/ Richard Hennessey
                              -----------------------------------------
                                  Richard Hennessey, President

                          By: /s/ Debra Kirven
                              -----------------------------------------
                                  Debra Kirven, Chief Financial Officer


In accordance  with the  Securities  Exchange Act of 1934,  this report has been
signed  below by the  following  persons  on  behalf  of the  registrant  in the
capacities and on the dates indicated.


    Signature                           Capacity                     Date
--------------------------------------------------------------------------------


/s/ Irene Lebovics               Chairman of the Board          March 30, 2004
--------------------------
    Irene Lebovics


/s/ Cy E. Hammond                       Director                March 30, 2004
--------------------------
    Cy E. Hammond


/s/ Richard Hennessey            Director and President         March 30, 2004
--------------------------
    Richard Hennessey


/s/ Keith Larkin                        Director                March 30, 2004
--------------------------
    Keith Larkin


/s/ Michael J. Parrella                 Director                March 30, 2004
--------------------------
    Michael J. Parrella

                                       27
<PAGE>





Independent Auditors' Report


Board of Directors and Stockholders
Pro Tech Communications, Inc.

We have audited the accompanying balance sheets of Pro Tech Communications, Inc.
as of  December  31,  2003 and 2002 and the related  statements  of  operations,
changes in stockholders' equity and cash flows for each of the years then ended.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Pro Tech Communications, Inc. as of
December 31, 2003 and 2002 and the results of its  operations and its cash flows
for each of the  years  then  ended in  conformity  with  accounting  principles
generally accepted in the United States of America.

As discussed in Note 7 to the financial  statements,  the Company  adopted a new
accounting standard regarding financial instruments with characteristics of both
liabilities  and equity and changed its method of  accounting  for its preferred
stock in 2003, in accordance with Statement of Financial Accounting Standard No.
150, "Accounting for Certain Financial  Instruments with Characteristics of both
Liabilities and Equity."




/s/  Eisner LLP
-----------------------
Eisner LLP


New York, New York
January 30, 2004

With respect to Note 1(a) and last paragraph of Note 10
March 29, 2004

                                      F-1
<PAGE>


Independent Auditors' Report


The Board of Directors
Pro Tech Communications, Inc.:


We have  audited  the  balance  sheet of Pro  Tech  Communications,  Inc.  as of
December  31,  2001  and the  related  accompanying  statements  of  operations,
stockholders'  equity and cash flows for the year then  ended.  These  financial
statements are the responsibility of Pro Tech's  management.  Our responsibility
is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Pro Tech Communications,  Inc.
as of December 31, 2001,  and the results of its  operations  and its cash flows
for the year then  ended in  conformity  with  accounting  principles  generally
accepted in the United States of America.


/s/ Morgan, Jacoby, Thurn, Boyle & Associates, P.A.
---------------------------------------------------
    Morgan, Jacoby, Thurn, Boyle & Associates, P.A.


Vero Beach, Florida
March 1, 2002

                                      F-2
<PAGE>


PRO TECH COMMUNICATIONS, INC.
BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                 ----------------------------------
                                                                                      2002               2003
                                                                                 ----------------    --------------
ASSETS
Current assets:
<S>                                                                                   <C>               <C>
  Cash and cash equivalents                                                           $ 13,624          $ 21,193
  Accounts receivable, less allowance for doubtful accounts
     of $27,309; and $31,437, respectively                                             160,961            88,769
  Inventories, net of reserves (Note 2)                                                592,536           493,555
  Due from officer/stockholder and employees (Note 14)                                  63,113            66,044
  Other current assets                                                                  16,760            17,571
                                                                                 ----------------    --------------
       Total current assets                                                            846,994           687,132

Property and equipment, net (Note 3)                                                   601,183           449,672

Intangible assets, net of accumulated amortization of
  $2,096,677 and $2,277,398, respectively (Note 1)                                   2,710,815         2,530,094

Other assets                                                                             4,500             6,138
                                                                                 ----------------    --------------
                                                                                   $ 4,163,492       $ 3,673,036
                                                                                 ================    ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                                   $ 426,976         $ 231,282
  Accrued expenses (Note 4)                                                            222,980           195,201
  Current portion of capital lease obligations (Note 11)                                 9,662            10,434
  Due to factor (Note 5)                                                                34,165            11,117
  Note payable (Note 6)                                                                  2,150             2,385
  Note payable to stockholder (Note 6)                                                 170,604           142,001
  Preferred stock subject to mandatory conversion into
     a variable number of shares (Note 7)                                                    -           742,459
                                                                                 ----------------    --------------
       Total current liabilities                                                       866,537         1,334,879

Noncurrent note payable (Note 6)                                                         6,461             4,076
Noncurrent notes payable due to affiliates (Note 8)                                  1,064,703         1,824,540
Capital lease obligations (Note 11)                                                     31,767            21,333
                                                                                  ----------------    --------------

       Total liabilities                                                             1,969,468         3,184,828
                                                                                  ----------------    --------------

Commitments (Note 11)

Series B redeemable convertible preferred stock (Note 7)                               653,438                 -
                                                                                 ----------------    --------------

Stockholders' equity (Notes 9 and 10):
  Preferred stock, $.01 par value, authorized 998,000 shares, none
     issued and outstanding                                                                  -                 -
  Series A convertible preferred stock, $0.01 par value, $1,000 stated
     value, authorized 1,500 shares, issued and outstanding 50 shares (Note 7)          54,521                 -
  Common stock, $.001 par value, authorized 300,000,000 shares,
     issued and outstanding 33,200,311 shares                                           33,200            33,200
  Additional paid-in-capital                                                        18,451,079        18,427,668
  Accumulated deficit                                                              (16,998,214)      (17,972,660)
                                                                                 ----------------    --------------
       Total stockholders' equity                                                    1,540,586           488,208
                                                                                 ----------------    --------------
                                                                                   $ 4,163,492       $ 3,673,036
                                                                                 ================    ==============
The accompanying notes are an integral part of the financial statements.

</TABLE>

                                      F-3
<PAGE>


PRO TECH COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                          For the Year Ended December 31,
                                                                                 ------------------------------------------------
                                                                                      2001             2002              2003
                                                                                 -------------    -------------     -------------

<S>                                                                              <C>              <C>               <C>
Net sales                                                                        $  2,175,306     $  1,648,949      $  1,178,535

Cost of goods sold                                                                    920,127          774,316           364,413
                                                                                 -------------    -------------     -------------

        Gross profit                                                                1,255,179          874,633           814,122

Selling, general and administrative expenses                                        2,276,614        1,296,088         1,042,085
Depreciation and amortization                                                       1,052,737        1,093,778           338,071
NCT Hearing and affiliates charges (Note 14)                                          326,360          313,559           314,207
Impairment charge on intangible assets                                                      -       11,500,000                 -
Provision for doubtful accounts                                                         9,958           29,800             6,591
                                                                                 -------------    -------------     -------------

       Loss before other income (expense)                                          (2,410,490)     (13,358,592)         (886,832)

Other income (expense):
    Interest income                                                                     4,530            3,109             2,931
    Interest expense                                                                  (24,349)         (33,297)          (26,353)
    Interest expense - NCT Hearing (Note 14)                                             (443)         (21,102)          (56,455)
    Interest expense - convertible preferred stock (Note 7)                                 -                -           (11,089)
    Miscellaneous income, net                                                           4,305            5,004             3,352
    Loss on disposal of fixed assets                                                   (2,945)               -                 -
                                                                                 -------------    -------------     -------------

Net loss                                                                         $ (2,429,392)    $(13,404,878)     $   (974,446)

Adjustments attributable to preferred stock (Notes 7 and 9):
   Preferred stock beneficial conversion feature                                 $     79,190     $     45,810      $          -
   Preferred stock embedded dividend requirement                                       62,661                -                 -
   Preferred stock dividend (accretion)                                                24,085           22,000            10,911
                                                                                 -------------    -------------     -------------

Net loss attributable to common stockholders                                     $ (2,595,328)    $(13,472,688)     $   (985,357)
                                                                                 =============    =============     =============

Basic and diluted net loss per share attributable
  to common stockholders                                                         $      (0.08)    $      (0.41)     $      (0.03)
                                                                                 =============    =============     =============

Weighted average common shares outstanding -
   basic and diluted                                                               32,281,034       33,200,311        33,200,311
                                                                                 =============    =============     =============

The accompanying notes are an integral part of the financial statements.

</TABLE>

                                      F-4
<PAGE>



PRO TECH COMMUNICATIONS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY  (Note 9)


<TABLE>
<CAPTION>

                                            Series A                                     Additional
                                            Preferred                  Common              Paid in       Accumulated
                                              Stock                     Stock              Capital         Deficit        Total
                                         ---------------------   --------------------   -------------  --------------  -------------
                                         Shares     Amount         Shares    Amount

<S>                 <C> <C>               <C>     <C>            <C>         <C>         <C>           <C>             <C>
Balance at December 31, 2000              1,500   $ 1,515,452    28,248,438  $ 28,248    $17,229,946   $ (1,163,944)   $ 17,609,702

Exchange/conversion of preferred stock   (1,450)   (1,478,578)    4,951,873     4,952      1,473,626          -               -

Issuance costs on sale of Series B
     Preferred Stock (Note 7)               -          -              -           -         (81,408)          -             (81,408)

Redemption adjustment on Series B
   Preferred Stock (Note 7)                 -          -              -           -        (125,000)          -            (125,000)

Dividend on preferred stock                 -       15,647            -           -         (24,085)          -              (8,438)

Net loss                                    -          -              -           -             -        (2,429,392)     (2,429,392)
                                         ---------------------   --------------------   -------------  --------------  -------------
Balance at December 31, 2001              50        52,521       33,200,311    33,200     18,473,079     (3,593,336)     14,965,464

Dividend on preferred stock                 -        2,000            -           -         (22,000)          -             (20,000)

Net loss                                    -          -              -           -             -       (13,404,878)    (13,404,878)

                                         ---------------------   --------------------   -------------  --------------  -------------
Balance at December 31, 2002              50      $ 54,521       33,200,311  $ 33,200   $ 18,451,079   $(16,998,214)   $  1,540,586

Dividend on preferred stock                            991            -           -         (10,911)          -              (9,920)

Series B Preferred Stock waiver of
   registration rights (Note 7)             -          -              -           -          125,000          -             125,000

Accounting change for adoption of
     SFAS No. 150 (Note 7):Series A      (50)      (55,512)           -           -         (12,500)          -             (68,012)
                           Series B         -          -              -           -        (125,000)          -            (125,000)

Net loss                                    -          -              -           -             -          (974,446)       (974,446)
                                         ---------------------   --------------------   -------------  --------------  -------------
Balance at December 31, 2003                -     $    -         33,200,311  $ 33,200   $ 18,427,668   $(17,972,660)    $   488,208
                                         =====================   ====================  =============   ==============  =============

The accompanying notes are an integral part of the financial statements.

</TABLE>

                                      F-5
<PAGE>


PRO TECH COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                          For the Year Ended December 31,
                                                                                ----------------------------------------------------
                                                                                     2001              2002                2003
                                                                                --------------    --------------       -------------
<S>                                                                             <C>               <C>                  <C>

Cash flows from operating activities:
  Net loss                                                                      $ (2,429,392)     $ (13,404,878)       $   (974,446)
  Adjustments to reconcile net loss to net
      cash used in operating activities:
    Note payable issued for services received                                            -              508,561             454,104
    Depreciation and amortization                                                  1,052,737          1,093,778             338,071
    Impairment charge on intangible assets                                               -           11,500,000                   -
    Provision for doubtful accounts                                                    9,958              2,524               4,128
    Provision for obsolete inventory                                                     -               10,000              (5,000)
    Interest expense related to preferred stock dividend                                 -                    -              11,089
    Loss on disposal of fixed assets                                                   2,945                  -                   -
    Changes in operating assets and liabilities:
      Decrease in accounts receivable                                                192,413             55,949              68,064
      (Increase) decrease in inventories, net                                       (295,156)           343,208             103,981
      Decrease (increase) in other assets                                              2,316            (10,683)             (3,914)
      Increase (decrease) in accounts payable                                        378,167           (119,941)           (195,694)
      Increase (decrease) in accrued expenses                                        101,876             41,071             (26,779)
      Increase (decrease) in other liabilities                                       403,599            (29,865)            (23,048)
                                                                                --------------    --------------       -------------
        Net cash used in operating activities                                   $   (580,537)     $     (10,276)       $   (249,444)
                                                                                --------------    --------------       -------------
Cash flows from investing activities:
    Capital expenditures                                                            (543,702)                 -              (4,375)
    Proceeds on sale of fixed asset                                                      350                  -                   -
    Net change in due from officer/stockholder and employees                          (4,940)              (567)             (2,931)
                                                                                --------------    --------------       -------------
        Net cash used in investing activities                                   $   (548,292)     $        (567)       $     (7,306)
                                                                                --------------    --------------       -------------
Cash flows from financing activities:
    Proceeds from:
      Notes payable - NCT Hearing (Note 14)                                              -                    -             305,733
      Sale of preferred stock (net) (Note 7)                                         500,000                  -                   -
    Payment made on:
      Notes payable                                                                     (797)           (11,701)            (31,752)
      Issuance/conversion costs on preferred stock                                   (81,408)                 -                   -
      Capital lease obligations                                                      (18,466)           (10,713)             (9,662)
                                                                                --------------    --------------       -------------
        Net cash provided by (used in) financing activities                     $    399,329      $     (22,414)       $    264,319
                                                                                --------------    --------------       -------------
Net (decrease) increase in cash and cash equivalents                            $   (729,500)     $     (33,257)       $      7,569
Cash and cash equivalents - beginning of year                                        776,381             46,881              13,624
                                                                                --------------    --------------       -------------
Cash and cash equivalents - end of year                                         $     46,881      $      13,624        $     21,193
                                                                                ==============    ==============       =============

Supplemental disclosures of cash flow information:
    Cash paid during the year for interest                                      $     10,883      $      26,293        $     25,353
                                                                                ==============    ==============       =============
</TABLE>


Supplemental disclosures of non-cash investing and financing activities:

During the years ended  December  31, 2001 and 2002,  Pro Tech  acquired  assets
  under capital leases for $55,865 and $6,038, respectively.
During the year ended December 31, 2001, Pro Tech acquired an asset under a loan
  for $11,346.
During the years ended December 31, 2001; 2002; and 2003, Pro Tech increased the
  carrying  value of  preferred  stock and  additional  paid-in  capital  for a
  4% dividend totaling $24,085; $22,000; and $10,911, respectively.
During the year ended December 31, 2003, Pro Tech increased the carrying value
  of preferred stock and additional paid-in capital by $125,000 due to the
  reversal of a redemption penalty on the Series B preferred stock.
During the year ended December 31, 2003, Pro Tech increased the carrying value
  of preferred stock and additional paid-in capital by $137,500 due to the
  adoption of SFAS No. 150.

The accompanying notes are an integral part of the financial statements.

                                      F-6
<PAGE>


                          PRO TECH COMMUNICATIONS, INC.

                          Notes to Financial Statements

(1)  Organization and Summary of Significant Accounting Policies

    (a)    Organization

          Pro Tech Communications, Inc., herein referred to as "Pro Tech," "we,"
          or "our," was organized and  incorporated  under the laws of the State
          of Florida. Our chief purpose is designing,  developing, producing and
          marketing lightweight  telephone headsets emphasizing  performance and
          durability  at a cost  below  that of our  competitors.  We  presently
          manufacture and market headsets  primarily for fast food companies and
          other large quantity users of headset  systems.  We are in the process
          of developing  several  designs for the telephone  user market,  which
          includes  telephone  operating  companies,   government  agencies  and
          business offices.

          As a result of the  issuance of common  stock in  September  2000 (see
          Note 9 - Capital  Stock),  Pro Tech became a subsidiary of NCT Hearing
          Products,  Inc.,  herein  referred to as "NCT Hearing," a wholly-owned
          subsidiary  of NCT Group,  Inc.,  herein  referred  to as "NCT." As of
          December  31,  2003,  NCT  Hearing  owned  approximately  81.6% of the
          outstanding common stock of Pro Tech.

          Pro Tech has experienced  recurring net losses from  operations  since
          its  inception,  aggregating  $17,972,660  through  December 31, 2003.
          These losses,  which include the cost for  development of products for
          commercial  use and an  impairment  charge  of  $11,500,000  (see Note
          1(o)),  have been funded  primarily  from product  sales,  the sale of
          common stock and preferred stock  convertible  into common stock,  and
          advances  directly  and  indirectly  from  NCT  (our  ultimate  parent
          company) and its affiliates.

          In  addition,  Pro Tech had  negative  working  capital of $647,747 at
          December  31,  2003.  Pro Tech has taken  steps to reduce its  working
          capital  requirements.  These steps include the reduction of workforce
          levels in all areas of the products  operations and the institution of
          tighter controls over all expenditures.

          From  January  1, 2004  through  March  29,  2004,  Pro Tech  received
          approximately  $278,000 in cash  advances from NCT Hearing to fund our
          working  capital  needs during 2004.  In addition,  as a result of the
          steps that Pro Tech has taken,  management believes Pro Tech will have
          sufficient  funds to meet  anticipated  working  capital  requirements
          through December 31, 2004.

    (b)    Cash and Cash Equivalents

          Pro Tech  considers all highly  liquid  investments  purchased  with a
          maturity of three months or less to be cash equivalents.

    (c)    Inventory

          Inventories  are  stated  at the  lower  of  cost or  market.  Cost is
          determined using the first-in, first-out (FIFO) method.

                                      F-7
<PAGE>


    (d)    Revenue and Cost Recognition

          Pro Tech  recognizes  revenue as  products  are  shipped and title has
          passed. Generally, each headset,  depending on the model, is sold with
          a warranty ranging from 90 days to two years. We provide, by a current
          charge to income,  an amount we estimate  that will be needed to cover
          future  warranty  obligations for products sold with a warranty during
          the year.  The accrued  liability  for  warranty  costs is included in
          accrued expenses in the balance sheet.  Freight charges are charged to
          expense  when  incurred.  Not all  customers  are billed for  shipping
          costs;  however, the amount of shipping costs collected from customers
          is netted  against our  incurred  freight  charges.  The net amount of
          freight  charges is included in  selling,  general and  administrative
          expenses in the statements of operations.

    (e)    Property and Equipment

          Property and  equipment is carried at cost.  Depreciation  is computed
          using the straight-line  method over the estimated useful lives of the
          assets  (including  assets  held  under  capital  leases).   Leasehold
          improvements are amortized over the term of the lease. Asset lives are
          3-10  years for  machinery  and  equipment  and 5 years for  leasehold
          improvements. Repair and maintenance costs are charged to expense when
          incurred.

    (f)    Intangible Assets

          Intangible  assets consist of licensed rights to certain  technologies
          acquired  from NCT Hearing  through the  issuance of common stock (see
          Note  9  -  Capital   Stock).   Amortization  is  computed  using  the
          straight-line  method over the estimated useful lives of the assets of
          15 years.  Intangible assets are periodically  reviewed for impairment
          where the fair value is less than the carrying  value. We did not have
          an impairment on our intangible  asset for the year ended December 31,
          2003; however, we had an impairment charge of $11,500,000 for the year
          ended  December  31, 2002 (see Note 1 (o)).  Amortization  expense was
          $931,857;  $931,857;  and  $180,721  for the years ended  December 31,
          2001; 2002; and 2003, respectively. Estimated amortization expense for
          each of the next five years is $180,721.

    (g)    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.  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 or liabilities
          of a change in tax rates is  recognized  in income in the period  that
          includes the enactment date. See Note 12 - Income Taxes.

    (h)    Advertising

          The costs of advertising, promotion and marketing programs are charged
          to  operations  in the year  incurred  and are  included  in  selling,
          general and administrative  expenses in the accompanying statements of
          operations.  Advertising costs were $42,242;  $17,638; and $13,453 for
          the years ended December 31, 2001; 2002; and 2003, respectively.

    (i)    Research and Development

          Research  and  development  costs are expensed  when  incurred and are
          included in selling,  general and administrative expenses. The amounts
          charged to expense were  $71,097;  $10,377;  and $28,334 for the years
          ended December 31, 2001; 2002; and 2003, respectively.

                                      F-8
<PAGE>


    (j)    Fair Value of Financial Instruments

          The estimated  fair value of Pro Tech's notes  receivable  and current
          liabilities  approximates  the carrying  amount due to the  short-term
          nature of such financial instruments.  The fair value of certain loans
          to or  from  stockholders  are  not  readily  determinable  due to the
          related party nature of those instruments.

    (k)    Use of Estimates

          The preparation of Pro Tech's financial  statements in conformity with
          accounting  principles  generally  accepted  in the  United  States of
          America  requires  management to make estimates and  assumptions  that
          affect the reported and/or disclosed  amounts of assets,  liabilities,
          revenues  and  expenses  and  contingent  assets and  liabilities.  In
          particular,  judgment  is  used  in  areas  such  as  determining  the
          allowance for doubtful accounts,  adjustments to inventory valuations,
          asset  impairments  and the accrual for warranty  expense.  Management
          periodically  assesses and evaluates those estimates and  assumptions.
          Actual results could differ from those estimates.

    (l)    Reclassifications

          We have reclassified some amounts in prior period financial statements
          to conform to the current period's presentation.

    (m)    Loss Per Common Share

          Pro Tech reports loss per common share in accordance with Statement of
          Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share."
          The per share  effects of  potential  common  shares such as warrants,
          options,  convertible  debt and  convertible  preferred stock have not
          been  included,  as the effect would be  antidilutive.  The  potential
          common shares are as follows:


                                                  December 31,
                              --------------------------------------------------
                                    2001              2002             2003
                              ----------------   --------------   --------------
Warrants                            5,500,000        5,500,000        1,000,000
Options                             1,187,500        1,235,000        1,285,000
Convertible preferred stock        11,686,646       72,869,875       58,169,135
                              ----------------   --------------   --------------
                                   18,374,146       79,604,875       60,454,135
                              ================   ==============   ==============


          However, when preferred stock will be convertible to common stock at a
          conversion  rate that is at a discount  from the common  stock  market
          price at the time of  issuance,  the  discounted  amount is an assured
          incremental  yield,  the  "beneficial   conversion  feature,"  to  the
          preferred shareholders and is accounted for as an embedded dividend to
          preferred  shareholders.  We have reflected such beneficial conversion
          feature as a preferred  stock dividend and as an adjustment to the net
          loss attributable to common stockholders.

    (n)    Stock Options

          Pro Tech has adopted the disclosure  only  provisions of SFAS No. 123,
          "Accounting for Stock-Based Compensation," as amended by SFAS No. 148,
          "Accounting for  Stock-Based  Compensation - Transition and Disclosure
          an  amendment  to FASB  Statement  No.  123," and  continues  to apply
          Accounting  Principles  Board  ("APB")  Opinion  No.  25  and  related
          interpretations in accounting for our stock-based compensation plans.

          No options were issued  during the year ended  December  31, 2003.  No
          compensation  expense was recorded during the years ended December 31,
          2001  and 2002 for the  options  issued  to  directors,  officers  and
          employees,  in accordance  with APB No. 25. Had  compensation  expense
          been

                                      F-9
<PAGE>


          determined on the fair value at the date of grant in  accordance  with
          the  provisions  of SFAS No.  123,  the net  loss  and loss per  share
          attributable  to common  stockholders  would have been adjusted to the
          pro forma amounts indicated below:


                                              For the year ended
                                                 December 31,
                                 -----------------------------------------------
                                     2001             2002             2003
                                 --------------  --------------    -------------
 Net loss attributable to
   common stockholders,
   as reported                   $ (2,595,328)   $ (13,472,688)    $  (985,357)
 Stock-based employee costs
   based on fair value method,
   net of related taxes              (188,793)         (14,596)        (5,022)
                                 --------------   --------------   -------------
 Net loss attributable to
   common stockholders,
   pro forma                     $ (2,784,121)   $ (13,487,284)    $  (990,379)
                                 ==============   ==============   =============
 Loss per common share:
      As reported                $      (0.08)   $       (0.41)    $     (0.03)
                                 ==============   ==============   =============
      Pro forma                  $      (0.09)   $       (0.41)    $     (0.03)
                                 ==============   ==============   =============


          The fair value of each option grant on the date of grant was estimated
          using the Black-Scholes option-pricing model reflecting the following:


                                        For the year ended
                                            December 31,
                                 ---------------------------------
                                       2001              2002
                                 --------------   ----------------
 Volatility                               100%               100%
 Expected life of options         5 to 7 years            7 years
 Risk free interest rate                 4.25%              3.65%
 Dividend yield                             0%                 0%




          There were no options  granted  during the fiscal year ended  December
          31, 2003.  The weighted  average fair value of options  granted during
          the years  ended  December  31,  2001 and 2002 was  $0.14  and  $0.05,
          respectively.

    (o)    Long-Lived Assets

          Long-lived  assets and certain  identifiable  intangibles are reviewed
          for impairment  whenever events or changes in  circumstances  indicate
          that  the  carrying  amount  of  an  asset  may  not  be  recoverable.
          Recoverability  of  assets  to be  held  and  used  is  measured  by a
          comparison of the carrying amount of an asset to  undiscounted  future
          net cash flows  expected to be generated by the asset.  If such assets
          are  considered  to be impaired,  the  impairment  to be recognized is
          measured  by the  amount by which the  carrying  amount of the  assets
          exceeds  the fair value of the  assets.  Assets to be  disposed of are
          reported at the lower of the carrying  amount or fair value less costs
          to sell.  There were no such  impairments for the years ended December
          31,  2001  and  2003.  As of  December  31,  2002,  due to the lack of
          available  working capital,  we reviewed the impairment  testing under
          the  guidelines of SFAS No. 144. We estimated the future cash flows of
          those  products  identified as using the patent rights  included under
          our intangible  assets.  These future cash flows were then compared to
          the  carrying  value  of our  intangible  assets  on the  books  as of
          December  31,  2002.  Based  on  this  comparison,  we  determined  an
          impairment was present. We calculated the impairment loss by comparing
          the carrying  value of the  intangible  assets to the  estimated  fair
          value of the intangible assets. We determined the estimated fair value
          of  the  intangible   assets  based  on  the  discounted   cash  flows
          attributable  to  the  new  products  utilizing  the  technology.  The
          discount  rate used was based on cost of capital  associated  with our
          Series B

                                      F-10
<PAGE>


          convertible  preferred  stock.  The  resulting  impairment  charge  of
          $11,500,000  is included in the statement of  operations  for the year
          ended December 31, 2002.

    (p)    Concentrations of Credit Risk

          Cash and cash equivalents and trade  receivables  potentially  subject
          Pro Tech to  concentration  of credit risk.  We maintain cash and cash
          equivalents  in accounts  with one  financial  institution  in amounts
          which,  at times,  may be in excess of the FDIC insurance  limit.  Pro
          Tech does not  believe  it is  exposed  to any  significant  risk with
          respect to cash and cash equivalents.

          We sell our  products and  services to  distributors  and end users in
          various industries.  We regularly assess the realizability of accounts
          receivable  and  take  into   consideration  the  value  of  past  due
          receivables  and the  collectibility  of such  receivables,  based  on
          credit  worthiness.  We do not require collateral or other security to
          support customer receivables.

          Pro Tech is currently outsourcing all components from several Far East
          suppliers  who  build  each  component  to  our   specifications.   An
          interruption  in the supply of a component  for which we are unable to
          readily procure a substitute source of supply could temporarily result
          in Pro Tech's inability to deliver  products on a timely basis,  which
          in turn  could  adversely  affect  our  operations.  Pro  Tech has not
          experienced  any  shortages of  supplies;  however,  during  2001,  we
          experienced a temporary  quality  control issue with one supplier that
          required us to obtain  alternative means and, in effect,  increase our
          inventory to cover the anticipated returns under warranty.

    (q)    Recent Accounting Standards

          In May 2003, the Financial  Accounting Standards Board ("FASB") issued
          SFAS No. 150,  "Accounting  for  Certain  Financial  Instruments  with
          Characteristics   of  both  Liabilities  and  Equity."  SFAS  No.  150
          establishes  standards  for  how a  company  classifies  and  measures
          certain financial instruments with characteristics of both liabilities
          and  equity.  The  provisions  of SFAS  No.  150  were  effective  for
          financial  instruments entered into or modified after May 31, 2003 and
          to all other instruments that existed as of the beginning of the first
          interim financial  reporting period beginning after June 15, 2003. Pro
          Tech  adopted  SFAS No.  150 as of the  third  quarter  2003.  We were
          required to reclassify our Series A and Series B convertible preferred
          stock from the equity section to the current  liability section on our
          balance  sheet.  Adoption of SFAS No. 150 also  required us to present
          payments  to  holders  of  such   instruments  and  related   accruals
          separately from payments to and interest due to other creditors in our
          statements of cash flows and operations.  See Note 7 - Preferred Stock
          Subject to Mandatory Conversion into a Variable Number of Shares.

(2)       Inventory

Inventory consisted of the following:

                                                    December 31,
                                        ------------------------------------
                                              2002               2003
                                        -----------------  -----------------
Finished goods                              $   379,089        $   295,346
Raw materials                                   196,330            179,179
Work in progress                                 27,117             24,030
                                        -----------------  -----------------
  Gross inventory                               602,536            498,555
Less: reserve for obsolete inventory             10,000              5,000
                                        -----------------  -----------------
Total Inventory                               $ 592,536        $   493,555
                                        =================  =================

                                      F-11
<PAGE>


(3)       Property and Equipment, Net

The following is a summary of property and equipment:


                                                      December 31,
                                          ------------------------------------
                                                2002               2003
                                          -----------------  -----------------
Production molds                              $    454,076       $    455,440
Office equipment                                   146,556            149,568
Production equipment                                39,514             39,514
Leased equipment                                    83,188             83,188
Leasehold improvements                             315,050            315,050
Vehicles                                            12,414             12,414
Marketing displays                                  16,160             16,160
                                          -----------------  -----------------
    Total cost                                   1,066,958          1,071,334
Less accumulated depreciation
  and amortization                                 465,775            621,662
                                          -----------------  -----------------
Total Property and equipment, net             $    601,183       $    449,672
                                          =================  =================

Total  depreciation  and  amortization  expense,  with  respect to property  and
equipment, was $120,194; $161,219; and $155,887 for the years ended December 31,
2001; 2002; and 2003, respectively. Depreciation expense on assets under capital
leases for the years  ended  December  31,  2001;  2002;  and 2003 was  $24,464;
$20,401; and $18,517, respectively.

(4)       Accrued Expenses

Accrued expenses consisted of the following:

                                                      December 31,
                                          ------------------------------------
                                                2002               2003
                                          -----------------  -----------------
Accrued payroll and vacation                     $ 115,070          $ 132,182
Accrued warranty expense                            69,486             41,687
Other accrued expenses                              38,424             21,332
                                          -----------------  -----------------
Total Accrued expenses                           $ 222,980          $ 195,201
                                          =================  =================


(5)       Due to Factor

On March 26,  2001,  Pro Tech  entered  into a factoring  agreement.  Under this
agreement we are required to factor  substantially  all of our trade receivables
on a non-recourse basis in return for immediate cash credit equal to eighty-five
percent (85%) of these factored receivables, less a factoring fee. The factoring
fee is 1.9% of the  invoice  amount  and 3.5% over the prime  rate on the amount
advanced under the factoring agreement. The prime rate was 4.00% at December 31,
2003. In addition,  at December 31, 2003 we had $1,762 in holdback at the factor
representing  not less than fifteen percent (15%) of the aggregate  unpaid gross
amount of all outstanding accounts factored under this factoring  agreement.  If
the net amount of accounts submitted for any one month does not exceed $100,000,
the  factor  may  charge an  additional  commitment  fee,  as  described  in the
agreement.  As of December 31, 2003, no such fees were  required.  Such factored
receivables  are subject to  acceptance  by the factor.  The factor also has the
option  to  accept  factored   receivables  with  recourse.   If  such  recourse
receivables are not paid within 46 days, we must buy back the total  outstanding
receivable.  Obligations  due to the factor under the  factoring  agreement  are
collateralized  by a  continuing  security  interest  in  all  of  our  accounts
receivable, notes receivable, chattel paper, documents,  instruments and general
intangibles now existing or hereafter  acquired of every kind wherever  located,
together  with  merchandise  returns  and  goods  represented  thereby,  and all
proceeds therefrom of every kind and nature.

                                      F-12
<PAGE>


At December 31, 2003, accounts receivable factored under this agreement and
still outstanding were $12,879, of which, $11,117 had been received under the
factoring agreement under the recourse provisions. Total fees incurred under
this arrangement amounted to $13,008; $6,346; and $4,433 during the years ended
December 31, 2001; 2002; and 2003, respectively. Interest expense incurred under
this arrangement amounted to $5,901; $3,393; and $2,285 during the years ended
December 31, 2001; 2002; and 2003, respectively.

 (6)      Notes Payable and Note Payable to Stockholder

On May 13, 2001, Pro Tech received a bank loan of $11,346. The loan provides for
equal monthly payments of $245,  including  interest at prime plus 2.3% (6.3% at
December 31, 2003),  through May 13, 2006. The loan is secured by a vehicle with
a net book value of $1,524 at December  31, 2003.  As of December 31, 2003,  the
balance  outstanding was $6,461 and future maturities are: 2004,  $2,385;  2005,
$2,646; and 2006 $1,430.

On March 27, 2000, Pro Tech received a loan of $150,000 from a stockholder.  The
loan matured on March 27, 2001 and bore  interest at 8.5% per annum,  payable at
maturity. On the maturity date, Pro Tech entered into a new note, which included
the original  principal amount plus accrued interest to date. This $162,750 note
matured  on March 27,  2002 and bore  interest  at 8.5% per  annum,  payable  at
maturity.  On March 27, 2002, Pro Tech entered into a new note that included the
original  principal plus accrued interest to date. This $176,584 note matured on
June 27, 2002 and bore interest at 8.5% per annum, payable at maturity.  On June
27, 2002, Pro Tech renegotiated this note plus accrued interest into an $180,493
note with  interest at 8.5%,  due on June 27, 2003.  On June 27, 2003,  Pro Tech
renegotiated  the  outstanding  amount of this note  into a  $159,937  note with
interest at 8.5% and payment  terms of $3,500  (including  interest)  due on the
last day of each month  starting on June 30, 2003  through May 31, 2004 with the
remaining  balance due on June 27, 2004. As of December 31, 2003, the balance of
this note was $142,001.

(7)       Preferred Stock Subject to Mandatory Conversion into a Variable Number
          of Shares

Series A Convertible Preferred Stock
------------------------------------

As of December 31,  2003,  Pro Tech had 1,500  shares  authorized  and 50 shares
issued and outstanding of its Series A Convertible  Preferred  Stock  (Preferred
Stock-A). Each share has a par value of $0.01, and a stated value of $1,000. The
Preferred Stock-A has a cumulative dividend of 4% per annum on the stated value,
payable upon  conversion or exchange in either cash or common stock.  The shares
of Preferred  Stock-A may be  converted  into shares of Pro Tech common stock or
exchanged for shares of NCT common stock. Each share of stock is convertible, at
the holder's  option,  into Pro Tech's common stock based on a conversion  price
that is the  lower of:  the  lowest  average  closing  bid price for a  five-day
consecutive  period out of fifteen  trading  days,  less a discount of 20%; or a
fixed  price of $0.50.  The  exchange  rate into NCT common  stock is the lowest
average of the average closing bid price for a share of NCT common stock for any
consecutive five trading days out of the fifteen trading days preceding the date
of such conversion, less a discount of 20%.

Pro Tech, at its option,  may redeem up to $50,000 of the  Preferred  Stock-A if
the closing bid price of Pro Tech's  common  stock is less than $0.50 per share.
The  redemption  price is equal to 125% of the  stated  value  plus  100% of the
cumulative  4%  dividend.  The stock may be redeemed at the  holders'  option if
two-thirds of all preferred  stockholders  require such  redemption upon certain
events of noncompliance  with the terms of the Series A Preferred Stock Purchase
Agreement or  Registration  Rights  Agreement.  Any  outstanding  shares will be
mandatorily converted on March 31, 2005.

The  Preferred  Stock-A was covered under the adoption of SFAS No. 150 as of the
beginning  of the third  quarter  2003.  SFAS No.  150  required  us to move the
Preferred  Stock-A from the equity section to the current  liability  section on
our balance  sheet.  In connection  with the move from the equity section to the
current  liability  section,  Pro Tech was required to increase the value of the
Preferred  Stock-A to reflect the  monetary  value of the shares  required to be
issued upon  conversion.  The  Preferred  Stock-A was  increased  $12,500 with a
corresponding entry to additional paid-in-capital.

                                      F-13
<PAGE>


SFAS No. 150 also  required us to record any payments or accruals of payments to
holders of such  instruments as interest costs.  Therefore,  as of July 1, 2003,
the  dividends  accrued to holders of the  Preferred  Stock-A  are  recorded  as
interest expense in the statement of operations;  whereas,  previously they were
recorded as a reduction to additional paid-in-capital. Interest expense recorded
for the  Preferred  Stock-A for the period July 1 through  December 31, 2003 was
$1,009. The reduction to additional  paid-in-capital  for the Preferred Stock-A,
calculated  for  purposes  of  determining  net  loss   attributable  to  common
stockholders,  was $15,647 and $2,000 for the years ended  December 31, 2001 and
2002, respectively; and $991 for the period January 1 through June 30, 2003.

The Preferred Stock-A is carried on our balance sheet as of December 31, 2003 at
$69,021,  which is comprised of the monetary value of the shares of $62,500 plus
the accrued dividends of $6,521. Pro Tech would have had to issue  approximately
5 million  shares of our common stock if  settlement  of the stated value of the
Preferred Stock-A had settlement occurred at December 31, 2003. Pro Tech has the
option to settle the accrued  dividends in cash or common stock.  As of December
31, 2003,  settlement in common stock for the accrued dividends on the Preferred
Stock-A would have required issuance of approximately  630,000 shares.  There is
no limit on the number of shares  that Pro Tech could be  required to issue upon
conversion  of the  Preferred  Stock-A.  No shares  of  Preferred  Stock-A  were
converted or exchanged during the years ended December 31, 2002 and 2003.

Series B Convertible Preferred Stock
------------------------------------

As of  December  31,  2003,  Pro  Tech had 500  shares  authorized,  issued  and
outstanding of its Series B Convertible  Preferred  Stock  (Preferred  Stock-B).
Each share has a par value of $0.01 and a stated value of $1,000.  The Preferred
Stock-B has a cumulative  dividend of 4% per annum on the stated value,  payable
upon  conversion  or  exchange  in either  cash or common  stock.  The shares of
Preferred  Stock-B may be  converted  into  shares of Pro Tech  common  stock or
exchanged  for shares of NCT common  stock.  Each share of stock is  convertible
into Pro Tech's  common stock based on a conversion  price that is the lower of:
the lowest average  closing bid price for a five-day  consecutive  period out of
fifteen trading days, preceding the date of such conversion,  less a discount of
20%; or a fixed price of $0.25.  The exchange  rate into NCT common stock is the
lowest average of the average  closing bid price for a share of NCT common stock
for any consecutive  five trading days out of the fifteen trading days preceding
the date of such exchange,  less a discount of 20%. Any outstanding  shares will
be mandatorily converted on March 31, 2006.

In accordance  with Emerging  Issues Task Force 98-5, as codified in EITF 00-27,
we recorded a beneficial  conversion  feature of $125,000 in connection with the
Preferred  Stock-B  issuance.  This  entry was a  reduction  to the  outstanding
balance of the preferred  stock and an increase to  additional  paid in capital.
The beneficial  conversion  feature was recognized over the period from the date
of issuance to the date of earliest  conversion (50% on January 30, 2002 and 50%
on July 30, 2002) and is included in the calculation of net loss attributable to
common  stockholders on the statement of operations for the years ended December
31, 2001 and 2002.

As of December 31, 2002,  Preferred  Stock-B was carried on our balance sheet at
$653,438,  which  represented  125% of the stated value of the shares,  plus the
accrued  dividends of $28,438 and was classified as temporary equity rather than
stockholders'  equity.  The  Series  B was  presented  this way  because,  as of
December 31, 2002, under the terms of the agreements  entered into in connection
with the issuance of Preferred Stock-B, the holders of those shares may have had
a right to require  Pro Tech to redeem  the shares at 125% of the stated  value.
Because any such  redemption  would not be within the sole  control of Pro Tech,
and accordingly,  treated the shares as temporary equity. On April 10, 2003, Pro
Tech entered into an agreement with the holder of Preferred  Stock-B whereby the
holder agreed to waive certain requirements of the Registration Rights Agreement
relating  to  Preferred  Stock-B.   This  waiver  released  Pro  Tech  from  the
requirement to register  shares of Pro Tech's common stock for the conversion of
Preferred  Stock-B.  This cancelled the triggering event,  which may have placed
the redemption of Preferred Stock-B at the holder's option.  With the signing of
this agreement, such redemption was within Pro Tech's control. At June 30, 2003,
Preferred Stock-B was classified within the stockholders'  equity section of the
balance sheet and carried at its stated value plus accrued dividends.

                                      F-14
<PAGE>


The  Preferred  Stock-B was covered under the adoption of SFAS No. 150 as of the
beginning  of the third  quarter  2003.  SFAS No.  150  required  us to move the
Preferred  Stock-B from the equity section to the current  liability  section on
our balance  sheet.  In connection  with the move from the equity section to the
current  liability  section,  Pro Tech was required to increase the value of the
Preferred  Stock-B to reflect the  monetary  value of the shares  required to be
issued upon  conversion.  The Preferred  Stock-B was  increased  $125,000 with a
corresponding entry to additional paid-in-capital.

SFAS No. 150 also  required us to record any payments or accruals of payments to
holders of such  instruments as interest costs.  Therefore,  as of July 1, 2003,
the  dividends  accrued to holders of the  Preferred  Stock-B  are  recorded  as
interest expense in the statement of operations;  whereas,  previously they were
recorded as a reduction to additional paid-in-capital. Interest expense recorded
for the Preferred Stock-B for the year ended December 31, 2003 was $10,080.  The
reduction to additional  paid-in-capital  for the Preferred Stock-B,  calculated
for purposes of determining net loss  attributable to common  stockholders,  was
$8,438;  $20,000;  and $9,920 for the years ended  December 31, 2001;  2002; and
2003, respectively.

The Preferred Stock-B is carried on our balance sheet as of December 31, 2003 at
$673,438,  which is comprised  of the  monetary  value of the shares of $625,000
plus  the  accrued  dividends  of  $48,438.  Pro  Tech  would  have had to issue
approximately  48 million shares of our common stock if settlement of the stated
value of the Preferred Stock-B had settlement occurred at December 31, 2003. Pro
Tech has the option to settle the accrued  dividends in cash or common stock. As
of December 31, 2003,  settlement  in common stock for the accrued  dividends on
the Preferred  Stock-B would have required  issuance of  approximately 5 million
shares.  There  is no limit  on the  number  of  shares  that Pro Tech  could be
required  to issue  upon  conversion  of the  Preferred  Stock-B.  No  shares of
Preferred  Stock-B were  converted or exchanged  during the years ended December
31, 2002 and 2003.

(8)       Noncurrent Notes Payable Due to Affiliates

As of December 31, 2002, Pro Tech had two outstanding  promissory  notes payable
to NCT Hearing.  Both notes were due on April 1, 2004, bearing interest at prime
(4.25% as of  December  31,  2002).  The first note was issued for  $906,232  on
September 30, 2002,  in exchange for the amount due to NCT and its  subsidiaries
at September 30, 2002, and had an outstanding balance of $916,437 as of December
31,  2002.  The second  note was issue for  $148,266 on December  31,  2002,  in
exchange for the amount due to NCT and its  subsidiaries  for services  provided
and other charges to Pro Tech during the fourth quarter of 2002.

On March 31, 2003, Pro Tech issued a promissory  note payable to NCT Hearing for
$291,312,  bearing interest at prime, due on April 4, 2004, in exchange for cash
advanced,  services  provided  and  other  charges  to Pro  Tech  by NCT and its
subsidiaries during the first quarter of 2003.

On June 30,  2003,  Pro Tech issued a  promissory  note  payable to NCT Hearing,
bearing  interest at prime (4.00% at December 31, 2003) and due on April 1, 2005
in the  amount of  $1,512,679.  This note was  issued as  consideration  for the
rollover of $1,345,811 in principal of all outstanding notes payable by Pro Tech
to NCT Hearing  (plus  accrued  interest of $35,900) as of June 30,  2003,  plus
$130,968  for  services  provided  and cash  advanced to Pro Tech by NCT and its
subsidiaries  during the second quarter 2003.  The following  notes payable were
outstanding and rolled into the new note payable dated June 30, 2003:


                                      Outstanding      Accrued
Original issue date of note:           Principal       Interest        Total
                                    -------------   -------------   ------------

  September 30, 2002                $   906,232     $   29,664      $   935,896
  December 31, 2002                     148,267          3,146          151,413
  March 31, 2003                        291,312          3,090          294,402
                                    -------------   -------------   ------------
Total rolled into new note payable  $ 1,345,811     $   35,900      $ 1,381,711
                                    ==============  =============   ============

As of December 31, 2003, the June 30, 2003 note payable  outstanding balance was
$1,543,439.

                                      F-15
<PAGE>


On December 31, 2003, Pro Tech issued a $281,101  promissory note payable to NCT
Hearing, bearing interest at prime (4.00% at December 31, 2003) and due on April
1, 2005, in exchange for services  provided,  cash advanced and other charges to
Pro Tech  during the third and fourth  quarters  of 2003.  See Note 14 - Related
Party Transactions.

(9)       Capital Stock

On April 12, 2002, Pro Tech's stockholders approved an amendment to the Articles
of  Incorporation  to increase the number of  authorized  shares of common stock
from 40 million to 300 million.  The increase in authorized shares was effective
as of August 5, 2002,  upon  acceptance  by the Secretary of State of Florida of
Articles of Amendment to the Amended and Restated  Articles of  Incorporation of
Pro Tech.

Common Stock
------------

On  September  12,  2000,  Pro Tech  obtained  a license  for  rights to certain
technologies  from NCT Hearing in  consideration  of the issuance of  23,982,438
shares of common stock,  including  279,688  shares of common stock for costs of
issuance. The intangible assets received in the exchange were valued at the fair
value of our stock, which was $16,307,492.

As of December  31, 2002 and 2003,  $4,000 was held in escrow for the benefit of
Pro Tech pending completion of the subscription  agreements by two investors for
4,000 shares of common stock each.

The  number of  shares of common  stock  required  to be  reserved  for was 82.4
million at December 31, 2003. This reserve  includes  amounts for the conversion
of  preferred  stock and for the exercise of options and  warrants.  On July 12,
2002, Pro Tech, NCT and the holder of eight  convertible notes payable issued by
NCT entered into an  agreement.  Under this  agreement,  the holder of the notes
payable waived her right to exchange such notes into Pro Tech common shares.  In
consideration  of these  waivers,  the holder was given a warrant for 20 million
shares of NCT common  stock.  Prior to this  agreement,  the  convertible  notes
payable were exchangeable for Pro Tech common stock at prices ranging from $0.03
to $0.14 per share, or a total of approximately 215 million shares.

Warrants
--------

In connection  with the  Preferred  Series-A,  we provided  warrants to purchase
4,500,000  shares of Pro Tech's common stock.  The warrants were  exercisable at
$0.50 per share and expired on October 28, 2003.

In  connection  with the  Preferred  Series-B,  we issued a warrant to  purchase
1,000,000  shares of our common stock.  The warrant is  exercisable at $0.13 per
share and  expires on July 30,  2004.  We have the right to require  the warrant
holder to exercise upon a call by Pro Tech under the following  conditions:  (1)
one-third  of the  warrant is  callable  if the  closing bid price of the common
stock for each of the previous  fifteen days equals or exceeds  $0.177 per share
and the average  daily  trading  volume  during such period is at least  150,000
shares;  (2)  two-thirds  of the warrant is callable if the closing bid price of
the common stock for each of the previous  fifteen days equals or exceeds $0.244
per share and the average  daily  trading  volume during such period is at least
150,000 shares;  and (3) the entire warrant is callable if the closing bid price
of the common  stock for each of the  previous  fifteen  days  equals or exceeds
$0.295 per share and the average daily  trading  volume during such period is at
least 150,000 shares.

We estimated the fair value of this warrant to be approximately  $63,000,  using
the  following  assumptions  in applying  the  Black-Scholes  valuation  method:
dividend yield of 0%; risk-free interest rates of 4.25%, volatility of 100%, and
an expected life of three years.  The $63,000 is included in the  calculation of
net loss attributable to common stockholders on the statements of operations for
the year ended December 31, 2001.

The  following  table  summarizes  warrants to purchase  common stock during the
years ended  December 31, 2001;  2002;  and 2003:

                                      F-16
<PAGE>


<TABLE>
<CAPTION>

                                      December 31, 2001             December 31, 2002              December 31, 2003
                                 ----------------------------  -----------------------------  -----------------------------
                                                  Weighted                       Weighted                       Weighted
                                                   Average                        Average                        Average
                                    Shares     Exercise Price    Shares       Exercise Price     Shares       Exercise Price
                                 ------------  --------------  -------------  --------------  --------------  --------------
<S>                                <C>              <C>         <C>              <C>          <C>              <C>

Warrants outstanding,
     beginning of year             4,500,000       $ 0.500      5,500,000         $ 0.433        5,500,000        $ 0.433
Warrants granted                   1,000,000         0.130              -               -                -              -
Warrants canceled or expired               -             -              -               -       (4,500,000)         0.500
                                 ------------                  -------------                  --------------
Warrants outstanding,
     end of year                   5,500,000       $ 0.433      5,500,000         $ 0.433        1,000,000        $ 0.130
                                 ============                  =============                  ==============
</TABLE>


As of December 31, 2003,  the  outstanding  warrants  have an exercise  price of
$0.13 and a remaining contractual life of less than one year.

(10)      Stock Option Plans

On March 5, 1998, the Board of Directors  adopted the 1998 Stock Option Plan for
the benefit of directors, officers and employees of and consultants to Pro Tech.
This plan  originally  authorized the issuance of up to 500,000 shares of common
stock and was increased to 2 million  shares of common stock on August 11, 2000.
The  authorized  shares for this plan were  increased to 30 million on April 12,
2002 at Pro Tech's annual meeting of stockholders.

On August 4, 1998,  200,000 and 100,000  options to purchase shares were granted
to officers  and  employees,  respectively,  at an exercise  price of $0.375 per
share.  The exercise  price was the fair market value of a share of common stock
at the date of the grant. Of these, options to purchase 150,000 shares of common
stock  were  granted  to  Richard  Hennessey  and  vested  as  follows:   50,000
immediately;  50,000 on August  4,  1999;  and  50,000  on August 4,  2000.  The
remaining  options  vested  immediately.  All  options  are  exercisable  over a
three-year  period from the date of vesting.  Of the 300,000  options granted on
August 4,  1998,  12,000  were  exercised  during  March and April  2000,  total
proceeds received by Pro Tech amounted to $4,560, 188,000 options expired during
the year ended December 31, 2001,  50,000 expired during the year ended December
31, 2002 and 50,000 expired during the year end December 31, 2003. None of these
options remain outstanding at December 31, 2003.

On April 13, 1999, options to purchase 200,000 shares were granted to an officer
at an exercise  price of $0.375 per share.  The exercise  price was greater than
the fair market value of a share of common  stock at the date of the grant.  The
options vested and became exercisable as follows: 100,000 immediately; 50,000 on
April 13, 2000;  and 50,000 on April 13, 2001.  The options  expire on April 13,
2004. All 200,000  options are  outstanding  and  exercisable as of December 31,
2003.

On November  28, 2000,  Pro Tech issued  options to purchase  500,000  shares of
common stock at $0.4375 per share under the 1998 Stock Option Plan, which vested
as follows:  125,000  immediately,  125,000 on  November  28,  2001,  125,000 on
November 28,  2002,  and 125,000 on November  28,  2003.  The options  expire on
November 28, 2007. Of these options,  295,000 remain outstanding and exercisable
as of December 31, 2003.

On June 1,  2001,  Pro Tech  issued  options to the Chief  Executive  Officer to
purchase up to 540,000  shares at an exercise price of $0.17 per share under the
1998 Stock Option Plan,  which  options  vested  immediately  upon  issuance and
expire on June 1, 2008.  The  exercise  price of these  options was equal to the
fair market  value of the common  stock on the grant date.  On February 1, 2002,
Pro Tech  modified  the 540,000  options to exclude  the clause  under which the
options would expire upon termination of employment.  Although the change in the
termination  clause  was a  modification  of the  original  grant,  there was no
accounting consequence because the market price on the date of such modification
was lower than the  exercise  price of the grant.  All  540,000  options  remain
outstanding and exercisable as of December 31, 2003.

                                      F-17
<PAGE>


On June 1, 2001,  Pro Tech  issued  options to two  employees  to purchase up to
400,000  shares at an  exercise  price of $0.17 per share  under the 1998  Stock
Option Plan, which options vested or vest as follows:  160,000  immediately upon
issuance;  120,000 on June 1, 2002;  and 120,000 on June 1, 2003.  The  exercise
price of these options was equal to the fair market value of the common stock on
the grant date. In January 2002 employment of these two employees was terminated
and,  according to the option  agreement,  such granted options expired in April
2002.

On February 1, 2002,  Pro Tech  issued  options to the  Chairman of the Board of
Directors  to  purchase up to 250,000  shares at an exercise  price of $0.06 per
share under the 1998 Stock Option Plan,  which options vested  immediately  upon
issuance and expire on February 1, 2009. The exercise price of these options was
equal to the fair  market  value of the  common  stock on the  grant  date.  All
250,000 of these options remain  outstanding  and exercisable as of December 31,
2003.

The following  summarizes stock option activity for the years ended December 31,
2001; 2002; and 2003:

<TABLE>
<CAPTION>

                                  December 31, 2001             December 31, 2002            December 31, 2003
                             ---------------------------    --------------------------    --------------------------
                                           Weighted                      Weighted                      Weighted
                                            Average                       Average                       Average
                               Shares     Exercise Price      Shares    Exercise Price      Shares    Exercise Price
                             -----------  --------------    ----------  --------------    ----------  --------------
<S>                           <C>           <C>              <C>          <C>              <C>           <C>

Options outstanding,
   beginning of the year      1,528,000     $  0.440         1,740,000    $   0.283        1,372,500     $  0.253
Options granted                 940,000        0.170           250,000        0.060                -            -
Options exercised                     -            -                 -            -                -            -
Options expired                (728,000)       0.468          (617,500)       0.259          (87,500)       0.402
                             -----------                    -----------                   -----------
Options outstanding,
   end of year                1,740,000     $  0.283         1,372,500    $   0.253        1,285,000     $  0.242
                             ===========                    ===========                   ===========
Options exercisable,
   end of year                1,187,500     $  0.265         1,235,000    $   0.232        1,285,000     $  0.242
                             ===========                    ===========                   ===========

</TABLE>


As of December 31, 2003,  Pro Tech's  outstanding  stock  options have  exercise
prices  ranging  from  $0.06  to  $0.4375  and  a  weighted  average   remaining
contractual life of approximately 3.8 years. As of December 31, 2003, 28,715,500
options were available for future grants under the 1998 Stock Option Plan.

On March 9, 2004,  Pro Tech issued  options to officers and employees  under the
1998 Stock Option Plan to purchase 635,000 shares of common stock exercisable at
$0.03 per share,  the fair market  value of the  underlying  common stock on the
date of grant.

(11)      Commitments

Future minimum lease payments under noncancelable operating leases for buildings
and equipment and the present value of future minimum  capital lease payments as
of December 31, 2003 are as follows:

                                      F-18
<PAGE>


<TABLE>
<CAPTION>

Year ending December 31                                                          Capital Leases           Operating Leases
-----------------------                                                         -----------------        ------------------
<S>  <C>                                                                          <C>                      <C>
     2004                                                                         $    13,109              $      95,924
     2005                                                                              13,109                     96,563
     2006                                                                               9,992                     16,184
     2007                                                                                 373                          -
     2008 and thereafter                                                                    -                          -
                                                                                -----------------        ------------------
Total minimum lease payments                                                           36,583              $     208,671
                                                                                                         ==================
Less amount representing interest                                                       4,816
                                                                                -----------------
Present value of net minimum capital lease payments                                    31,767
Less current installments                                                              10,434
                                                                                -----------------
Obligations under capital leases, excluding current installments                  $    21,333
                                                                                =================
</TABLE>


Rent expense under lease agreements totaled $127,099,  $129,765 and $132,176 for
the years ended December 31, 2001; 2002; and 2003, respectively.

(12)      Income Taxes

There was no provision  for income taxes for the years ended  December 31, 2001;
2002; and 2003 due to operating losses incurred.

Pro Tech had a net deferred tax asset of approximately $6,523,000 and $6,887,000
available  to offset  future  federal  income tax at December 31, 2002 and 2003,
respectively.  Pro Tech's  deferred  tax assets  have been fully  reserved  by a
valuation  allowance  since the  realization  of its benefit is  uncertain.  The
difference  between the statutory  federal income tax rate of 34% and Pro Tech's
effective tax rate is due to an increase in the valuation allowance of $364,000.

At December 31, 2003, Pro Tech has net operating loss  carryforwards for federal
and  state  income  tax  purposes   amounting  to  $8,086,000  and   $8,162,000,
respectively,  which expire  through the year 2023. In accordance  with Internal
Revenue  Code  Section  382, Pro Tech's net  operating  loss  carryforwards  are
subject to certain  limitations  resulting  from the issuance of common stock to
NCT Hearing, as discussed in Note 9 - Capital Stock.

In assessing  the  realizability  of deferred tax assets,  management  considers
whether it is more likely than not that some  portion or all of the deferred tax
assets will not be realized.  The ultimate realization of deferred tax assets is
dependent  upon the  generation  of future  taxable  income during the period in
which those temporary  differences become deductible.  Management  considers the
scheduled reversal of deferred tax liabilities,  projected future taxable income
and tax planning strategies in making this assessment.

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
Pro Tech's deferred tax assets and liabilities are as follows:

                                      F-19
<PAGE>


                                                           December 31,
                                                  ------------------------------
                                                       2002             2003
                                                  --------------   -------------
Accounts receivable principally due to
   allowance for doubtful accounts                $     10,000     $    12,000
Accrued warranty expense                                26,000          16,000
Net operating loss carryforwards                     2,345,000       3,073,000
Amortization and impairment on intangible assets     4,162,000       3,795,000
Other                                                    1,000           3,000
                                                  --------------   -------------
                                                     6,544,000       6,899,000
Less valuation allowance                             6,523,000       6,887,000
                                                  --------------   -------------
Total deferred tax assets                               21,000          12,000
                                                  --------------   -------------

Property and equipment principally due to
   differences in depreciaton                           21,000          12,000
                                                  --------------   -------------
Total deferred tax liabilities                          21,000          12,000
                                                  --------------   -------------
Net deferred taxes                                $          -     $         -
                                                  ==============   =============


(13)      Business Division Information

During 2001, management identified two new business divisions that were added to
our business  focus.  These two new  identifiable  business  divisions were: (1)
Telecommunications  Systems  Integration;  and (2) Call  Center  Operations.  At
December 31,  2001;  2002;  and 2003 neither of these  divisions is a separately
reportable segment in accordance with SFAS No. 131,  "Disclosures about Segments
of an Enterprise and Related  Information."  Prior to establishment of these two
new  business  divisions,  we were  predominately  in the  design,  development,
manufacture and marketing of lightweight  telecommunications headsets, currently
known as Product Business.  We evaluate division  performance based on net sales
and  operating  income.  Management  does not track  division  data or  evaluate
division performance on additional financial information.  As such, there are no
separately   identifiable   division   assets  nor  are  there  any   separately
identifiable  statements of income data (below operating income).  Pro Tech does
not  track  or  assign  assets  to  individual  business  divisions.   Likewise,
depreciation  expense  and  capital  additions  are also not tracked by business
division.

No geographic information for revenues from external customers or for long-lived
assets  is  disclosed  as  our  primary  market  and  capital  investments  were
concentrated in the United States.

Business division data is as follows:

                                      F-20
<PAGE>


<TABLE>
<CAPTION>

                                                                        Division
                                        ---------------------------------------------------------------------
                                            Product        Telecom Systems    Call Center         Total
                                            Business        Integration       Operations        Divisions
                                        ----------------  ----------------  ---------------  ----------------
<S>                                       <C>                  <C>               <C>           <C>

For the year ended December 31, 2001:
 Sales to external  customers             $  2,001,348         99,376            74,582        $  2,175,306
 Loss before other income (expense)       $ (2,222,216)       (51,916)         (136,358)       $ (2,410,490)

For the year ended December 31, 2002:
 Sales to external  customers             $  1,500,883        131,378            16,688        $  1,648,949
 Loss before other income (expense)       $(13,321,985)          (657)          (35,950)       $(13,358,592)

For the year ended December 31, 2003:
 Sales to external  customers             $  1,067,430        110,133               972        $  1,178,535
 Loss before other income (expense)       $   (856,729)       (17,120)          (12,983)       $   (886,832)
</TABLE>


Pro Tech is divided into the following three business divisions:

Product  Business:  We  presently  design,   develop,   manufacture  and  market
lightweight  telecommunications  headsets.  Our headsets  employ new concepts in
advanced  lightweight  design, and our marketing  strategies involve the sale of
our product  directly to the commercial  headset market as a replacement for our
competitors'  products.  We presently  sell our first design for the  commercial
headset  market  comprised of fast food companies and other large quantity users
of headset  systems.  We are also in the process of  completing  development  of
several  other  headsets for the  telephone  user market,  to include  telephone
operating  companies,  government  agencies,  business offices, and professional
telephone centers.

Telecommunications  Systems Integration Business: The Telecommunications Systems
Integration Business sells and installs simple to sophisticated analog,  digital
and  Internet  Protocol  phone  systems  providing   telecommunications   system
integration  support to the small  office and the large  corporate  call  center
clients.

Call Center  Operations  Business:  During  2001,  we  launched  the Call Center
Operations Business. We utilized customer relationship  management  technologies
and strategies in order to achieve business division objectives.  As of December
21, 2001, we suspended  operations in the Call Center Operations Business due to
poor  performing  contracts.  We  resumed  limited  operations  during the third
quarter of 2002. We continued to develop this business in 2003.

(14)      Related Party Transactions

During fiscal year 1996,  Pro Tech loaned  $28,882 to its Chairman.  Outstanding
principal and  interest,  at 5% per annum,  were due August 2, 2003.  During the
year  ended  October  31,  1998,  Pro Tech  loaned an  additional  $3,650 to its
Chairman,  which was due October 31,  2002,  with  interest at 5% per annum.  On
October 19, 2001, the outstanding balance from the 1996 loan and the outstanding
balance from the 1998 loan were combined into one loan. The new loan included an
additional amount of $10,594 loaned to the Chairman.  Outstanding  principal and
interest,  at 5% per annum,  were due October 19, 2003. Pro Tech did not receive
payment for this note and has begun collection  efforts.  Outstanding  principal
and  interest  amounted to $63,009 and $66,044 as of December 31, 2002 and 2003,
respectively.

NCT and its affiliates  provided certain  administrative  services including but
not  limited to  accounting,  legal,  human  resources,  employee  benefits  and
insurance.  The costs of these  services  were  allocated  to Pro Tech  based on
specific  identification  and,  to the extent that such  identification  was not
practical, on the basis of employees or other methods which management  believes
to be a reasonable  reflection of the  utilization  of services  provided or the
benefit received by Pro Tech.

                                      F-21
<PAGE>


As of  December  31, 2002 and 2003,  Pro Tech owed  $1,064,703  and  $1,824,540,
respectively,  to NCT  and its  subsidiaries,  for  cash  advances  and  various
research,  administrative and accounting services provided to Pro Tech. See Note
8 - Noncurrent  Notes Payable Due to  Affiliates.  During 2002,  NCT charged Pro
Tech approximately  $203,000 for health benefits paid by NCT and its affiliates,
approximately  $120,000 for labor  provided by NCT employees  and  approximately
$193,000  for Pro Tech's  share of parent  company  expenses  allocated  to each
subsidiary.  During 2003, NCT charged Pro Tech approximately  $83,000 for health
benefits  paid by NCT and  its  affiliates,  approximately  $147,000  for  labor
provided by NCT  employees  and  approximately  $167,000 for Pro Tech's share of
parent company expenses allocated to each subsidiary.  In addition,  during 2003
NCT and its subsidiaries provided approximately $306,000 in cash advances to Pro
Tech.

As of January  1, 2001,  Pro Tech  began  participating  in the NCT Group,  Inc.
Employee  Benefits  Plan,  referred to as the  Benefit  Plan.  The Benefit  Plan
provides,  among  other  coverage,  certain  health  benefits to  employees  and
directors of NCT's United  States  operations.  NCT  administers  this  modified
self-insured Benefit Plan through a commercial third-party administrative health
care provider.  NCT's maximum  aggregate  benefit  exposure in each Benefit Plan
fiscal year is limited to $725,000, while combined individual and family benefit
exposure in each Benefit Plan fiscal year is limited to $450,000. Benefit claims
in excess of these individual or maximum  aggregate stop loss limits are covered
by a commercial  insurance provider to which NCT pays a nominal premium for such
stop loss coverage. NCT records benefit claim expense in the period in which the
benefit claim is incurred. Any benefit claims incurred by Pro Tech are submitted
to NCT for payments and such claims are then charged to Pro Tech. As of December
31,  2002  and  2003,  the  total  amount  owed to NCT for  benefit  claims  was
approximately $388,000 and $471,000, respectively, and is included in the amount
due to NCT and its subsidiaries discussed above.

As of January  1,  2001,  Pro Tech began  participating  in NCT's  401(k)  Plan,
referred to as the 401(k)  Plan.  The 401(k)  Plan is  qualified  under  Section
401(k) of the Internal Revenue Code of 1986. Each eligible employee may elect to
contribute up to 15% of the employee's  annual  compensation to the 401(k) Plan.
NCT,  at  the  discretion  of  its  Board  of  Directors,   may  match  employee
contributions to the 401(k) Plan. There were no matching  contributions  for the
years ended December 31, 2001, 2002 and 2003.

(15)      Major Customers

Two customers  accounted for approximately 35% of net sales generated during the
year ended December 31, 2001. Two customers  accounted for  approximately 38% of
net sales generated during the year ended December 31, 2002. These two customers
represented  approximately 10% of the gross accounts  receivable at December 31,
2002.  Three customers  accounted for  approximately  35% of net sales generated
during the year ended  December  31,  2003.  These three  customers  represented
approximately 9% of the gross accounts receivable at December 31, 2003.

                                      F-22
<PAGE>


(16)      Selected Quarterly Financial Data (Unaudited)

The following tables contain selected quarterly  financial data for each quarter
of 2002 and 2003. Pro Tech believes that the following  information reflects all
normal  recurring   adjustments   necessary  for  a  fair  presentation  of  the
information for the periods presented. The operating results for any quarter are
not necessarily indicative of results for any future periods.


(Unaudited)

<TABLE>
<CAPTION>

                                                                       Year Ended December 31, 2002
                                           ----------------------------------------------------------------------------
                                           1st Quarter   2nd Quarter   3rd Quarter    4th Quarter       Full Year
                                           ------------  ------------  -----------   --------------   -----------------

<S>                                        <C>           <C>           <C>           <C>              <C>
Net sales                                  $ 443,796     $ 439,212     $ 407,357     $     358,584    $   1,648,949
Gross profit                                 267,424       241,772       198,082           167,355          874,633
Loss attributable to common stockholders    (586,821)     (520,292)     (402,020)      (11,963,555)     (13,472,688)
Loss per share - basic and diluted             (0.02)        (0.02)        (0.01)            (0.36)           (0.41)

                                                                       Year Ended December 31, 2003
                                           ----------------------------------------------------------------------------
                                           1st Quarter   2nd Quarter   3rd Quarter    4th Quarter       Full Year
                                           ------------  ------------  -----------   --------------   -----------------

Net sales                                  $ 353,537     $ 258,142     $ 324,639     $     242,217    $   1,178,535
Gross profit                                 229,006       192,774       221,656           170,686          814,122
Loss attributable to common stockholders    (257,916)     (239,887)     (188,350)         (299,204)        (985,357)
Loss per share - basic and diluted             (0.01)        (0.01)            -             (0.01)           (0.03)

</TABLE>


                                      F-23