______________________________________________________________________


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                _________________


                                    FORM 10-Q


(Mark One)
          [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                      For the Quarter Ended March 31, 2003
                                       OR
          [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                       For the transition period from   to
                         Commission File Number 0-27460



                     PERFORMANCE TECHNOLOGIES, INCORPORATED
             (Exact name of registrant as specified in its charter)

           Delaware                                      16-1158413
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation of organization)
                                                            14626
205 Indigo Creek Drive, Rochester, New York               (Zip Code)
 (Address of principal executive offices)

                          _____________________________

       Registrant's telephone number, including area code: (585) 256-0200

                          _____________________________


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [ X ]

     The  number of shares  outstanding  of the  registrant's  common  stock was
12,189,992 as of April 30, 2003.
________________________________________________________________________________

<PAGE>




             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES

                                      INDEX


                                                                          Page

PART I.    FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements

                     Consolidated Balance Sheets as of March 31, 2003
                     (unaudited) and December 31, 2002                      3

                     Consolidated Statements of Income For The Three Months
                     Ended March 31, 2003 and 2002 (unaudited)              4

                     Consolidated Statements of Cash Flows For The Three
                     Months Ended March 31, 2003 and 2002 (unaudited)       5

                     Notes to Consolidated Financial Statements For The
                     Three Months Ended March 31, 2003 (unaudited)          6

Item 2.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                        8

Item 3.    Quantitative and Qualitative Disclosures About Market Risk      15

Item 4.    Controls and Procedures                                         15


PART II.   OTHER INFORMATION

Item 1.    Legal Proceedings                                               16

Item 6.    Exhibits and Reports on Form 8-K                                16

Signatures                                                                 17

Certifications                                                             18
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.      CONSOLIDATED FINANCIAL STATEMENTS

             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

                                                    March 31,       December 31,
                                                      2003             2002
                                                  -------------    -------------
                                                   (unaudited)

Current assets:
  Cash and cash equivalents                        $20,140,000      $22,077,000
  Marketable securities                              2,001,000        2,006,000
  Accounts receivable, net                           7,722,000        6,622,000
  Inventories, net                                   6,391,000        4,550,000
  Prepaid expenses and other assets                    432,000          942,000
  Deferred taxes                                     1,583,000        1,574,000
                                                  -------------    -------------
       Total current assets                         38,269,000       37,771,000

Property, equipment and improvements, net            2,786,000        3,012,000
Software development costs, net                      2,104,000        2,068,000
Note receivable from unconsolidated company          1,000,000        1,000,000
Investment in unconsolidated company                 1,327,000        1,353,000
                                                  -------------    -------------
       Total assets                                $45,486,000      $45,204,000
                                                  =============    =============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                 $ 2,396,000      $ 1,926,000
  Income taxes payable                                 564,000          502,000
  Accrued expenses                                   2,876,000        3,213,000
                                                  -------------    -------------
       Total current liabilities                     5,836,000        5,641,000

Deferred taxes                                         756,000          754,000
                                                  -------------    -------------
       Total liabilities                             6,592,000        6,395,000
                                                  -------------    -------------
Stockholders' equity:
  Preferred stock - $.01 par value; 1,000,000
    shares authorized; none issued
  Common stock - $.01 par value; 50,000,000 shares
    authorized; 13,260,038 shares issued               133,000          133,000
  Additional paid-in capital                        10,961,000       10,961,000
  Retained earnings                                 40,822,000       40,565,000
  Treasury stock - at cost; 1,064,346 and
    1,013,696 shares held at March 31, 2003
    and December 31, 2002, respectively            (12,956,000)     (12,782,000)
  Accumulated other comprehensive loss                 (66,000)         (68,000)
                                                  -------------    -------------
       Total stockholders' equity                   38,894,000       38,809,000
                                                  -------------    -------------
       Total liabilities and stockholders' equity  $45,486,000      $45,204,000
                                                  =============    =============


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

             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (unaudited)


                                                        Three Months Ended
                                                             March 31,
                                                     2003                2002
                                                  -------------    -------------


Sales                                              $11,039,000       $6,407,000
Cost of goods sold                                   6,036,000        2,652,000
                                                  -------------    -------------
Gross profit                                         5,003,000        3,755,000
                                                  -------------    -------------

Operating expenses:
  Selling and marketing                              1,362,000        1,063,000
  Research and development                           2,307,000        1,498,000
  General and administrative                         1,063,000          577,000
  Restructuring charge                                                  163,000
                                                  -------------    -------------
      Total operating expenses                       4,732,000        3,301,000
                                                  -------------    -------------
Income from operations                                 271,000          454,000

Other income, net                                      127,000          116,000
                                                  -------------    -------------
Income before income taxes and equity in loss of
   unconsolidated company                              398,000          570,000

Income tax provision                                   124,000          177,000
                                                  -------------    -------------
Income before equity in loss of unconsolidated
   company                                             274,000          393,000

Equity in loss of unconsolidated company, net of tax   (17,000)
                                                  -------------    -------------
      Net income                                   $   257,000       $  393,000
                                                  =============    =============



Basic and diluted earnings per share               $       .02       $      .03
                                                  =============    =============




Weighted average number of common shares used
  in basic earnings per share                       12,231,691       12,238,095
Potential common shares                                  2,838          313,542
                                                  -------------    -------------
Weighted average number of common shares used
  in diluted earnings per share                     12,234,529       12,551,637
                                                  =============    =============






     The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>

             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                       Three Months Ended
                                                             March 31,
                                                      2003              2002
                                                  -------------    -------------

Cash flows from operating activities:
 Net income                                        $   257,000      $   393,000

Non-cash adjustments:
   Depreciation and amortization                       570,000          401,000
   Equity in loss of unconsolidated company, net
     of tax                                             17,000
   Other                                                69,000           12,000

Changes in operating assets and liabilities:
   Accounts receivable                              (1,169,000)          79,000
   Inventories                                      (1,840,000)        (107,000)
   Prepaid expenses and other assets                   510,000           35,000
   Accounts payable and accrued expenses               168,000         (327,000)
   Income taxes payable                                 62,000           83,000
                                                  -------------    -------------
    Net cash (used) provided by operating
     activities                                     (1,356,000)         569,000
                                                  -------------    -------------

Cash flows from investing activities:
 Purchases of property, equipment and improvements    (101,000)        (190,000)
 Capitalized software development costs               (278,000)        (352,000)
 Purchase of marketable securities                       5,000
 Other                                                 (33,000)
                                                  -------------    -------------

    Net cash used by investing activities             (407,000)        (542,000)
                                                  -------------    -------------

Cash flows from financing activities:
 Exercise of stock options and warrants                                  32,000
 Purchase of treasury stock                           (174,000)
                                                  -------------    -------------
    Net cash (used) provided by financing activities  (174,000)          32,000
                                                  -------------    -------------

    Net (decrease) increase in cash and cash
     equivalents                                    (1,937,000)          59,000

Cash and cash equivalents at beginning of period    22,077,000       26,913,000
                                                  -------------    -------------

Cash and cash equivalents at end of period         $20,140,000      $26,972,000
                                                  =============    =============





     The accompanying notes are an integral part of these consolidated financial
statements
<PAGE>

             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    FOR THE THREE MONTHS ENDED MARCH 31, 2003
                                   (Unaudited)

Note - A     The unaudited  Consolidated  Financial  Statements  of  Performance
Technologies,  Incorporated and Subsidiaries  (the "Company") have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X of the  Securities  and Exchange  Commission.  Accordingly,  the
Consolidated  Financial  Statements  do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  all adjustments considered
necessary  for a fair  presentation  have been  included.  The  results  for the
interim periods are not necessarily indicative of the results to be expected for
the year. The accompanying  Consolidated  Financial Statements should be read in
conjunction with the audited Consolidated Financial Statements of the Company as
of December 31, 2002,  as reported in its Annual  Report on Form 10-K filed with
the Securities and Exchange Commission.

Stock-Based  Employee  Compensation:  At March 31,  2003,  the  Company  had one
stock-based employee compensation plan. The Company accounts for this plan under
the recognition and  measurement  principles of APB Opinion No. 25,  "Accounting
for Stock Issued to Employees,"  and related  interpretations.  Accordingly,  no
stock-based employee compensation cost has been recognized in net income for the
stock  option  plan.  Had  compensation  cost for the  stock  option  plan  been
determined  based on the fair  value  recognition  provisions  of SFAS No.  123,
"Accounting for Stock-Based  Compensation,"  the Company's net income (loss) and
earnings (loss) per share would have been as follows:

                                                   Three Months Ended March 31,
                                                      2003               2002
                                                  -------------    -------------

Net income, as reported                               $257,000        $ 393,000

Deduct: Total stock-based employee compensation
  expense determined under fair value based method
  for all awards, net of related tax effects          (274,000)        (571,000)
                                                  -------------    -------------
Pro forma net loss                                    $(17,000)       $(178,000)
                                                  =============    =============

Earnings (loss) per share:
Basic - as reported                                   $    .02        $     .03
                                                  =============    =============

Basic - pro forma                                     $    .00        $    (.01)
                                                  =============    =============

Diluted - as reported                                 $    .02        $     .03
                                                  =============    =============

Diluted - pro forma                                   $    .00        $    (.01)
                                                  =============    =============

There were no stock options  granted in the first quarter 2003. The  assumptions
regarding  the annual  vesting of stock  options  were 25% per year for  options
granted in 2002. The fair value of each option grant is estimated on the date of
grant  using  the   Black-Scholes   option-pricing   model  with  the  following
weighted-average  assumptions  used for  grants in 2002:  Dividend  yield of 0%;
expected  volatility of 68%,  risk-free interest rate of 3.7%, and expected life
of four years.

Earnings Per Share:  Basic earnings per share is computed by dividing net income
by the weighted  average  number of common  shares  outstanding  for the period.
Diluted earnings per share calculations reflect the assumed exercise of dilutive
employee stock options,  applying the treasury stock method.  Dilutive  earnings
per share calculations exclude the effect of approximately 1,924,000 and 858,000
options for the first  quarter 2003 and 2002,  respectively,  since such options
have an exercise  price in excess of the average  market price of the  Company's
common stock for the respective periods.
<PAGE>

Note - B      Inventories  consisted of  the  following  at  March 31,  2003 and
December 31, 2002:

                                                    March 31,       December 31,
                                                      2003             2002
                                                    ----------       ----------
Purchased parts and components                      $5,007,000       $3,967,000
Work in process                                      2,602,000        2,046,000
Finished goods                                       2,253,000        2,088,000
                                                    ----------       ----------
                                                     9,862,000        8,101,000
Less:  reserve for inventory obsolescence           (3,471,000)      (3,551,000)
                                                    ----------       ----------
   Net                                              $6,391,000       $4,550,000
                                                    ==========       ==========
Note - C      Restructuring Programs

During  2002,  the  Company  improved  its  cost  structure   primarily  through
reductions  in  the  Company's  staff  and  by  consolidating   the  engineering
operations  of its Raleigh,  North  Carolina  facility  into its Ottawa,  Canada
Signaling Group.  The programs were  essentially  completed during the first and
third  quarters  of 2002 as the  continuing  decline in capital  spending in the
Company's  target markets  resulted in lower than  anticipated  Company revenue.
Substantially all actions under these programs were completed in 2002,  although
lease  commitments will continue through 2005. A summary of the activity and the
remaining balance at March 31, 2003 in the restructuring accrual is as follows:
<TABLE>
<S>                               <C>                  <C>                    <C>                <C>

                                   Severance
                                  and related             Leasehold             Asset
                                     costs               commitments         impairment             Total
                                ----------------       ----------------     --------------      ------------
2002 charge                         $341,000               $177,000            $55,000           $573,000
2002 utilization                    (332,000)               (23,000)           (55,000)          (410,000)
                                ----------------       ----------------     --------------      ------------
Balance at
   December 31, 2002                   9,000                154,000                               163,000
2003 utilization                                            (33,000)                              (33,000)
                                ----------------       ----------------     --------------      ------------
Balance at
   March 31, 2003                   $  9,000               $121,000            $                 $130,000
                                ================       ================     ==============      ============
</TABLE>

In January 2002, the uncertain economic conditions and the lack of visibility of
customer  orders led the  Company  to improve  its cost  structure  by  reducing
annualized expenses by approximately $1.6 million.

<PAGE>

             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES

ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                 RESULTS OF OPERATIONS

Matters discussed in Management's Discussion and Analysis of Financial Condition
and  Results  of   Operations   and   elsewhere   in  this  Form  10-Q   include
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,  and are  subject  to the safe  harbor  provisions  of the  Private
Securities  Litigation  Reform Act of 1995.  The Company's  actual results could
differ materially from those discussed in the forward-looking statements.

Overview

Business Strategy: Performance Technologies has a proven history of successfully
adapting its  products,  services  and  organization  to a  constantly  changing
technology-driven marketplace. This adaptation has been demonstrated through the
course of several business cycles that have occurred since its founding in 1981.
With the Computing  Products  Group  acquisition  in October  2002,  the Company
substantially broadened both its product offering and market coverage to include
additional  computing and system products that can be effectively  supplied to a
market that is twice the size of that which was  available to the Company  prior
to the  acquisition.  Following the  acquisition,  a new corporate  strategy was
defined that  integrates  the  Company's  technological  innovation  and product
breadth.  Please refer to the Company's Annual Report on Form 10-K, PART 1, Item
1, under the caption "Business," for a discussion of the Company's new corporate
and product strategies for 2003.

Financial  Information:  Revenue in the first  quarter  2003 was $11.0  million,
compared to $6.4 million in the first quarter 2002.  For the first quarter 2003,
the results of  operations  include the  Computing  Products  Group  acquired in
October 2002. Net income for the first quarter 2003 amounted to $.3 million,  or
$.02 per share, compared to $.4 million, or $.03 per share for the first quarter
2002, based on 12.2 million and 12.6 million shares  outstanding,  respectively.
First quarter 2002 results  included  expenses  associated  with a restructuring
charge amounting to $.2 million  (pre-tax),  or $.01 per share. In January 2002,
the uncertain economic  conditions and the lack of visibility of customer orders
led the Company to improve its cost structure by reducing annualized expenses by
approximately $1.6 million.

Cash and  marketable  securities  amounted to $22.1  million at March 31,  2003,
compared to $24.1 million at December 31, 2002 and no long-term  debt existed at
either date.

The following includes forward-looking  statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 and is subject to the safe harbor  provisions of the Private  Securities
Litigation Reform Act of 1995.

As the Company began  integrating  the Computing  Products  Group  acquired from
Intel in October 2002,  management  sought to maximize the synergies between the
two  organizations,  which it  believed  provided  considerable  opportunity  to
improve both future top and bottom line  performance,  despite current  economic
conditions.  To capitalize  on this  opportunity,  a new corporate  strategy was
defined that  integrates  the  Company's  technological  innovation  and product
breadth,  and emphasizes the Company's expanded  capability to offer a "unified"
solution to the customer base including software,  hardware and system platforms
through a single Performance  Technologies offering.  This new business strategy
broadens the Company's market focus to more effectively address embedded systems
requirements for  communications,  military and commercial  applications.  While
early signs are  encouraging,  management  expects the response to the Company's
new strategy to be  evolutionary  as the  marketplace  and our customers  better
understand and embrace the Company's enhanced capabilities.

During the first quarter 2003,  the Company made  progress in  implementing  the
initial  phase  of this  strategy  including  adding  three  new  sales  people,
initiating   new   advertising   and   marketing   programs,   and  focusing  on
interoperability between all elements of our expanded product line. Furthermore,
the  Company  received  positive   indications  from  customers  validating  the
Company's  new  approach  to  providing a more  comprehensive  range of embedded
products  and  system  platforms,  and our  sales  organization  reports  seeing
increased involvement earlier in the customer's project development cycle.

Forward Looking Guidance for the Second Quarter 2003 (published April 23, 2003):

The Company's products are integrated into current and next-generation  embedded
systems  infrastructure.  Traditionally,  "design  wins" have been an  important
metric  for  management  to  judge  the  Company's  product  acceptance  in  its
marketplace.  Typically,  design wins reach production volumes at varying rates,
generally  beginning  twelve to eighteen  months after the design win occurs.  A
variety of risks such as schedule delays, cancellations, and changes in customer
markets  and  economic  conditions  can  adversely  affect a design  win  before
production is reached or during deployment. While management still believes that
design  wins  continue  to be an  important  metric  in  evaluating  the  market
acceptance of the Company's  product,  in the current  economic  climate,  fewer
customers  are doing new design  activity  and a smaller  number of these design
wins are moving into production than in the past. In addition,  during difficult
economic  periods,  customers'  visibility  deteriorates,  causing delays in the
placement of orders.  These factors often result in a substantial portion of the
Company's  revenue  being  derived  from  orders  placed  within the quarter and
shipped in the final month of the quarter.

In the Company's target markets,  capital spending  appeared to stabilize during
the fourth  quarter  2002 and  certain  customers  appear to be moving  projects
toward production during the first quarter 2003. However,  overall,  new project
deployments  and design  activity in the first quarter were still  sluggish with
only limited  forward  visibility in the market.  During the first quarter 2003,
the Company  realized  three new design  wins for its  IPnexusTM,  SEGwayTM  and
ZiatechTM product families.

Based upon the current  business  mix,  the current  backlog and review of sales
forecasts,  management  expects  revenue to be $11.5 million to $12.5 million in
the second quarter 2003. Gross margin is expected to be approximately 45% to 47%
and diluted  earnings per share for the second quarter is expected to be between
$.02 and $.06. This guidance  includes an increase in expenses of  approximately
$.3 million,  reflecting the full  quarter's  impact for  initiatives  commenced
during the first quarter to implement the new strategy.  The income tax rate for
the second quarter is assumed to be 31%.

More in-depth  discussions of the Company's  strategy and financial  performance
can be found in the Company's recent Annual and Quarterly Reports,  on Form 10-K
and Form 10-Q, as filed with the Securities and Exchange Commission.
<PAGE>

                   Quarter Ended March 31, 2003, Compared with
                        the Quarter Ended March 31, 2002

The following table presents the percentage of sales represented by each item in
the  Company's  consolidated  statements  of income for the  periods  indicated.
Beginning in October 2002,  the table  includes the results of operations of the
Computing Products Group.
                                                        Three Months Ended
                                                             March 31,
                                                       2003             2002
                                                  -------------    -------------

Sales                                                   100.0%           100.0%
Cost of goods sold                                       54.7             41.4
                                                  -------------    -------------
Gross profit                                             45.3             58.6
                                                  -------------    -------------
Operating expenses:
  Selling and marketing                                  12.3             16.6
  Research and development                               20.9             23.4
  General and administrative                              9.6              9.0
  Restructuring charge                                                     2.5
                                                  -------------    -------------
        Total operating expenses                         42.8             51.5
                                                  -------------    -------------
Income from operations                                    2.5              7.1

Other income, net                                         1.1              1.8
                                                  -------------    -------------
Income before income taxes and equity in loss of
  unconsolidated company                                  3.6              8.9

Income tax provision                                     (1.1)            (2.8)
                                                  -------------    -------------
Income before equity in loss of unconsolidated
  company                                                 2.5              6.1

Equity in loss of unconsolidated company, net of
  tax                                                    (0.2)
                                                  -------------    -------------
         Net income                                       2.3%             6.1%
                                                  =============    =============

Sales.  Total revenue for the first quarter 2003 was $11.0 million,  compared to
$6.4  million for the same  quarter in 2002.  For the first  quarter  2003,  the
Computing  Products Group contributed $5.7 million to revenue.  During the first
quarter 2003, the Company had two customers that each  represented  greater than
10% of sales, and the four largest  customers  represented 54% of sales.  During
the first quarter 2002,  the Company had one customer that  represented  greater
than 10% of sales  and the four  largest  customers  represented  32% of  sales.
Shipments to customers outside of North America represented 24% and 31% of sales
during the first quarter of 2003 and 2002, respectively.

For the periods indicated, the Company's products are grouped into four distinct
categories  in one  market  segment:  Signaling  and  network  access  products,
Computing products, IPnexus switching products, and other products. Revenue from
each product  category  expressed as a percentage  of sales for the three months
ended March 31, 2003 and 2002 is as follows:
                                                       Three Months Ended
                                                            March 31,
                                                      2003              2002
                                                  -------------    -------------

Signaling and network access products                 34%               87%
Computing products                                    51%                0%
IPnexus switching products                            13%                7%
Other                                                  2%                6%
                                                  -------------    -------------
    Total                                            100%              100%
                                                  =============    =============

Signaling  and  network  access  products:  The  continuing  decline  in capital
expenditure  investments  by  customers  in the  Company's  target  markets  has
significantly  reduced  the  Company's  signaling  and  network  access  product
revenue.

Computing  products:  The newly acquired  Computing Products Group generated the
revenue in this category.

IPnexus switching  products:  Revenue from this category  increased 195% to $1.4
million in 2003,  compared to $.5 million in the respective quarter of 2002. The
Company's  IPnexus  switch  product  family has been  designed  for the embedded
systems  market and is based on the PICMG 2.16 systems  architecture,  which was
ratified in September  2001.  While still a modest  percentage  of the Company's
revenue,  IPnexus switch product revenue is expected to grow when customers move
their new products into production.

Other product revenue: This revenue is related to legacy products. Over the past
twenty  four   months,   customer   demand  for  these   products  has  declined
significantly  as  customers  have  moved to newer  technologies.  Many of these
products are project oriented and shipments can fluctuate on a quarterly basis.

Gross profit.  Gross profit consists of sales, less cost of goods sold including
material costs,  manufacturing  expenses,  amortization of software  development
costs,  expenses  associated with  engineering  contracts and technical  support
function  expenses.  In the first  quarter,  gross margin was 45.3% and 58.6% of
sales in 2003 and 2002,  respectively.  During  the first  quarter  2003,  fixed
expenses  such as certain  manufacturing  labor and  overhead  costs,  technical
support costs, and amortization of capitalized  software development spread over
lower sales volumes  negatively  impacted gross margin as a percentage of sales.
The  decrease in gross  margin in 2003 is also  attributable  to the lower gross
margins on the newly acquired computing products.

Total Operating  Expenses.  Total operating  expenses were $4.7 million and $3.3
million in first  quarter of 2003 and 2002,  respectively.  During  January  and
September 2002, staff  reductions were initiated  throughout the organization to
more closely align expenses with current  revenue  levels.  In October 2002, the
new Computing  Products  Group was acquired.  During the first quarter 2003, the
Company began to selectively increase expenditures in the new Computing Products
Group and in sales  and  marketing,  to  implement  the  first  phase of its new
business strategy.

Selling and  marketing  expenses  were $1.4  million  and $1.1  million in first
quarter of 2003 and 2002, respectively. During January and September 2002, sales
and marketing  staff  reductions  were  initiated to more closely align expenses
with current revenue levels.  In October 2002, the new Computing  Products Group
was  acquired.  During the first  quarter  2003,  the Company  began to increase
expenditures  in sales and  marketing  to  implement  the first phase of its new
business strategy.

Research  and  development  expenses  were $2.3  million and $1.5 million in the
first quarter of 2003 and 2002, respectively. During January and September 2002,
engineering  staff reductions were initiated to more closely align expenses with
current  revenue levels.  In October 2002, the new Computing  Products Group was
acquired.  During the first quarter  2003,  the Company  increased  research and
development  expenditures  in its Computing  Products  Group.  In addition,  the
Company capitalizes certain software  development costs, which reduce the amount
of software development costs charged to operating expense.  Amounts capitalized
were $.3  million  and $.4  million  in the  first  quarter  of 2003  and  2002,
respectively.

General and  administrative  expenses  were $1.1 million and $.6 million for the
first quarter 2003 and 2002, respectively. This increase in expense is primarily
attributable  to  expenses  associated  with the new  Computing  Products  Group
acquired in October 2002 and expenses associated with the newly created position
of Chief Strategic Officer.

Restructuring  charges were zero and $.2 million for the first  quarter 2003 and
2002,  respectively.  In January 2002,  the Company  improved its cost structure
primarily  through the reduction of the Company's  staff resulting in a decrease
in its workforce of approximately 10%.

Other  income,  net.  Other income  consists  primarily of interest  income from
marketable securities and cash equivalents.  The funds are primarily invested in
high quality Municipal,  U.S. Treasury and corporate obligations with maturities
of less than one year.

Income  taxes.  The provision for income taxes for the first quarter of 2003 and
2002 is based on an assumed combined  federal,  state and foreign  effective tax
rate of  31%.    The difference between the effective tax rate and the statutory
rate is attributable to certain permanent items.

Equity in Loss of  Unconsolidated  Company,  net of tax. In September  2002, the
Company completed a 47% minority interest  investment in Momentum Computer Inc.,
a developer of specialized  single board computer solutions located in Carlsbad,
California. During the first quarter of 2003, a loss was recorded reflecting the
allocation  of  Momentum's  net  loss to the  Company,  based  on the  Company's
ownership percentage.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2003, the Company's primary source of liquidity included cash, cash
equivalents and marketable  securities of $22.1 million and available borrowings
of $5.0 million under a revolving  credit  facility with a bank. No amounts were
outstanding  under this credit  facility as of March 31, 2003 and this  facility
expired on April 15, 2003.  The Company had working  capital of $32.4 million at
March 31, 2003, compared to $32.1 million at December 31, 2002.

Cash used by operating  activities  for the first quarter 2003 was $1.4 million,
compared to cash  provided by operating  activities  of $.6 million for the same
period in 2002.  The net change in cash from  operating  activities is primarily
attributable  to increases in inventory due to higher backlog and an increase in
accounts receivable as a result of higher sales.

Capital equipment  purchases  amounted to $.1 million for the three months ended
March  31,  2003,  compared  to  $.2  million  for  the  same  period  in  2002.
Capitalization of certain software development costs amounted to $.3 million and
$.4 million for the three months ended March 31, 2003 and 2002, respectively.

In August 2002, the Board of Directors authorized a plan to repurchase up to one
million shares of the Company's common stock. During the first quarter 2003, the
Company  repurchased  a total of 51,000  shares at a total  cost of $.2  million
under this program.

Assuming there is no significant  change in the Company's  business,  management
believes that its current cash, cash equivalents and marketable  securities will
be sufficient to meet the Company's anticipated needs, including working capital
and  capital  expenditure  requirements,  for at least the next  twelve  months.
However,  management is continuing its strategic  acquisition program to further
accelerate its new product and market  penetration  efforts.  This program could
have an impact on the Company's working capital, liquidity or capital resources.

Recently Issued Accounting Pronouncements

FIN 45 - In November 2002, the FASB issued  Interpretation No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of  Indebtedness of Others."  Interpretation  No. 45 required that at
the time a company  issues a guarantee,  the company  must  recognize an initial
liability for the fair value,  or market value,  of the  obligations  it assumes
under that guarantee.  This  interpretation is applicable on a prospective basis
to guarantees  issued or modified  after December 31, 2002. The Company does not
currently provide significant guarantees on a routine basis. The Company adopted
this  interpretation  and it did not have a  material  impact on the  results of
operations or the financial position of the Company.

FIN 46 - In January 2003, the FASB issued  Interpretation No. 46, "Consolidation
of Variable Interest Entities."  Interpretation No. 46 requires companies with a
variable  interest  entity  to apply  this  guidance  to that  entity  as of the
beginning of the first interim period beginning after June 15, 2003 for existing
interests and  immediately  for new interests.  The  application of the Guidance
could  result in the  consolidation  of a  variable  interest  entity.  The only
variable interest entity of the Company is its investment in Momentum  Computer,
Inc.  The Company  adopted  this  interpretation  and it did not have a material
impact on the financial results.

Critical Accounting Estimates and Assumptions

In preparing the financial  statements  in accordance  with GAAP,  management is
required to make  estimates and  assumptions  that have an impact on the assets,
liabilities,  revenue and expense  amounts  reported.  These  estimates can also
affect   supplemental   information   disclosures  by  the  Company,   including
information  about  contingencies,  risk and  financial  condition.  The Company
believes,  given current facts and circumstances,  its estimates and assumptions
are reasonable,  adhere to GAAP, and are consistently  applied.  Inherent in the
nature of an estimate or assumption  is the fact that actual  results may differ
from estimates, and estimates may vary as new facts and circumstances arise. The
critical accounting policies, judgments and estimates, which management believes
have the most  significant  effect  on the  financial  statements  are set forth
below:

        o        Revenue Recognition
        o        Software Development Costs
        o        Valuation of Inventory

Revenue  Recognition:  The Company recognizes revenue in accordance with the SEC
Staff  Accounting  Bulletin  (SAB) No. 101,  "Revenue  Recognition  in Financial
Statements."  The Company  recognizes  revenue  when  persuasive  evidence of an
arrangement  exists,  delivery has occurred or services have been provided,  the
sale price is fixed or determinable,  and collectability is reasonably  assured.
Additionally,  the Company sells its products on terms, which transfer title and
risk of loss at a specified  location,  typically  shipping point.  Accordingly,
revenue  recognition  from  product  sales  occurs  when  all  factors  are met,
including  transfer  of title  and risk of loss,  which  generally  occurs  upon
shipment by the Company.  Revenue earned from  arrangements for software systems
requiring significant production,  modification, or customization of software is
recognized over the contract period as performance milestones are fulfilled.  If
all  conditions of revenue  recognition  are not met, the Company defers revenue
recognition.  Revenue from  consulting  and other  services is recognized at the
time the services are rendered.  Any anticipated losses on contracts are charged
to  operations  as soon as such losses are  determined.  Revenue  from  software
maintenance  contracts is recognized  ratably over the contractual  period.  The
Company believes that the accounting  estimate related to revenue recognition is
a "critical  accounting  estimate" because the Company's terms of sale can vary,
and  management  exercises  judgment  in  determining  whether to defer  revenue
recognition.  Such  judgments  may  materially  affect net sales for any period.
Management  exercises judgment within the parameters of GAAP in determining when
contractual  obligations are met, title and risk of loss are transferred,  sales
price is fixed or determinable and collectability is reasonably assured.

Software   Development  Costs:  All  software   development  costs  incurred  in
establishing the  technological  feasibility of computer software products to be
sold are research and development  costs.  Software  development  costs incurred
subsequent  to the  establishment  of  technological  feasibility  of a computer
software  product to be sold and prior to general  release of that  product  are
capitalized.  Amounts capitalized are amortized commencing after general release
of that product over the  estimated  remaining  economic  life of that  product,
generally  three  years,  or using the ratio of current  revenues to current and
anticipated revenues from such product, whichever provides greater amortization.
If in the judgment of  management,  technological  feasibility  for a particular
project has not been met or recoverability  of amounts  capitalized is in doubt,
project  costs are expensed as research and  development  or charged to costs of
goods sold, as applicable.  The Company  believes that the  accounting  estimate
related  to  software  development  costs is a  "critical  accounting  estimate"
because the  Company's  management  exercises  judgment in  determining  whether
project  costs are  expensed as research and  development.  Such  judgments  may
materially affect expense amounts for any period.  Management exercises judgment
within the parameters of GAAP in determining when technological  feasibility has
been met and recoverability of software development costs is reasonably assured.

Valuation of Inventories: Inventories are stated at the lower of cost or market,
using the first-in, first-out method. The Company's inventory includes purchased
parts and components,  work in process and finished goods.  The Company provides
inventory reserves for excess,  obsolete or slow moving inventory after periodic
evaluation of historical  sales,  current  economic  trends,  forecasted  sales,
estimated product  lifecycles and estimated  inventory levels.  The factors that
contribute to inventory valuation risks are the Company's purchasing  practices,
electronic component  obsolescence,  accuracy of sales and production forecasts,
introduction  of new products,  product  lifecycles and the  associated  product
support.  The Company  manages  its  exposure to  inventory  valuation  risks by
maintaining safety stocks,  minimum purchase lots,  managing product end-of-life
issues  brought on by aging  components  or new  product  introductions,  and by
utilizing  certain  inventory  minimization  strategies  such as  vendor-managed
inventories.  The  Company  believes  that the  accounting  estimate  related to
valuation  of  inventories  is a "critical  accounting  estimate"  because it is
susceptible  to  changes  from  period-to-period  due  to  the  requirement  for
management to make estimates  relative to each of the underlying factors ranging
from  purchasing,  to sales,  to production,  to after-sale  support.  If actual
demand,  market  conditions or product  lifecycles are adversely  different from
those  estimated by  management,  inventory  adjustments  to lower market values
would result in a reduction to the carrying  value of inventory,  an increase in
inventory write-offs and a decrease to gross margins.


FORWARD-LOOKING STATEMENTS AND RISK FACTORS

This Quarterly Report on Form 10-Q contains  forward-looking  statements,  which
reflect the Company's  current views with respect to future events and financial
performance, within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the  Securities  Exchange  Act of 1934 and is subject to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are subject to certain risks and uncertainties,
including  those  identified  below,  which could cause actual results to differ
materially from historical results or those  anticipated.  The words "believes,"
"anticipates,"  "plans," "may," "intend," "estimate," "will," "should," "could,"
"feels," "is optimistic," "expects," and other expressions which indicate future
events and trends also identify forward-looking statements. However, the absence
of such words does not mean that a statement is not forward-looking.

The  Company's  future  operating  results  are  subject  to  various  risks and
uncertainties   and  could  differ   materially  from  those  discussed  in  the
forward-looking  statements  and may be affected  by various  trends and factors
which are beyond the Company's  control.  These  include,  among other  factors,
general  business  and  economic  conditions,  rapid or  unexpected  changes  in
technologies,  cancellation or delay of customer orders including those relating
to the "design wins"  referenced  above,  unreliability  of customer  forecasts,
changes  in  the  product  or  customer  mix of  sales,  delays  in new  product
development,  delays or lack of availability of electronic components,  customer
acceptance of new products,  customer  delays in  qualification  of products and
difficulties  of  integrating  the  Computing   Products   Group's   operations.
Furthermore,  if the Court does not  approve  the  settlement  agreement  in the
outstanding class action litigation this could have a material adverse effect on
the  Company's  working  capital.  This  report on Form  10-Q  should be read in
conjunction  with the  Consolidated  Financial  Statements,  the notes  thereto,
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  as of  December  31,  2002 and "Risk  Factors"  as  reported  in the
Company's  Annual  Report on Form  10-K,  and other  reports  as filed  with the
Securities and Exchange Commission.

Stockholders  are  cautioned  not  to  place  undue  reliance  on  the  forward-
looking statements  which  speak as of the  date of this Quarterly Report or the
date of  the  documents  incorporated  by  reference  in  this Quarterly Report.
The  Company  is  not  under  any  obligation,  and  it expressly  disclaims any
objection, to update or alter any such statements.
<PAGE>


ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to various market risks in the normal course of business,
primarily interest rate risk, Canadian currency  fluctuation risk and changes in
the market value of its  investments,  and believes its exposure to such risk is
minimal.  The Company's  investments  are made in accordance  with the Company's
investment policy and primarily consist of U.S. Treasury  securities,  municipal
securities and corporate  obligations.  The Company does not  participate in the
investment of derivative financial instruments.

ITEM 4.        CONTROLS AND PROCEDURES

a.       Evaluation of Disclosure Controls and Procedures

         In accordance with   Rule 13a-15(b)  of the Securities  Exchange Act of
         1934  (the "Exchange Act"),  within 90 days prior to the filing date of
         this Quarterly Report on Form 10-Q, an evaluation was carried out under
         the supervision and with the participation of the Company's management,
         including  the  certifying officers of the  effectiveness of the design
         and  operation  of the  Company's  disclosure  controls  and procedures
         (as defined in Rule 13a-14(c)  under the  Exchange  Act).   Based  upon
         their  evaluation  of  these  disclosure  controls and procedures,  the
         certifying  officers  concluded  that   the   disclosure  controls  and
         procedures were effective as of the date of such   evaluation to ensure
         that material  information  relating  to the  Company,  including   its
         consolidated  subsidiaries,  was made  known to them by  others  within
         those  entities, particularly during the period in which this Quarterly
         Report on Form 10-Q was being prepared.

b.       Changes in Internal Controls

         There were no  significant  changes in the Company's  internal controls
         or in other  factors  that could  significantly affect  these  controls
         subsequent to the date of their evaluation.

<PAGE>

             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES

                           PART II. OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

No material  changes have  transpired  since the Company's  filing of its Annual
Report on Form 10-K  relative  to Court  acceptance  and  approval  of the class
action litigation settlement agreement.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

         A.   Exhibits

              99.1     Certification  Pursuant  to  18  U.S.C. Section  1350, as
                       Adopted  Pursuant to  Section 906  of  the Sarbanes-Oxley
                       Act of 2002.

              99.2     Certification  Pursuant  to  18  U.S.C. Section  1350, as
                       Adopted  Pursuant to Section 906  of  the  Sarbanes-Oxley
                       Act of 2002.

         B.   Reports on Form 8-K

              On January 31, 2003,  the Company  filed a Current  Report on Form
              8-K, Item 5 - Other.   On January 20, 2003, the Board of Directors
              of the Company created the  position of Chief  Strategic  Officer.
              John  M. Slusser  agreed to fill this position  and will carry out
              the  duties and  responsibilities  of this  position  in  addition
              to his  ongoing responsibilities as  Chairman  of  the  Board.  No
              financial  statements  were filed with the Form 8-K.
<PAGE>



                                                    SIGNATURES




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


                                        PERFORMANCE TECHNOLOGIES, INCORPORATED





May 8, 2003                                 By: /s/       Donald L. Turrell
                                            ------------------------------------
                                                          Donald L. Turrell
                                                            President and
                                                        Chief Executive Officer




May 8, 2003                                 By: /s/       Dorrance W. Lamb
                                            ------------------------------------
                                                          Dorrance W. Lamb
                                                    Chief Financial Officer and
                                                      Vice President, Finance
<PAGE>


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Donald L. Turrell, certify that:

1.  I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  Performance
Technologies, Incorporated;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  Presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) All  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) Any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

6.  The  registrant's other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

May 8, 2003

                                            /s/ Donald L. Turrell
                                            -------------------------
                                                Donald L. Turrell
                                           President and Chief Executive Officer

<PAGE>

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Dorrance W. Lamb, certify that:

1.  I  have  reviewed  this  quarterly   report  on  Form  10-Q  of  Performance
Technologies, Incorporated;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

     c)  Presented  in  this  quarterly   report  our   conclusions   about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a) All  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

     b) Any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

May 8, 2003

                                            /s/ Dorrance W. Lamb
                                            -------------------------
                                                Dorrance W. Lamb
                                                Chief Financial Officer
<PAGE>




                                                                  Exhibit 99.1





     Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to

                  Section 906 of the Sarbanes-Oxley Act of 2002



     I,  Donald  L.  Turrell,   the  Chief  Executive   Officer  of  Performance
Technologies, Incorporated, certify that (i) the Form 10-Q for the quarter ended
March 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities  Exchange Act of 1934 and (ii) the  information  contained in the
Form 10-Q fairly presents, in all material respects, the financial condition and
results of operations of Performance Technologies, Incorporated.

     A signed  original of this  written  statement  required by Section 906 has
been provided to Performance Technologies,  Incorporated and will be retained by
Performance  Technologies,  Incorporated  and  furnished to the  Securities  and
Exchange Commission on request.

                                            By:/s/   Donald L. Turrell
                                            --------------------------
                                                     Donald L. Turrell
                                                     Chief Executive Officer

                                                     May 8, 2003
<PAGE>


                                                                  Exhibit 99.2





     Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to

                  Section 906 of the Sarbanes-Oxley Act of 2002



     I,  Dorrance  W.  Lamb,   the  Chief   Financial   Officer  of  Performance
Technologies, Incorporated, certify that (i) the Form 10-Q for the quarter ended
March 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities  Exchange Act of 1934 and (ii) the  information  contained in the
Form 10-Q fairly presents, in all material respects, the financial condition and
results of operations of Performance Technologies, Incorporated.

     A signed  original of this  written  statement  required by Section 906 has
been provided to Performance Technologies,  Incorporated and will be retained by
Performance  Technologies,  Incorporated  and  furnished to the  Securities  and
Exchange Commission on request.

                                            By:/s/   Dorrance W. Lamb
                                            --------------------------
                                                     Dorrance W. Lamb
                                                     Chief Financial Officer

                                                     May 8, 2003