SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                _______________

                                   Form 10-KSB

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

For the fiscal year ended                               Commission file number:
October 31, 1996                                               1-11032
-------------------------                               -----------------------


                     PROFESSIONAL DENTAL TECHNOLOGIES, INC.
              -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Nevada                                          71-0644350
--------------------------------                          ----------------------
(State or other jurisdiction of                           (IRS Employer
  incorporation or organization)                          Identification Number)


633 Lawrence Street, Batesville, Arkansas                        72501
-----------------------------------------                      ----------
(Address of Principal Executive Offices)                       (Zip Code)

Registrant's telephone number, including area code:  (501) 698-2300
                                                     --------------

Securities registered pursuant to Section 12(b) of the Act:

                         Common Stock, $0.01 par value
                         ------------------------------
                                (Title of class)

Securities registered pursuant to Section 12(g) of the Act:    None
                                                               ----

       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 the subject of
such filing requirements for the past 90 days. YES __X__      NO_____

<PAGE>






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

       The aggregate market value of the voting stock held by  non-affiliates of
the registrant, based upon the closing price of the registrant's Common Stock as
reported on the American Stock Exchange on January 7, 1997, was $2.6 million.

       The registrant's revenue for fiscal 1996 was $22.0 million.

       As of  January  24,  1997,  the  latest  practicable  date for which such
information is available, there were issued and outstanding 14,100,000 shares of
the Registrant's Common Stock.


Documents Incorporated By Reference
-----------------------------------

       The following documents are incorporated by reference herein:

       None.

                                                                               2
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                                        PART I


ITEM 1.  BUSINESS
-------  --------

                                     GENERAL

       Professional  Dental  Technologies,  Inc.  ("Pro-Dentec" or "Company") is
principally  engaged in the business of designing,  manufacturing  and marketing
products  to dental  professionals  relating  to the  diagnosis,  treatment  and
prevention of  periodontal  and other dental  diseases.  The Company  focuses on
incorporating  the  most  current   technological   advances  into  its  product
development. The Company uses extensive educational and other support systems to
help the dentist  practice to today's  standard of care.  These  activities  are
based upon current concepts of disease, diagnosis,  treatment and prevention. By
promoting a team concept which integrates and coordinates the efforts of general
dentists,  periodontists and other dental  specialists,  hygienists and patients
themselves,  the Company has positioned itself to take advantage of an enlarging
market by acting as a resource for change.  The  Company's  products,  including
proprietary  software,  hardware and  instruments are designed to facilitate the
dental  office's shift toward an earlier  diagnosis and treatment of periodontal
and other dental diseases.

       The  Company was  incorporated  on July 12,  1900,  under the laws of the
State of  California  under  the name of The  Banner  Mine  Development  Company
("Banner Mine").  From 1906 until 1986 Banner Mine was inactive and conducted no
material business operations.  In December 1986, the authority of the Company to
conduct  business was  reinstated and the domicile of the Company was changed to
the State of Nevada through the merger of the Company into a newly formed Nevada
corporation.  Subsequently,  on  February  26,  1987,  the  Company  amended its
articles  of  incorporation  to,  among  other  things,  change  the name of the
corporation to its current name,  Professional Dental Technologies,  Inc. In May
1991, the Company's Registration Statement on Form 10 filed under the Securities
Exchange Act of 1934,  as amended,  became  effective,  and the Company  thereby
became a  "reporting  company"  subject  to the  periodic  reporting  and  other
requirements of the Act. The Company's shares of Common Stock were listed on the
American Stock Exchange Emerging Company Marketplace on March 18, 1992.

        The  Company's  executive  offices are located at 633  Lawrence  Street,
Batesville, Arkansas 72501. The telephone number is (501) 698-2300.


                                    Products

                                  Rota-dent(R)

        The  Company's  principal  product  is  the  Rota-dent,  a  proprietary,
patented,  rotary-action,  easy-to-use  plaque removal and teeth cleaning device
dispensed by dental  professionals  to patients  for use at home between  dental
office visits. The Rota-dent is a rechargeable,  power assisted  instrument that

                                                                               3

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is  designed  using  a  Lexan(TM)  water-resistant  power  handle  that  accepts
interchangeable  heads and uniquely  designed,  patented brush tips. The product
utilizes a cleaning  action  similar to that of the rotary  instruments  used by
dentists and hygienists to professionally clean teeth in the dental office. Each
Rota-dent  instrument  is  supplied  with  two  interchangeable  heads  so  that
different  persons can  economically and hygienically use the same power handle.
Replacement  interchangeable  heads and brush tips are available  through dental
offices and from the Company's Customer Service department by telephone.

        Each  of  the  patented  interchangeable  brush  tips  is  comprised  of
approximately  4,600  filaments  made from a  combination  of three and four mil
fibers  that,  when  compared  to  conventional  toothbrush  bristles,  are less
abrasive to tooth enamel and gingival tissue (gums). The tips are soft, safe and
durable.  The small size of the  filaments  and brush tips  enables  the user to
reach areas of the mouth that conventional  toothbrushes  generally cannot reach
effectively.

        The  Rota-dent's  effectiveness  is a result  of its  ability  to remove
dental plaque.  Plaque is a thin filmy substance that  continually  forms in the
mouth due to bacterial  activity and, if allowed to remain,  hardens on teeth as
calculus or tartar. Unless removed daily, plaque deposits can cause inflammation
and gingivitis and can ultimately lead to more severe periodontal disease, now a
leading  cause of tooth  loss in the United  States.  Numerous  clinical  trials
conducted at major university dental schools have shown the Rota-dent product to
be more effective than manual  toothbrushing for removing plaque and controlling
gingivitis.  Two  one-year  clinical  trials  published  in a  leading  refereed
periodontal research journal, have shown that the Rota-dent is as effective as a
combination of floss,  interspace brush,  toothpicks and conventional toothbrush
in removing plaque,  controlling gingivitis and reducing the bacteria that cause
periodontal  disease. The Rota-dent was the first single product shown to do the
plaque removal job that formerly required several products and procedures.

        The Rota-dent  instrument has been engineered to be especially effective
for  plaque   removal  from  the  area  at  or  just  below  the  gum  line  and
interproximally (between teeth), the most critical areas for cleaning to prevent
periodontal  disease.  Many  dentists and  hygienists  recommend  the use of the
Rota-dent instrument for applying anti-microbials and other medications to tooth
surfaces and gums.  A study at the Harvard  School of Dental  Medicine,  jointly
sponsored  with Procter and Gamble,  concluded  that the effect of their leading
anti-microbial,  Peridex(TM),  is  significantly  enhanced when applied with the
Rota-dent.

        Traditionally,  a regimen of manual  toothbrushing and flossing has been
recommended  by  dentists  and  hygienists  as part of a sound  program for oral
hygiene.  Nevertheless,  it is  generally  accepted  that  90%  of  the  general
population do not floss on a regular basis because it is too time  consuming and
difficult.  The  Rota-dent  product is routinely  dispensed  to simplify  plaque
control for the general  population,  as well as for  orthodontic,  handicapped,
arthritic,  and geriatric  patients,  as well as those who have received  dental
implants.

                                                                               4

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        The Company  relies  upon  numerous  university  clinical  trials,  some
sponsored  by Company  grants  and  others  sponsored  by major  dental  product
companies, to demonstrate to the dental profession that the Rota-dent product is
an effective plaque removal  instrument.  Based on these studies,  the Rota-dent
product  was  awarded  the  American  Dental  Association's  Council  on  Dental
Materials, Instruments and Equipment Seal of Acceptance as an effective cleaning
instrument,  which significantly reduces both plaque and gingivitis when used as
part of a program for good oral hygiene and regular  professional  care.  During
1996, the Company voluntarily relinquished the ADA Seal for the Rota-dent.  This
action  was  taken  as  a  result  of  the  overly  restrictive  and  burdensome
administrative  requirements  which the ADA  sought  to impose on the  Company's
advertising  and promotion of the product,  requirements  with which the Company
would have had to comply as a condition of retaining the Seal.

        Prior  to   commercial   introduction,   the   Rota-dent   product   was
test-marketed  to over five  thousand  consumers and hundreds of dentists in the
United States.  Early  clinical  trials at the Ohio State  University  School of
Dentistry showed that the Rota-dent could be most beneficial with a well defined
period of clinical  instruction.  At the urging of many clinicians,  the Company
committed to keep the product exclusively in dental offices, as opposed to using
retail channels of distribution, to be dispensed from the office, as part of the
dentist's  armamentarium  against  dental  disease.  This provided an additional
service  for the dental  practice  to offer,  as well as an  incidental  revenue
source.

        The Company has  engineered  and owns  computer-driven,  automated,  and
patented brush machines, semi-automatic and automatic brush cutters, tooling for
high precision metal parts,  injection molding machines  multi-cavity  injection
molds  for the  product's  plastic  parts,  as well as other  manufacturing  and
assembly  equipment.  With one exception,  all plastic parts used to manufacture
the Rota-dent  instrument  are now produced  in-house by the Company.  There are
alternate  sources  of  supply  for all  components  and  materials  used in the
manufacturing  process,  and the Company is not dependent upon a single supplier
for any component or type of material for these products.

        The marketplace for home use oral hygiene devices is highly competitive.
Several  manufacturers of home use oral hygiene devices are better financed than
the Company and use a wider  variety of  distribution  methods than the Company.
The  Company   competes  with  many  different   manufacturers   of  manual  and
electrically  powered tooth cleaning devices,  including  electric  toothbrushes
such as the  Interplak,  produced and sold by Conair,  the Oral B,  produced and
sold by Braun,  a division of  Gillette,  and the  Sonicare,  produced by Optiva
Corporation.  These  products are  distributed  primarily  through  retail sales
outlets.  The Company  successfully  competes with these devices on the basis of
favorable  long-term  clinical  studies,  product  design,  product  quality and
responsive  service  to both  professionals  and  consumers.  While  most of the
Company's  competitors  rely on traditional  retail  distribution  methods,  the
Company  believes that a professional  distribution  system is more effective in
the long-term.  Thus, the Company has invested in clinical trials and in efforts
to  demonstrate  to dentists and  hygienists  the  advantages of dispensing  the

                                                                               5

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Rota-dent  product  from their dental  offices as part of their  plaque  control
programs  and the other  professional  services  they offer,  including  implant
maintenance,  orthodontic appliances,  the maintenance of cosmetic restorations,
post-surgical  maintenance  of  periodontal  cases and general  preventive  oral
hygiene.  The Company holds several design and utility  patents  relating to the
Rota-dent (See  "Proprietary  Rights"),  and has vigorously  enforced its patent
rights and advantages against infringing parties. To date, all patent litigation
has been resolved in the Company's favor.

        In  fiscal  1996,   sales  of  the  Rota-dent  and  accessory   products
represented  approximately  75% of the Company's  total revenues for the period.
Effective  September 1, 1996,  the Company  raised the price of the Rota-dent by
6%, the first price increase for the product since 1986.


                           PDT Sensor(TM) Sc/RP Scaler

        During fiscal 1996, the Company sold the PDT Sensor Sc/RP Scaler,  which
is an ultrasonic  instrument  for use by dentists and dental  hygienists for the
therapeutic removal of hardened deposits from root surfaces of teeth.

        The PDT Sensor  Sc/RP was  distributed  by the  Company  pursuant to the
terms  of  a  joint  venture  agreement   between  the  Company's   wholly-owned
subsidiary,  PDT Production  Corporation,  and Lyco, Inc. ("Lyco"),  an Arkansas
Company.  Under the  agreement,  Lyco was  obligated to deliver to the Company's
manufacturing facilities in Batesville,  Arkansas, the equipment,  machinery and
technology  necessary to produce the product,  and the Company was  obligated to
make available  sufficient personnel and space to manufacture and distribute it.
Lyco was  entitled  to  receive a  royalty  for each unit  sold.  The  Company's
distribution rights covered North and South America.

        The Company  entered into the joint venture to  manufacture,  market and
distribute  the scaler  based on  representations  by its  partner  that led the
Company  to  believe  that the  scaler  had a  competitive  edge over most other
ultrasonic scalers in the U.S. market. Subsequently,  it was determined that the
scaler had to be redesigned.  Sales activity was temporarily curtailed while the
Company completed redesign efforts.  Shipment of the redesigned product began in
January,  1993.  Nevertheless,  for this and other  reasons,  the scaler did not
achieve satisfactory market acceptance.

        The  agreement  with the  scaler's  licensor  called for the  Company to
guarantee  to pay a minimum  royalty  amount each year.  The Company did not, in
1996,  sell scaler  instruments  in sufficient  quantity to meet the  guaranteed
minimum royalty obligation. Therefore, the Company was required, during 1996, to
make an additional royalty payment to satisfy the terms of the guarantee.

        On September 30, 1996, PDT Production  Corporation ("PDT") purchased its
partner's interest in the joint venture.  On October 23, 1996, the assets of PDT
were assigned for the benefit of creditors.  At the time of the assignment,  the

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only  creditors of PDT were the Company and its former  partner.  (See Note 5 to
the financial statements.) The assignment terminated the license with the former
partner.  The  Company  has  developed  and  expects  to  introduce  in  1997 an
alternative  scaler product.  Based on advice of counsel,  the Company  believes
that the Company  will have no further  obligation  to make  payments  under the
minimum  guaranteed  royalty  provision of the license with respect to sales, if
any, of the  alternative  scaler.  However,  there can be no assurance  that the
former  partner will not assert a claim or commence  litigation  concerning  the
failure of the  Company to make  royalty  payments  to the former  partner  with
respect to sales of the alternative scaler by the Company in 1997.

        The Company  competes with several  other  companies  that  manufacture,
market, and sell electronically powered dental scaling equipment.  The Company's
largest  competitor  is  Dentsply  International,  Inc.,  which  distributes  an
established  dental scaler under the name of Cavitron(TM).  The Company seeks to
compete with other manufacturers based on direct distribution to its established
network  of  dental   practitioners,   and  through  the   product's   increased
effectiveness and comfort for both the patient and clinician.

        During the 1996 fiscal  year,  sales of the PDT Sensor  Sc/RP Scaler and
accessories accounted for approximately 6% of the Company's revenue.


                         DENTAL PHARMACEUTICAL PRODUCTS

        Pro-Dentec  manufactures  and markets a full line of  topically  applied
dental  fluoride  products,  including  rinses and gels.  The line  consists  of
products  applied  in the  office by dental  professionals  as well as  products
utilized at home by the patient  between  office  visits.  This product line was
introduced  to the market in 1993.  Prior to  January,  1993,  the  Company  was
involved  in a joint  venture  with a private  label  manufacturer  of  fluoride
products.   This  joint  venture  was   terminated   during  1993.   The  dental
pharmaceutical  product line has been expanded each year since being introduced,
and is now the  broadest-based and most complete fluoride product line available
in dentistry.  In 1995, the Company  introduced a line of prophy paste, used for
in-office  prophylaxis.  In 1996, a disposable prophy angle and a line of manual
toothbrushes and dental floss were introduced to the market.

        The  effectiveness  of  fluoride  for  fighting  tooth  decay is  widely
recognized.  Fluoride is also extensively  used by dental  professionals to help
fight the bacteria associated with periodontal disease, as well as to reduce the
sensitivity  of exposed roots from soft tissue loss due to  periodontal  disease
and/or periodontal surgery.

        The Company  currently  manufactures all its fluoride rinses and gels in
an  FDA-approved  facility  in  Batesville,   Arkansas.  The  Company  does  not
anticipate  significant  difficulties  in obtaining the  materials  necessary to

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manufacture  these products.  The Company  competes with several other companies
that manufacture,  market,  and distribute  fluoride  products to dentists.  The
market is fragmented,  and no one company controls or dominates the market.  The
Company competes in this market by selling its products through its professional
representatives.  The ability to purchase  fluorides,  prophy  paste and angles,
toothbrushes  and dental floss becomes a convenience for the dental office,  and
to the  extent the  Company  offers a complete  line of such  products,  thereby
reduces the number of  suppliers  with which each office must deal.  The Company
believes this gives it a competitive advantage.

        During the 1996 fiscal year, dental  pharmaceutical  products  accounted
for approximately 6% of the Company's revenue.


                        VICTOR(R) VOICE CHARTING SOFTWARE

        In 1995,  a project  to  completely  rewrite  the  Victor  software  was
completed,  and the new product was introduced to the market. An upgrade to this
program was released  during 1996.  The rewritten  software is fully  compatible
with Windows 95, and has had its  functionality  increased  to include  complete
restorative examination capability,  as well as extensive treatment planning and
patient  education  capability.  The  software  has  been  integrated  with  the
Company's  dental office  management  and dental imaging  software,  to form the
Victor  Dental  Office  integrated  software  suite,  under which name the three
software  packages are currently being  marketed.  Each program may be purchased
individually, in any combination, or as a full suite.

        The Victor  voice  activated  software,  is  intended  to be used in the
dental office by dentists and dental  hygienists to assist them in the efficient
recording, organizing,  maintaining,  retrieving and comparing of diagnostic and
restorative  information  obtained  during  dental  examinations.  It  therefore
enables  dentists  to  communicate  more  effectively  with their  patients  and
insurance  carriers and reduces their exposure to malpractice  claims  resulting
from incomplete record-keeping. The use of the Victor system assists dentists in
meeting the American  Dental  Association's  guidelines  which  recommend that a
periodontal  evaluation  for  every  patient  be done  at  least  annually,  but
preferably  biannually,  to reduce tooth loss and prevent or reduce  malpractice
claims.

        The Victor  system was the first  voice  operated  comprehensive  dental
examination, diagnosis and presentation aid introduced to the dental profession.
It is easily  transportable  within the dental  office to different  examination
areas. The Windows version of the software includes highly  sophisticated speech
recognition technology, allowing the practitioner to speak continuously,  rather
than having to pause between each word spoken, as in the original version.  This
permits data to be input faster, more completely, and more accurately. Using the
Victor system,  professionals  can perform a complete dental exam unassisted and
hands free,  permitting the clinician to maintain  sterility.  Also, it frees up
the time of a  hygienist  or  assistant  who  would  otherwise  be  required  to
facilitate  the  recording  of data.  The  traditional  periodontal  examination

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process,  which  generally  consists of recording up to eight  hundred  separate
items,   has  been  difficult  for  dentists   because  it  is  complicated  and
time-consuming.   The  easy-to-read   computer  screen  and  multi-color  charts
generated by the Victor  system reduce the time involved by assisting the dental
professional  in making a diagnosis,  and  presenting a record of the timing and
scope  of the  examination.  The  failure  to  diagnose,  adequately  treat,  or
appropriately  refer the  periodontal  patient,  has been the greatest source of
malpractice  lawsuits  against dentists during the last ten years. The completed
charts  printed by the Victor system can be used to provide  dental  specialists
and  third  parties,  such  as  insurance  companies,  with  accurate,  detailed
information.  The Victor system can store virtually unlimited numbers of reports
and  examinations  for future  reference,  periodic  updating,  and  comparative
analysis.  The Victor system's  ability to compare current data against previous
examinations is crucial,  as it automatically  and clearly alerts clinicians and
patients  to  worsening  conditions  as well as  clinical  improvement.  Through
graphic illustration, the Victor system enables the patient to better understand
the diagnosis and more readily accept the need for treatment.  Furthermore,  the
Victor system facilitates increased communication between the doctor and patient
regarding the nature of the diagnosis and the recommended  treatment course, and
enables  both of them to better  monitor  the  effects of  treatment  over time.
Patient   motivation  is  heightened   through  the  easily  understood  graphic
presentation of treatment results.

        The Company began marketing of the Victor system in January 1991.  Prior
to October 31, 1992, the Victor system was  distributed by the Company  pursuant
to the terms of a joint venture  agreement  between the  Company's  wholly-owned
subsidiary, PDT Computer Associates,  Inc. and Avanti Computer Associates,  Inc.
The joint  venture  was  dissolved  in October,  1992 and the  Company  acquired
exclusive rights to manufacture and market the system.  The Company now has only
a royalty obligation to the principals of the original joint venture partner.
        In fiscal 1996,  Victor system and software sales made up  approximately
5% of the Company's total revenues.


                          PRACTICE MANAGEMENT SOFTWARE

        The Company  completed  negotiations  in 1993  whereby its  wholly-owned
subsidiary,  PDT Byte, Inc. would enter into the PerfectByte Limited Partnership
with  PerfectByte,  Inc.  PerfectByte,  Inc.  had been  marketing a  proprietary
computerized  management  system  named  PerfectByte(R)  to dental  offices  for
several years. The partnership has  subsequently  completed the development of a
new  practice  management  program  which  utilizes  Microsoft  Windows  95  and
significantly  expands the  functionality of the original  PerfectByte  program.
Initial installations of PerfectByte for Windows were made in 1994.  Incremental
improvements  and  upgraded  versions of the program  have been shipped to users
during  1995 and 1996,  including  a major  rewrite  of the  patient  scheduling
module.  As  indicated  previously,  the  practice  management  system  has been
integrated with the Victor voice charting  system,  and is being sold as part of
the Victor Dental Office software suite.

        During 1996, the Company  determined  that  distribution of its software
products  through  independent  resellers was in its best interest.  These Value
Added Resellers  (VARs) install  hardware if the sale involves a turnkey system,
provide  on-site  training of the customer in the proper system  operation,  and
other services as requested by the customer.  VARs typically purchase and resell
their own hardware.  In those instances where the Company purchases the hardware

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portion of the system,  it is from well  established  vendors,  normally Hewlett
Packard.  Such equipment is available from numerous computer suppliers,  and the
Company has not experienced any difficulties in obtaining  adequate  supplies of
any components or materials.


                                 OTHER PRODUCTS

                           PRISM(TM) INTRA-ORAL CAMERA

        The  Prism  is  the  Company's  second  generation   intra-oral  camera,
introduced  in May of 1994.  The Prism is a video camera  system that shows,  at
over 25x  magnification,  the exact  condition of the mouth, in color, on a high
resolution monitor,  for viewing by the doctor and the patient. It produces hard
copy,  full-color  pictures to file,  for take home or to send to the  patient's
insurance  company.  It is used to  increase  case  acceptance  and to  expedite
insurance payment.

        Currently, the Company considers the market for intra-oral cameras to be
unsatisfactory  due to intense  price  competition.  While the  Company  has not
withdrawn from the intraoral camera market,  it has maintained  camera prices at
levels  at which it can  make a  profit.  This  has  resulted  in a  significant
decrease in the number of camera units sold by the Company in 1996.


                               PERIODONTAL PROBES

        The Perio-Probe(TM) and the patented PDT Sensor(TM) Probe are disposable
diagnostic dental instruments, used in the dental office to examine patients for
indicators of periodontal  disease.  The PDT Sensor Probe differs from the Perio
Probe in that it has a sensing  mechanism built into it which allows the user to
control the amount of pressure used during  periodontal  exams for more accurate
results. This is the first time dental professionals have had an instrument that
can provide a pre-determined  amount of force without utilizing  complicated and
expensive electronic instruments.

        The probes are flexible dental instruments  designed to be used with the
Company's other  periodontal  exam products to provide easier,  less painful and
more accurate measurement of subgingival conditions.  The probes are designed to
be disposable,  but may be autoclaved  (sterilized) for multiple uses. The Perio
Probes and the PDT Sensor  Probes are molded for the  Company by a local  vendor
who uses  tooling  owned by the  Company.  The  probes  are  made  from  readily
available  materials.  Precision  markings  are  applied  by the  Company at its
manufacturing  facilities  in  Arkansas.  The  Company has not  experienced  any
difficulties in obtaining  materials for the probes, and does not anticipate any
such difficulty in the future.

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<PAGE>




                                 ROTA-POINTS(TM)

        The  Rota-point  a  flexible,  non-splintering  interdental  cleaner and
stimulator.  Rota-points  are used  interproximally  to remove  both  debris and
dental  plaque from the surfaces of teeth.  This area (between the teeth) is the
most difficult  area to clean  properly.  The mild surface  texture and physical
design of the  Rota-points  make them an ideal product to use with  Rota-dent to
help maintain a healthy mouth.  Wooden  toothpicks can damage gum tissue because
of their awkward shape and the possibility of breaking and splintering.

        Since bleeding gums are not healthy, patients can be instructed to watch
for signs of bleeding on the white  surface of the  Rota-point.  If this occurs,
the bleeding area may need more attention.  Rota-points are convenient,  require
less manual  dexterity than floss,  clean larger  interproximal  areas than many
interdental type cleaners,  and effectively massage and stimulate the gums. Each
Rota-dent kit contains a package of Rota-points, which are sold individually.


                                  PERIOCHECK(R)

        The Periocheck Enzyme Activity Test Kit provides the dental professional
with an accurate and economic  chairside  test for use in monitoring the outcome
of  periodontal  therapy.  The test  measures  the  activity  level of patient's
neutral protease enzymes in gingival  crevicular  fluid. This family of enzymes,
which  include  collagenase  and  elastase,  accounts  for  most  of the  tissue
degradation  observed in periodontal  disease. Up to seven gingival sites may be
tested with a single patient test packet. The easy-to-read results are available
in minutes  during  the  patient's  office  visit  eliminating  any need to send
samples to an outside lab for  analysis.  Positive  and  negative  controls  are
included with each test kit to increase confidence that the results are valid.

        Periocheck   is  the  first  test   approved  by  the  US  Food  &  Drug
Administration   for  use  in  monitoring  the  periodontal   disease   process.
Eye-readable   test   results   are   intended   to  assist  in  the   treatment
decision-making  process by  indicating  whether a patient is  improving  or not
responding to the selected therapy.


                                DEVELOPMENT COSTS

        The Company incurred $542,000 of product  development expense in 1996 as
compared to  $470,000  in 1995.  The  Company  from time to time  considers  the
development  and   introduction,   whether  alone  or  with  others,   of  other
professional  and  consumer  dental  products.  The Company has applied for, and
currently has pending, several additional applications for patents on additional
products  or product  improvements.  The  Company  cannot  predict  whether  any
additional  products will be developed or introduced,  or patents  issued,  as a
result of these efforts.

                                                                              11

<PAGE>




                               SALES AND MARKETING

        The Company believes that the market for dental instruments and consumer
products  intended  for home use for oral  hygiene  maintenance  is an expanding
market,  attributable  in large part to a shift in focus by the general  dentist
from the eradication of tooth decay to the placing of a greater  emphasis on the
prevention and treatment of gingivitis  (early stages of  periodontal  disease).
Management believes that the Company has positioned itself to capitalize on this
shift through sales of the Rota-dent and other specialty dental products,  which
it markets exclusively through dental offices.

        The Company  maintains a full-service  printing facility and audio-video
production  studio to design and produce a variety of  educational,  promotional
and marketing  materials about the Company's products for use by the dentist and
his patients.

        The  increasing  awareness of the impact of periodontal  disease,  among
consumers and dental  professionals alike, as well as the wide and varied extent
of the disease  (which  industry  figures  suggest  affects upward of 75% of the
American  adult  population),  should lead to an expanding  marketplace  for the
Company's  products.  With the current  professional and consumer focus on "soft
tissue" (gums) and periodontal  disease,  the Company  believes that it is in an
advantageous  position to supply dental  professionals with the high quality and
effective  specialty   instruments  and  equipment  necessary  to  provide  more
specialized services to patients.

        The Company  expects to continue the  expansion of its field sales force
through  1997.  The focus of this  expansion is to provide  greater  territorial
coverage,  which  management  believes is the most effective way to increase the
penetration  of the  Company's  products  in dental  offices  across the nation.
Customers in geographic  areas not covered by a field sales  representative  are
served over the telephone by experienced account executives.

        No single  dental  practice  accounted for more than 1% of the Company's
total sales revenues in fiscal 1996.


                                  FOREIGN SALES

        The Company  began  exporting  its  products  in 1991.  Sales to foreign
distributors represented  approximately 5% of the Company's total sales in 1996.
A significant  part of this total  represented  sales to the Company's  Canadian
joint venture subsidiary,  with most of the balance to independent  distributors
in Western  Europe.  Management  believes  there is  significant  potential  for
increased  sales in the export  marketplace,  and is actively  searching for new
distributors  in countries  in which the  Company's  products are not  currently
sold.

                                                                              12

<PAGE>




                                   REGULATION

        Several of the dental products manufactured and marketed by the Company,
the Rota-dent  product,  the PDT Sensor Sc/RP  ultrasonic  instrument,  fluoride
products  and  Periocheck  are  subject  to  regulation  by the  Food  and  Drug
Administration ("FDA") and, in some instances, by foreign governments. Under the
1976 Amendments  (the "1976  Amendments") to the Federal Food, Drug and Cosmetic
Act, as amended (the "Act"),  and the regulations  promulgated  thereunder,  the
manufacturers  of  "devices,"  as such term is defined in Section  201(h) of the
Act, must comply with certain controls that regulate the testing, manufacturing,
packaging  and  marketing  of  devices.  Under the Act,  devices  are subject to
different  levels of  approval  requirements,  the most  comprehensive  of which
requires  that a  clinical  evaluation  program  be  conducted  before  a device
receives  pre-market  approval  by the  FDA  for  commercial  distribution.  The
Company's products are "Class II" products under this classification  system and
did not require clinical  evaluation prior to pre-market  approval.  The Company
has complied with the FDA's  applicable  qualification  procedures  for all such
products.  Numerous clinical studies were, however,  required to obtain the Seal
of Acceptance for the Rota-dent product from the American Dental Association.

        As a  manufacturer  of devices,  the Company is also  subject to certain
other FDA  regulations,  and its  manufacturing  processes  and  facilities  are
subject  to  continuing  review  by  the  FDA to  insure  compliance  with  Good
Manufacturing Practices regulations. The Company believes that its manufacturing
and quality control procedures  substantially conform to the requirements of FDA
regulations.


                              WORKING CAPITAL ITEMS

        Most components and materials required for the manufacturing process for
the Company's  products are readily  available on an ongoing basis.  The Company
typically maintains a 60-day supply of components and material for its products,
available  for either  assembly  or  shipment  upon  order.  Larger  supplies of
components having a longer lead time are kept on hand.


                                     BACKLOG

        The  Company   manufactures/purchases  all  products  on  the  basis  of
committed and/or projected orders.  The Company normally ships  non-personalized
Rota-dent products in one day and personalized products within two to three days
of order  receipt.  The Company ships other  products as requested.  The Company
typically  has no  significant  order  backlog  and has  never  experienced  any
significant  delay in shipping  orders.  The  Company  does not  anticipate  any
material delay in meeting foreseeable product requests.


                               PROPRIETARY RIGHTS

        The Company  currently holds the following  United States patents on the
Rota-dent(R) and other products as indicated:

a.      Design patent  Registration  Number  D278,764 issued May 14, 1985, for a
        term of 14 years covering the ornamental  design for a  battery-operated
        toothbrush.

                                                                              13

<PAGE>




b.      Design patent  Registration  Number  D295,801 issued May 24, 1988, for a
        term of 14  years  covering  the  ornamental  design  for a set of brush
        heads.

c.      Utility patent  Registration Number 4,869,277 issued September 26, 1989,
        for a term of 17 years  covering a brush head and a method and apparatus
        for producing the brush head.

d.      Design patent Registration Number D306,236 issued February 27, 1990, for
        a term of 14 years covering the  ornamental  design for the long pointed
        brush tip.

e.      Design Patent  Registration  Number  D309,062  issued July 10, 1990, for
        expiration on February 27, 2004,  covering the ornamental design for the
        short pointed brush tip.

f.      Utility patent  Registration  Number  4,884,849 issued December 5, 1989,
        for a term of 17 years  covering an apparatus and method of  manufacture
        of a brush head.

g.      Utility  patent  Registration  Number  4827552 issued May 9, 1989, for a
        term of 17 years covering a rotary electric toothbrush.

h.      Utility patent Registration Number 5,052,419 issued October 1, 1991, for
        expiration  on September 26, 2006,  covering a brush head,  and a method
        and apparatus for producing the brush head.

i.      Utility patent  Registration  Number 5,072,482 issued December 17, 1991,
        for a term of 17 years  covering a brush head,  apparatus and method for
        producing the brush head.

j.      Utility patent Registration Number 5,078,158 issued January 7, 1992, for
        a term of 17 years covering a brush head with a shaped bottom plate.

k.      Utility patent  Registration  Number 5,090,902 issued February 25, 1992,
        for a term of 17 years covering a multi-measurement periodontal probe.

l.      Utility patent  Registration  Number 5,109,563 issued May 5, 1992, for a
        term of 17 years covering a soft brush gum stimulator.

m.      Utility patent  Registration Number 5,112,226 issued May 12, 1992, for a
        term of 17 years covering a constant pressure periodontal probe.


                                                                              14

<PAGE>




n.      Utility patent  Registration Number 5,146,643 issued September 15, 1992,
        for a term of 17 years  covering an end brush,  and apparatus and method
        for producing the end brush.

o.      Utility patent  Registration Number 5,148,568 issued September 22, 1992,
        for a term of 17 years  covering an  apparatus  and method for making an
        end brush.

p.      Design patent  Registration  Number D334,842 issued April 20, 1993 for a
        term of 14 years  covering  the  ornamental  design  for a  triple  head
        toothbrush.

q.      Utility patent  Registration Number 5,205,302 issued April 27, 1993, for
        a term of 17 years covering a gum stimulator which has a removable brush
        composed of a high-density of soft thin fibers.

r.      Utility patent Registration Number 5,234,009 issued August 10, 1993, for
        a term of 17 years covering a toothpick  having opposite ends adapted to
        clean the interstitial spaces and tooth surfaces between adjacent teeth.

s.      Utility patent  Registration  Number  5,276,935 issued January 11, 1994,
        for a term  of 17  years  covering  dental  brushes  impregnated  with a
        medicament for slow release during brushing.

        The Company has also  obtained  patents or trademarks or has applied for
patents  or  trademarks  under the laws of 28  foreign  countries.  The  Company
believes  that the patents  issued to it are  material to its business and seeks
vigorously to protect its rights against infringement.

        The Company  owns, or has licensed the rights to, a number of registered
trademarks.  Those owned include Rota-dent,  Pro-Dentec,  Pro-Dentx, PDT Sensor,
STM,  Beyond STM, Soft Tissue  Management,  Professional  Relationship  Program,
Victor,  Pro-Cam and Mobius. Those licensed include PerfectByte,  Periocheck and
Biocheck.  In addition,  the Company has registrations  pending on certain other
trade names, and has trademarked the names of all of its other products.


                                    EMPLOYEES

        As of December 31, 1996, the Company employed 315 persons full-time,  of
whom 168 worked in manufacturing,  103 in sales and marketing,  with the balance
in  administration  and  management.   None  of  the  Company's   employees  are
represented  by a labor  organization,  and the Company has never  experienced a
work stoppage or interruption due to a labor dispute.  Management  believes that
relations with its employees are good.


                                                                              15

<PAGE>




ITEM 2.  PROPERTIES
-------  ----------

        The Company owns three  buildings in Batesville,  Arkansas  containing a
total of 49,000 square feet of  administration,  warehouse and production space.
The building on Harrison Street houses the Company's  production  facilities for
the Rota-dent product and other products, spaces devoted to product development,
purchasing and an audiovisual production studio. The Company also owns ten acres
of land and a masonry  building  which has been  modified  for use as a printing
facility  and for the  production  of its  dental  pharmaceutical  products.  An
addition to this  facility  was  completed  in 1996.  The  building  housing the
Company's executive offices as well as its marketing,  professional  consulting,
accounting and administrative staffs was purchased in1994. The building had been
leased and used for the same  purpose  prior to the  purchase.  The  Company has
outstanding  mortgages on the buildings totaling $526,000.  The Company believes
that the  facilities  are  adequate  for its current  production  needs and that
additional space, if needed,  can be constructed or purchased without materially
affecting operations.

        The Company leases space in two buildings in Batesville,  Arkansas for a
monthly  rental of $3,550.  One  building is a 12,200  square  foot  facility in
Batesville,  Arkansas, which houses the Company's warehouse and its shipping and
receiving  facilities.  It is leased for one year beginning July 1, 1996.  After
this initial lease term is complete,  the Company has four  one-year  options to
renew the  lease.  The other  building  is used as a  woodworking  facility  for
construction  of  computer  system  and  intraoral  camera  carts,  and  is on a
month-to-month  lease.  The Company  believes that these facilities are adequate
for its current needs.


ITEM 3.  LEGAL PROCEEDINGS
-------  -----------------

        On June 26,  1995,  PDT  Image,  Inc.,  (a  wholly-owned  subsidiary  of
Professional Dental Technologies,  Inc.) filed a Petition for Declaratory Decree
and Restraining  Order against Source- 1 Dental Image,  Inc., et al, its partner
in the  Pro-Dentec  Canada  partnership.  The  partnership is in the business of
distributing the Company's  products and software of throughout  Canada, as well
as the development and marketing of imaging software.  The Company was granted a
Temporary Restraining Order by the Court, and later amended its claim to include
claims of damages for breach of fiduciary  duty,  fraud,  civil  conspiracy  and
contempt.  In July 1995,  Source-1 Dental Image,  Inc., filed its response and a
Counterclaim  for dissolution of the  partnership.  The lawsuit was tried in the
Chancery  Court of  Independence  County,  Arkansas,  in  September,  1996,  and
post-trial  briefs were  submitted to the Court in November,  1996. In December,
1996, the Company filed a motion to reopen,  in order to present newly available
evidence. The Company is currently awaiting the rulings of the Court. Regardless
of the outcome,  the Company will continue  distributing its products in Canada.
No prediction of the outcome can be reasonably made at this time concerning this
matter, however, the Company does not believe the outcome could adversely affect
its financial position in any material way.


                                                                              16

<PAGE>




        The Company is not aware of any other material litigation  involving the
Company or any of its officers or directors.


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

        No matters  were  submitted  to a vote of  security  holders  during the
fourth quarter of the fiscal year covered by this report.


                                                                              17

<PAGE>




                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
-------  STOCKHOLDERS MATTERS
         -------------------------------------------------

        As of December  31,  1996,  the Company had 274 holders of record of its
Common  Stock.  The  Company's  Common  Stock is  traded on the  American  Stock
Exchange Emerging Company Marketplace.

        The following are the high and low prices of the Company's  Common Stock
as published by the American Stock Exchange Emerging Company Marketplace:


        QUARTER ENDED               HIGH CLOSE            LOW CLOSE
        -------------               ----------            ---------

        January 31, 1995               2 1/4                1 7/8
        April 30, 1995                 2 1/4                1 9/16
        July 31, 1995                  1 7/16               1 5/16
        October 31, 1995               1 9/16               1 3/8
        January 31, 1996               1 1/8                  13/16
        April 30, 1996                 1 1/4                  7/8
        July 31, 1996                  1 1/4                  13/16
        October 31, 1996                 7/8                  3/4

        In May,  1991,  the  Company's  Registration  Statement on Form 10 filed
under the Securities Exchange Act of 1934, as amended,  became effective and the
Company thereby became a "reporting  Company" subject to the periodic  reporting
and other requirements of such Act.

        In March of 1992,  the Company  listed its shares of Common Stock on the
American Stock Exchange Emerging Company Marketplace.

        The  Company  historically  has not paid cash  dividends  on its  Common
Stock.  While  the  Company  does  not  currently  intend  to pay  regular  cash
dividends,  this policy will be reviewed periodically by the Board of Directors,
taking into account,  among other things,  the Company's  earnings and financial
position.


                                                                              18


<PAGE>




ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------  CONDITION AND RESULTS OF OPERATIONS.
         -------------------------------------------------

                           FISCAL YEARS 1996 AND 1995

                              RESULTS OF OPERATIONS

        In fiscal 1996, net sales totaled $22.0 million,  a 7% decrease compared
to net sales of $23.7 million in 1995. The decrease can be attributed  primarily
to lower  sales of  intraoral  cameras (by about  82%),  due to the  decision by
management  not to compete at the  prevailing  price  levels in the market,  and
lower sales of scalers (by about 26%), due to competition in the market. Foreign
sales  amounted  to 5% of total  sales in 1996  compared to 6% of total sales in
1995.  These  decreases  were  partially  offset  by an  increase  in  sales  of
pharmaceutical products amounting to 42%.

        The  Company's  revenues  for  both  1996 and  1995  were  substantially
attributable to sales of Rota-dents and associated accessory products. In fiscal
years  1996  and  1995,  revenue  from the sale of  Rota-dents  and  accessories
amounted to approximately  $16.7 million and $17.2 million  respectively.  Sales
revenues from equipment  (scalers,  intraoral  cameras and computer  systems and
software)  amounted to $3.0 million for 1996 and $5.0 million in 1995.  Sales of
other products and services were $2.3 million in 1996 and $1.5 million in 1995.

        The cost of goods sold in fiscal  1996 was $8.7  million,  and in fiscal
1995,  $9.6 million.  As a percentage of sales,  cost of goods was 39.5% in 1996
compared to 40.7% in 1995.  The decrease in cost of goods was due to lower sales
revenue,  improved operating efficiencies in the production of the Rota-dent and
a  favorable  shift in product mix due to lower  sales of  intraoral  cameras in
1996. Included in 1996 cost of goods is a writedown of approximately $213,000 of
obsolete  and  slow  moving  intraoral  camera  inventory.  There  were  no such
writedowns of inventory in 1995.

        Operating   expenses   (selling,   general,   administrative,    product
development and royalty) were $12.1 million in 1996 compared to $12.9 million in
fiscal 1995. The decrease in operating  expense is attributable to reductions in
selling expense.

        Other  income and  expenses  netted to an expense of  $834,000 in fiscal
1996  compared  to net  expense of $957,000  in fiscal  1995.  This  category of
expense is primarily  composed of the Company's  pro-rata share of the operating
profit   and   loss   of  its   non-consolidated   subsidiaries   and   interest
income/expense.  The total for 1996  includes  writeoffs  of  investment  in PDT
Production Company (scaler) and the PerfectByte Limited  Partnership  (software)
amounting to $293,000.  The 1995 total included the Company's share (99%) of the
loss  resulting from the writeoff of a receivable on the books of the Pro-Dentec
Canada Partnership (software), amounting to about $182,000.


                                                                              19

<PAGE>




         On October 3, 1990, PDT Production Company ("PDT Production"), a wholly
owned  subsidiary of the Company,  entered into a joint venture  agreement  with
Lyco, Inc., to produce the PDT Sensor Sc/RP Scaler.  PDT Production  contributed
$1,000 to the joint  venture for a 50%  partnership  interest.  Since then,  PDT
Production has provided a physical location to house  production,  engineers and
personnel to operate the production  line. On September 30, 1996, PDT Production
acquired its partner's interest in this venture for a purchase price of $20,000.
On October 23, 1996, the assets of PDT Production  were assigned for the benefit
of its creditors (who were, at the time of assignment,  only the Company and two
companies owned by the former partner). This action terminated the license under
which the PDT Production  manufactured the scaler,  as well as the obligation of
the Company to pay royalties  relating to that  product.  As of the date of this
report,  the  assets  of PDT  Production  have  been  liquidated,  and the  cash
resulting from the  liquidation is in process of being  distributed to creditors
by the  assignee.  The Company has designed  and intends to bring to market,  in
1997,   an   alternative   scaler   product.   (See  Item  1.   Business  -  PDT
Sensor[TRADEMARK] Sc/RP Scaler).

        In January 1993 PDT Byte, Inc.  ("Byte"),  a wholly owned  subsidiary of
the Company,  entered  into a  partnership  agreement  with  PerfectByte,  Inc.,
whereby Byte contributed $200,000 for a 50% general partnership  interest.  Byte
will be allocated 40% of all profits of the  partnership  until  cumulative  net
profits exceed  $1,246,420,  at which time,  Byte's  allocation will increase to
50%. All losses will be allocated to the partners in proportion to their capital
account balances as of October 31 of each year. As of October 31, 1996, Byte was
allocated 99.5% of the partnership's loss.

        As of  March  1,  1993,  PDT  Image,  Inc.  ("Image"),  a  wholly  owned
subsidiary of the Company,  entered into a partnership  agreement  with Source 1
Dental Image,  Inc.  ("SDI").  Image  contributed  the right to  distribute  the
Company's products in Canada, valued at $100,000, in exchange for a 50% interest
in the partnership.  In addition, Image agreed to loan the partnership an amount
not to exceed $300,000 to fund the startup  working capital  requirements of the
partnership  and to  complete  the  development  of certain  software  programs.
Pursuant to the agreement, Image is allocated 50% of net profits, and net losses
will be allocated in proportion to the partners'  capital accounts at October 31
of each year. As of October 31, 1996, Image was allocated 99% of the partnership
loss. This partnership is currently the subject of unresolved  litigation.  (See
Item 3. Legal Proceedings).


                                                                              20


<PAGE>




During the years ended October 31, 1996 and 1995,  the Company had made advances
and investments in these equity affiliates as follows:

                                                          1996           1995
                                                          ----           ----
PROLYCO PRODUCTION COMPANY:                         
      Advances                                       $   474,408      $ 490,453
      Investment                                         492,194        492,194
      Cumulative equity in net loss of affiliate        (823,842)      (773,329)
      Write-down of investment in affiliate             (142,760)         --
                                                     ------------     ----------
                                                            --          209,318
                                                      
PERFECTBYTE LIMITED PARTNERSHIP:
      Advances                                         1,214,104        974,202
      Investment                                         200,000        200,000
      Cumulative equity in net loss affiliate         (1,262,860)    (1,077,492)
      Write-down of investment in affiliate             (150,000)         --
                                                     ------------    -----------
                                                           1,244         96,710
PRO-DENTEC CANADA:
      Advances                                         1,487,716      1,303,079
      Investment                                         100,000        100,000
      Cumulative equity in net loss of affiliate      (1,264,341)    (1,075,145)
      Cumulative currency translation adjustment            (226)       (11,276)
                                                     ------------    -----------
                                                         323,149        316,658
                                                     $   324,393     $  622,686
                                                     ============    ==========


        The results of these  operations do not reflect the income earned by the
Company as sales agent for the products of PerfectByte  Limited  Partnership and
Pro-Lyco Production Company.

        The following is a summary of the condensed aggregate financial position
and results of operations for all equity affiliates as of October 31:

                                                          1996           1995
                                                          ----           ----

      Current assets                                 $   398,961     $  642,007
      Noncurrent assets                                   31,289        117,880
                                                      ----------     -----------

      Total assets                                   $   430,250     $  759,887
                                                     ===========     ===========

      Current and total liabilities                   $2,669,628     $3,133,863
      Ownership equity (deficit)                      (2,239,378)    (2,373,976)
                                                      -----------    -----------

      Total liabilities and equity                   $   430,250     $  759,887
                                                     ===========     ===========

      Sales                                           $2,779,537     $3,070,257
                                                                     ===========

      Net loss                                          (456,334)   ($1,054,397)
                                                                    ============

      Company's proportionate share of loss             (425,077)   $(1,012,438)


                                                                              21

<PAGE>




        The Company's net income in fiscal 1996 was $258,000, which represents a
$147,000,  increase from net income of $111,000 in fiscal 1995. The  improvement
in net income  resulted from a reduction in cost of goods sold,  lower operating
losses in the joint  venture  affiliates,  and a reduction in the  effective tax
rate.


                         CAPITAL RESOURCES AND LIQUIDITY

        As of fiscal year end 1996, the Company had total assets of $8.0 million
compared to $7.7 million in 1995. Total liabilities were $3.9 million at the end
of both years. The increase in assets primarily reflects  additional  investment
in fixed assets  during  1996.  At October 31,  1996,  stockholders'  equity had
improved to $4.1  million  from $3.8  million at October 31,  1995.  The current
ratio increased from 1.6 in 1995 to 1.9 in 1996,  reflecting an increase in cash
and certificates of deposit, and a decrease in accounts payable in 1996 compared
to 1995.

        During fiscal years 1996 and 1995, net cash provided from  operations of
$1,415,000  and  $644,000  was  used  to  increase   capital  items,   including
manufacturing  space and manufacturing and computer  equipment,  by $345,000 and
$178,000;  to increase its  investments  in affiliates by $419,000 and $894,000;
and to invest $400,000 in certificates of deposit in 1996.

        The Company  currently pays a royalty to a foreign  company of $3.00 for
each Rota-dent unit sold as part of the cost of obtaining the world-wide  rights
to manufacture  and distribute the product,  under an agreement  entered into in
December,  1988.  Under  the  terms  of this  agreement,  the per  unit  royalty
decreases to $1.50 after an aggregate of $5 million of royalties have been paid.
This royalty reduction should occur late in the 1997 or early in the 1998 fiscal
year.

        In  October,  1994,  the  Company  signed an  agreement  to enter into a
business  relationship with Aztec Developments  Ltd., a British company.  During
1995 and 1996,  Aztec and the Company  completed the development of an automated
periodontal  probe. The Company expects to bring this product to market in 1997.
During the 24 month period commencing with the date of the first commercial sale
of the product, the Company is committed to incur marketing  expenditures of not
less than  $300,000 in connection  with the sale of this product,  in return for
50% of the profits of the joint venture. The Company does not believe that these
expenditures will adversely impact its liquidity.

        The Company has  established  reserves for potential  warranty claims on
its  products,  and such  claims  have  historically  been  within  management's
expectations.

        Additional long-term debt,  including  obligations under capital leases,
was  incurred  in the  amount of  approximately  $457,000  during  fiscal  1996,
increasing  total long term debt to $983,000.  The Company  believes that it can
retire this debt through its normal cash flow.


                                                                              22

<PAGE>




        The Company defines  liquidity as the ability of the Company to generate
adequate amounts of cash to meet the Company's  operating needs. The Company has
historically  relied on cash provided from  operations to meet a majority of its
financial  needs and anticipates  this will continue in the near term.  However,
the Company  currently has a revolving  line of credit with NBD Bank under which
it can draw up to $3 million,  subject to the  availability of collateral.  This
line of credit is primarily secured by receivables and inventory, and is used to
finance the working capital  requirements  of the Company.  The Company also has
other  sources of credit with which it can finance the purchase of fixed assets.
The  Company  believes  these  sources  of credit  combined  with cash flow from
operations will be sufficient to meet its foreseeable cash requirements.


ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
-------  --------------------------------------------

        The required financial statements and supplementary data are included in
a separate  section  following  the  signature  page as an addendum to this Form
10-KSB.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
-------  ACCOUNTING AND FINANCIAL DISCLOSURE
         ------------------------------------------------

        None.


                                                                              23

<PAGE>




                                    PART III
                                    --------

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS
-------  --------------------------------

        The directors and executive officers of the Company are as follows:

                                      AGE AT 
        NAME                      JANUARY 1, 1997     POSITION
        ----                      ---------------     --------

        William T. Evans                  54          Director, President and
                                                      Chief Executive Officer

        Robert E. Christian               34          Director, Executive Vice
                                                      President and Treasurer

        Frank H. Newton, III              56          Chief Operating Officer

        J. Robert Lemon                   54          Director

        Timothy A. Nolan                  43          Director

        J. Philip Boesel                  64          Director

        Michael S. Black                  46          Director

        William T. Evans became  President  and Chief  Executive  Officer of the
Company in February,  1996. Previously,  he was the Executive Vice President and
Secretary,  and has been a  Director  since  1987.  Mr.  Evans was an officer of
Dynavest Partnership, the original licensee for the Rota-dent product, from 1981
until  its  dissolution  in  December  of 1992.  He is an  officer  of  Multiway
Associates,  a specialty nutrition company, since 1982. Mr. Evans is a cousin of
Timothy A. Nolan, a Director of the Company.

        Robert E.  Christian  became  Executive  Vice  President,  Secretary and
Treasurer of the Company in February,  1996. Previously,  he was the Senior Vice
President and Treasurer,  and has been a Director since 1988. Mr.  Christian has
been  Vice  President  of  Data  Control  and  Computer  Services  for  Multiway
Associates, a specialty nutrition company, since 1982.

        Frank H.  Newton,  III has been Chief  Operating  Officer of the Company
since February, 1993. Prior to joining the Company, Mr. Newton was President and
Chief Operating Officer of Scott Instruments  Corporation,  Denton, Texas, since
1988, and prior to that,  President and Chief Executive  Officer of AVM Systems,
Inc., Fort Worth, Texas, for six years.


                                                                              24

<PAGE>




        J.  Robert  Lemon has been a director of the  Company  since  1987,  and
served as its President from 1987 to 1996,  when he resigned to devote full time
to  other  business  interests.  He  continues  to work  with the  Company  as a
consultant.  Mr.  Lemon was an officer of  Dynavest  Partnership,  the  original
licensee for the Rota-dent product, from 1981 until its dissolution in December,
1992;  and has been an officer of Multiway  Associates,  a  specialty  nutrition
company, since 1982.

        Timothy A. Nolan has been a director  of the  Company  since  1988.  Mr.
Nolan has been Managing Director of Multiway  Associates,  a specialty nutrition
company,  since 1987,  and an officer  and  director  of V. M.  Nutri,  Inc.,  a
specialty  nutrition  company,  since 1989.  He has been employed by V. M. Nutri
since 1982. Mr. Nolan is the cousin of William T. Evans.

        J. Philip Boesel,  Jr. has been a director of the Company since 1995. He
has been the First Vice President,  Investment  Banking of Kirkpatrick,  Pettis,
Smith, Polian, Inc. since 1991.  Kirkpatrick Pettis is a subsidiary of Mutual of
Omaha.  Prior to this Mr. Boesel was the President of Robert G. Dickinson & Co.,
a regional investment banking firm, from 1971 through 1990, when the company was
sold. Mr. Boesel is a former Governor of the National  Association of Securities
Dealers,  and is currently a director of Dealers Lumber Company and  Continental
Travel  Associates.  He holds a B.B.A.  degree from the University of Wisconsin,
and a Masters degree in Business from Michigan State University.

        Michael S. Black has been a director of the Company  since 1996. He is a
partner in the firm of Smith & Black,  CPA's and  Consultants,  since  1988.  He
specializes in the areas of corporate  information  systems and corporate income
tax.  Mr.  Black  holds a B.B.A  degrees  in  Accounting  and  Finance  from the
University of Wisconsin at Whitewater, and is a Certified Public Accountant.


                                                                              25

<PAGE>




ITEM 10.  EXECUTIVE COMPENSATION
--------  ----------------------

        The  following  table  sets  forth the  compensation  paid to William T.
Evans,   Pro-Dentec's  President,   and  other  executive  officers  whose  cash
compensation exceeded $100,000 during the fiscal year ended October 31, 1996.

NAME &                                        BONUS
PRINCIPAL                                     (YEAR     OPTIONS/   ALL OTHER
POSITION                 YEAR      SALARY     EARNED)   SARS (#) COMPENSATION(1)

William T. Evans         1996      $140,000(1)  -0-        -0-         -0-
President                1995       140,000     -0-        -0-         -0-
                         1994       140,000     -0-        -0-         -0-

Frank H. Newton, III     1996      $125,000     -0-        -0-         -0-
Chief Operating Officer  1995       125,000     -0-        -0-         -0-
                         1994       125,000     -0-      100,000       -0-


                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)

                                         PERCENT OF
                                            TOTAL
                                        OPTIONS/SARS    EXERCISE OR
                         OPTIONS/SARS     EMPLOYEES     BASE PRICE    EXPIRATION
        NAME              GRANTED (#)  IN FISCAL YEAR    ($/SH.)         DATE
-------------------      ------------  --------------   -----------   ----------

William T. Evans            -0-            -0-             -0-            -0-
President

Robert E. Christian         -0-            -0-             -0-            -0-
Executive Vice President

Frank H. Newton, III        -0-            -0-             -0-            -0-
Chief Operating Officer


________________________

(1)     The Company also provides certain of its senior executive  officers with
certain  personal  benefits.  The  Company  believes  that  the  individual  and
aggregate  amount of such  benefits  does not  exceed,  in the case of any named
individual,  the lesser of $50,000 or 10% of the reported cash  compensation for
such individual.


                                                                              26

<PAGE>




             AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                            FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>

                                                            NUMBER OF        VALUE OF UNEXERCISED
                                                           UNEXERCISED           IN-THE-MONEY
                                                           OPTIONS/SARS          OPTIONS/SARS
                                                             AT FISCAL             AT FISCAL
                                                            YEAR-END (#)          YEAR-END ($)
                            SHARES            VALUE        -------------         -------------
                          ACQUIRED ON       REALIZED        EXERCISABLE/          EXERCISABLE/
     NAME                 EXERCISE (#)         ($)          UNEXERCISED           UNEXERCISABLE
     ----                 ------------       -------        ------------          -------------
<S>                       <C>               <C>              <C>               <C> 
William T. Evans           -0-                  -0-              -0-                 -0-
                                                                         
Robert E. Christian        -0-                  -0-              -0-                 -0-
                                                                         
Frank H. Newton, III       -0-                  -0-          -0-/100,000            -0-/-0-
                                                          
</TABLE>




        Mr. Newton was granted stock options  totaling 100,000 shares vesting in
lots of 25,000  shares per year with exercise  dates  beginning on June 13, 1998
and ending on June 13, 2001.  The options expire on June 13, 2004.

        Based  solely upon a review of Forms 3, 4 and 5 furnished to the Company
during or with respect to fiscal 1996, the Company is not aware of any director,
officer or ten percent  shareholder  that failed to file on a timely  basis,  as
disclosed  in the above  referenced  Forms,  reports  required by Section 16 (a)
under the Securities Exchange Act of 1934 during fiscal 1995 or a prior year.


                                   OPTION PLAN

        In 1989, the Company adopted the Pro-Dentec  Incentive Stock Option Plan
("Plan")  pursuant  to which  stock  options  ("Options")  may be granted to key
employees and other individuals  providing services to the Company. Five million
(5,000,000)  shares have been reserved for issuance under the Plan, subject to a
limitation  that  options  covering  shares in excess of 10% of the  outstanding
shares may not be granted  during any one year.  The Plan is  administered  by a
committee  comprised of three  members of the Board of Directors of the Company.
Options must be granted at the fair market value of the covered shares as of the
date of grant.  The Plan has been approved by the  shareholders.  Options may be
granted for a term of up to ten years, but may be terminated upon termination of
employment.  In 1996,  805,000 option shares expired or were  terminated.  As of
October  31,  1996,  options  relating  to a total of 833,500  shares  have been
granted to employees and others, of which none were granted in fiscal 1996.


                                                                              27

<PAGE>




ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
--------  AND MANAGEMENT
          -----------------------------------------------


        The  following  table sets forth as of January 1, 1997,  the  beneficial
ownership of the Company's Common Stock, $.01 par value, by all persons known by
the Company to own,  beneficially  or of record,  more than five  percent of the
Company's Common Stock, by each director of the Company, and by all officers and
directors as a group:

        NAME AND ADDRESS OF          AMOUNT AND NATURE OF        PERCENT OF
        BENEFICIAL OWNER             BENEFICIAL OWNERSHIP           CLASS
        -------------------          ---------------------       ----------

        William T. Evans                   5,068,178(2)             35.9%
        P. O. Box 4129
        Batesville, AR  72503

        J. Robert Lemon                    4,904,242(3)             34.8%
        P. O. Box 4129
        Batesville, AR  72503

        Robert E. Christian                   310,400                2.2%
        P. O. Box 4129
        Batesville, AR  72503

        Timothy A. Nolan                   5,603,760(4)             39.7%
        P. O. Box 4129
        Batesville, AR  72503

        Directors and Officers as
        a group (4 persons)                10,593,220               75.1%


___________________________

(2)     Includes 4,211,360 shares held by a trust principally for the benefit of
Mr.  Evans.  Also includes  717,000  shares held in trust for the benefit of Mr.
Evans' mother and nephew for which he disclaims beneficial ownership.

(3)     Includes 4,093,360 shares held by a trust principally for the benefit of
Mr. Lemon. Also includes 671,000 shares held in trust for the benefit of nephews
and nieces of Mr. Lemon for which he disclaims beneficial ownership.

(4)     Includes  310,400  shares held by a trust for the benefit of Mr.  Nolan.
Also includes  5,293,360  shares held as trustee,  for which Mr. Nolan disclaims
beneficial ownership.



                                                                              28

<PAGE>




ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------  ----------------------------------------------

        The Company  performs  commercial  printing  services  for Life Plus,  a
partnership  ("Partnership")  engaged in the distribution of specialty nutrition
and other health-related  products.  Messrs. Evans, Christian,  Lemon and Nolan,
all of whom are officers and/or directors of the Company,  are  beneficiaries of
trusts  which  are  partners  in the  Partnership.  Messrs.  Lemon and Nolan are
employed by and are officers of the Partnership. During 1996, the Company billed
Life Plus $722,000 for printing  services.  Commercial  market rates are charged
for these  printing  services,  based on  arms-length  negotiation  between  the
parties.  Payment terms are standard for the trade. Life Plus' payment status is
current with regard to receivables currently owed the Company.

        As of October 31,  1996,  the  Company  had made loans to Mr.  Christian
totaling $52,378. Payments and interest are current.



                                                                              29

<PAGE>



                                       PART IV


ITEM 13.  FINANCIAL STATEMENTS AND SCHEDULES AND REPORTS
--------  ON FORM 8-K
          ----------------------------------------------
          

1.      All Consolidated Financial Statements

        (a)    Consolidated Balance Sheets at October 31, 1996 and 1995.

        (b)    Consolidated  Statements of  Operations  for Each of the Years in
               the Two-Year Period Ended October 31, 1996.

        (c)    Consolidated  Statements of Stockholder's  Equity for Each of the
               Years in the Two-Year Period Ended October 31, 1996.

        (d)    Consolidated  Statements  of Cash  Flows for Each of the Years in
               the Two-Year Period Ended October 31, 1996.

        (e)    Notes to Consolidated Financial Statements.

2.      Financial Statement Schedules

        (a)    Schedule II - Amounts Receivable From Related Parties.

        (b)    Schedule IX - Short-Term Borrowings.

        (c)    Schedule X - Supplemental Income Statement Information.

        (d)    Schedule XI - Computation of Earnings Per Share.

3.      Report of Independent Certified Public Accountants.

4.      Reports on Form 8-K.

5.      Exhibits

        EXHIBIT 3(a) - Articles of Incorporation

        Incorporated  herein by  reference  to Exhibit  3.1 to the  Registration
        Statement on Form 10 filed in March 1991 ("1991 Registration Statement")


                                                                              30
<PAGE>





        EXHIBIT 3(b) - Bylaws
        ------------

        Incorporated herein by reference to Exhibit 3.2 to the 1991 Registration
        Statement. Bylaws dated December 20, 1995. See Exhibit 3(b)

        EXHIBIT 10 - Material Contracts
        ----------

        (i)     Stock  Incentive  Plan.  Incorporated  herein  by  reference  to
                Exhibit  10.1 of the 1991  Registration  Statement.  

        (ii)    Secured Credit Agreement with NBD Bank and supporting documents.
                Attached  herewith.  

        (iii)   Capital  Equipment  leases  with  The CIT  Group  (6).  Attached
                herewith.


        EXHIBIT 21 - Subsidiaries of the Registrant.  Attached herewith.
        ----------

        EXHIBIT 27 - Financial Data Schedule
        ----------


                                                                              31
<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 report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                     PROFESSIONAL DENTAL TECHNOLOGIES, INC.


Date:   January 24, 1997                   By:    /s/ William T. Evans
                                                  ------------------------------
                                                  William T. Evans
                                                  Principal Executive Officer

Date:   January 24, 1997                   By:    /s/ Richard L. Land
                                                  ------------------------------
                                                  Richard L. Land
                                                  Principal Accounting Officer


        Pursuant to the  requirements  of Section 13 of 15(d) of the  Securities
Exchange Act of 1934,  this report has been signed by the  following  persons on
behalf of the registrant and in the capacities and on the dates indicated.


By:     /s/ J. Robert Lemon              By:    /s/ Robert E. Christian
        ------------------------                -------------------------
        J. Robert Lemon                           Robert E. Christian
        Director                                  Director

Date:   January 24, 1997                   Date:  January 24, 1997



By:     /s/ William T. Evans              By:   /s/ J. Philip Boesel, Jr.
        -------------------------               -------------------------
        William T. Evans                          J. Philip Boesel, Jr.
        Director                                  Director

Date:   January 24, 1997                   Date:  January 24, 1997



By:     /s/ Timothy A. Nolan               By:  /s/ Michael S. Black
        --------------------------              --------------------------
        Timothy A. Nolan                          Michael S. Black
        Director                                  Director

Date:   January 24, 1997                   Date:   January 24, 1997


<PAGE>




                                 EXHIBIT INDEX
                                 -------------



Exhibit No.                          Description
-----------                          -----------

Exhibit 3(a)                         Articles of Incorporation
                                     Incorporated herein by reference to Exhibit
                                     3.1 to the  Registration  Statement on Form
                                     10 filed in March 1991 ("1991  Registration
                                     Statement")

Exhibit 3(b)                         Bylaws
                                     Incorporated herein by reference to Exhibit
                                     3.2 to  the  1991  Registration  Statement.
                                     Bylaws dated December 20, 1995. See Exhibit
                                     3(b).

Exhibit 10                           Material Contracts

                                     (i)    Stock Incentive  Plan.  Incorporated
                                            herein by  reference to Exhibit 10.1
                                            of the 1991 Registration Statement

                                     (ii)   Secured  Credit  Agreement  with NBD
                                            Bank and supporting documents.

                                     (iii)  Capital  Equipment  leases  with the
                                            CIT Group (6).

Exhibit 21                          Subsidiaries of the Registrant.
                                       

Exhibit 27                          Financial Data Schedule