U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-QSB

X    Quarterly  report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934 for the quarterly ---- period ended 6/30/97

     Transition report under Section 13 or 15(d) of the Securities  Exchange Act
          of 1934 (No fee required) ----

For the transition period from           to

Commission file number 1-11586

                                PTI HOLDING INC.
                 (Name of small business issuer in its charter)


      Delaware                                               13-3590980
(State or jurisdiction                                    (I.R.S.Employer
of incorporation or                                      Identification No.)
organization)

c/o 15 E. North Street, Dover, DE                               19901
(Address of principal executive offices)                     (Zip Code)


                                                          (302) 678-0855
                                (Issuer's Telephone Number, Including Area Code)


     (Former Name,  Former Address and Former Fiscal Year, if Changed Since Last
Report)
         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for past 90 days.

Yes  X    No


         State the number of shares  outstanding  of each class of the  issuer's
classes of common  equity,  as of the latest  practicable  date. As of August 8,
1997, 4,207,491 shares of the issuer's common equity were outstanding.

<PAGE>


                                     PART I


ITEM 1.  Consolidated Financial Statements.
                                                                       Page
Consolidated Balance Sheet as of June 30, 1997                         F-1

Consolidated Statement of Income for the three
and six months ended June 30, 1997 and 1996                            F-2

Consolidated Statement of Cash Flows for the
six months ended June 30, 1997 and 1996                                F-3

Notes to Consolidated Financial Statements                             F-4 - F-7

ITEM 2.  Management's Discussion and Analysis

         PTI  Holding  Inc.  (collectively  with its  wholly-owned  subsidiaries
referred  to herein  as the  "Company"),  manufactures  and  markets  protective
equipment,  primarily  bicycle  helmets and safety  supplies.  In addition,  the
Company markets and distributes bicycles and bicycle-related products, and other
medical supplies.

Acquisition of Flents Products Co., Inc. By the Company

         On August 5, 1997, the Company consummated the merger (the "Merger") of
Flents  Products  Co.,  Inc.,  a  New  York  corporation  ("Flents"),  which  is
principally  engaged in the business of the  manufacture of wax earplugs and the
marketing and sale of earplugs and other safety and medical supplies, such as an
eye  drop  delivery  system,   styptic   devices,   and  air-filter  masks  (the
"Business"),  with  and into  the  Company's  wholly  owned  subsidiary,  Flents
Products  Co.,  Inc.,  a Delaware  corporation  ("Merger  Sub"),  pursuant to an
Agreement and Plan of Merger among the Company,  Merger Sub and Flents. From and
after August 5, 1997,  Flents had no separate or independent  existence,  having
been merged into Merger Sub.  For purposes of  financial  accounting  and income
tax,  the Merger was deemed to have  occurred  as of the  opening of business on
June 1, 1997 (the "Effective Date").

         The principal  assets of Flents as of the Effective  Date of the Merger
consisted of: approximately  $1,024,364 of accounts receivable;  approximately $
806,465 of inventory;  certain proprietary  information (including molds, vendor
contacts and customer information) and various registered trademarks used in the
Business.

         Merger Sub  delivered  at the  closing  (the  "Closing")  of the Merger
$27.46  and 3.47  shares of the  common  stock,  par value $.01 per share of the
Company (the "Company's Common Stock") (with associated convertible value rights
described  below) to the shareholders of Flents in respect of each of the 77,756
issued and  outstanding  shares of the common  stock of Flents,  or total merger
consideration  of $4,837,085.  The merger  consideration  was paid $2,135,435 in
cash,  and  $2,701,650 in units  consisting  of 270,165  shares of the Company's
Common Stock and 270,165 Convertible Value Rights ("CVRs").  For purposes of the
Merger,  the Units were valued at $10 per Unit.  Each CVR  entitles the original
holder to up to $4.00 of  additional  Common  Stock of the Company to the extent
that the market  value of the  Company's  Common  Stock is less than  $10.00 per
share on the one-year anniversary of the Closing.

  In addition, at the Closing, Merger Sub entered into noncompetition agreements
with Stuart M. Low,  Chairman of the Board of  Directors of Flents  ("Low"),  W.
Thomas Davies,  President of Flents ("Davies") and James E. Dunn, Vice President
of sales of  Flents  ("Dunn"),  all of whom were also  shareholders  of  Flents,
restricting them from, among other  activities,  competing with Merger Sub for a
period of five years (or four years, in the case of Davies) from the Closing.

         At the  Closing,  Merger Sub also  entered  into a ten-year  consulting
agreement with Low,  commencing on the Closing  whereby he will receive  $12,000
annually for the term of the agreement  and health  insurance for the first four
years of the term. Merger Sub also entered into a four-year employment agreement
with Davies,  commencing as of June 1, 1997,  providing for an initial  starting
salary of $180,000 per annum and options  ("Options") for the purchase of 10,000
shares of the  Company's  Common  Stock per year for the term of the  employment
agreement.  Davies' will also receive  additional  Options based on Merger Sub's
performance.  In  addition,  Merger  Sub  entered  into a  five-year  employment
agreement  with Dunn,  commencing  as of June 1, 1997,  providing for an initial
starting  salary of  $108,000  per annum and a bonus  based on the  increase  in
Merger Sub's net revenues.

         The amount of  consideration  paid by Merger Sub as set forth above was
determined by arms-length negotiations between the parties involved.  Woodbridge
Group Inc.  received a fee for its advice  rendered to Company and for arranging
the Merger,  however,  no opinion was  provided as to the fairness of the merger
consideration  in the  transaction.  The  Company's  evaluation  of  the  merger
consideration  paid in the Merger  was based upon the book value of Flents,  its
revenues and profits during its 1996 fiscal year, and its sales  prospects.  The
Company  incurred  acquisition  costs in  connection  with the  merger  totaling
approximately $412,000.

         The three  major  shareholders  of Flents  prior to the Merger were all
members  of the Low  family.  Four  of the  other  five  shareholders  were  all
employees of Flents at the time of the Closing who had received  their shares as
stock bonuses from Flents and the fifth  shareholder  was Flents'  attorney.  No
relation  existed prior to the Merger between any of such persons or Flents,  on
the one hand, and the Company, any of its affiliates, any director or officer of
the Company,  or any  associates of any such  director or officer,  on the other
hand.

         The  source of funds  used to  capitalize  Merger Sub and to effect the
Merger was the Company's  cash  reserves.  Merger Sub intends to continue to use
the assets of Flents in the Business.

     Results of Continuing  Operations:  Second  Quarter 1997 Compared to Second
Quarter 1996
-------------------------------------------------------------------------------

   The Company's net sales were  $9,943,409  during the quarter ended June
30,  1997,  an  increase  of 45.8%  from  net  sales of  $6,820,979  during  the
comparable  quarter in 1996. The 45.8% sales increase from 1996 to 1997 resulted
from several factors: increased sales to existing customers through the addition
of new helmet  models;  increased  market  share at the expense of  competitors;
increased  sales of existing  models due to growth in the overall helmet market;
increased sales of the Company's  bicycle and bicycle  accessory  products;  the
addition of new retail outlets for the Company's  products;  the introduction of
new accessory  product lines; and sales of safety equipment and medical supplies
by Flents during the month of June, 1997.

  Net loss was $2,811,506 for the quarter ended June 30, 1997, compared to a net
 income of $884,122 during the same period in 1996. Included in the net loss was
 a one time non cash  accounting  charge of $3,844,531 to expense the conversion
 of preferred shares into common shares.  Without this charge net income for the
 quarter would have been  $1,033,025,  an increase of 16.8% over the same period
 last year.  Without the charge, the increase in net income was due to increased
 sales by the Company and the  inclusion of sales of Flents  Products  Co., Inc.
 for the month of June 1997.

         The cost of sales for the quarter  ended June 30,  1997 was  $7,007,163
(resulting in a gross profit margin of 29.5%)  compared to the Company's cost of
sales of  $4,763,977  (resulting  in a gross  profit  margin of 30.16%)  for the
quarter ended June 30, 1996.

         Selling, general and administrative expenses for the quarter ended June
30, 1997 were $1,163,847 (not including the one time non cash accounting charge)
compared  to the  Company's  selling,  general  and  administrative  expenses of
$594,038 for the quarter ended June 30, 1996.  As a percentage  of sales,  these
expenses  were 11.7% and 8.7% for the  quarters  ended  June 30,  1997 and 1996,
respectively.  The increased selling,  general and  administrative  spending was
primarily due to the higher costs  associated  with the expansion of the helmet,
bicycle and bicycle  accessory  business,  the higher costs for human resources,
and the selling,  general and administrative expenses of Flents during the month
of June, 1997.

Six Months Ended 6/30/97 Compared to Six Months Ended 6/30/96

         The  Company's net sales were  $16,172,915  during the six months ended
June 30,  1997,  an  increase of 71.2% from net sales of  $9,444,839  during the
comparable  six  months  in 1996.  The  increase  in net  sales  resulted  from:
increased sales to existing customers through the addition of new helmet models;
increased  market  share  at the  expense  of  competitors;  increased  sales of
existing  models due to growth in the overall helmet market;  increased sales of
the Company's bicycle and bicycle accessory products; the addition of new retail
outlets for the Company's  products;  the introduction of new accessory  product
lines;  and sales of safety  equipment and medical supplies by Flents during the
month of June, 1997.

         Net loss was  $2,052,535  during  the six months  ended June 30,  1997,
compared to a net income of $1,127,369 during the same period in 1996.  Included
in the net  loss was a one time non cash  accounting  charge  of  $3,844,531  to
expense the  conversion  of preferred  shares into common  shares.  Without this
charge net income  during the six month  period would have been  $1,791,996,  an
increase of 59%.

         The  cost  of  sales  for  the six  months  ended  June  30,  1997  was
$10,944,556  (resulting  in a gross profit  margin of 32.3%) compared to cost of
sales of  $6,575,536  (yielding  a gross  profit  margin of 30.38%)  for the six
months ended June 30, 1996. The Company's increased gross profit margin resulted
primarily  from  the  fact  that   higher-margin   products,   such  as  bicycle
accessories, constituted a greater percentage of the Company's sales.

         Selling,  general and administrative  expenses for the six months ended
June 30, 1997 were  $2,128,683  (not including the one time non cash  accounting
charge) compared to the Company's selling,  general and administrative  expenses
of $1,214,076  for the six months ended June 30, 1996. As a percentage of sales,
these expenses were 13.16% and 12.85% for the six months ended June 30, 1997 and
1996,  respectively.  The increased selling, general and administrative spending
was  primarily  due to the higher  costs  associated  with the  expansion of the
helmet,  bicycle  and bicycle  accessory  business,  the higher  costs for human
resources,  and Flents' selling,  general and administrative expenses during the
month of June, 1997.

Capital Resources

         The Company has satisfied its capital requirements through the proceeds
of its initial public offering of securities,  which resulted in net proceeds of
approximately  $3,800,000;  through  the  proceeds of a  Regulation  'S' private
placement in November 1994,  which  resulted in gross proceeds of  approximately
$751,875;  through the exercise of certain outstanding options held by employees
and consultants of the Company,  which resulted in net proceeds of approximately
$220,450;   through  internal  cash  flow;  and  through  Protective  Technology
International  Inc.'s,  the Company's  wholly-owned  operating  subsidiary  (the
"Operating Subsidiary"), opening of a revolving line of credit in May, 1996.

         In addition,  in February 1997, the Company registered shares of Common
Stock underlying  various  warrants and options of the Company,  the exercise of
which resulted in gross proceeds of approximately  $3,017,925,  with expenses of
approximately $50,000.    In large part, these gross proceeds were the result of
the Company, on June 4, 1997, announcing the redemption of its Redeemable Public
Warrants as of July 16, 1997 at the  redemption  price of $.01 per warrant.  The
exercise by holders of the  Company's  Redeemable  Public  Warrants  resulted in
approximately  $3,017,925 of such gross proceeds. The Company paid approximately
$526    to redeem those Redeemable Public Warrants which remained unexercised as
of July 16, 1997.  Currently,  the Company does not have any  Redeemable  Public
Warrants outstanding. See Part II, Item 2.

         On May 6, 1996,  the Operating  Subsidiary  opened a revolving  line of
credit at Key Bank of New York.  The line of  credit  is  collateralized  by the
Operating  Subsidiary's   inventory,   receivables  and  other  assets,  and  is
guaranteed  by the  Company.  As of June 30,  1997,  the Company had  $4,127,773
outstanding pursuant to such line of credit.

         The Company  pays its  employees  and  vendors on a weekly,  monthly or
bi-monthly basis,  while its customers pay for products generally within 75 days
after shipment and,  therefore,  the Company has  substantial  needs for working
capital

         The Company will also consider  financing through additional public and
private securities offerings and solicitations.

         Based on the  Company's  current  plans,  management  anticipates  that
current cash balances,  together with the Company's line of credit and cash flow
generated from  operations,  will be sufficient to continue to fund  production,
purchase of equipment, increased marketing activities and continued research and
development,  as  well as the  rest  of the  Company's  cash  requirements,  for
approximately the next 18 months.


                                     PART II


ITEM 1.  Legal Proceedings.

         Harbor at Hastings  Associates,  the alleged owner of the manufacturing
facilities occupied by the Operating  Subsidiary,  has commenced an action on or
about August 4, 1997 against the  Operating  Subsidiary  in the Supreme Court of
the State of New York,  Westchester County, to vacate the premises,  and for use
and occupancy in the amount of approximately  $66,000 per month beginning August
1, 1997.  Since  February 28, 1997,  the Operating  Subsidiary  has occupied the
premises  on a  month-by-month  basis  while  negotiating  a  renewal  lease for
premises.  The Company denies the material  allegations  in the  Complaint,  and
possesses  a set-off  against  any  claims  in the  amount  of  $234,377,  which
represents  the  unamortized  portion  of the amount  the  Operating  Subsidiary
advanced on behalf of the  landlord of the premises for  renovation  costs,  and
which has not been amortized yet through application as an offset to rent.

ITEM 2.  Changes in Securities.

  The Company's  Series A Preferred Stock bears stock issuance rights  entitling
 the holder thereof to the issuance of a maximum  aggregate  amount of 30 shares
 of Common Stock for each share of Series A Preferred  Stock in accordance  with
 the  following  schedule:  (1) if the Company has net income  equal to $750,000
 during any of the three complete fiscal years commencing  January 1, 1993, then
 10 shares of Common  Stock  will be issued in respect of each share of Series A
 Preferred Stock; (2) if the Company has gross revenues equal to or greater than
 $20,000,000  during any of the five complete fiscal years commencing January 1,
 1993, then 10 shares of Common Stock will be issued in respect of each share of
 Series A Preferred  Stock;  (3) if the Company has gross  revenues  equal to or
 greater  than  $35,000,000  during  any  of  the  five  complete  fiscal  years
 commencing  January 1, 1993,  then 10 shares of Common  Stock will be issued in
 respect of each share of Series A Preferred Stock; or (4) if a cumulative total
 of 50% or  more of the  Redeemable  Public  Warrants  issued  in the  Company's
 initial  public  offering shall have been  exercised,  then 10 shares of Common
 Stock will be issued in respect of each share of Series A Preferred Stock.

         Pursuant to the Warrant  Agreement dated December 22, 1992 by and among
the Company, Corporate Stock Transfer, Inc. and Oak Ridge Investments,  Inc., as
amended (the "Warrant  Agreement"),  the Company had 460,000  Redeemable  Public
Warrants  outstanding.  Each  Redeemable  Public Warrant  entitled the holder to
purchase one share of the  Company's  common stock at a purchase  price of $7.50
per share.  Pursuant to Section 8 of the Warrant Agreement,  as of June 4, 1997,
the Company announced that it was redeeming its Redeemable Public Warrants as of
July 16, 1997, at the redemption price of $.01 per Redeemable Public Warrant. As
of July 16, 1997,  holders of Redeemable  Public  Warrants  exercised a total of
402,390 of such warrants for an aggregate exercise price of $3,017,925,  and the
Company redeemed the remaining 57,610 warrants for an aggregate redemption price
of $525.50.
The Company currently does not have any Redeemable Public Warrants outstanding.

  As of July  16,  1997,  more  than  half of the  Company's  Redeemable  Public
 Warrants had been  exercised,  and holders of the Company's  Series A Preferred
 Stock were  thereby  entitled to an issuance of ten shares of the  Registrant's
 Common Stock for each share of Series A Preferred Stock. Further,  based on the
 Company's  net  revenues  during the first two  quarters  of 1997,  the Company
 expects to receive in excess of $20,000,000 of net revenues during all of 1997,
 thereby  entitling  the  holders of Series A Preferred  Stock to an  additional
 issuance of ten shares of the Company's Common Stock for each share of Series A
 Preferred  Stock.  All of the  Company's  Series A  Preferred  Stock  will have
 thereby been converted  into Common Stock,  and no shares of Series A Preferred
 Stock will remain outstanding.  In total, of the 250,000 shares of Common Stock
 thus  issuable in respect of the Company's  meeting each of the  aforementioned
 issuance  requirements  of the Series A Preferred Stock (for a total of 500,000
 shares of Common Stock issuable),  Meredith Birrittella, the Chairman and Chief
 Executive Officer of the Company, is entitled to receive 176,640 shares, Martin
 Birrittella, the former Chairman of the Company, is entitled to receive 176,640
 shares, and Thomas Coleman,  the former Co-Chief Executive officer and a former
 director of the  Company,  is entitled to receive  117,760  shares.  A one-time
 charge in the aggregate  amount of  $3,844,531  will be taken by the Company in
 respect to shares issued to employees and former employees of the Company.

ITEM 6.  Exhibits and Reports on Form 8-K.

         (a)      Exhibits

          3.1  Registrant's Articles of Incorporation,  as amended, incorporated
               by reference  to the like  numbered  exhibit in the  Registrant's
               Registration  Statement on Form SB-2 under the  Securities Act of
               1933, as amended, File No. 33-53466

          3.2  Registrant's  By-Laws,  incorporated  by  reference  to the  like
               numbered  exhibit in the Registrant's  Registration  Statement on
               Form SB-2 under the Securities Act of 1933, as amended,  File No.
               33-53466

          4.1  Resolution  of  Designation,  Powers,  Preferences  and Rights of
               Series A Preferred  Stock,  incorporated by reference to the like
               numbered  exhibit in the Registrant's  Registration  Statement on
               Form SB-2 under the Securities Act of 1933, as amended,  File No.
               33-53466

          4.2  Form of Warrant of Bridge Loan lenders, incorporated by reference
               to the like  numbered  exhibit in the  Registrant's  Registration
               Statement  on Form SB-2  under  the  Securities  Act of 1933,  as
               amended, File No. 33-53466

          4.3  Form of Warrant  included in Units,  incorporated by reference to
               the  like  numbered  exhibit  in  the  Registrant's  Registration
               Statement  on Form SB-2  under  the  Securities  Act of 1933,  as
               amended, File No. 33-53466

          4.4  Form of Underwriters'  Warrant,  incorporated by reference to the
               like numbered exhibit in the Registrant's  Registration Statement
               on Form SB-2 under the Securities  Act of 1933, as amended,  File
               No. 33-53466

          10.1 Warrant  Agreement dated , 1992 between Corporate Stock Transfer,
               Inc. and the Company, incorporated by reference to exhibit number
               10.9 in the  Registrant's  Registration  Statement  on Form  SB-2
               under the Securities Act of 1933, as amended, File No. 33-53466

          10.2 Form  of  Stock   Option   granted  to   employees,   independent
               contractors and consultants, incorporated by reference to exhibit
               number 10.14 in the Registrant's  Registration  Statement on Form
               SB-2  under the  Securities  Act of 1933,  as  amended,  File No.
               33-53466

          10.3 Merger  Agreement and Plan of  Reorganization  dated February 14,
               1994   among   Protective   Technologies    International   Inc.,
               Foam-O-Rama,   Inc.,  Ellen  Schaeffer  and  Lori  Hillsberg,  as
               amended,  incorporated  by reference  to exhibit  number 2 in the
               Registrant's  Current  Report  on Form 8-K dated  March 16,  1994
               under the Securities Exchange Act of 1934, as amended

          10.4 Noncompetition  Agreement dated March 1, 1994 between  Protective
               Technologies  International  Inc.  and Ellen  Schaeffer  and Lori
               Hillsberg,  incorporated  by reference to exhibit  number 99.1 in
               the Registrant's  Current Report on Form 8-K dated March 16, 1994
               under the Securities Exchange Act of 1934, as amended

          10.5 Noncompetition  Agreement dated March 1, 1994 between  Protective
               Technologies  International  Inc. and Warren  Schaeffer  and Alan
               Hillsberg,  incorporated  by reference to exhibit  number 99.2 in
               the Registrant's  Current Report on Form 8-K dated March 16, 1994
               under the Securities Exchange Act of 1934, as amended

          10.6 Form of Promissory  Note  memorializing  loans from directors and
               officers as  authorized  by the Board of  Directors  on March 13,
               1996,  incorporated  by reference to exhibit  number 10.21 in the
               Registrant's  Annual  Report on Form 10-KSB for the period  ended
               December 31, 1995, under the Securities  Exchange Act of 1934, as
               amended

          10.7 Guarantee from Warren  Schaeffer and Alan Hillsberg to Protective
               Technologies  International  Inc.,  incorporated  by reference to
               exhibit number 10.21 in the Registrant's Quarterly Report on Form
               10-QSB  for the  period  ended  September  30,  1995,  under  the
               Securities Exchange Act of 1934, as amended

               10.8 Omitted

               10.9 Omitted

               10.10Line of Credit Agreement  (Asset Based),  dated May 6, 1996,
                    between  Key  Bank  of  New  York,  Protective  Technologies
                    International   Inc.,   PTI  Holding  Inc.  and   Protective
                    Technologies  of America Inc., and collateral loan documents
                    thereto,  incorporated  by reference to exhibit number 10.25
                    in the  Registrant's  Quarterly  Report on Form 10-QSB dated
                    March 31, 1996,  under the Securities  Exchange Act of 1934,
                    as amended

               10.11Financial Advisory and Investment  Banking Agreement,  dated
                    April 2, 1996,  between PTI Holding Inc. and GKN  Securities
                    Corp.,  incorporated  by  reference  to  the  like  numbered
                    exhibit in Registrant's  Registration Statement on Form SB-2
                    under the  Securities  Act of 1933,  dated January 27, 1997,
                    File No. 333-20607

               10.12Amendment  #2,  dated  June 6,  1996 to  Warrant  Agreement,
                    incorporated   by   reference   to   exhibit   number  2  in
                    Registrant's  Current Report on Form 8-K dated July 9, 1996,
                    under the Securities Exchange Act of 1934, as amended

               10.13Amendment #3, dated December 12, 1996 to Warrant  Agreement,
                    incorporated   by   reference   to   exhibit   number  3  in
                    Registrant's  Current  Report on Form 8-K dated December 12,
                    1996, under the Securities Exchange Act of 1934, as amended

               (b)  Reports on Form 8-K

         No  Current  Report on Form 8-K was  filed by the  Company  during  the
quarter ended June 30, 1997.




<PAGE>



                                       SIGNATURE

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated:  August 19, 1996


                           PTI HOLDING INC.




                           By/s/ Meredith W. Birrittella
                             Meredith W. Birrittella,
                             Chief Executive Officer (authorized signatory)
                             Chief Financial Officer











<PAGE>
<TABLE>



                        PTI HOLDING INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)

                                  JUNE 30, 1997

<S>                                                                   <C>
ASSETS

Current assets:
   Cash and cash equivalents                                   $        951,236
   Accounts receivable, net of allowance 
     for returns and doubtful collections of $195,906                 6,517,473
   Inventories                                                        6,117,711
   Deferred tax asset                                                   204,671
   Prepaid expenses and other current assets                          1,366,086
                                                                ----------------

   Total current assets                                              15,157,177

Equipment and improvements, net of accumulated 
     depreciation of $1,123,995                                         862,663
Deferred tax asset                                                      129,200
Goodwill, net of accumulated amortization of $146,959                 4,283,363
Covenants not to compete, net of accumulated 
     amortization of $382,850                                           136,558
Patents & trademarks, net of accumulated 
     amortization of $1,135                                               6,404
                                                                ----------------
                                                                $    20,575,365
                                                                ================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Loan payable, bank                                          $      4,127,773
   Accounts payable and accrued expenses                              1,705,088
   Due to former key employee and shareholders of 
     acquired companies                                               2,314,185
   Acquisition costs payable                                            175,133
   Income taxes payable                                                 121,969
                                                                ----------------

   Total current liabilities                                          8,444,148
                                                                ----------------

Commitments and contingent liabilities

Stockholders' equity:
   Preferred stock, $.001 par value; authorized 
     100,000 shares of which 25,000 shares
      have been designated as Series A preferred                           -
   Common stock, $.01 par value; authorized 10,000,000 
     shares, issued and outstanding 4,297,601 shares                     42,976
   Capital in excess of par                                          13,014,115
   Deficit                                                             (925,874)
                                                                ----------------

   Total stockholders' equity                                        12,131,217
                                                                ----------------
                                                               $     20,575,365
                                                                ================

</TABLE>
<PAGE>
<TABLE>


                        PTI HOLDING INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENT OF INCOME
                                   (Unaudited)

                 THREE & SIX MONTHS ENDED JUNE 30, 1997 AND 1996


<S>                      <C>            <C>            <C>            <C>
                              For the Three Months         For the Six Months
                                 ended June 30,              ended June 30,
                              --------------------         ---------------------
                            1997           1996          1997           1996
                           ------         ------        ------         ------

Net sales              $  9,943,409   $  6,820,979   $ 16,172,915   $ 9,444,839

Cost of sales             7,007,163      4,763,977     10,944,556     6,575,536
                       ------------   ------------   ------------   ------------

Gross profit              2,936,246      2,057,002      5,228,359     2,869,303
                       ------------   ------------   ------------   ------------

Selling, general and 
 administrative expenses:
   SG&A - before 
     stock-based 
     compensation         1,163,847      594,038       2,128,683      1,214,076 
   Stock-based 
     compensation 
     expense              3,844,531         -          3,844,531           -
                                                            
                       ------------   ----------     -----------    ------------

                          5,008,378      594,038       5,973,214      1,214,076
                       ------------   ----------     -----------    ------------

Income (loss) from 
     operations          (2,072,132)   1,462,964        (744,855)     1,655,227

Interest income, net 
     of interest 
     (expense)              (71,303)     (16,458)        (85,683)        (9,458)
                       ------------   ----------     -----------    ------------

Income (loss) before 
     income taxes        (2,143,435)   1,446,506        (830,538)     1,645,769

Income  taxes              (668,071)    (562,384)     (1,221,997)      (518,400)
                       ------------   ----------     -----------    ------------

Net income (loss)        (2,811,506)     884,122      (2,052,535)     1,127,369
                       ============   ==========     ===========    ============


Net income (loss) per 
share of common stock:
   Primary            $        (.65)   $     .23    $       (.48)   $       .29
   Fully diluted               (.59)         .23            (.43)           .29


Weighted average 
shares outstanding:
   Primary                4,245,349    4,093,085       4,197,096      3,834,250
   Fully diluted          4,717,349    4,093,085       4,673,063      3,834,250




</TABLE>


<PAGE>

<TABLE>


                        PTI HOLDING INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                     SIX MONTHS ENDED JUNE 30, 1997 AND 1996

<S>                                                    <C>            <C>
                                                        1997             1996
                                                     ----------     -----------
Cash flows from operating activities:
   Net income (loss)                              $  (2,052,535)   $  1,127,369
   Adjustments to reconcile net income (loss) 
     to net cash (used in)operating activities:
         Provision for returns and doubtful 
          collections                                      -              4,252
         Depreciation                                   294,121         136,471
         Amortization of intangible assets               77,982          73,013
         Deferred Income tax (benefit)                   (7,400)         41,600
         Stock-compensation                           3,844,531            -
         (Increase) decrease in operating assets 
          exclusive of the effects of the business 
          combination:
            Accounts receivable                      (2,311,445)     (2,781,792)
            Inventories                              (1,655,855)       (997,886)
            Prepaid expenses and other 
               current assets                          (313,231)       (712,833)
         (Decrease) increase in operating liabilities
          exclusive of the effects of business 
          combination:
            Accounts payable and accrued expenses       452,744       1,226,830
            Income taxes payable                       (935,553)        476,800
                                                     ----------     ------------

   Net cash (used in) operating activities           (2,606,641)     (1,406,176)
                                                     ----------     ------------

Cash flows from investing activities:
   Cash acquired in business combination, net of 
     partial payments of acquisition costs              711,969            -
   Purchase of equipment and improvements              (490,886)       (193,393)
   Reduction in cash invested to secure 
     letters of credit                                     -            208,750
                                                     ----------     ------------

   Net cash provided by investing activities            221,083          15,357
                                                     ----------     ------------

Cash flows from financing activities:
   Payments of amounts due to former key employee 
     of acquired company                                (21,832)        (41,308)
   Proceeds from issuance of common stock                65,174         198,438
   Proceeds from bank loan, net                       2,931,574         569,589
                                                     ----------     ------------

   Net cash provided by financing activities          2,974,916         726,719
                                                     ----------     ------------

Net increase (decrease) in cash and 
     cash equivalents                                   589,358        (664,100)

Cash and cash equivalents, beginning of period          361,878         969,329
                                                     ----------     ------------


Cash and cash equivalents, end of period            $   951,236    $    305,229
                                                     ==========     ============

</TABLE>


<PAGE>



                       PTI HOLDING INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


  
1.      Basis of presentation:

        The consolidated financial statements included herein have been prepared
        by the Company,  without the benefit of an audit,  pursuant to the rules
        and  regulations  of the  Securities  and Exchange  Commission.  Certain
        information and disclosures  normally  included in financial  statements
        prepared in accordance  with generally  accepted  accounting  principles
        have been condensed or omitted  pursuant to such rules and  regulations.
        These  unaudited  consolidated  financial  statements  should be read in
        conjunction with the consolidated financial statements and notes thereto
        included  in the  Company's  Annual  Report on Form  10-KSB for the year
        ended  December  31,  1996 and filed with the  Securities  and  Exchange
        Commission.

        In the opinion of the Company's management, these unaudited consolidated
        financial  statements  include  all  adjustments,  consisting  solely of
        normal recurring  adjustments,  necessary in order to present fairly the
        Company's  consolidated  financial  position as of June 30, 1997 and the
        results of operations  and cash flows for the three and six months ended
        June 30, 1997 and 1996.  The results of operations for an interim period
        are not  necessarily  indicative  of the  results to be  attained in any
        other fiscal period.  

        The acquisition  discussed in note 2 is accounted for using the purchase
        method of  accounting,  whereby  assets  and  liabilities  acquired  are
        recognized at fair value as of the date of acquisition and the excess of
        purchase price over such fair value of net assets acquired is recognized
        as goodwill.  The results of the operations of the acquired company have
        been included from the date of acquisition (June 1,1997).

        In February  1997,  the  Financial  Accounting  Standards  Board  issued
        Statement No. 128, "Earnings Per Share", which is required to be adopted
        on December  31,  1997.  At that time,  the Company  will be required to
        change the method  currently  used to compute  earnings per share and to
        restate  prior  periods.  Under  the new  requirements  for  calculating
        primary  earnings per share,  the dilutive  effect of stock  options and
        warrants  will be  excluded.  The  impact  is  expected  to result in an
        increase in primary  earnings  per share of $.02 per share for the three
        and six months ended June 30, 1997 and $.03 per share and $.04 per share
        for the three and six months ended June 30, 1996, respectively.


2.      Business combination:

        On August 5, 1997, the Company  acquired,  Flents  Products Co., Inc., a
        New York corporation (Flents-New York) a business principally engaged in
        the  manufacture of wax earplugs and the marketing of earplugs and other
        safety  and  medical  supplies,  such as an eye  drop  delivery  system,
        styptic  devices,   and  air-filter   masks,  and  concurrently   merged
        Flents-New  York  into  the  Company's   newly-organized,   wholly-owned
        subsidiary,   Flents   Products  Co.,   Inc.,  a  Delaware   corporation
        ("Flents-Delaware").  After  August  5,  1997,  Flents-New  York  had no
        separate   or   independent   existence,   having   been   merged   into
        Flents-Delaware.  For purposes of financial  accounting  and income tax,
        the business  combination  was deemed to have occurred as of the opening
        of business on June 1, 1997.

        The  principal  assets of  Flents-New  York  consisted  of cash and cash
        equivalents, accounts receivable, and inventory.

        In exchange for all the outstanding shares of common stock of Flents-New
        York,  the Company paid $2,  135,435 to the  shareholders  of Flents-New
        York, and issued them:    270,650 units  consisting of 270,165 shares of
        the  Company's  common  stock  and  270,165   convertible  value  rights
        ("CVRs").  For  purposes  of the  business  combination,  the units were
        valued at $10 per unit.  Each CVR entitles the original  holder to up to
        $4.00 of  additional  common stock of the Company to the extent that the
        market value of the Company's common stock is less than $10.00 per share
        on the one-year anniversary of the closing.


3.      Employment agreements:

        Effective  June 1,  1997,  the  Company  also  entered  into a  ten-year
        consulting agreement, a four-year  employment  agreement and a five-year
        employment  agreement  with three of the former  employees of Flents-New
        York. The consulting  agreement provides for annual payments of $12,000.
        The  four-year  employment  agreement  provides for an initial  starting
        salary of  $180,000  per annum and  options  for the  purchase of 10,000
        shares  of the  Company's  common  stock  per  year  for the term of the
        employment  agreement.  The employee may also receive additional options
        based  on  performance  of  Flents-Delaware.  The  five-year  employment
        agreement  provides for an initial starting salary of $108,000 per annum
        and a  bonus  based  on an  increase  in net  revenues  of the  acquired
        business.

4.      Contingent liabilities:

        Effective   April  1,  1994,  the  Company   entered  into  a  two-year,
        noncancellable lease for a production,  warehouse,  and office facility.
        The lease called for the minimum annual rent of $76,000 plus  escalation
        charges for increases in real estate  taxes.  By notice in October 1994,
        the Company  ceased making  rental  payments and  terminated  such lease
        because the lessor failed to obtain a certificate of occupancy. However,
        the Company  continued to occupy the space through  September 1995 until
        it  relocated  to a new  facility.  The  landlord  has  commenced a suit
        against the Company for unpaid rent and for funds to make  repairs.  The
        resolution of this matter is presently uncertain.  However, any possible
        settlement  is not expected to have a material  effect on the  financial
        position  and  results  of   operations  of  the  Company  if  concluded
        unfavorably.

        Certain claims,  suits and complaints  arising in the ordinary course of
        business  have been filed or are  pending  against the  Company.  In the
        opinion of management, all matters are without merit or of such kind, or
        involve  such  amounts,  as would  not  have a  material  effect  on the
        financial position and results of operations of the Company if concluded
        unfavorably.

        While the Company has not experienced any product  liability  claims, it
        presently  cannot be  determined if its product  liability  insurance is
        adequate to cover any losses that may arise.

5.      Series A preferred stock:

        The  Series A  preferred  stock  issued  on July 31,  1992  bears  stock
        issuance  rights  entitling  the holder  thereof to the  issuance  of 10
        shares of common stock, up to a maximum aggregate amount of 30 shares of
        common stock, for each share of Series A preferred stock for each of the
        following  conditions  that are  met:  The  Company  has net  income  of
        $750,000 during any of the complete fiscal years  immediately  after the
        date of the public  offering  (December  1992);  the  Company  has gross
        revenue of  $20,000,000  during any of the five  complete  fiscal  years
        after the date of the public offering;  the Company has gross revenue of
        $35,000,000  during any of the five complete fiscal years after the date
        of the public  offering;  and a cumulative  total of 50% of the warrants
        issued  in  the  public  offering  (the  "public  warrants")  have  been
        exercised.  The issuance of the final 10 of 30 shares of common stock in
        respect of each share of preferred  stock  constitutes  a conversion  of
        each  share of the  Series A  Preferred  Stock  into 10 shares of common
        stock,  and the ceasing of all further rights of the holders of Series A
        Preferred Stock.

        If the  period  during  which the  shares of common  stock are  issuable
        lapses and each  Series A preferred  stockholder  has not been issued 30
        shares of common  stock,  then each share of Series A preferred is to be
        redeemed  at the  liquidation  preference  price of $.10 per share.  All
        shares of common stock  issuable  with respect to the Series A preferred
        stock  and not previously  issued are to be  issued  if the  Company  is
        acquired,  provided  that if the common  stock  continues to be publicly
        traded,  the average bid price  during the prior 90 days is greater than
        or equal to $5.00 per share (the initial  public  offering  price of the
        common stock).

        For the year ended  December  31,  1995,  the  Company had net income in
        excess of  $750,000.  Accordingly,  the Series A preferred  shareholders
        were  entitled  to 10  shares  of the  common  stock  for each  Series A
        preferred share owned. However,  three preferred shareholders holding an
        aggregate of 23,552 preferred shares relinquished their right to receive
        an issuance of an aggregate of 235,520  shares of the  Company's  common
        stock. In consideration  for  relinquishing  their rights to that common
        stock, the Company granted the three preferred  shareholders  options to
        acquire an aggregate of 235,520 shares of the common stock.  The options
        have an  exercise  price  of  $4.50  (the  quoted  market  price  on the
        effective date of grant),  are  outstanding  and exercisable as of March
        31, 1997 and expire in January,  2006. The three preferred  shareholders
        are also major common stockholders of the Company.  The remaining 14,480
        common shares were issued to the other preferred stockholders in 1996.

        During  the  six-month  period  ended June 30,  1997,  the  Company  (1)
        determined  that the gross revenue for the year ending December 31, 1997
        would exceed  $20,000,000 and (2) notify holders of the Company's public
        warrants that it was redeeming the public  warrants  effective  July 16,
        1997.  During August 1997, the Company's  gross revenues from January 1,
        1997 to date exceeded the $20,000,000  threshold.  In addition,  on July
        16, 1997, a cumulative  total of 402,390 public  warrants were exercised
        resulting in total proceeds of $3,017,925.  These  accomplishments  give
        rise to 500,000 shares of the Company's common stock to be issued to the
        preferred  shareholders  approximately  95% of which  will be  issued to
        either presently or formerly served the Company as directors,  officers,
        employees  and  consultants  of the  Company.  Accordingly,  for the six
        months  ended  June 30,  1997,  the  Company  provided  for  stock-based
        compensation  of  $3,844,531,  resulting  from  meeting  two  additional
        preferred  stock  conditions.   The  expected  stock  issuance  for  the
        remaining 5% of the preferred  stock,  held by individuals not otherwise
        involved with the Company, has no effect on results of operations.

        The 500,000  shares of the  Company's  common  stock to be issued to the
        preferred shareholders pursuant to the conversion provision described in
        the  first  paragraph  of  this  Note 5, is  reported  in the  Company's
        consolidated balance sheet as having been completed by June 30, 1997.


6.      Pro-forma data:

        Pro-forma  data for the three and six-month  periods ended June 30, 1997
        and 1996 as  though  the  business  combination  had been  completed  on
        January 1, 1996 are as follows:

<TABLE>

<S>                        <C>          <C>            <C>            <C>
                            For the Three Months          For the Six Months
                                ended June 30,              ended June 30,
                            --------------------         ---------------------
                            1997          1996         1997          1996
                         ---------      --------     --------      ---------

Revenue               $  11,106,000   $ 8,550,000   $ 18,826,000   $ 12,655,000

Income (loss) from 
 continuing operations   (1,948,000)    1,619,000       (465,000)     2,009,000

Net income (loss)        (2,689,000)      978,000     (1,825,000)     1,342,000

Net income (loss) per 
 share of common stock:
        Primary       $        (.59)  $      .24    $       (.40)  $        .40
        Fully diluted          (.54)         .24            (.36)           .40

</TABLE>


<PAGE>



7.       Statement of cash flows:

<TABLE>

<S>                                                    <C>              <C>
   Supplemental disclosures:

                                                        1997            1996
                                                    -----------     ------------
   Interest paid                                  $     124,377     $    24,074
   Income taxes paid                                  2,165,000            -
   Noncash investing and financing activities:
      Common stock issued as partial consideration 
          for the purchase of the acquired company    2,701,650            -
      Cash consideration and acquisition costs 
          payable for the purchase of the acquired 
          company                                     2,447,258            -
      Conversion of preferred stock                       2,500            -

</TABLE>