SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB/A
                                 AMENDMENT NO. 1

(Mark One)

        [X]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                        EXCHANGE ACT OF 1934

                   For the quarterly period ended March 31, 2001

        [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                        EXCHANGE ACT OF 1934

             For the transition period from         to

                      Commission file number 000-31631

                          PERMA-TUNE ELECTRONICS, INC.
        (Exact name of small business issuer as specified in its charter)

               TEXAS                                    75-2510791
  (State or other jurisdiction of            (IRS Employer Identification No.)
   incorporation or organization)

                 111SOUTH  BIRMINGHAM  STREET,  WYLIE,  TEXAS 75098  (Address of
                    principal executive offices)

                                 (972) 442-6774
                         (Issuer's telephone number)


    Check  whether the issuer (1) has 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 the past 90 days. Yes [X] No [
]


     State the number of shares  outstanding of each of the issuer's  classes of
common equity. As of March 31, 2001 - 2,292,700 shares of Common Stock

                    Documents Incorporated by Reference: NONE

          Transitional Small Business Disclosure Format: Yes [ ] No [X]







<PAGE>


                          PERMA-TUNE ELECTRONICS, INC.
                                   FORM 10-QSB
                                      Index

                                                                         Page
                                                                        Number

PART I.    FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

       Balance Sheet as of March 31, 2001                                 3

       Statements of Operations for the three months
       ended March 31, 2001 and 2000                                      4

       Statements of Cash Flows for the three months
       ended March 31, 2001 and 2000                                      5

       Notes to Financial Statements                                      6

Item 2. Management's Discussion and Analysis of Financial Condition      12
        and Results of Operations


Part II.   OTHER INFORMATION                                             23

Item 1.    Legal Proceedings                                             23

Item 2.    Change in Securities and Use of Proceeds                      23

Item 3.    Defaults Upon Senior Securities                               23

Item 4.    Submission of Matters to a Vote of Security Holders           23

Item 5.    Other Information                                             23

Item 6.    Exhibits and Reports on Form 8-K                              23

SIGNATURES                                                               24



                                       2




<PAGE>

PART I.    FINANCIAL INFORMATION
Item 1.    Financial Statements

                           PERMA-TUNE ELECTRONICS, INC
                                  Balance Sheet
                                   (Unaudited)

                                                                    March 31,
                                                                      2001
                                                              -----------------
  ASSETS
 Current assets:
     Cash                                                   $             7,084
     Accounts receivable, trade                                          15,505
     Inventory                                                           38,546
     Deposits                                                               160
                                                              -----------------
       Total current assets                                              61,295
                                                              -----------------
 Property, plant and equipment:
     Molds and tooling                                                    5,523
     Leasehold improvements                                               3,127
     Machinery and equipment                                             54,574
                                                              -----------------
                                                                         63,224
     Less accumulated depreciation                                       53,971
                                                              -----------------
                                                                          9,253
                                                              -----------------
                                                            $            70,548
                                                              =================
 LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
     Line of credit                                         $            19,600
     Accounts payable, trade                                             46,624
     Accrued liabilities                                                  5,830
     Note payable - stockholder                                          40,000
                                                              -----------------
       Total current liabilities                                        112,054
                                                              -----------------
 Note payable - stockholder                                                   -
                                                              -----------------
 Stockholders' deficit:
     Common stock - 10,000,000 shares of no par stock
       authorized, 2,292,700, and 2,142,700 issued and
       outstanding as of March 31, 2001 and 2000,
       respectively                                                     243,395
     Additional paid-in capital                                          15,550
     Accumulated deficit                                               (300,451)
                                                              -----------------
       Total stockholders' deficit                                      (41,506)
                                                              -----------------

                                                            $            70,548
                                                              =================

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

                                       3
<PAGE>

                          PERMA-TUNE ELECTRONICS, INC.
                            Statements of Operations
                                   (Unaudited)

                                               For the Three Months Ended
                                                         March 31,
                                            -------------------------------
                                                2001               2000
                                            ------------     ---------------


 Net sales                                  $     53,319     $        49,407

 Cost of goods sold                               25,831              20,064
                                            ------------     ---------------

 Gross profit                                     27,488              29,343
                                            ------------     ---------------

 Operating expenses:
 General and administrative                       50,396              22,324
 Legal and professional                           30,296              18,038
 Research and development                          1,559                 276
 Depreciation                                        841               1,075
                                            ------------     ---------------
                                                  83,092              41,713
                                            ------------     ---------------

 Loss from operations                            (55,604)            (12,370)
                                            ------------     ---------------

 Other income (expense):
 Interest expense                                 (1,414)             (1,425)
 Consulting                                        5,001                   -
                                            ------------     ---------------
                                                   3,587              (1,425)
                                            ------------     ---------------
 Loss before federal income tax                  (52,017)            (13,795)

 Provision for federal income tax                      -                   -
                                            ------------     ---------------

 Net loss                                   $    (52,017)    $       (13,795)
                                            ============     ===============

 Loss per share:
 Basic                                      $     (0.023)    $        (0.006)
                                            ============     ===============
 Diluted                                    $     (0.023)    $        (0.006)
                                            ============     ===============

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

                                       4

<PAGE>
<TABLE>
<CAPTION>
                               PERMA-TUNE ELECTRONICS, INC.
                                 Statements of Cash Flows
                                       (Unaudited)

                                                              For the Three Months Ended
                                                                      March 31,
                                                           --------------------------------
                                                               2001              2000
                                                           --------------    --------------
 <S>                                                     <C>               <C>
 Cash flows from operating activities:
 Net loss                                                $       (52,017)  $       (13,795)
                                                           --------------    --------------
 Adjustments to reconcile net loss to net cash used in operating activities:
 Depreciation                                                        841             1,075
 Changes in operating assets and liabilities:
 (Increase) decrease in trade accounts receivable                (11,956)            1,253
 Increase (decrease) in inventory                                 11,461            (8,544)
 Decrease in prepaid expenses                                      3,414                 -
 Increase in accounts payable                                     24,938            16,726
 Increase (decrease) in accrued expenses                               1           (11,443)
                                                           --------------    --------------
 Total adjustments                                                28,699              (933)
                                                           --------------    --------------

 Net cash used in operating activities                           (23,318)          (14,728)
                                                           --------------    --------------
 Cash flows used in investing activities:
 Acquisition of property and equipment                              (244)           (6,212)
                                                           --------------    --------------

 Cash flows from financing activities:
 Repayments of note payable                                            -                 -
 Proceeds from line of credit                                     21,800            13,500
 Repayments of line of credit                                     (2,200)                -
 Proceed from sale of stock                                            -                 -
                                                           --------------    --------------
 Net cash provided by financing activities                        19,600            13,500
                                                           --------------    --------------
 Decrease in cash                                                 (3,962)           (7,440)

 Cash, beginning of period                                        11,046            24,752
                                                           --------------    --------------
 Cash, end of period                                     $         7,084    $       17,312
                                                           ==============    ==============
 Cash paid during the period for:
   Interest                                              $         1,414    $        1,425
                                                           ==============    ==============
</TABLE>

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

                                       5


<PAGE>


                          PERMA-TUNE ELECTRONICS, INC.
                          Notes to Financial Statements
                             March 31, 2001 and 2000
                                   (Unaudited)

Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OPERATIONS

Perma-Tune  Electronics,  Inc. (the "Company") is a Texas  corporation  that was
incorporated in 1993. The Company is engaged in the manufacture and sale of high
performance  automobile ignition systems for distribution  throughout the United
States and Canada.

TRADE ACCOUNTS RECEIVABLE

The Company  provides  for  uncollectible  receivables  using an  allowance  for
doubtful  accounts.  As of March 31, 2001 and 2000,  the Company  considers  all
receivables  fully  collectible  and, as such, no allowance is included in trade
accounts receivable.

INVENTORIES

Inventories are valued at the lower of cost or market with cost being determined
using the first-in, first-out method and consist of the following at March 31:


                                     2001                          2000

     Raw materials         $          32,641            $            43,068

     Work in process                     664                              -
     Finished goods                    5,241                          4,259
                              -------------------          ------------------
                           $          38,546            $            47,327
                              ===================          ==================

PROPERTY, PLANT AND EQUIPMENT

Property,  plant  and  equipment  are  stated  at cost  and are  depreciated  or
amortized over the estimated useful lives and methods as summarized below:

     Asset Type                       Estimated Life             Method
     ----------                       --------------             ------
Molds and tooling                         5 years              Accelerated
Leasehold improvements                  5 - 7 years            Accelerated
Machinery and equipment                  Lease term           Straight-line



                                       6

<PAGE>


                          PERMA-TUNE ELECTRONICS, INC.
                          Notes to Financial Statements
                             March 31, 2001 and 2000
                                   (Unaudited)

Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

PROPERTY, PLANT AND EQUIPMENT - (continued)

Maintenance and repairs are expensed when incurred.  Material expenditures which
increase the life of an asset are capitalized and depreciated over the estimated
remaining  useful  life of the  asset.  The cost of assets  sold,  or  otherwise
disposed  of, and the related  accumulated  depreciation  are  removed  from the
accounts and any gains or losses are reflected in current operations.

Depreciation  expense for the three  months  ended March 31, 2001 and 2000,  was
$841 and $1,075, respectively.

FEDERAL INCOME TAXES

Deferred taxes are calculated on temporary  differences resulting from different
financial  and  income  tax  reporting  methods  used to  recognize  income  and
expenses.  These  differences  result  primarily  from methods used to calculate
depreciation and the allowance for doubtful accounts.

ADDITIONAL PAID-IN CAPITAL

The major shareholder of the Company,  Lonnie  Lenarduzzi,  contributed  $15,550
cash to the Company in 1994.

CONCENTRATION OF RISK

The Company  maintains its cash in bank deposit  accounts which,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
these accounts and believes it is not exposed to any significant risk on cash.

For the three months ended March 31, 2001, two customers  accounted for 28%, and
18%, respectively, of net sales.

For the three months ended March 31, 2000, two customers  accounted for 36%, and
15%, respectively, of net sales.

The breakdown of these net sales is as follows:

                              Net sales for the          Net sales for the
                              three months ended        three months ended
                                   3/31/01                 3/31/00
                            --------------------        -------------------
           A                $            -               $       17,568
           B                $            -               $        7,179
           C                $        14,795              $            -
           D                $         9,431              $            -

                                       7

<PAGE>


                          PERMA-TUNE ELECTRONICS, INC.
                          Notes to Financial Statements
                             March 31, 2001 and 2000
                                   (Unaudited)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued)

NET LOSS PER SHARE

Basic and diluted (loss) per share is calculated on the weighted  average number
of shares of common stock  outstanding  during the period.  The weighted average
number  of shares  outstanding  at March 31,  2001 and 2000 were  2,292,700  and
2,142,700, respectively.

REVENUE RECOGNITION AND PRODUCT WARRANTY


The Company sells its products to wholesale  distributors  on a no return policy
and revenue is recognized  at the time the products are shipped.  The product is
warrantied for defects for one year from the user's original  purchase,  and, at
management's  option, the Company will either repair or replace units that prove
to be defective.  As of December 31, 1999 and 1998,  the Company has  determined
that a warranty  provision is not  necessary  given the  extremely low number of
returned products during the Company's history.


The Digital Fire product  includes  software,  the Digital Fire Operating System
(DFOS), which is incidental.  Therefore, the costs of producing the software are
capitalized as inventory  along with the Digital Fire product on a unit specific
basis and  charged  to cost of goods  sold when  revenue  from the sale of those
units is recognized.

Additionally,  the Company has developed an accessory  software  product  termed
Digital Fire  Programming  Software  (DFPS).  The Company has not yet placed the
DFPS on the market.  The DFPS will be delivered on-line and is used to customize
the Digital Fire product for specific  applications.  The Company will recognize
revenue at the time the  software  is  delivered.  The costs to develop the DFPS
have been expensed as research and development.

STATEMENTS OF CASH FLOWS

For purposes of the statements of cash flows,  the Company  considers all highly
liquid financial instruments purchased with an original maturity of three months
or less to be cash  equivalents.  At March 31, 2001 and 2000, there were no cash
equivalents.

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the financial  statements  at, and during the reporting  periods.  Actual
results could differ from these estimates.


                                       8

<PAGE>


                          PERMA-TUNE ELECTRONICS, INC.
                          Notes to Financial Statements
                             March 31, 2001 and 2000
                                   (Unaudited)

Note 2 - INCOME TAXES

At March 31, 2001 and 2000, and for the three months then ended, the Company has
incurred net losses and, therefore,  has no tax liability.  The net deferred tax
asset  generated  by  the  loss  carry-forward  has  been  fully  reserved.  The
cumulative net operating loss  carry-forward is approximately  $300,000 at March
31, 2001 and will expire in the years 2011 through 2019.

The  provision  for federal  income tax consists of the  following for the three
months ended March 31:

                                                    2001              2000
                                                --------------    ------------
Current (provision) benefit                    $        -        $        -
Deferred (provision) benefit                            -                 -
                                                --------------    ------------
                                               $        -        $        -
                                                ==============    ============

Deferred income taxes consist of the following at March 31:

                                                     2001              2000
                                                --------------    ------------
Current:
    Deferred tax assets                        $        -        $        -
    Deferred tax asset valuation allowance              -                 -
                                                --------------    ------------

                                               $        -        $        -
                                                ==============    ============

Non-current:
    Deferred tax assets                        $   45,705        $   32,480
    Deferred tax asset valuation allowance        (45,705)          (32,480)
    Deferred tax liabilities                            -                 -
                                                --------------    ------------

                                               $        -        $        -
                                                ==============    ============

Note 3 - RELATED PARTY TRANSACTIONS

The Company has a $40,000 loan from a stockholder  that is  collateralized  by a
second  lien on  inventory.  The loan  accrues  interest  at 10%  with  interest
payments to be made quarterly and is due December 31, 2001.


                                       9

<PAGE>


                          PERMA-TUNE ELECTRONICS, INC.
                          Notes to Financial Statements
                             March 31, 2001 and 2000
                                   (Unaudited)

Note 3 - RELATED PARTY TRANSACTIONS - (Continued)

The Company has a license  agreement with its President  whereby it has acquired
all rights to  patents,  trademarks,  technical  information  and trade  secrets
through November 30, 2021 by payment of a yearly license fee of $1,000.


Note 4 - COMMITMENTS

On June 1, 2000,  the Company  entered  into an  agreement to extend its current
lease of office and production  facilities  under an operating lease through May
2005.  Lease  expense was $4,350 and $3,750 for each of the three months  ending
March 31, 2001 and 2000, respectively.

Minimum future lease rentals are as follows:

                             December 31,               Amount
                              ------------               ------
                                  2001                   18,300
                                  2002                   18,600
                                  2003                   18,600
                                  2004                   18,600
                                  2005                    7,750

Note 5 - WARRANTS

On December 8, 1997, the Company  issued an offering  circular for 125,000 units
priced at $2 per unit. Each unit purchased entitled the investor to one share of
common stock and three stock purchase warrants. Each warrant entitled the holder
to purchase one share of stock for $2. The  warrants  were to expire on December
31, 1999. However, the expiration date has been extended to December 31, 2001.

For the three months  ended March 31, 2001,  no  additional  warrants  have been
issued  or  exercised  and  at  March  31,  2001,   348,000  warrants   remained
outstanding.


Note 6 - LINE OF CREDIT

On January  12, 2001 the Company  entered  into a $15,000  line of credit with a
bank that is collateralized by the Company's accounts receivable,  inventory and
equipment.  The line was  renegotiated to $25,000 during the quarter ended March
31, 2001.  The line requires  monthly  payments of accrued  interest  accrued at
11.50% and matures on February 12, 2002.


                                       10

<PAGE>


Note 7 - CONTINUED OPERATIONS

As shown in the financial statements,  the Company incurred an operating loss of
approximately  $52,000  for the three  months  ended  March 31,  2001 and has an
accumulated deficit of approximately $300,000. Accordingly, there is substantial
doubt  about  the  Company's  ability  to  continue  as  a  going  concern.  The
accompanying financial statements do not include any adjustments relating to the
recoverability of assets or amounts of liabilities  should the Company be unable
to continue as a going concern. The accompanying  financial statements have been
prepared on a going concern basis,  which contemplates the realization of assets
and  liquidation of liabilities in the normal course of business.  Management is
committed  to  reducing  expenses,  and  continues  to attempt to raise  capital
through the issuance of common stock through.









                                       11


<PAGE>


Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations

General
-------
         The following  discussion  and analysis  should be read in  conjunction
with the Company's financial statements and related footnotes for the year ended
December 31, 2000 included in its Annual Report on Form 10-KSB.  The  discussion
of results,  causes and trends  should not be construed to imply any  conclusion
that such results or trends will necessarily continue in the future.

OVERVIEW

Since its  inception,  the Company has focused on the  production,  research and
development  of Porsche and  Ferrari  high  performance  ignition  systems.  The
Company's  principal  source of revenue has been from the Porsche  repair  parts
product  line.  In 1997 the Company  began  development  of new product lines to
supply many repair and performance  parts for a variety of cars and trucks.  The
Company cannot estimate the size of its marketplace.


Production,  profit  margin and  operational  efficiency  have all been  further
improved  in the  first  quarter  of  2001.  However,  the  Company  experienced
continuing  losses  due to the heavy  burdens of legal and  accounting  expenses
involved with fulfilling the requirements of a fully reporting  company.  At the
direction  of the SEC,  legal  and  accounting  fees  previously  classified  as
"Prepaid  Offering  Expenses"  were  reclassified  as "General &  Administrative
Expenses."  During  this  period,  we have been  limited in our ability to raise
capital from an offering of our stock and exercise of our warrants.  because the
Company's  stock  is  listed  on the  Pink  Sheets,  which  is not an  automated
quotation  system and is  characterized  by an extremely low volume of activity.
The Company's ability to raise equity capital will be impeded until it is listed
on the NASDAQ  Over the  Counter  Bulletin  Board.  Exercise  of warrants is not
attractive to shareholders at this time because the current stock price is lower
than their warrant price of $2.00 per share.


Management   believes  it  is  well   positioned   to  take   advantage  of  the
infrastructure  improvements  it has made  (implementation  of fully  integrated
manufacturing/data  base  accounting  software,  the dedication of an officer to
finance/SEC   compliance   and  marketing   planning,   outsourcing  of  certain
manufacturing functions) when significant capital becomes available.


Since the Company has not yet applied to be listed on the NASD OTC BB and raised
money from its  outstanding  warrants,  we have focused on our existing  product
lines to provide operating capital.  The Company has concentrated its efforts on
streamlining  and  increasing  the  production of its existing  product lines in
order to  eliminate  backorders  for  Porsche  products,  and to begin  shipping
Mercedes  products.  As of the end of the first quarter of 2001,  all backorders
have been eliminated and reserves of finished  product are in stock. The Company
expects  to  ship  future  orders  directly  from  stock  to  increase  customer
satisfaction and permit quicker collection of accounts receivable.


The Company is pursuing its plans to be listed on the OTC BB.


                                       12

<PAGE>



NEW PRODUCTS

The  Company  plans to make the  following  inventions  the basis of new product
lines.

The New Perma-Tune
------------------

The Rev. F  Perma-Tune  is the result of  technology  the company  developed  to
replace the original Perma-Tune design. The product can be expanded to Mercedes,
Honda and Toyota cars and trucks.  The new  Perma-Tune  product is both a repair
part and a performance/fuel economy enhancement for Ferrari, Porsche,  Mercedes,
Honda and  Toyota  vehicles.  The  Company  intends  to  continue  trade  secret
protection  of the  Perma-Tune  product  line.  The  Company  may  file a patent
application,  copyright  and or  trade  secret  protection  on some  aspects  of
Perma-Tune products for use on General Motors and Ford vehicles.

The Digital Fire
----------------

Digital Fire is the Company's newest product line designed for racecars only. It
competes with the makers of sophisticated  engine control  systems.  The Company
has delayed the introduction of the Digital Fire product line until it can raise
additional capital.  During this delay, the Company has continued development of
the  product  line with the recent  addition of Palm Pilot  interface  software.
Management  believes  that the  Digital  Fire Palm  Pilot  software  creates  an
affordable and  sophisticated  engine  control system that may have  mass-market
appeal.  This is because the  customer can adapt the software for his or her own
personal  needs.  The  Company  must  complete  production  tooling at a cost of
approximately  $60,000 and  complete  and amass an inventory of 100 units before
marketing the Digital Fire. Marketing expenses are estimated at $80,000.

The Company has designed the Digital Fire product line that generates revenue in
the manufacturing of hardware and software.  The Digital Fire involves two kinds
of software  akin to the desktop  computer.  The Digital Fire  Operating  System
(DFOS) is like Windows to a desktop computer and the Palm Pilot software is like
a word processor.  For the Digital Fire, DFOS is the software that determines if
the unit is a four  cylinder,  six  cylinder  or eight  cylinder  product.  This
software configures the Digital Fire for what kind of car it will be used on but
not what to do. The ability to change the "to do"  instructions  are intended to
fine  tune the  engine  for  maximum  performance  given  any  different  set of
variables at the race track.  During the last step of manufacture for each unit,
a special chip  containing  the DFOS is inserted that  determines  which type of
Digital  Fire the unit  will be.  Simply  programming  new DFOS can  create  new
features and products.  This software is not retrievable from any unit and it is
proprietary.  It cannot be altered once the unit is  completely  assembled.  The
Digital Fire Programming Software (DFPS) is the software that allows the user to
program the Digital Fire. This software can be continuously upgraded and


                                       13


<PAGE>


customized  like Word or any other user  interface.  This software  resides in a
Palm Pilot  personal  organizer.  It is very  inexpensive,  easy to use,  and is
connected  to the Internet via the desktop  computer or the new  Connected  Palm
Pilot.  The  Company  intends  to  continue  developing  new DFPS  designed  for
distribution  through the Internet or compact disk. The open architecture design
of the Digital  Fire may allow the Company to reduce DFPS  development  costs by
acquiring software developed by freelance programmers

New Product Research and Development: the Plasma Injector
---------------------------------------------------------

In 1997,  Laurence Livermore National Laboratory ("LLNL") approached the Company
with a request to develop a new kind of ignition  system with certain  technical
specifications.  The eventual  intended use for this ignitor was not revealed to
the Company by LLNL. At the time LLNL  approached  the Company,  we had no prior
experience in the field of plasma injection technology development.  To the best
of our knowledge,  we were not competing with any other company on this project.
The Company, at its expense, conducted the research necessary to develop special
ignitors to satisfy LLNL's requirements.  Prototype units were delivered to LLNL
in 1998. The Company retains the rights to the intellectual  property created in
the manufacture of these ignitors for LLNL,  although patent  protection has not
been applied for.

In 1999,  the U.S. Navy Surface  Weapons  Center  approached  the Company with a
requirement  for  a  device  with  technical  specifications  similar  to  those
requested by LLNL. In response to this request, the Company developed the Plasma
Injector.  To the best of our  knowledge,  we were not competing  with any other
company on this project. To date, seven Plasma Injectors have been manufactured;
one was sold to the U.S.  Navy, and six have been used by the Company in various
research  projects  aimed  at  developing  commercial   automotive,   space  and
industrial applications for the technology.

Plasma Injectors can be used to ignite liquid fuel rockets,  turbine engines, to
ignite boilers used in the petrochemical industry, and for commercial automotive
applications.  To date,  at  least  one  scientific  application  of the  Plasma
Injector  has been  established  with the sale of a  prototype  unit to  Bechtel
Nevada.  In June 2000,  Bechtel  incorporated the Plasma Injector into equipment
they use for a research program with the U.S. Department of Energy. Although the
Company is not under  long-term  contracts  with  LLNL,  the U.S.  Navy  Surface
Weapons  Research  Center  or  Bechtel,  we will  continue  to work  with  these
organizations,  and there are no restrictions on the Company's use of technology
developed in conjunction with any of these projects.

In  February  2000,  the  Company  began a dialog  with the Plasma  Science  and
Technology  Center at the  Massachusetts  Institute of Technology to incorporate
the Plasma  Injector into MIT's  Plasmatron.  The Plasmatron is an  experimental
device that reduces auto emissions by removing the danger of using clean burning
but volatile  hydrogen to power vehicles.  It works by splitting  hydrogen atoms
from  conventional  petroleum  just fast  enough for the  engine to consume  it,
thereby  eliminating the need to store hydrogen fuel onboard the vehicle.  As of
March 2001, that dialog has not progressed.

                                       14

<PAGE>

Management  intends to conduct more Plasma Injector research in combination with
its Digital  Fire during the next two years.  The Company has already  completed
the  interface  circuitry  between the Plasma  Injector and the Digital Fire. In
order to  investigate  the potential  market for  commercial  applications,  the
Company  will need to make other  engine  designers  and  engineers,  as well as
scientists, aware of the Plasma Injector technology.

This can be done via  advertising  in trade  publications  and via  Internet web
sites  for  an  estimated  cost  of  approximately  $20,000.  In  addition,  for
automotive  applications,  testing and customization will be performed to tailor
Plasma  Injector  systems  for  individual  vehicles  for an  estimated  cost of
approximately   $5,000.   A  White  Paper  describing  the  technology  and  its
pollution-reducing  benefits has been  written,  and has been  provided to Texas
legislators  and certain  scientists  engaged in the development of alternative,
clean fuels.

The Plasma Injector-to-Digital Fire interface circuitry Research and Development
program is complete,  but new product  development has been halted on the Honda,
Toyota,  GM and Digital  Fire  product  lines  pending  funding.  The Company is
working on finding new commercial  applications  for the Plasma Injector product
line.  Bechtel Nevada has purchased a Plasma Injector and has successfully  used
it in their scientific  experiments.  It is not known at this time if there will
be  subsequent  sales of the product for this  purpose.  The  dialogue  with MIT
concerning  the Plasma  Injector has not  progressed.  The Company has written a
white paper about its Plasma  Injector  technology,  which will be circulated in
the Texas legislature by the Company's public relations firm.


The company is currently able to manufacture Plasma Injectors utilizing existing
manufacturing  facilities without incurring  additional  expense.  However,  new
product  development and the expansion of our manufacturing staff and facilities
have been halted pending funding.



MARKETING STRATEGY

Management  has  retained  a public  relations  firm,  Shapiro  &  Company,  for
assistance in the planning and implementation of new product marketing strategy.
They have already created a marketing plan and Mercedes  brochures.  The Company
will continue to foster word of mouth  advertising  and will continue to conduct
sales training missions to the Company's wholesale distributors.


The Company sells to six wholesale  distributors who supply an unknown number of
distributors and retailers.  The products of the Company are sold throughout the
United  States.  All sales to  warehouse  distributors  are final.  There are no
rights of return.  The  Company  warrants  that its  products  will be free from
defects in  materials and workmanship for one  year from the time of purchase by


                                       15
<PAGE>


the end user. Should the Company determine that there are defects within the one
year period, management has a choice to repair or replace the defective unit. In
the first quarter of 2000, the Company repaired zero units and replaced 2 units;
in the first  quarter of 2001,  the Company  repaired  zero units and replaced 1
unit. Costs related to handling repairs and replacements have been insignificant
and immaterial  historically.  Adoption of SAB-101 will not affect our financial
statements  because of the  Company's  no right of return  (i.e.,  all sales are
final) policy.

The short-term strategy is to begin shipment of the Mercedes products in fall of
2001.  The Company  already has some of these products in inventory and is ready
to produce  more.  A  distribution  network  for these  parts has  already  been
established.  In speaking with its major distributors  (Worldpac,  Interamerican
Motor Corp.,  Performance  Products and SSF Imported Auto Parts, Inc.) regarding
the Mercedes  product line,  the Company has learned that they are interested in
carrying the line,  and that they have customers who are ready to buy it as soon
as they have  received  product  samples and price lists from the  Company.  The
Company does not have written commitments for these potential sales.

The interim  marketing  strategy is to develop the Honda and Toyota product line
in the last quarter of 2001,  and then move on to the  development of the market
for  Perma-Tune  products for domestic  makes in 2002. The product lines require
that  production  tooling be made,  for which funding is currently  unavailable.
Most of the Company's  distribution  network  already  includes Asian car parts.
There is  interest  in the  Perma-Tune  Toyota  repair  parts  because  there is
currently no aftermarket  supply available.  The Company knows of no aftermarket
manufacturing   companies   making   replacement   ignition  modules  for  these
automobiles.   In  1999  the  Company  began  negotiations  with  Toyota  Racing
Development  (TRD) for  distribution of the Perma-Tune  product line through TRD
catalogs and TRD retail shops  located  inside Toyota new car  dealerships.  The
Company has demonstrated  its applicable  technology to TRD. TRD engineering has
approved  the  basic  design.  Pending  contract  negotiations  for start up and
tooling costs and execution of non-disclosure agreements, the Company has agreed
to manufacture product for distribution under the TRD name. Since TRD has yet to
sign non-disclosure  agreements with the Company, requires that the Company fund
the tooling  required for  manufacturing,  and such funding is not  available at
this time, the project has not progressed.

All Perma-Tune  ignition  systems  designed for street vehicles are certified by
California  Air  Resources  Board  Executive  Order D-210.  There was no testing
required  to  obtain  this  certification   because,  in  compliance  with  CARB
regulations,  the Company  was able to state that its  products do not alter the
ignition  timing of the engine.  Therefore,  if the vehicle  meets EPA standards
with its original  ignition system, it will meet EPA standards with a Perma-Tune
ignition system installed on it.


                                       16

<PAGE>

2005 PLAN

Management  intends to expand its market globally.  The Company plans to combine
the Digital Fire and Plasma Injector technology into a new product line to allow
car manufacturers to meet new, stricter EPA air pollution standards.


MANUFACTURING OVERVIEW

Management has prepared for rapid growth. The Company's  manufacturing technique
is flexible  because of its modular design and it can respond easily to customer
demand.  Modules  can be  mass-produced  and  then  assembled  to meet  changing
purchase  orders.  Production  can be  increased  and  new  products  introduced
readily.  Currently  the  Company  is  operating  at a small  percentage  of its
manufacturing capacity.


RESULTS OF OPERATIONS

In the first quarter of 2001, the Company experienced 7.8% sales growth as gross
sales  increased  from  $49,407 in the first  quarter of 2000 to $53,319 for the
current  period.  A total of 251 units were sold in the first quarter of 2001 at
an average price of $185. A total of 284 units were sold in the first quarter of
2000 at an average price of $174. This change in average price per unit sold was
due primarily to a drop in the number of overall  sales of the older  Perma-Tune
product lines offset by the sale of more  profitable  new  products.  During the
2000 first quarter period,  the company was shipping against back orders to fill
orders for its current product line. In 2001 first quarter  period,  the company
was  shipping its current  product line from stock and shipped new product.  The
new product models shipped were the MB010, RV010, PR020, PL020, HN050, DF045 and
UFX79.

Gross profit in the first quarter of 2000 was $29,343 compared to $27,488 in the
first quarter of 2001. As a percentage of sales,  gross profit  decreased in the
first quarter of 2001 to 51.6% from 59.4% in the first quarter of 2000. This was
due to less sub  contracting of labor  intensive  operations in first quarter of
2001 than in 2000 due to financial restrictions.



General and  Administrative  (G & A) expenses  were  $50,396 and $ 22,324 in the
first quarters of 2001 and 2000,  respectively.  As a percentage of sales, G & A
expenses  increased to 94.5% from 45.2%.  This increase was due to Internet fees
and site  development  costs  ($4230.50) and an increase in legal and accounting
fees.  Legal and  accounting  fees  increased  during  this  period  due to fees
associated  with the  auditing of the  Company's  financials  for the year ended
December 31, 2000, and for fees associated  with services  related to completing
SEC  filings.  Other  income  increased  due to the receipt of  consulting  fees
associated with Mr. Lenarduzzi's research and development work with US MagneGas.


                                       17
<PAGE>

Interest expenses decreased slightly from $1,425 in the first quarter of 2000 to
$1,414 in the first quarter of 2001. Third-party debt levels remained consistent
for 2001 year to date.

Research and  development  expenses  were $276 in the first  quarter of 2000 and
$1,559 in the first quarter of 2001.

Since the  Company  incurred  net losses for both first  quarter  2000 and 2001,
there was no income tax liability for either quarter.  As of March 31, 2001, the
Company's  approximate  accumulated  losses were  $302,000 to be offset  against
future  income thru year end Dec. 32, 2012.  The majority of this net  operating
loss carry forward,  $272,000, has occurred in the last four years. This was the
direct result of increased R&D expenses for  developing  new products as well as
the costs associated with the public offering that will fund the mass production
of all product lines.


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

For the quarter  ended March 31, 2001,  the Company has not  generated  positive
cash  flow  from  its  own  operations  due to the  preliminary  nature  of such
operations,  ongoing  investment in research and development and expenditures to
build  the   appropriate   infrastructure   to  support  its  expected   growth.
Consequently, the Company has been dependent on private placements of its equity
securities and debt financing to fund its cash requirements, as well as revenues
provided by the normal operations of Perma-Tune.


On January 12, 2001 the Company  entered  into a $15,000 line of credit with The
American National Bank of Texas in Wylie that is collateralized by the Company's
accounts  receivable,  inventory and  equipment.  The line was  renegotiated  to
$25,000 on March 12,  2001,  with an  initial  interest  rate of 11.5%.  Accrued
interest is payable monthly, and the maturity date is March 12, 2002.


On December 8, 1997, the Company  issued an offering  circular for 125,000 units
priced at $2.00 per unit. Each unit entitled the investor to one share of common
stock and three stock  purchase  warrants.  Each warrant  entitled the holder to
purchase one share of stock for $2.00. The warrants expire on December 31, 2001.
At March 31, 2001, there are 348,000 warrants outstanding.

Proceeds  from the exercise of warrants are planned to fund  production  tooling
and start up costs of the Honda and Toyota products lines.  The Company plans to
manufacture the required  tooling  estimated at $35,000 in materials and 560 man
hours.  There may be other costs  associated  with  attaining the California Air
Resources  Board  certification  for the Honda and Toyota product lines.  In the
year ended  December  31, 2000,  the Company  sold  150,000  shares in a private
placement for net proceeds of $60,000.  No additional  private  placements  were
made in the first quarter of 2001.

                                       18

<PAGE>


As of March 31, 2001,  the  Company's  cash  reserves  totaled  $7,084 and total
current  assets were  $61,295.  The Company is continuing  production  and sales
efforts as well as further research and development and has yet to break-even in
terms of both  cash  flow and  profitability.  For the  remainder  of 2001,  the
Company has no long-term  commitments but expects to incur  additional costs for
research  and  development.  It also  expects to expand its sales and  marketing
effort.  These efforts  could  significantly  increase  demand for the Company's
products beyond the Company's  current  production  capacity.  While the Company
believes  it  can  increase  its  production  capacity  to  meet  sales  demand,
significant additional capital could be required to meet expansion requirements.

Inventory  at March  31,  2001 was  $38,546.  Inventory  at March  31,  2000 was
$47,327.  The inventory  turnover  ratios were .7 and .4 for the periods  ending
March 31,  2001 and 2000,  respectively.  This  decrease  was due to  decline in
production  activity to concentrate on the public offering.  Accounts receivable
ratios were 26 days and 20 days for the periods  ending March 31, 2001 and 2000,
respectively.  Working  capital  ratios were .55 and 1.46 for the periods ending
March 31, 2001 and 2000,  respectively.  This change was due to a large increase
in  accounts  payable  for  legal and  accounting  services  resulting  from the
Company's  preparation and filing of SEC forms.  The Company has agreements with
its accountants and attorneys to pay these balances as funding becomes available
via accounts receivable generated from the normal operations of the Company.


The Company presently has an outstanding loan payable on demand to Terry Taylor,
a stockholder. Principal balance as of March 31, 2001 is $40,000. The loan bears
an interest rate of 10%. Interest is payable  quarterly.  The loan is secured by
inventory.

The Company is taking steps to raise equity  capital.  The Company's  ability to
raise additional capital will be impeded until it is listed on the NASD Over the
Counter Bulletin Board.  There can be no assurance that any new capital would be
available to the Company or that adequate  funds for the  Company's  operations,
whether from the Company's  revenues,  financial markets,  or other arrangements
will be  available  when needed or on terms  satisfactory  to the  Company.  The
Company has no  commitments  from  officers,  directors or affiliates to provide
funding.  The failure of the Company to obtain adequate additional financing may
require the Company to delay,  curtail or scale back some or all of its research
and  development  programs,  sales  and  marketing  efforts,  and  manufacturing
operations.  Any  additional  financing  may involve  dilution to the  Company's
then-existing shareholders.

Without additional  capital funding,  the Company believes it can operate at its
current level of liquidity for twelve to twenty-four  months.  However, it hopes
to obtain  short-term  funding  until  operations  are ramped up,  creating  the
profitability that will improve its liquidity position.

                                       19

<PAGE>

RECENT DEVELOPMENTS
-------------------
In the  first  quarter  of 2001,  the  Company  began  taking  advantage  of the
infrastructure improvements made during 2000 (implementation of fully integrated
manufacturing/accounting  software,  availability  of a  dedicated  officer  for
finance,   marketing  and  SEC  compliance  tasks  and  outsourcing  of  certain
manufacturing functions).

The Company is compiling a database of potential new wholesale  distributors and
end users to promote its existing  product line sales through  low-cost,  direct
mail  marketing  and  e-mail.  The new  Company  web site has been posted on the
Internet and is being continually fine-tuned and updated.

The  Company  has  continued  building  finished  product  for the  shelf of its
existing  product  line,  is shipping  all orders from stock,  and has  improved
accounts receivable turn-around time.


The Mercedes Benz Kit 1 is now in stock. The Company has selected  Kingsborne to
subcontract the  manufacturing of the supplemental  Mercedes products for Kits 2
and 3. Initial reaction of the Company's wholesale  distributors to the Mercedes
product release in December of 2000 has been  conservative  due to the product's
cost.  Wholesale prices for the Perma-Tune  Mercedes Benz Kits are: $380 for Kit
#1, $310 for Kit #2 and $643 for Kit #3.  While these prices are  comparable  to
other new replacement  parts kits offered by our  wholesalers,  their concern is
that  customers are currently  purchasing  rebuilt  replacement  parts at prices
lower than that of new replacement parts.

Wholesalers  indicate  that if  enough  of their  customers  inquire  about  the
product,  they will stock the products.  The Company's  research  indicates that
there are no  aftermarket  products  that compete with the  Company's  offerings
available,  and that consumers will buy the Company's  Mercedes Kits if they are
readily available to them. After speaking with the Company's major  distributors
(Worldpac,  IMC,  Performance  Products  and SSF),  the Company has learned that
these  distributors  are  interested in carrying the product line, and that they
are aware of customers of theirs who will buy the products. The distributors are
awaiting receipt of production  samples of the spark plug wire harness component
of the kits (they have already received  prototype samples of the wire sets) and
price lists before they proceed to stock the product line.  The Company does not
have written commitments from these distributors to purchase the products. Since
funding for large-scale advertising and marketing is not available at this time,
the Company is promoting  the  products  via its website and direct  mailings of
postcards.


The Company  therefore  has decided to take a grass roots  approach to marketing
the Mercedes  product line to create demand for the product.  We have mailed new
product brochures to all of our existing wholesale distributors as well as every
Mercedes  repair shop in our area to pique  interest,  and we are  beginning  to
receive interested inquiries in response. Interest has been further generated by
postings on the Mercedes lists-server of the Internet inviting interested people
to visit our website, and our ad in the local Mercedes Benz Club newsletter.

                                       20
<PAGE>

The Company has  continued to search for more  commercial  applications  for its
Plasma   Injector   technology.   The  United  States  Mine  Safety  and  Health
Administration has expressed interest in Perma-Tune  technology for use in their
experiments to increase the safety of mining workers.

The U.S.  Navy  Surface  Weapons  Center has  reported  successful  results from
experiments  using the Plasma  Injector but has released no  information  on the
possibility of more sales to them or regarding commercial  applications of their
technology using the Plasma Injector.


The White Paper  circulated by the Company has resulted in a new  application of
the Plasma Injector for use with  alternative  fuels. Dr. Ruggero Santilli of US
MagneGas has read the  Perma-Tune  White Paper and believes  that the theory set
forth in the paper is consistent with his research in plasma theory. US MagneGas
manufactures  equipment  that  creates a clean  burning  fuel from  crude oil or
liquid  petroleum  wastes using their own plasma arc technology (a term employed
by US MagneGas to describe the patented process by which their equipment creates
a plasma state in the production of MagneGas). Dr. Santilli theorized that since
MagneGas  was created in a plasma  field,  a plasma  field may be needed to burn
MagneGas in an automobile engine.

Plasma is  commonly  referred  to as "the  fourth  state of matter",  after
solid,  liquid and gas.  Plasma is a high  temperature,  ionized gas composed of
electrons and positive ions in such relative  numbers that the gaseous medium is
essentially  neutral.  The  plasma  field is  produced  by a  Perma-Tune  Plasma
Injector by subjecting  the fuel-air  mixture to a sudden blast of  high-Voltage
energy  (32,000 Volts with a rise time of 2  nanoseconds)  which strips  valence
electrons from the fuel-air molecules.

Subsequently,  US MagneGas flew Lonnie  Lenarduzzi to their laboratory in Largo,
Florida to conduct experimentation using MagneGas to power a bi-fuel automobile.
Mr.  Lenarduzzi  installed a Digital  Fire and four Plasma  Injectors on a Honda
automobile, achieving remarkable success. Better performance was achieved in the
experiment  with  Perma-Tune  Plasma  Drives than had ever before been  achieved
using MagneGas in an automobile with any other ignition system.  The exhaust gas
from the test  vehicle  running on MagneGas was analyzed and found to contain no
carbon  monoxide,  elevated oxygen levels and even less  hydrocarbons  than were
measured in the  surrounding  atmosphere  before the test. These tests were
performed using a digital read-out,  four-gas analyzer.  This piece of equipment
does not have the capability to produce hard-copy reports.

Installation of a Digital Fire and Plasma  Injectors on older vehicles  consists
of mounting a crankshaft  encoder on the engine and  installing one Digital Fire
to  control  the Plasma  Injectors  (one per  cylinder).  For new  vehicles,  if
desired,  the  existing  controller  can be used  instead  of a Digital  Fire to
control the Plasma Injectors (again, one per cylinder).  If the vehicle is to be
powered by MagneGas,  it would have to be fitted with a gas storage cylinder and
fuel delivery  system  identical to those used on natural-gas  powered  vehicles
currently in use today.


                                       21
<PAGE>



The test results  showing  elevated  oxygen levels and less  hydrocarbons  are a
result  of  two  factors.   1)  Perma-Tune's  Plasma  Injector  technology  more
completely  burns the  fuel-air  mixture in the  vehicle  due to the  ionization
achieved via a plasma field  (described  above) and the initiation of combustion
with an explosion  rather than the spark which is used in conventional  ignition
systems.  2) Chemical reactions  produced by burning MagneGas,  details of which
are the intellectual property of US MagneGas, to which the Company does not have
access.


The experiment demonstrated that existing vehicles can be modified to operate on
both gasoline and MagneGas with the addition of the Plasma  Injector and Digital
Fire to achieve improved performance.


The Company  sold eight  Plasma  Injectors  and two Digital  Fire  systems to US
MagneGas,  one set for the  Honda and  another  set to use in  experiments  on a
four-cylinder generator. Revenues from the Company's work with US MagneGas as of
3/31/01  total  $16,289.66.  Both  companies  have  agreed to  continue  working
together to fully develop  commercial  application  for these  technologies.  US
MagneGas is studying the  possibility  of other uses for the Plasma  Injector in
gas ionization processing equipment that they manufacture.

US MagneGas has reviewed this disclosure and has agreed that it is correct.


In April 2001, the Company filed an amended Registration  Statement on Form 10SB
and responded to comments from the Securities and Exchange Commission's staff.

Forward looking statements
--------------------------
This report contains certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933, as amended,  and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking  statements  involve risks and uncertainty.  Although we believe
the assumptions  underlying the forward-looking  statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements contained in the report will
prove to be accurate.

                                       22

<PAGE>


Part II.   OTHER INFORMATION

Item 1.    Legal Proceedings

     None

Item 2.    Change in Securities and Use of Proceeds

     None

Item 3.    Defaults Upon Senior Securities

     None

Item 4.    Submission of Matters to a Vote of Security Holders

     Not applicable

Item 5.    Other Information

     Not applicable

Item 6.    Exhibits and Reports on Form 8-K

     (a) Exhibits

         None

     (b) Reports on Form 8-K

         None


                                       23


<PAGE>





                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned thereunto duly authorized.


                              PERMA-TUNE ELECTRONICS, INC.



                          By: /s/ Linda Decker
                              -------------------------
                              Linda Decker
                              Chief Financial Officer


Amendment No. 1
Date:  July 6, 2001





                                       24