SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                  FORM 10-K/A2

AMENDMENT  NO.  2 TO  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED                       OCTOBER 31, 2000

Commission File Number:

PRO TECH COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)

Florida                                                            59-3281593
(State or other jurisdiction of                                  (IRS Employer
incorporation organization)                                  Identification No.)

3311 Industrial 25th Street, Fort Pierce, Florida                    34946
(Address of principal executive office)                            (Zip Code)

(561) 464-5100
(Registrant's telephone number, including area code)


<PAGE>

                                     PART II

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

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


             Year ended October 31, 1999       High      Low
             --------------------------------  -------- --------
               First Quarter                   $ 0.50   $ 0.38
               Second Quarter                  $ 0.38   $ 0.27
               Third Quarter                   $ 0.50   $ 0.31
               Fourth Quarter                  $ 0.50   $ 0.19


             Year ended October 31, 2000       High      Low
             --------------------------------  -------- --------
               First Quarter                   $0.310   $0.299
               Second Quarter                  $0.880   $0.788
               Third Quarter                   $0.670   $0.625
               Fourth Quarter                  $1.062   $0.625

On February 12, 2001,  the last reported  sale of the Company's  common stock as
reported by the NASD OTC  Bulletin  Board was $0.437.  As of February  12, 2001,
there were approximately 44 record holders of the common stock.

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

See Item 7 -  "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations - Overview" for a  description  of the Company's  sales of
unregistered securities during the year ended October 31, 2000.


ITEM 11.    EXECUTIVE COMPENSATION

Set forth below is certain  information for the three fiscal years ended October
31, 1998, 1999 and 2000 relating to compensation received by the Company's Chief
Executive  Officer and, if  applicable,  the other four most highly  compensated
officers of the Company  whose total annual salary and bonus for the fiscal year
ended October 31, 2000 exceeded $100,000.

<TABLE>
<CAPTION>
                                                                                  Securities
                                                                 Other            Underlying          All
Name and Principal                                               Annual        Options/Warrants      Other
     Position                 Year    Salary ($)    Bonus ($) Compensation ($)     SARs (#)      Compensation
--------------------------- -------- -----------   ---------- ---------------- ----------------  -------------
<S>                           <C>     <C>          <C>          <C>               <C>             <C>
Keith Larkin                  2000    $22,500      $       -    $       -                -         $      -
   Chairman of the Board      1999     25,000              -            -          540,000                -
    Chief Executive Officer   1998     45,000              -            -                -                -
    and Treasurer
</TABLE>

Compensation Arrangements with Certain Officers and Directors

The Company had an employment  agreement with Keith Larkin, which was terminated
on February 2, 1999.  The  agreement  provided  for a maximum  annual  salary of
$90,000  with  additional  amounts  added  using the  consumer  price index as a
minimum.  Mr.  Larkin was eligible for the maximum  annual salary during a given
year only if the  Company  generated  annual  sales of at least  $2,000,000  and
pre-tax  income equal to at least 20% of the Company's  annual sales.  Since the
Company did not meet the minimum  requirements during fiscal years 1998, 1999 or
2000, the Board of Directors paid Mr. Larkin the  compensation  set forth in the
preceding table.

The Company has no set salary obligations to Mr. Larkin for his services for the
current or future fiscal years. Mr. Larkin, however, has agreed to assign to the
Company 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 Chairman
of the Board of Directors, Chief Executive Officer and Treasurer of the Company.

The Company does not have a written employment agreement with Richard Hennessey.
During each of the fiscal  years  ended  October 31,  1998,  1999 and 2000,  Mr.
Hennessey received a salary of $51,000, $51,000 and $76,621, respectively.

Messrs.  Larkin and Hennessey did not receive any  additional  compensation  for
serving as directors of the Company.

Compensation of Directors

No directors of the Company have received any fees for serving as a director.


                               Stock Option Plans

On November 28, 2000, the Company  issued options to purchase  500,000 shares of
common stock at $0.4375 per share under the 1998 Stock  Option Plan,  which vest
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.


                2000 Aggregated Option and Warrant Exercises and
                   October 31, 2000 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 fiscal year ended
October 31, 2000 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                            Underlying                 Value of Unexercised
                        of                          Unexercised Options          In-the-Money Options
                      Shares                          and Warrants at               and Warrants at
                     Acquired                        October 31, 2000              October 31, 2000
                         On          Value   --------------------------------- --------------------------
    Name             Exercise(#)   Realized  Exercisable (#) Unexercisable ($) Exercisable Unexercisable
------------------  ------------  ---------- --------------- ----------------- ----------- --------------
<S>                 <C>           <C>          <C>            <C>                <C>        <C>
Keith Larkin               -           -       540,000               -           $ 97,200    $        -

Richard Hennessey          -           -       300,000          50,000           $ 90,750    $   15,000
</TABLE>

During  fiscal year 2000,  neither Mr.  Larkin nor Mr.  Hennessey  exercised any
stock options. The fair market value of the Company's common stock as of October
31,  2000 was in excess of the  exercise  price  for both Mr.  Larkin's  and Mr.
Hennessey's stock options. Accordingly, as of October 31, 2000, Mr. Larkin's and
Mr. Hennessey's unexercised stock options had value as indicated above.

                             1996 Stock Option Plan

On April 15, 1996,  the Board of Directors of the Company  adopted the Company's
1996 Stock Option Plan.  The 1996 Plan  provides for the grant by the Company of
options to purchase up to an  aggregate of 590,000 of the  Company's  authorized
but unissued  shares of common stock  (subject to  adjustment  in certain  cases
including  stock splits,  recapitalizations  and  reorganizations)  to officers,
directors, consultants, and other persons rendering services to the Company.

The purposes of the 1996 Plan are to provide  incentive to employees,  including
officers, directors and consultants of the Company, to encourage such persons to
remain in the employ of the  Company  and to attract to the  Company  persons of
experience and ability. The 1996 Plan terminates on April 15, 2002.

Options granted under the 1996 Plan may be either incentive stock options within
the meaning of the Internal Revenue Code of 1986, as amended, or options that do
not qualify as incentive  options.  The exercise price of incentive options must
be at least equal to the fair market  value of the shares of common stock on the
date of grant;  provided,  however,  that the  exercise  price of any  incentive
option  granted to any person who, at the time of the grant of the option,  owns
stock  aggregating 10% or more of the total combined voting power of the Company
or any parent or  subsidiary  of the Company,  must not be less than 110% of the
fair market value

On April 15, 1996,  540,000 and 50,000 shares were granted to the Company's then
president and officers, respectively, at an option price of $0.50 per share. The
stock option  exercise price was the fair value at the date of the grant,  which
was determined from the price paid per share during the Company's stock offering
carried  out in 1996.  The stock  options are  exercisable  upon the grant date,
extending over a period of three years.

Prior to fiscal year 1998, the Company  received $25,000 upon issuance of 50,000
shares of common  stock upon the  exercise  of 50,000  options by the  Company's
officers.  On April  13,  1999  the  remaining  540,000  options  issued  to the
Company's previous president were extended for 2 years to April 15, 2001.

      1998 Stock Option Plan

On March 5, 1998, the Board of Directors  adopted the 1998 Stock Option Plan for
the benefit of directors,  officers,  employees and  consultants to the Company.
The 1998 Plan  originally  authorized  the  issuance of up to 500,000  shares of
common stock and was increased to 2,000,000 shares of common stock on August 11,
2000.  On August 4,  1998,  200,000  and  100,000  shares  were  granted  to the
Company's officers and employees, respectively, at an option price of $0.375 per
share.  The stock option  exercise price was the fair market value of a share of
common  stock at the date of the grant.  Options to purchase  150,000  shares of
common stock granted to Richard  Hennessey vest and are  exercisable 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,  the remaining  1998 Plan options to purchase  200,000 shares
were granted to Richard  Hennessey  at an option  price of $0.38 per share.  The
stock option exercise price was greater than the fair market value of a share of
common stock at the date of the grant.  The options vest and are  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.


ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT.


The following table sets forth, as of February 13, 2001,  information concerning
the  shares  of common  stock  beneficially  owned by each  person  who,  to the
knowledge of the Company,  is (i) the beneficial owner of more than five percent
of the common stock of the Company, (ii) each director of the Company, (iii) the
five  most  highly  compensated  executive  officers  of the  Company,  if  such
compensation  was at least  $100,000,  (including the Company's  Chief Executive
Officer) in the last fiscal year, and (iv) all executive  officers and directors
of the Company as a group.  Except as otherwise noted, each beneficial owner has
sole investment and voting power with respect to the listed shares.

                                              Amount and Nature     Approximate
                                               of Beneficial       Percentage
Name of Beneficial Owner                         Ownership          of Class
------------------------                      -----------------   --------------
Keith Larkin                                   1,380,000(1)            4.5%
Richard Hennessey                                362,500(2)            1.2%
Michael J. Parrella(4)                                 -                 -
Irene Lebovics(4)                                      -                 -
Cy E. Hammond(4)                                       -                 -
NCT Hearing Products, Inc.                    24,613,539              82.6%
Austost Anstalt Schaan                         2,238,163(3)            7.0%
Balmore S.A.                                   2,238,163(3)            7.0%
Zakeni Limited                                 6,017,870(3)           16.8%
All Executive Officers and Directors as
  a Group (5 persons)                          1,742,500(1)(2)         5.7%
----------------


Note:  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.

(1)  Includes  540,000  shares of common stock  underlying  certainstock  option
     agreements,  which is presently  exercisable at $0.50 per share and expires
     on April  15,2001,  and  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 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.

(2)  Represents  (1) 350,000  shares of common stock  underlying  certain  stock
     option  agreements,  of which  300,000 are presently  exercisable.  Of such
     options,  50,000 expire on August 4, 2001, 50,000 expire on August 4, 2002,
     50,000  expire on August 4, 2003 and 200,000  expire on August 13, 2004 and
     (2)  250,000  shares  of  common  stock  underlying  certain  stock  option
     agreements, of which 62,500 are presently exercisable.  Such options expire
     on November 28, 2007.

(3)  In  addition  to  shares  owned,  includes  shares  of  common  stock  that
     beneficial owner has the right to acquire pursuant to exercise of currently
     exercisable  warrants as follows:  Austost -  1,125,000  shares;  Balmore -
     1,125,000  shares;  and Zakeni  Limited - 2,250,000  shares.  Also includes
     shares of  common  stock  that  beneficial  owner has the right to  acquire
     pursuant to conversion rights. Such conversion shares were determined using
     80% of the lowest,  consecutive  five-day  average close of the fifteen-day
     trading  period  ending  February 13, 2001,  or $0.20 per share.  Accretion
     shares  have  been  included  in the  calculation.  The  conversion  shares
     included above are as follows:  Austost - 989,532 shares; Balmore - 989,532
     shares; and Zakeni Limited - 3,653,655 shares.

(4)  Messrs. Parrella and Hammond, and Ms. Lebovics, are officers of NCT and Mr.
     Parrella is a director of NCT. NCT Hearing is a wholly owned  subsidiary of
     NCT. Messrs.  Parrella and Hammond,  and Ms. Lebovics,  disclaim beneficial
     ownership in respect of the Company's common stock held by NCT Hearing.
<PAGE>

                          Independent Auditors' Report
                           --------------------------

The Board of Directors
Pro Tech Communications, Inc.:


We have audited the accompanying balance sheets of Pro Tech Communications, Inc.
as of  October  31,  1999 and 2000 and the  related  statements  of  operations,
stockholders'  equity  and cash  flows for each of the  years in the  three-year
period ended October 31, 2000. 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  referred to above present fairly, in
all material respects,  the financial position of Pro Tech Communications,  Inc.
as of October 31, 1999 and 2000,  and the results of its operations and its cash
flows for each of the years in the  three-year  period ended October 31, 2000 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
December 22, 2000,
    except for note 12,
    as to which the date is
    January 26, 2001




<PAGE>

<TABLE>
<CAPTION>
PRO TECH COMMUNICATIONS, INC.
BALANCE SHEETS
OCTOBER 31,

                                                                          1999            2000
                                                                       ------------    ------------
ASSETS
Current assets:
<S>                                                                    <C>             <C>
     Cash and cash equivalents                                         $  160,428      $ 1,070,408
     Accounts receivable, less allowance for doubtful accounts of
         $18,661 and $26,557, respectively (note 5)                       205,923          421,372
     Inventories, net of reserves (note 2)                                285,883          558,860
     Due from officers and employees                                       14,298              365
     Other current assets                                                  36,916           31,770
                                                                       ------------    ------------
                     Total current assets                                 703,448        2,082,775

Property and equipment, net(note 3)                                       196,747          278,805

Intangible assets, net of accumulated amortization of $77,655 (note 6)          -       16,229,837

Due from officer (note 10)                                                 43,743           56,824
Other assets                                                                1,439            4,424
                                                                       ------------    ------------
                                                                       $  945,377      $18,652,665
                                                                       ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                  $  100,104      $   216,807
     Accrued expenses(note 4)                                             100,388          102,165
     Current portion of capital lease obligations (note 8)                  8,808            6,757
     Other liabilities (note 10)                                                -          101,057
     Notes Payable(note 5)                                                      -          236,170
                                                                       ------------    ------------
                     Total current liabilities                            209,300          662,956

      Capital lease obligations(note 8)                                     8,089            3,687
                                                                       ------------    ------------

                     Total liabilities                                    217,389          666,643

Commitments (note 8)

Stockholders' equity(notes 6 and 7):
Preferred stock, $.01 par value,  authorized 998,500 shares,
  none issued and outstanding                                                   -                -
Series A  Convertible  Preferred  stock,  $.01 par value,
  $1,000  stated value, authorized, issued and outstanding
  1,500 shares                                                                  -        1,505,425
Common stock, $.001 par value, authorized 40,000,000 shares,
  issued and outstanding 4,254,000 and 28,248,438 shares,
  respectively                                                              4,254           28,248
Additional paid-in-capital                                              1,137,018       17,239,973
Accumulated deficit                                                      (413,284)        (787,624)
                                                                       ------------    ------------
                     Total stockholders' equity                           727,988       17,986,022
                                                                       ------------    ------------
                                                                       $  945,377      $18,652,665
                                                                       ============    ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PRO TECH COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                        For the Years
                                                                       Ended October 31,
                                                          -------------------------------------------
                                                              1998           1999            2000
                                                          ------------   ------------   -------------
<S>                                                       <C>            <C>            <C>

Net sales                                                 $ 1,142,482    $ 1,090,551    $  1,562,484

Cost of goods sold                                            470,450        414,931         623,555
                                                          ------------   ------------   -------------

        Gross profit                                          672,032        675,620         938,929

Selling, general and administrative                           882,385        893,384       1,275,290
Provision for doubtful accounts                                38,835          3,771           7,990
                                                          ------------   ------------   -------------

       Loss from operations                                  (249,188)      (221,535)       (344,351)

Other income (expense) :
    Interest income                                            24,719         10,202           4,877
    Interest expense                                                -         (1,021)        (36,592)
    Miscellaneous expense                                          89            697           1,726
    Loss on disposal of fixed assets                                -         (9,408)              -
                                                          ------------   ------------   -------------
         Loss before income taxes                            (224,380)      (221,065)       (374,340)

Income tax expense (benefit)(note 9)                             (964)             -               -
                                                          ------------   ------------   -------------

NET LOSS                                                  $  (223,416)   $  (221,065)   $   (374,340)
                                                          ============   ============   =============

Adjustments attributable to preferred stock(note 6):
   Preferred stock beneficial conversion feature          $         -    $         -    $  3,569,000
   Preferred stock dividend requirement                             -              -         375,000
   Accretion of difference between carrying amount
      and redemption amount of redeemable
      preferred stock                                               -              -           5,425
                                                          ------------   ------------   -------------

NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS                                       $  (223,416)   $  (221,065)   $ (4,323,765)
                                                          ============   ============   =============

Basic and diluted income/(loss) per share                 $     (0.05)   $     (0.05)   $      (0.57)
                                                          ============   ============   =============

Weighted average common shares outstanding -
   basic and diluted                                        4,254,000      4,254,000       7,537,855
                                                          ============   ============   =============
</TABLE>

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

<PAGE>

PRO TECH COMMUNICATIONS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended October 31, 1998, 1999 and 2000

<TABLE>
<CAPTION>
                                                                                                           Retained
                                                                      Series A                             Earnings
                                                        Common        Preferred       Additional        (Accumulated)
                                                        Stock          Stock         Paid in Capital      (Deficit)         Total
                                                    ------------    ------------    -----------------   -------------   ------------
<S>              <C> <C>                            <C>             <C>             <C>                 <C>             <C>
Balance, October 31, 1997                           $         -     $     4,254     $     1,122,018     $    31,197     $ 1,157,469

Executive compensation
  contributed by an officer (note 6)                                                         15,000                          15,000

Net loss                                                                                                   (223,416)       (223,416)
                                                    ------------    ------------    -----------------   -------------   ------------

Balance, October 31, 1998                                     -           4,254           1,137,018        (192,219)        949,053

Net loss                                                      -               -                   -        (221,065)       (221,065)
                                                    ------------    ------------    -----------------   -------------   ------------

Balance, October 31, 1999                                     -           4,254           1,137,018         (413,284)       727,988

Issuance of 12,000  shares of common stock under
   stock option plans(note 7)                                 -              12               4,548                -          4,560

Issuance of 23,982,438 shares of common stock in
   exchange for certain intangible assets including
   279,688 shares issued as issuance costs, net of
   related issuance costs of $179,678 (note 6)                -          23,982          16,103,832                -     16,127,814

Issuance of 1,500,000 of preferred stock (note 6)     1,500,000               -                   -                -      1,500,000

Accretion dividend of preferred stock (note 6)            5,425               -              (5,425)               -              -

Net loss                                                      -               -                   -         (374,340)      (374,340)
                                                    ------------    ------------    -----------------   -------------   ------------
Balance, October 31, 2000                           $ 1,505,425     $    28,248     $    17,239,973     $   (787,624)   $17,986,022
                                                    ============    ============    =================   =============   ============
</TABLE>

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

<PAGE>
PRO TECH COMMUNICATIONS, INC.
STATEMENTS OF Cash Flows
Years ended October 31,
<TABLE>
<CAPTION>

                                                                            ------------      ------------      -------------
                                                                                1998              1999              2000
                                                                            ------------      ------------      -------------
Cash flows from operating activities:
<S>                                                                          <C>               <C>              <C>
         Net (loss)                                                         $  (223,416)      $  (221,065)      $   (374,340)
         Adjustments to reconcile net loss to net cash (used in)
           operating activities:
          Depreciation and amortization                                          38,783            45,222            128,658
          Provision for doubtful accounts                                         2,773             3,771              7,990
          Loss on disposition of fixed assets                                         -             9,408                  -
          Executive compensation contributed by an officer                       15,000                 -                  -
          Changes in operating assets and liabilities:
                  (Increase) decrease in accounts receivable                     27,746            (9,459)          (223,439)
                  (Increase) decrease in inventories, net                       (85,001)          (40,273)          (272,977)
                  Increase in receivable from officers and employees            (22,033)             (590)               852
                  (Increase) decrease in other assets                            21,553           (17,519)             2,161
                  Increase(decrease) in accounts payable                         13,641            63,724            116,703
                  Increase (decrease) in accrued expenses                       114,530           (73,077)             1,777
                  Increase in due to parent                                           -                 -            101,057
                                                                            ------------      ------------      -------------
          Net cash (used in) operating activities                           $   (96,424)      $  (239,858)      $   (511,558)
                                                                            ------------      ------------      -------------

Cash flows from investing activities:
         Capital expenditures                                                   (64,497)          (49,482)          (130,152)
         Purchase of short-term investments                                    (523,905)                -                  -
         Proceeds on maturity of short-term investments                         527,296           254,545                  -
                                                                            ------------      ------------      -------------
          Net cash provided by (used in) investing activities               $   (61,106)      $   205,063       $   (130,152)
                                                                            ------------      ------------      -------------

Cash flows from financing activities:
         Proceeds from:

          Convertible notes (net) (Note 8)                                            -                 -                  -
          Notes payable                                                               -                 -            536,145
          Sale of preferred stock (net) (Note 6)                                      -                 -          1,020,347
          Sale of common stock (net)                                                  -                 -              4,560
         Repayment of:
          Capital lease obligations                                                   -            (3,574)            (9,362)
                                                                            ------------      ------------      -------------
          Net cash provided by (used in) financing activities               $         -       $    (3,574)      $  1,551,690
                                                                            ------------      ------------      -------------

Net increase (decrease) in cash and cash equivalents                        $  (157,530)      $   (38,369)      $    909,980
Cash and cash equivalents - beginning of period                                 356,327           198,797                  -
                                                                            ------------      ------------      -------------
Cash and cash equivalents - end of period                                   $   198,797       $   160,428       $    909,980
                                                                            ============      ============      =============

Supplemental  disclosures  of cash flow  information:
 Cash paid during the year for:
   Interest                                                                 $         -       $     1,021       $     36,592
                                                                            ============      ============      =============
</TABLE>
Supplemental disclosures of non-cash investing and financing activities:

During 1999 and 2000, the Company acquired $20,471 and $2,909, respectively,  of
equipment through capital leases.

During  2000,  the  Company  acquired  licenses  and patent  rights  through the
issuance of 23,982,438 shares of common stock valued at $16,307,492.

During 2000, the Company issued Series A Convertible Preferred Stock in exchange
for the satisfaction of notes payable amounting to $299,975.

During 2000,  the Company  adjusted the  carrying  value of preferred  stock and
additional paid-in capital for the 4% accretion totaling $5,425.

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


                          PRO TECH COMMUNICATIONS, INC.

                          Notes to Financial Statements


(1)   Organization and Summary of Significant Accounting Policies

      (a)  Organization

           Pro Tech  Communications,  Inc.  (the  "Company")  was  organized and
           incorporated  under the laws of the State of Florida  for the purpose
           of  designing,   developing,   producing  and  marketing  lightweight
           telephone  headsets.  The Company presently  manufactures and markets
           its  headsets  primarily  for fast food  companies  and  other  large
           quantity users of headset  systems.  The Company is in the process of
           completing the  development of several designs for the telephone user
           market,  which includes  telephone  operating  companies,  government
           agencies and business offices.  The Company's business strategy is to
           offer  lightweight  headsets with design  emphasis on performance and
           durability at a cost below that of its competitors.

           As a result of the issuance of common stock on September 13, 2000, as
           discussed in note 6, the Company  became a subsidiary  of NCT Hearing
           Products,  Inc., a wholly owned  subsidiary of NCT Group,  Inc. As of
           October 31, 2000,  NCT Hearing  Products,  Inc.  owned  approximately
           82.9% of the outstanding common stock of the Company.

           On December 28, 2000,  the Company  decided to change its year-end to
           conform with NCT Group, Inc., which is December 31. Accordingly,  the
           Company will report on the  two-month  transition  period in its Form
           10-K as of December 31, 2000.

      (b)  Cash and Cash Equivalents

           The Company 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.

      (d)  Revenue and Cost Recognition

           The Company recognizes revenues as products are shipped. Each headset
           carries  a one to two year  warranty,  depending  on the  model.  The
           Company  provides,  by a  current  charge  to  income,  an  amount it
           estimates  that will be needed to cover future  warranty  obligations
           for products sold during the year. The accrued liability for warranty
           costs is included in accrued expenses in the balance sheet.

      (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,  which are generally 5-10 years. Repair and maintenance costs
           are charged to expense when incurred.

      (e)  Intangible Assets

           Intangible assets consist of licensing rights of certain technologies
           acquired  from NCT Hearing  Products,  Inc.  through the  issuance of
           common  stock  (see  note 6).  Amortization  is  computed  using  the
           straight-line method over the estimated useful lives of the assets of
           17.5  years.  Intangible  assets  are  periodically  reviewed  by the
           Company  for  impairments  where  the  fair  value  is less  than the
           carrying value.  Amortization  expense was $77,655 for the year ended
           October 31, 2000.

      (f)  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.

      (g)  Advertising

           The  costs of  advertising,  promotion  and  marketing  programs  are
           charged to operations in the year  incurred.  Advertising  costs were
           $43,143,  $98,738 and $54,424 for the years ended  October 31,  1998,
           1999 and 2000,  respectively,  and were included in selling,  general
           and  administrative   expenses  in  the  accompanying  statements  of
           operations.

      (h)  Research and Development

           Research and  development  costs are expensed  when  incurred and are
           included in selling,  general and administrative expenses. The amount
           charged to expense for the years ended  October  31,  1998,  1999 and
           2000 was $40,815, $70,809 and $41,554, respectively.

      (i)  Fair Value of Financial Instruments

           The estimated fair values of the Company's cash and cash equivalents,
           accounts receivable and current liabilities  approximate the carrying
           amount due to the short-term nature of such financial instruments.

      (j)  Use of Estimates

           The preparation of the Company's  financial  statements in conformity
           with generally accepted accounting  principles requires management to
           make estimates and  assumptions  that affect the reported  amounts of
           assets, liabilities,  revenues and expenses and contingent assets and
           liabilities. Actual results could differ from those estimates.

      (k)  Loss Per Common Share

           The  Company  reports  loss  per  common  share  in  accordance  with
           Statement  of  Financial   Accounting  Standards  ("SFAS")  No.  128,
           "Earnings Per Share."  Generally,  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  (see note 6).  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.  The
           Company  has  reflected  such  beneficial  conversion  feature  as  a
           preferred  stock  dividend  and  as an  adjustment  to the  net  loss
           attributable to common stockholders.

      (l)  Stock Options

           The Company has adopted the disclosure  only  provisions of Statement
           of Financial  Accounting  Standards  (SFAS) No. 123,  Accounting  for
           Stock-Based   Compensation,   and   continues  to  apply   Accounting
           Principles  Board  Opinion  No.  25 and  related  interpretations  in
           accounting for its stock-based compensation plans.

      (m)  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  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 ending October
           31, 1999 and 2000.

      (n)  Concentrations of Credit Risk

           Financial  instruments,  which  potentially  subject  the  Company to
           concentration  of credit risk,  consist of cash and cash  equivalents
           and  trade   receivables.   The  Company   maintains  cash  and  cash
           equivalents  in  accounts  with  various  financial  institutions  in
           amounts,  which at  times,  may be in  excess  of the FDIC  insurance
           limit. As of October 31, 2000, the Company's cash and cash equivalent
           balances  exceeded the FDIC insurance limit by $948,749.  The Company
           has not  experienced any losses on such accounts and does not believe
           it is exposed to any  significant  risk with respect to cash and cash
           equivalents.

           The Company sells its products and services to  distributors  and end
           users in various industries worldwide. The Company regularly assesses
           the realizability of accounts receivable and takes into consideration
           the  value of past due  receivables  and the  collectibility  of such
           receivables, based on credit worthiness. The Company does not require
           collateral or other security to support customer receivables.

           The Company is  currently  sourcing all  components  from several Far
           East   suppliers   who  build  each   component   to  the   Company's
           specifications.  An  interruption  in the supply of a  component  for
           which the Company is unable to readily procure a substitute source of
           supply could  temporarily  result in the Company's ability to deliver
           products on a timely basis,  which in turn could adversely affect its
           operations. To date, the Company has not experienced any shortages of
           supplies.

      (o)  Recent Accounting Standards

           In June 1997, the Financial Standards  Accounting Board (FASB) issued
           Statement No. 130,  Reporting  Comprehensive  Income (Statement 130),
           which   establishes   standards   for   reporting   and   display  of
           comprehensive  income and its  components  in a  financial  statement
           having the same prominence as other financial  statements.  Statement
           130 is effective for years  beginning after December 15, 1997 (fiscal
           year 1999 for the Company).  As of October 31, 2000,  the Company had
           no components considered to be other comprehensive income.

           In June 1999,  the FASB  issued  Statement  No. 133,  Accounting  for
           Derivative  Instruments and Hedging Activities (Statement 133), which
           establishes   accounting  and  reporting   standards  for  derivative
           instruments   and  hedging   activities.   Statement   133   requires
           recognizing  derivatives  as assets or  liabilities at fair value and
           defines certain  conditions  when such  derivatives may be considered
           hedges. In addition,  the FASB issued Statement No. 138, which amends
           Statement  133.  Statement 133, as amended by Statements 137 and 138,
           is effective for fiscal years  beginning  after June 15, 2000 (fiscal
           year 2001 for the Company).  As of October 31, 2000,  the Company had
           no such derivatives.

           In September 2000, the FASB issued Statement No. 140,  Accounting for
           Transfers and Servicing of Financial  Assets and  Extinguishments  of
           Liabilities - a replacement of FASB Statement No. 125. This statement
           replaced  Statement  No.  125  and is  effective  for  transfers  and
           servicing  of financial  assets and  extinguishments  of  liabilities
           occurring  after  March 31,  2001.  Statement  140 is  effective  for
           recognition  and disclosures of certain  securitization  transactions
           for fiscal years ending after December 15, 2000.

           The  Company  does not expect  these new  pronouncements  will have a
           significant impact on the reporting of its financial results.

(2)  Inventory

     Inventory at October 31, 1999 and 2000 consists of the following:

                                                   1999          2000
                                              -------------  ------------

       Raw materials                          $   96,015     $  180,347
       Work in process                            70,560         77,766
       Finished goods                            119,308        300,747
                                              -------------  ------------

                                              $  285,883     $  558,860
                                              =============  ============

(3)  Net Property and Equipment

     The  following is a summary of property  and  equipment at October 31, 1999
     and 2000:

                                                  1999          2000
                                              -------------  ------------
       Production molds                        $ 184,430      $ 295,621
       Office equipment                           63,957         36,049
       Production equipment                       35,049         66,918
       Leased equipment                           20,471         23,380
       Leasehold improvements                     14,577         29,577
       Vehicles                                    5,557          5,557
       Marketing displays                         16,160         16,160
                                              -------------  ------------

           Total cost                            340,201        473,262
     Less accumulated depreciation and
       amortization                              143,454        194,457
                                              -------------  ------------
           Total                               $ 196,747      $ 278,805
                                              =============  ============

     Total  depreciation  and  amortization  expense  was  $38,628,  $45,067 and
     $51,546 for the years ended October 31, 1998, 1999 and 2000, respectively.

(4)  Accrued Expenses

     Accrued expenses consisted of the following at October 31, 1999 and 2000:

                                            1999           2000
                                       --------------  -------------
           Accrued warranty expense    $  78,038       $  78,879
           Other accrued expenses         22,350          23,286
                                       --------------  -------------
                                       $ 100,388       $ 102,165
                                       ==============  =============
<PAGE>
(5)  Notes Payable and Other Financing Arrangements

     On  March  27,  2000,  the  Company  received  a loan  of  $150,000  from a
     stockholder  of the  Company.  The loan matures on March 27, 2001 and bears
     interest at 8.5% per annum, payable at maturity.

     On December 22,  1999,  the Company  entered  into a  short-term  factoring
     arrangement  providing  for  advances  of up to  $300,000,  based on 80% of
     selected  accounts  receivable  factored  under the agreement on a recourse
     basis.  The Company is charged a factoring fee of 1% on each advance,  plus
     2% per month on advances outstanding.  In addition, the minimum fee charged
     per month is 1% of the total factoring plan, or $3,000,  during the life of
     the  agreement,  which is for six months and  automatically  renewable  for
     additional six month terms,  unless  terminated by the Company with 30 days
     notice.  The  Company's  obligations  are  collateralized  by  all  of  the
     Company's account receivable, inventory, and equipment.

     At October 31, 2000,  accounts receivable factored under this agreement and
     still outstanding was $103,223,  of which,  $86,170 had been received under
     the  borrowing  arrangement  and is  classified  as note payable to finance
     company in the accompanying  balance sheet.  Total fees incurred under this
     arrangement  amounted to $25,167 during the year ended October 31, 2000 and
     have been classified as interest expense in the  accompanying  statement of
     operations. The Company terminated this arrangement in December 2000.

(6)  Capital Stock

     On August 11, 2000, the Company's shareholders approved an amendment to the
     Company's  Articles of  Incorporation  to increase the number of authorized
     shares of common stock from  10,000,000 to 40,000,000  and to authorize the
     creation of 1,000,000 shares of non-voting, blank check preferred stock.

     Series A Convertible Preferred Stock

     On September 29, 2000,  the  Company's  Board of Directors  designated  the
     Series A Convertible  Preferred Stock with 1,500  authorized  shares, a par
     value of $0.01 per  share,  and a stated  value of $1,000  per  share.  The
     Series A  preferred  stock has an  accretion  of 4% per annum on the stated
     value  payable upon  conversion or exchange in either cash or common stock.
     Each share of stock is convertible into the Company'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%,  subject  to  certain  adjustments  as set  forth  in the
     Articles of Amendment to Articles of  Incorporation of the Company dated as
     of  September  29,  2000;  or a fixed  price of $0.50,  subject  to certain
     adjustments  as set forth in the  Articles  of  Amendment  to  Articles  of
     Incorporation  of the Company  dated as of September 29, 2000. In addition,
     the  stock  is  exchangeable  for  common  stock  of NCT  Group,  Inc.  Any
     outstanding shares will be manditorily converted on March 31, 2005.

     The  Company,  at its  option,  may redeem up to  $500,000  of the Series A
     preferred stock if the closing bid price is less than $0.50 per share.  The
     redemption  price is equal to 125% of the  stated  value  plus  100% of the
     cumulative 4% accretion.  The stock may be redeemed at the holders'  option
     if the holder of at least  two-thirds of the Series A Preferred Shares then
     outstanding  require such redemption  upon certain events of  noncompliance
     with the  terms of the  Series A  Preferred  Stock  Purchase  Agreement  or
     Registration Rights Agreement.

     On September 29, 2000, the Company entered into an agreement to issue 1,500
     shares of Series A Convertible Preferred Stock for $1,500,000.  The Company
     received  $1,200,025  cash  and  satisfied  $299,975  of notes  payable  in
     exchange for the preferred  stock.  In addition,  under the agreement,  the
     Company  provided  warrants to purchase  4,500,000  shares of the Company's
     common stock. The warrants are exercisable at $0.50 per share and expire on
     October 28, 2003. The Company has the right to require the warrant  holders
     to exercise upon a call by the Company under the following conditions:  one
     third of the  warrants  are callable if the closing bid price of the common
     stock for each of the  previous  fifteen  days equals or exceeds  $0.68 per
     share and the average daily  trading  volume during such period is at least
     150,000 shares;  two thirds of the warrants are callable if the closing bid
     price of the common stock for each of the  previous  fifteen days equals or
     exceeds $0.94 per share and the average  daily  trading  volume during such
     period is at least 150,000 shares; and, all of the warrants are callable if
     the closing bid price of the common stock for each of the previous  fifteen
     days  equals or exceeds  $1.135  per share and the  average  daily  trading
     volume during such period is at least 150,000 shares.
<PAGE>
     The following table summarizes warrants to purchase common stock during the
     years ended October 31, 1998 and 2000 (no warrants were outstanding  during
     the year ended October 31, 1999):

<TABLE>
<CAPTION>
                                                        1998                      2000
                                               ------------------------  -----------------------
                                                           Weighted                  Weighted
                                                           Average                   Average
                                                           Exercise                  Exercise
                                                Shares       Price         Shares       Price
                                               ---------  -------------  ----------  -----------
<S>                                            <C>         <C>           <C>          <C>
     Warrants outstanding,  beginning of year  1,000,000   $   1.50               -   $      -

     Warrants granted                                  -          -       4,500,000       0.50

     Warrants terminated                       1,000,000       1.50               -          -
                                               ---------  -------------  ----------  -----------

     Warrants outstanding and
       exercisable, end of year                        -   $      -       4,500,000   $   0.50
       year
                                               ---------  -------------  ----------  -----------
</TABLE>

     As of October 31, 2000, the Company's  outstanding warrants have a weighted
     average remaining contractual life of approximately 2.9 years.

     Common Stock

     On September 12, 2000, the Company  acquired  licensing  rights for certain
     technologies  from NCT  Hearing  Products,  Inc.  through  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 the Company's stock, which was $16,307,492.

     At October 31, 1999 and 2000,  $4,000 was held in escrow for the benefit of
     the  Company  pending  completion  of the  subscription  agreements  by two
     investors  for 4,000  shares each.  These  receivables  are netted  against
     additional paid-in capital.

     For purposes of determining earnings per share per common stockholder,  the
     Company  estimated  the value of the warrants  issued during the year ended
     October 31, 2000 to be $3,569,000 using the Black-Scholes  valuation method
     prescribed by SFAS No. 123, with the following assumptions:  dividend yield
     of 0%; expected  volatility of 100%;  risk-free interest rate of 5.97%; and
     expected  lives of three years.  In addition,  the value of the  discounted
     conversion  price as of October 31, 2000 was $375,000  based on the average
     closing bid price of approximately  $0.96.  Total accretion on the Series A
     Convertible Preferred Stock as of October 31, 2000 amounted to $5,425.

     As of October 31, 2000, the number of shares of common stock required to be
     reserved  for the  conversion  of  preferred  stock and for the exercise of
     options and warrants, was 8,802,981 shares.

     During the year ended October 31, 1998, the Company's  president was paid a
     salary in cash of $30,000. In addition,  the Company recorded  compensation
     expense of  $15,000,  with a  corresponding  credit to  additional  paid-in
     capital,  to  reflect  the  estimated  fair  value of the  unpaid  services
     provided by the president to the Company.

(7)  Stock Option Plans

     On April 15,  1996,  the Board of  Directors  adopted The 1996 Stock Option
     Plan (the 1996 Plan), for the benefit of directors, officers, employees and
     consultants  to the  Company.  The Plan  authorized  the  issuance of up to
     590,000  shares of common  stock.  On April 15,  1996,  540,000  and 50,000
     shares were granted to the Company's President and officers,  respectively,
     at an option price of $0.50 per share.  The stock option exercise price was
     the fair value at the date of the grant.  On April 13,  1999,  the original
     expiration date of the options,  the Company  extended the options to April
     15, 2001.

     On March 5, 1998, the Board of Directors adopted the 1998 Stock Option Plan
     for the benefit of directors,  officers,  employees and  consultants to the
     Company.  This plan  originally  authorized  the  issuance of up to 500,000
     shares of common  stock and was  increased  to  2,000,000  shares of common
     stock on August 11,  2000.  On August 4, 1998,  200,000 and 100,000  shares
     were granted to the Company's officers and employees,  respectively,  at an
     option price of $0.375 per share.  The stock option  exercise price was the
     fair  market  value of a share of  common  stock at the date of the  grant.
     Options to purchase 150,000 shares of common stock vest and are exercisable
     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.

     During March and April 2000,  options to purchase  12,000  shares of common
     stock at $0.375 per share were  exercised.  Total proceeds  received by the
     Company amounted to $4,560.

     On April 13, 1999,  the  remaining  1998 Plan  options to purchase  200,000
     shares were  granted to Company  officer,  at an option  price of $0.38 per
     share.  The stock  option  exercise  price was greater than the fair market
     value of a share of common stock at the date of the grant. The options vest
     and are 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.

     The following table summarizes stock option activity:
<TABLE>
<CAPTION>

                              1998                   1999                   2000
                       --------------------   --------------------  ---------------------
                                  Weighted               Weighted              Weighted
                                  Average                Average               Average
                                  Exercise               Exercise              Exercise
                       Shares     Price       Shares     Price      Shares     Price
                       --------   ---------   ---------  ---------  ---------  ----------
<S>                     <C>       <C>          <C>       <C>        <C>         <C>
Options outstanding,
beginning of year       540,000   $  0.500     840,000   $  0.455   1,040,000   $  0.441

Options granted         300,000      0.375     200,000      0.380           -          -

Options exercised             -          -           -          -     (12,000)    (0.380)
Options expired               -          -           -          -           -          -
                       --------   ---------   ---------  ---------  ---------  ----------

Options outstanding,
   end of year          840,000   $  0.455    1,040,000  $  0.441   1,028,000   $  0.442
                       ========   =========   =========  =========  =========  ==========

Options exercisable,
   end of year          740,000   $  0.466      890,000  $  0.451     978,000   $  0.445
                       ========   =========   =========  =========  =========  ==========
</TABLE>

     As of October 31,  2000,  the  Company's  outstanding  stock  options  have
     exercise  prices  ranging  from  $0.375  to $0.50  and a  weighted  average
     remaining contractual life of approximately 1.3 years.

     No  compensation  expense was recorded  during 1998,  1999 and 2000 for the
     options issued to the Company's officers and employees,  in accordance with
     APB 25. Had  compensation  expense been determined on the fair value at the
     date of grant in  accordance  with the  provisions  of  Statement  123, the
     Company's net loss and loss per share  attributable to common  stockholders
     would have been adjusted to the pro forma amounts indicated below:

                                1998          1999         2000
                            ------------  ------------  ------------
        Net loss:
        As reported         $ (223,416)    $(221,065)   $(4,323,765)
                            ============  ============  ============
        Pro forma           $ (278,280)    $(369,295)   $(4,341,632)
                            ============  ============  ============
        Loss per share:
        As reported          $   (0.05)     $  (0.05)   $     (0.57)
                            ============  ============  ============
        Pro forma            $   (0.06)     $  (0.09)   $     (0.58)
                            ============  ============  ============

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted-average
     assumptions  used for  grants  in  1999:  dividend  yield  of 0%;  expected
     volatility of 141%;  risk-free  interest rate of 5.76%; and, expected lives
     ranging from three to five years.

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted-average
     assumptions  used for  grants  in  1998:  dividend  yield  of 0%;  expected
     volatility of 150%;  risk-free  interest rate of 5.45%; and, expected lives
     of three years.

<PAGE>

(8)  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 October 31, 2000 are:

          Year ended October 31         Capital Leases      Operating Leases
      ------------------------------    ----------------  ------------------

                   2001                  $    7,964           $  2,789
                   2002                       3,676                  -
                   2003                         390                  -
                                        ----------------  ------------------
      Total minimum lease payments           12,030           $  2,789
                                                          ==================

      Less amount representing interest       1,586
                                        ----------------
      Present  value of net minimum
         capital lease payments              10,444

      Less current installments               6,757
                                        ----------------

      Obligations under capital
         leases, excluding current
         installments                    $    3,687
                                        ================

     Rent expense under lease agreements  totaled  $24,637,  $32,559 and $41,696
     for the years ended October 31, 1998, 1999 and 2000, respectively.

(9)  Income Taxes

     There was no  provision  for income  taxes for the years ended  October 31,
     1999  and  2000  due to  operating  losses  incurred.  Income  tax  expense
     (benefit) consisted of the following for the year ended October 31, 1998:

                                      Current     Deferred       Total
                                     ----------  ------------  -----------
               1998:
                  Federal            $  (6,264)        3,800       (2,464)
                  State                      -         1,500        1,500
                                     ----------  ------------  -----------
                                     $  (6,264)        5,300         (964)
                                     ==========  ============  ===========

     The actual expense (benefit) differs from the "expected" amount computed by
     applying the U.S.  Federal  corporate income tax rate of 34% to loss before
     income taxes as follows:

                                             1998        1999          2000
                                          ----------  ------------  -----------
        Computed "expected" tax benefit   $ (75,961)  $   (75,162)  $  (127,276)
        Increase (reduction) in income
          taxes resulting from:
        Net operating loss not
           currently utilizable              70,001        75,016       100,873
       Nondeductible amortization                 -             -        26,403
       Other nondeductible expenses           4,996           146             -
                                          ----------  ------------  -----------
                                          $    (964)  $         -   $         -
                                          ==========  ============  ===========

     The  exercise  of stock  options in 1997 and 2000,  which had been  granted
     under the  Company's  1996 and 1998 Stock  Option  Plans (see note 7), gave
     rise to compensation  totaling $225,000 and $8,952,  respectively,  that is
     includable in the taxable  income of the  employees  and  deductible by the
     Company  for  federal  and state  income tax  purposes.  Such  compensation
     resulted from  increases in the fair market value of the  Company's  common
     stock  subsequent to the date of grant of the  applicable  exercised  stock
     options and, accordingly,  in accordance with APB 25, such compensation was
     not recognized as an expense for financial reporting purposes.  The related
     tax benefits  will be  reflected as  contributions  to  additional  paid-in
     capital in the periods in which the  compensation  deduction is utilized by
     the  Company  and,  in  accordance  with  APB 25 and  Statement  109,  such
     compensation  deductions  are not  considered to be temporary  differences.
     Such  deductions  have  not been  utilized  by the  Company  due to the net
     operating losses generated in 1999 and 2000.

     The  Company has net  operating  loss  carryforwards  for federal and state
     income tax purposes amounting to $846,000 and $927,000, respectively, which
     expire  through the year 2020.  In accordance  with  Internal  Revenue Code
     Section 382, the Company's net operating loss  carryforwards are subject to
     certain  limitations  resulting  from the  issuance of common  stock to NCT
     Hearing Products, Inc., as discussed in note 6.

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

                                                     1999        2000
                                                   ----------  ----------
        Accounts receivable principally due to
          allowance for doubtful accounts          $  3,700    $   5,200
        Accrued warranty expense                     15,400       15,400
        Net operating loss carryforwards             70,000      124,900
       Contribution carryforwards                       400          500
                                                   ----------  ----------
                                                     89,500      146,000
        Less valuation allowance                     81,700      139,200
                                                   ----------  ----------

       Total deferred tax assets                      7,800        6,800

        Plant and equipment principally due to
          differences in depreciation                 7,800        6,800
                                                   ----------  ----------

       Total deferred tax liabilities                 7,800        6,800
                                                   ----------  ----------

       Net deferred taxes                          $      -    $       -
                                                   ----------  ----------

(10) Related Party Transactions

     During  fiscal  year 1996,  the  Company  loaned  $28,882 to its  Chairman.
     Outstanding  principal  and  interest,  at 5% per annum,  are due August 2,
     2003.  During  the year ended  October  31,  1998,  the  Company  loaned an
     additional  $3,650 to its  Chairman,  which is due October 31,  2002,  with
     interest at 5% per annum.  Outstanding  principal and interest  amounted to
     $43,743 and $56,824 as of October 31, 1999 and 2000, respectively.

     The Company had an employment  agreement with its former  President,  which
     was  terminated  during 1999.  The agreement  provided for a maximum annual
     salary of $90,000 with  additional  amounts added using the consumer  price
     index as a minimum.  The  President  was  eligible  for the maximum  annual
     salary during a given year only if the Company generated annual sales of at
     least  $2,000,000 and pre-tax income equal to at least 20% of the Company's
     annual sales. Since the Company had not met the minimum  requirements noted
     above, the Board determined the President's compensation accordingly.

     As of October 31, 2000, the Company owed $101,057 to NCT Hearing  Products,
     Inc.,  its  parent  company,  for  various  administrative  and  accounting
     services provided to the Company.

11)  Major Customers

     During 1998,  one customer  accounted  for  approximately  27% of net sales
     generated  during  the year.  During  1999,  two  customers  accounted  for
     approximately  30% of net sales generated during the year. During 2000, two
     customers accounted for approximately 34% of net sales generated during the
     year.

(12)  Fourth Quarter Adjustment

     During the fourth  quarter of the year ended October 31, 2000,  the Company
     recorded a decrease to inventory  and an increase to cost of goods sold for
     approximately  $75,000 to correct an error that occurred  during the second
     quarter of the year ended October 31, 2000.

(13) Subsequent Events

     On November 28, 2000, the Company issued options to purchase 500,000 shares
     of common  stock at $0.4375  per share  under the 1998 Stock  Option  Plan,
     which vest 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

     On  January  4,  2001,  330  shares of  convertible  preferred  stock  were
     converted in exchange for 1,336,170  shares of the Company's  common stock.
     On  January  16,  2001,  20  shares of  convertible  preferred  stock  were
     converted in exchange  for 73,725  shares of common  stock.  On January 19,
     2001, 40 shares of convertible  preferred  stock were converted in exchange
     for 142,058 shares of common stock.

     On January 26,  2001,  the Company  entered  into an agreement to lease new
     office and production  space,  effective  March 1, 2001. The lease provides
     for  monthly  payments  increasing  from  $5,395 to $8,092 over a five-year
     term.
<PAGE>
                                   SIGNATURES

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

                                          PRO TECH COMMUNICATIONS, INC..


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


February 26, 2001