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 September 30, 1997

[    ] 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 November
14,1997, 4,708,991 shares of the issuer's common equity were outstanding.




                                       PART I


ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS.
                                                            Page
Consolidated Balance Sheet as of September 30, 1997         F- 1

Consolidated Statement of Operations for the three
and nine months ended September 30, 1997 and 1996           F- 2

Consolidated Statement of Cash Flows for the
nine months ended September 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 ear plugs. In addition, the Company markets
and  distributes  bicycles and  bicycle-related  products,  and other safety and
medical supplies.

     On August 5, 1997, the Company expanded its line of protective  products by
acquiring 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, by merging
Flents with and into the Company's wholly owned subsidiary, Flents Products Co.,
Inc., a Delaware corporation ("Flents Merger Sub"), pursuant to an Agreement and
Plan of Merger  among the  foregoing  entities.  From and after  August 5, 1997,
Flents had no separate or independent existence,  having been merged into Flents
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").


                        RESULTS OF CONTINUING OPERATIONS


     Third Quarter 1997 Compared to Third Quarter 1996

     The Company's net sales were $8,502,729  during the quarter ended September
30, 1997, an increase of 108% from net sales of $4,087,524 during the comparable
quarter in 1996. The 108% 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,   which  the  Company  recently
introduced; the introduction of new accessory product lines; and sales of safety
equipment and medical supplies by Flents Merger Sub.

     Net income was $624,663 for the quarter ended September 30, 1997,  compared
to net income of $158,750 during the same period in 1996. The 293.5% increase in
net income was due to increased sales by the Company, and the inclusion of sales
of Flents Merger Sub.

     The cost of sales for the quarter ended  September 30, 1997 was  $5,788,009
(resulting in a gross profit margin of 31.9%)  compared to the Company's cost of
sales of  $3,142,180  (resulting  in a gross  profit  margin of  23.1%)  for the
quarter ended September 30, 1996.

     Selling,   general  and  administrative  expenses  for  the  quarter  ended
September 30, 1997 were $1,614,017,  compared to the Company's selling,  general
and  administrative  expenses of $687,080 for the quarter  ended  September  30,
1996.  As a percentage  of sales,  these  expenses  were 19.0% and 16.8% for the
quarters ended September 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,  the  Company's  opening of an
additional  office  in San  Diego,  California,  and the  selling,  general  and
administrative expenses of Flents Merger Sub.


                  Nine Months Ended September 30, 1997 Compared
                     To Nine Months Ended September 30, 1996

     The  Company's  net sales were  $24,675,644  during the nine  months  ended
September  30, 1997, an increase of 82.3% from net sales of  $13,532,363  during
the  comparable  nine months in 1996. The 82.3% sales increase from 1996 to 1997
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, which the company
recently
introduced;  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 Merger Sub.

     Net loss was  $1,427,882  during the nine months ended  September 30, 1997,
compared to a net income of $1,286,119 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 shares of the Company's  series A Preferred Stock into
shares of the Company's common stock. After the conversion,  no shares of Series
A Preferred Stock remain outstanding.  See note 5 to the Consolidated  Financial
statements.  Without this charge  reflecting the conversion,  net income for the
none-month  period  would have been  $2,416,649,  an  increase of 88.0% from the
nine-month period ended September 30, 1996.

     The  cost of  sales  for the  nine  months  ended  September  30,  1997 was
$16,732,575  (resulting in a gross profit  margin of 32.2%)  compared to cost of
sales of  $9,717,716  (yielding  a gross  profit  margin of 28.2%)  for the nine
months ended September 30, 1996.

     Selling,  general and  administrative  expenses  for the nine months  ended
September  30,  1997  were  $3,472,700  (not  including  the  one-time  non-cash
accounting charge described above),  compared to the Company's selling,  general
and  administrative  expenses of $1,901,156 for the nine months ended  September
30, 1996. As a percentage of sales,  these expenses were 15.2% and 14.0% for the
nine months  ended  September  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,  the  Company's  opening of an
additional  office  in San  Diego,  California,  and the  selling,  general  and
administrative expenses of Flents Merger Sub.


                                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
$276,700;  through  internal  cash  flow;  and  through  the  Company  opening 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 15, 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
$525 to redeem those Redeemable Public Warrants which remained unexercised as of
July 15,  1997.  Currently,  the  Company  does not have any  Redeemable  Public
Warrants outstanding.

     On May 6, 1996, as described  above, the Company opened a revolving line of
credit at Key Bank of New York.  The line of  credit  is  collateralized  by the
Company's inventory, receivables and other assets. As of September 30, 1997, the
Company had $3,327,700 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 ("Harbor"), the alleged owner
of the manufacturing  facilities occupied by the Operating  Subsidiary 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  Operating  Subsidiary  denied 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. In or about October,  1997, the Operating  Subsidiary and Harbor
entered  into a lease with  respect to the  premises  whereby  Harbor  agreed to
discontinue its lawsuit, and the Operating Subsidiary agreed to enter into a new
lease with respect to the premises. See Item 5.

     GKN Securities  Corp.  ("GKN"),  an entity which the Company  retained as a
financial agent and consultant,  has commenced an arbitration proceeding against
the Company pursuant to a Financial  Advisory and Investment  Banking  Agreement
(the "Agreement") entered into between GKN and the Company effective as of April
2,  1996.  GKN seeks  damages  of  $12,500  allegedly  due and  owing  under the
Agreement,  and specific  performance  of the  Agreement  whereby the Company is
allegedly  obligated to grant to GKN 75,000,  four-year warrants to purchase the
common  stock of the  Company at an  exercise  price of $5.875  per  share.  The
Company denies the material  allegations of the Demand for Arbitration,  and has
asserted  a  counterclaim  in  the  amount  of  $100,000,  alleging  that  GKN's
non-performance  of its  obligations  pursuant to the  Agreement has damaged the
Company.


ITEM 5.   OTHER INFORMATION.

     On October 17,  1997,  the Company  entered into a new lease with Harbor at
Hastings  Associates  for expanded  space  consisting of  approximately  175,000
square feet of usable  space for a term ending on December  31, 2000 for a fixed
annual rent of  approximately  $614,000,  plus certain payments for increases in
taxes imposed upon the demised  premises.  The Company is responsible for paying
for the costs of renovating the demised  premises.  The Company also obtained an
offset to its current rent in the full amount of the  unamortized  advances that
the Company made on behalf of the landlord  for prior  renovations.  The Company
plans to consolidate the operations of Flents Merger Sub into its main facility.
The Company  expects that the lawsuit  commenced  by Harbor at Hastings  will be
dismissed in the near future without any liability for the Company. See Item 1.


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

           10.10    Line 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

           10.11    Financial 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

           10.12    Amendment  #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

           10.13    Amendment #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

           10.14    Agreement and Plan of Merger, dated July 25,
                    1997, among PTI Holding Inc., Flents Product
                    Co., Inc. (a Delaware corporation) and Flents
                    Product Co., Inc. (a New York corporation)
                    incorporated by reference to exhibit number 1
                    in Registrant's Current Report on Form 8-K
                    dated August 20, 1997, under the Securities
                    Exchange Act of 1934, as amended


           10.15    Amendment to Agreement and Plan of Merger,
                    dated July 25, 1997, among PTI Holding Inc.,
                    Flents Product Co., Inc. (a Delaware
                    corporation), Flents Product Co., Inc. (a New
                    York corporation), W. Thomas Davies, James E.
                    Dunn, Stuart M. Low, Robert A. Low, Doris L.
                    Hirsch, Lester C. Migdal, Peter C. Kohn and
                    Mary Lou Secchi incorporated by reference to
                    exhibit number 2 in Registrant's Current
                    Report on Form 8-K dated August 20, 1997,
                    under the Securities Exchange Act of 1934, as
                    amended

           10.16    Certificates of Merger for the State of New
                    York and the State of Delaware, each dated
                    August 5, 1997, of Flents Products Co., Inc.
                    (a New York corporation) into Flents Product
                    Co., Inc. (a Delaware
                    corporation)incorporated by reference to
                    exhibit number 3 in Registrant's Current
                    Report on Form 8-K dated August 20, 1997,
                    under the Securities Exchange Act of 1934, as
                    amended

           10.17    Noncompetition Agreement, dated August 5,
                    1997, among PTI Holding Inc., Flents Products
                    Co., Inc. (a Delaware corporation) and Stuart
                    M. Low incorporated by reference to exhibit
                    number 4 in Registrant's Current Report on
                    Form 8-K dated August 20, 1997, under the
                    Securities Exchange Act of 1934, as amended

           10.18    Noncompetition Agreement, dated August 5,
                    1997, among PTI Holding Inc., Flents Products
                    Co., Inc. (a Delaware corporation), W. Thomas
                    Davies, and James E. Dunn incorporated by
                    reference to exhibit number 5 in Registrant's
                    Current Report on Form 8-K dated August 20,
                    1997, under the Securities Exchange Act of
                    1934, as amended

           10.19    Consulting Agreement, dated August 5, 1997,
                    between Flents Products Co., Inc. (a Delaware
                    corporation) and Stuart M. Low incorporated
                    by reference to exhibit number 6 in
                    Registrant's Current Report on Form 8-K dated
                    August 20, 1997, under the Securities
                    Exchange Act of 1934, as amended

           10.20    Employment Agreement, dated August 5, 1997,
                    between Flents Products Co., Inc. (a Delaware
                    corporation) and W. Thomas Davies
                    incorporated by reference to exhibit number 7
                    in Registrant's Current Report on Form 8-K
                    dated August 20, 1997, under the Securities
                    Exchange Act of 1934, as amended

           10.21    Employment Agreement, dated August 5, 1997,
                    between Flents Products Co., Inc. (a Delaware
                    corporation) and James E. Dunn incorporated
                    by reference to exhibit number 8 in
                    Registrant's Current Report on Form 8-K dated
                    August 20, 1997, under the Securities
                    Exchange Act of 1934, as amended

           10.22    Convertible Value and Registration Rights
                    Agreement, dated August 5, 1997, among PTI
                    Holding Inc., W. Thomas Davies, James E.
                    Dunn, Stuart M. Low, Doris L. Hirsch, Peter
                    C. Kohn, Robert A. Low, Lester C. Migdal, and
                    Mary Lou Secchi incorporated by reference to
                    exhibit number 9 in Registrant's Current
                    Report on Form 8-K dated August 20, 1997,
                    under the Securities Exchange Act of 1934, as
                    amended



     (b)  Reports on Form 8-K

     The  Registrant  filed two  reports on Form 8-K during  the  quarter  ended
September 30, 1997.

           (i) On August 20, 1997 the Registrant  filed a Current Report on Form
     8-K with  respect to Item 2:  Acquisition  or  Disposition  of Assets.  The
     Company  amended  this Form 8-K on October 20,  1997 to file the  Financial
     Statements and the Pro-Forma Financial  Information  required in connection
     with the Registrant's acquisition of Flents Products Co., Inc.

           (ii) On September 2, 1997 the  Registrant  filed a Current  Report on
     Form  8-K  with  respect  to Item 4:  Changes  In  Registrant's  Certifying
     Accountant.










<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:  November 14, 1997


               PTI HOLDING INC.




               By:  /s/ Meredith W. Birrittella
                    Meredith W. Birrittella,
                    Chief Executive Officer




               By:  /s/ Anthony Costanzo
                    Anthony Costanzo
                    Chief Financial Officer
                    Authorized Signatory

<PAGE>
<TABLE>

                        PTI HOLDING INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                   (Unaudited)

                               SEPTEMBER 30, 1997

ASSETS
<C>                                                                                                 <S>                   
Current assets:
   Cash and cash equivalents                                                              $      730,105
   Accounts receivable, net of allowance for returns and doubtful collections of $228,406      5,938,695
   Inventories                                                                                 8,859,454
   Deferred tax asset                                                                            285,600
   Prepaid expenses and other current assets                                                   1,380,467
                                                                                            ------------
   Total current assets                                                                       17,194,321

Equipment and improvements, net of accumulated depreciation of $1,202,115
                                                                                               1,026,294
Deferred tax asset                                                                               125,200
Goodwill, net of accumulated amortization of $157,456                                          4,272,866
Covenants not to compete, net of accumulated amortization of $408,785                            109,915
Patents & trademarks, net of accumulated amortization of $1,237                                    6,302
                                                                                            ------------

                                                                                            $ 22,734,898
                                                                                            ============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Loan payable, bank                                                                       $  3,327,700
   Accounts payable and accrued expenses                                                       3,515,483
   Due to former key employee of acquired company                                                 56,999
   Income taxes payable                                                                          101,562
                                                                                            ------------
   Total current liabilities                                                                   7,001,744
                                                                                            ------------

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
      4,707,491 shares                                                                            47,075
   Capital in excess of par                                                                   16,040,317
   Deficit                                                                                      (354,238
                                                                                            ------------
   Total stockholders' equity                                                                 15,733,154
                                                                                            ------------

                                                                                            $ 22,734,898
                                                                                            ============
</TABLE>

<PAGE>

<TABLE>

                        PTI HOLDING INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

              THREE & NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996



                                                         For the Three Months ended                   For the Nine Months ended
                                                               September 30,                                September 30,
                                                    -----------------------------------------    -----------------------------------
                                                       1997                   1996                  1997                  1996
                                                    ------------          -------------          ------------           -----------
<C>                                                         <S>                   <S>                    <S>                 <S>
Net sales                                      $       8,502,729     $        4,087,524     $      24,675,644     $      13,532,363

Cost of sales                                          5,788,009              3,142,180            16,732,575             9,717,716
                                                    ------------           ------------          ------------           -----------
Gross profit                                           2,714,720                945,344             7,943,069             3,814,647
                                                    ------------           ------------          ------------           -----------

Selling, general and administrative expenses:
   SG&A - before stock-based compensation              1,614,017                687,080             3,742,700             1,901,156
   Non recurring stock-based compensation
   expense                                                  -                      -                3,844,531                  -
                                                    ------------           ------------          ------------           -----------

                                                       1,614,017                687,080             7,587,231             1,901,156
                                                    ------------           ------------          ------------           -----------

Income from operations                                 1,100,703                258,264               355,838             1,913,491

Interest income, net of interest (expense)               (55,271)                22,166              (140,954)               12,708
                                                    ------------           ------------          ------------           -----------

Income before income taxes                             1,045,432                280,430               214,884             1,926,199

Income  taxes                                            420,769                121,680             1,642,766               640,080
                                                    ------------          -------------          ------------           -----------

Net income (loss)                                        624,663                158,750            (1,427,882)            1,286,119
                                                    ============          =============          ============           ===========
 

Net income (loss) per share of common stock:
   Primary                                     $             .13     $              .04     $            (.34 )   $             .33
   Fully diluted                                             .13                    .04                  (.30 )                 .33


Weighted average shares outstanding:
   Primary                                             4,650,601              4,216,889             4,252,201             3,891,973
   Fully diluted                                       4,869,539              4,216,889             4,720,107             3,891,973



</TABLE>


<PAGE>
<TABLE>



                                             PTI HOLDING INC. AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENT OF CASH FLOWS
                                                        (Unaudited)

                                       NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996

                                                                                          1997                    1996
                                                                                      ------------            ----------
<C>                                                                                         <S>                    <S>              
Cash flows from operating activities:
   Net income (loss)                                                          $        (1,427,882)    $        1,286,119
   Adjustments to reconcile net income (loss) to net cash (used in)
      operating activities:
         Depreciation                                                                     370,334                236,739
         Amortization of intangible assets                                                109,604                109,519
         Deferred income tax (benefit)                                                    (92,277)                29,200
         Stock- based compensation                                                      3,844,531                      -
         (Increase) in operating assets exclusive of the effects of the business
            combination:
            Accounts receivable                                                        (1,732,667)            (1,584,074)
            Inventories                                                                (4,377,532)            (1,641,639)
            Prepaid expenses and other current assets                                    (205,846)              (521,121)
         (Decrease) increase in operating  liabilities  exclusive of the effects
            of business combination:
            Accounts payable and accrued expenses                                       2,244,598                913,985
            Income taxes payable                                                         (976,913)               610,880
                                                                                      ------------            -----------

   Net cash (used in) operating activities                                             (2,244,050)              (560,392)
                                                                                      ------------            -----------

Cash flows from investing activities:
   Cash payment as partial consideration for purchase of acquired
      company and acquisition costs, net of cash acquired in the
      business combination.                                                            (1,855,289)                  -
   Purchase of equipment and improvements                                                (742,013)              (325,538)
   Reduction in cash invested to secure letters of credit                                    -                   208,750
                                                                                      -----------             ----------

   Net cash (used in) investing activities                                             (2,597,302)              (116,788)
                                                                                      -----------             -----------

Cash flows from financing activities:
   Payments of  amounts due to former key employee of acquired company
                                                                                          (23,583)               (41,309)
   Proceeds from issuance of common stock                                               3,101,661                198,438
   Proceeds from bank loan, net                                                         2,131,501                      -
                                                                                      -----------             ----------

   Net cash provided by financing activities                                            5,209,579                157,129
                                                                                      -----------             ----------

Net increase (decrease) in cash and cash equivalents                                      368,227               (520,051)

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


Cash and cash equivalents, end of period                                      $           730,105     $          449,278
                                                                                      ===========             ==========

</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 September 30, 1997 and
        the results of  operations  and cash flows for the three and nine months
        ended  September  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  of  Financial  Accounting  Standards  No. 128  ("SFAS  128"),
        "Earnings  Per Share".  This  statement  establishes  new  standards for
        computing  and  presenting  earnings  per  share  (EPS),  replacing  the
        presentation  of currently  required  primary EPS with a presentation of
        basic EPS. For entities with complex capital  structures,  the statement
        requires dual presentation of both basic EPS and diluted EPS on the face
        of the statement of  operations.  Under this new standard,  basic EPS is
        computed based on weighted  average shares  outstanding and excludes any
        potential  dilution.  Diluted EPS reflects  potential  dilution from the
        exercise or  conversion  of  securities  into common stock or from other
        contracts to issue common  stock.  SFAS 128 is effective  for  financial
        statements  issued for years ending after December 15, 1997, and earlier
        application is not permitted. When adopted, the Company will be required
        to restate  its EPS data for all prior  periods  presented.  The Company
        does not expect  the  impact of the  adoption  of this  statement  to be
        material to previously reported EPS amounts.


2.       Business combination:

        On August 5, 1997, the Company  acquired,  Flents  Products Co., Inc., a
        New York  corporation  ("Flents-New  York")  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: 270,165 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.      Commitments and 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.

        On October 17, 1997, the Company entered into a new lease with Harbor at
        Hastings  Associates  for expanded  space at its primary  facility.  The
        lease has a term ending on December  31, 2000 for a fixed annual rent of
        approximately  $614,000  plus  certain  payments  for  increases in real
        estate  taxes.  The  Company is  responsible  for paying for the cost of
        renovating  the  premises . The Company  also  obtained an offset to its
        current  rent in the full amount of the  unamortized  advances  that the
        Company made on behalf of the landlord for prior renovations.

        An  entity  which  the  Company   retained  as  a  financial  agent  and
        consultant, has commenced an arbitration against the Company pursuant to
        a Financial  Advisory  and  Investment  Banking  Agreement  entered into
        between the  consultant  and the Company  effective as of April 2, 1997.
        The consultant  seeks damages of $12,500  alledgedly due and owing under
        the agreement,  and specific  performance of the agreement,  whereby the
        Company is  alledgedly  obligated  to grant to the  consultant,  75,000,
        four-year  warrants  to purchase  the common  stock of the Company at an
        exercise  price of $5.875 per share.  The  Company  denies the  material
        allegations  of  the  Demand  for   Arbitration,   and  has  asserted  a
        counterclaim in the amount of $100,000,  alleging that the  consultant's
        non-performance of its obligations pursuant to the agreement has damaged
        the Company.

        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 three 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.

        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
        September  30, 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)  notified  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.  As a result of the Company's
        meeting these two  conditions,  an aggregate of 500,000 shares of common
        stock are issuable to holders of the Company's Series A preferred stock.
        Approximately  95% of the shares of common stock issuable will be issued
        to  either  present  or  former  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 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.




6.      Pro-forma data:

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

<TABLE>

                                                For the Three Months ended Sept. 30,         For the Nine Months ended Sept. 30,
                                              -----------------------------------------    ----------------------------------------
                                                    1997                   1996                  1997                  1996
                                              ------------------    -------------------    ------------------    ------------------
<C>                                                    <S>                      <S>                 <S>                      <S>
Revenue                                       $       8,524,000     $        5,501,000     $      27,355,000     $      18,348,000

Income from continuing operations                     1,054,000                432,000               399,000             2,397,000

Net income (loss)                                       630,000                235,000            (1,458,000)            1,614,000

Net income (loss) per share of common stock:
        Primary                               $             .14     $              .06     $            (.33)    $             .39
        Fully diluted                                       .13                    .06                  (.30)                  .39


</TABLE>

<PAGE>



7. Statement of cash flows:


   Supplemental disclosures:
<TABLE>
                                                                                     Nine Months ended September 30,
                                                                              -------------------------------------------
                                                                                          1997                     1996
                                                                                    -------------              ----------       
   <C>                                                                                      <S>                    <S>              
   Interest paid                                                              $           209,977     $           24,074
   Income taxes paid                                                                    2,740,004                  4,160
   Noncash investing and financing activities:
      Common stock issued as partial consideration for the purchase of
      the acquired company                                                              2,701,650                      -
      Conversion of preferred stock                                                         2,500                      -

</TABLE>