--------------------------------------------------------------------------------


                                  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 September 30, 1997
                                       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)

315 Science Parkway, Rochester   New York              14620
(Address of principal executive offices)            (Zip Code)

       Registrant's telephone number, including area code: (716) 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 .


The number of shares outstanding of the registrant's  common stock was 7,261,825
as of November 5, 1997.


--------------------------------------------------------------------------------
                             Cover Page of 13 Pages



                                       1
<PAGE>


                                                        --
             Performance Technologies, Incorporated and Subsidiaries

                                      Index


                                                                          Page

Part I.                       Financial Information

Item 1.                   Consolidated Financial Statements

           Consolidated Balance Sheets as of September 30, 1997
           (unaudited) and December 31, 1996                                3

           Consolidated Statements of Income For The Three and Nine
           Months Ended September 30, 1997 and 1996 (unaudited)             4

           Consolidated Statements of Cash Flows For The Nine
           Months Ended September 30, 1997 and 1996 (unaudited)             5

           Notes to Consolidated Financial Statements For The Nine
           Months Ended September 30, 1997 (unaudited)                      6

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                              7


Part II.                       Other Information

Item 2.    Changes in Securities and Use of Proceeds                        11

Item 6.    Exhibits and Reports on Form 8-K                                 11

Signatures                                                                  13



                                       2
<PAGE>




             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS

<TABLE>
<CAPTION>
<S>                                                                               <C>            <C>

                                                                                  September 30,   December 31,
                                                                                      1997            1996
                                                                                   (unaudited)
                                                                                  -------------  -------------
Current assets:
Cash and cash equivalents                                                         $   6,638,000  $  10,027,000
Marketable securities                                                                12,614,000      6,102,000
Accounts receivable, net                                                              4,847,000      3,234,000
Inventories, net - Note C                                                             3,470,000      4,032,000
Prepaid expenses and other                                                              536,000        284,000
Deferred taxes                                                                          419,000        419,000
                                                                                  -------------  -------------
Total current assets                                                                 28,524,000     24,098,000

Equipment and improvements, net                                                       1,062,000      1,267,000
Software development, net                                                               668,000        549,000
Other assets                                                                            134,000        175,000
                                                                                  -------------  -------------
Total assets                                                                      $  30,388,000  $  26,089,000
                                                                                  =============  =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current portion of long term debt                                                 $      12,000  $      26,000
Accounts payable                                                                      1,173,000        953,000
Income taxes payable                                                                    327,000         23,000
Accrued expenses                                                                      2,150,000      2,131,000
                                                                                  -------------  -------------
Total current liabilities                                                             3,662,000      3,133,000

Long term debt, less current portion                                                     21,000         30,000
Deferred taxes                                                                          219,000        219,000
                                                                                  -------------  -------------
Total liabilities                                                                     3,902,000      3,382,000
                                                                                  -------------  -------------
Stockholders' equity
Preferred stock
Common stock - Note B                                                                    73,000         49,000
Additional paid-in capital - Note B                                                  12,927,000     12,885,000
Retained earnings                                                                    13,644,000      9,930,000
Treasury stock                                                                         (158,000)      (157,000)
                                                                                  -------------  -------------
Total stockholders' equity                                                           26,486,000     22,707,000
                                                                                  -------------  -------------
Total liabilities and stockholders' equity                                        $  30,388,000  $  26,089,000
                                                                                  =============  =============

</TABLE>

                                       3
<PAGE>



             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                                 <C>            <C>             <C>            <C>

                                                        Three Months Ended              Nine Months Ended
                                                          September 30,                   September 30,
                                                         1997           1996           1997             1996
                                                    ------------   ------------    ------------   ------------
Sales                                               $  7,606,000   $  6,412,000    $ 22,579,000   $ 18,412,000
Cost of goods sold                                     3,263,000      2,906,000       9,620,000      8,011,000
                                                    ------------   ------------    ------------   ------------
Gross profit                                           4,343,000      3,506,000      12,959,000     10,401,000
                                                    ------------   ------------    ------------   ------------
Operating expenses:
 Selling and marketing                                 1,004,000        732,000       3,015,000      2,300,000
 Research and development                                791,000        801,000       2,705,000      2,124,000
 General and administrative                              552,000        719,000       1,980,000      2,112,000
                                                    ------------   ------------    ------------   ------------  
   Total operating expenses                            2,347,000      2,252,000       7,700,000      6,536,000
                                                    ------------   ------------    ------------   ------------
Income from operations                                 1,996,000      1,254,000       5,259,000      3,865,000

Other income, net                                        266,000        202,000         733,000        509,000
                                                    ------------   ------------    ------------   ------------
Income before taxes and minority interest              2,262,000      1,456,000       5,992,000      4,374,000

Provision for income taxes                               860,000        544,000       2,278,000      1,631,000
                                                    ------------   ------------    ------------   ------------
Income before minority interest                        1,402,000        912,000       3,714,000      2,743,000
Minority interest                                                                                      (24,000) 
                                                    ------------   ------------    ------------   ------------
   Net income                                       $  1,402,000   $    912,000    $  3,714,000   $  2,719,000
                                                    ============   ============    ============   ============



Earnings per share - Note B                         $       .18    $       .12     $       .50    $       .37
                                                    ===========    ===========     ===========    ===========

Weighted average common and common
   equivalent shares - Note B                         7,625,000      7,417,000       7,418,000      7,375,000
                                                    ===========    ===========     ===========    ===========

</TABLE>

                                       4
<PAGE>







             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                                                               <C>            <C>




                                                                                         Nine Months Ended
                                                                                           September 30,
                                                                                       1997            1996
                                                                                  -------------   ------------
Cash flows from operating activities
   Net income                                                                     $   3,714,000   $  2,719,000
   Non-cash adjustments:
      Depreciation and amortization                                                   1,119,000        589,000
      Other                                                                             168,000        466,000
   Changes in operating assets and liabilities:
      Accounts receivable                                                            (1,628,000)    (1,032,000)
      Inventories                                                                       409,000     (1,190,000)
      Prepaid expenses and other                                                       (251,000)        92,000
      Accounts payable                                                                  220,000         23,000
      Accrued expenses                                                                   19,000        682,000
      Income taxes payable                                                              304,000        412,000
                                                                                  -------------   ------------

         Net cash provided by operating activities                                    4,074,000      2,761,000
                                                                                  -------------   ------------

Cash flows from investing activities
   Cash purchases of equipment and improvements, net                                   (456,000)      (674,000)
   Capitalized software development                                                    (537,000)      (232,000)
   Purchase of marketable securities                                                 (6,512,000)
   Purchase of remaining shares in subsidiary                                                          (93,000)
                                                                                  -------------   ------------

         Net cash used in investing activities                                       (7,505,000)      (999,000)
                                                                                  -------------   ------------

Cash flows from financing activities
   Payments on capital lease obligations                                                (15,000)       (46,000)
   Repayment of notes payable                                                            (8,000)       (23,000)
   Proceeds from issuance of common stock                                                65,000     11,453,000
                                                                                  -------------   ------------

         Net cash provided by financing activities                                       42,000     11,384,000
                                                                                  -------------   ------------

         Net (decrease) increase in cash                                             (3,389,000)    13,146,000

Cash and cash equivalents at beginning of period                                     10,027,000      2,466,000
                                                                                  -------------   ------------

Cash and cash equivalents at end of period                                        $   6,638,000   $ 15,612,000
                                                                                  =============   ============


</TABLE>

                                       5
<PAGE>







             Performance Technologies, Incorporated and Subsidiaries
                   Notes to Consolidated Financial Statements
                  For The Nine Months Ended September 30, 1997
                                   (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, 1996,  as reported in its Annual  Report on Form 10-K filed with
the Securities and Exchange Commission.

Note - B A three-for-two  stock split on the Company's Common stock was effected
in the  form of a stock  dividend  on  September  15,  1997.  Common  stock  and
Additional  paid-in capital as of September 30, 1997 and all share and per share
data have been restated to reflect this split.

                  There were 7,244,710 and 4,801,301 shares  (pre-split)  issued
and outstanding (net of treasury shares held) at September 30, 1997 and December
31, 1996, respectively, of the Company's $.01 par value Common Stock. During the
nine months ended  September 30, 1997,  28,514 common  shares  (pre-split)  were
issued upon the exercise of stock options.

Note - C          Inventories consisted of the following at September 30, 1997
           and December 31, 1996:

<TABLE>
<CAPTION>
         <S>                                       <C>              <C>
                                                  September 30,     December 31,
                                                      1997              1996
                                                   (unaudited)

         Purchased parts and components ......     $ 1,134,000      $ 1,601,000
         Work in process .....................       2,551,000        2,641,000
         Finished goods ......................         284,000          292,000
                                                   -----------      -----------
                                                     3,969,000        4,534,000
         Less:  reserve for inventory obsolescence    (499,000)        (502,000)
                                                   -----------      -----------
           Net ...............................     $ 3,470,000      $ 4,032,000
                                                   ===========      ===========

</TABLE>

Note - D The provisions of Statement of Financial  Accounting  Standards No. 128
("SFAS 128"), "Earnings per Share" are effective for financial statements issued
for  interim  and annual  periods  ending  after  December  15,  1997.  SFAS 128
simplifies  the standards for computing  earnings per share and makes the United
States  earnings  per share  accounting  standard  comparable  to  international
standards.  The  Company  believes  that the  adoption  of SFAS 128  would  have
increased reported earnings per share by $.01 and $.02 for the third quarter and
nine months ended September 30, 1997, respectively,  and $.01 for each the third
quarter and nine months ended September 30, 1996, respectively.





                                       6
<PAGE>


             Performance Technologies, Incorporated and Subsidiaries

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

The   Company's   operating   performance   is  subject  to  various  risks  and
uncertainties.  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,
1996 and "Risk Factors" as reported in the Company's  Annual Report on Form 10-K
filed with the Securities and Exchange Commission.

Matters discussed in Management's Discussion and Analysis of Financial Condition
and Results of Operations 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  Act of 1934, as amended,  and are subject to the
safe harbor provisions of those Sections. The Company's future operating results
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,  changes in the product or customer mix of sales,  delays in
new product development, customer acceptance of new products and customer delays
in qualification of products.


Overview

The Company  achieved  record sales and net income for the third quarter and for
the nine months ended  September 30, 1997. Net income for the third quarter 1997
increased  by 54% to  $1,402,000  and net  income  for  the  nine  months  ended
September 30, 1997  increased  37% to  $3,714,000 as compared to the  respective
1996 periods. At September 30, 1997, the Company had approximately $19.3 million
in cash and marketable securities, no significant debt and generated income from
operations excluding  depreciation and amortization (EBITDA) for the nine months
ended  September  30,  1997  of  approximately   $6.4  million  as  compared  to
approximately $4.5 million for the same period in 1996.

On September 15, 1997, the Company  effected a three-for-two  stock split in the
form of a 50% stock dividend which increased the number of shares outstanding to
7.2 million  shares.  Management  believes that  increasing the number of shares
available in the financial market will benefit the Company's stockholders and is
part of an active program to broaden the Company's  stockholder base. By the end
of the third  quarter,  the Company's  market  capitalization  had exceeded $100
million. Management believes this is significant to the investment community and
ultimately to its stockholders as many institutional  investors are unwilling to
invest in companies with a market capitalization of less than $100 million.

The  Company's  revenues are  generated  from  products  designed to enhance the
performance of network systems based on varied computer architectures  including
VMEbus,  SBus and PCIbus.  The Company's  products operate on various  operating
systems  including UNIX,  Solaris(TM),  SunOS(TM),  Windows NT(TM),  VxWorks and
LINUX.  During the third quarter of 1997, the Company has  introduced  PCI-based
LAN,  WAN and Mass Storage  products  that  support the new  PCI-based  Ultra 30
workstations  introduced  by Sun  Microsystems,  Inc.;  Mass Storage  Ultra SCSI
Adapters and three new fast Ethernet network switch  products.  These new switch
products  have not only  expanded  the  Nebula(TM)  product  line  with the next
generation  of fast  Ethernet  products but also  incorporate  features for high
reliability and fault  tolerance.  These products were launched in early October
at the Networld+InterOp  trade show in Atlanta and are designed specifically for
business and mission  critical  environments.  Beta units of these new switching
products are expected to be shipped by year-end with  production  units shipping
in March or April of next year.

                                       7
<PAGE>


In September,  the Company's  Controller Products Group presented its new PCIbus
WAN and LAN communications and mass storage products at the IT Forum in New York
City. In addition,  in mid-October the Company  announced three new products for
the new emerging  Compact PCI market.  These  products are a WAN  Communications
Controller,  T1/E1 Primary Rate WAN Communication  Controller,  and WAN Protocol
Engine.  Availability  of these  products is  scheduled  for  December  1997 and
January 1998.

The Company has recently been featured in a number of publications  including an
article in the  Investor's  Business  Daily on  September  10th titled  "Finding
Growth in Ultra-High-Tech Markets". For the second consecutive year, Performance
Technologies  was recognized on the Forbes  Magazine list of the "Best 200 Small
Companies in America."

         Quarter and Nine Months Ended September 30, 1997, compared with
              the Quarter and Nine Months Ended September 30, 1996

         SALES.  Sales for the third  quarter of 1997  increased  by  $1,194,000
(18.6%) to $7,606,000,  from $6,412,000 for the third quarter of 1996. Sales for
the nine months ended  September  30, 1997  increased by  $4,167,000  (22.6%) to
$22,579,000,  from $18,412,000 for the nine months ended September 30, 1996. The
Company's  products  are grouped into five  categories:  WAN  Interface  Adapter
products, LAN Interface Adapter products, Network Systems products, Mass Storage
Interface products and Inter-system Connectivity products.

Shipments  of WAN Adapter  products  amounted  to 47% of sales  during the third
quarter of 1997, compared to 41% for the same period in 1996. Shipments were 47%
of sales for the nine months ended  September 30, 1997 and were 43% of sales for
the comparable  1996 period.  Sales of WAN products  increased 35% for the third
quarter and 33%  year-to-date in 1997,  over the respective  1996 periods.  This
increase  is  attributable  to  introductions  over the last  twelve to eighteen
months of several new WAN  products  and several new OEM  customers  integrating
these products into their product applications.

Shipments of LAN Adapter  products for the third quarter of 1997 amounted to 15%
of sales,  compared to 18% for the third quarter of 1996,  and were 17% of sales
for the nine months ended September 30, 1997, compared to 22% for the first nine
months of 1996.  The largest  share of the  Company's  LAN business is generated
from Commercial Off-the-Shelf (COTS) Defense applications. This project-oriented
business is difficult to predict on a quarterly  basis.  Management  expects the
dollar volume of this  business to meet or slightly  exceed last year's level of
sales.

Shipments  of Network  Systems  products  represented  11% of total sales in the
third quarter of 1997 and 15% for same period in 1996. Network Systems shipments
were 11% of total sales for each of the nine months ended September 30, 1997 and
1996.  For the third  quarter of 1997,  revenues from Network  Systems  products
increased  from the second  quarter level because a component  design change was
successfully  resolved.  However,  the Radar protocol  software  business in the
Company's UCONx subsidiary was less than forecast.  The Radar protocol  business
is typically project-oriented and can fluctuate from quarter to quarter.

Shipments  of Mass  Storage  Interface  products  for the third  quarter of 1997
amounted to 14% of sales,  compared to 16% in the third quarter of 1996. For the
nine months ended  September 30, 1997,  Mass Storage  products were 16% of total
sales compared to 15% for the same 1996 period.  Sales of Mass Storage Interface
products  increased  26% for the nine months ended  September  30, 1997 over the
respective 1996 period.  The increase in sales volume is primarily  attributable
to the Company's Ultra SCSI interface product introduced in mid 1996.

Shipments of Inter-system Connectivity products represented 13% of sales for the
third quarter of 1997 and 9% of total sales for the nine months ended  September
30, 1997, compared to 10% and 9%, respectively for the 1996 periods. The Company
is not  investing in this group of products  and a decline in these  revenues is
expected from last year's levels.

International  sales  amounted to 10% of total  sales for the first nine  months
of 1997,  compared to 11% of sales for all of 1996.

                                       8
<PAGE>

         GROSS PROFIT.  Gross profit consists of sales,  less cost of goods sold
including materials costs,  manufacturing  expenses and amortization of software
development  costs.  Gross  margin  improved  to 57.1% of  sales  for the  third
quarter,  from 54.7% in the third quarter of 1996.  For the first nine months of
1997 gross  margin  improved to 57.4% of sales as compared to 56.5% for the same
period in 1996.  The  improved  margin is primarily  attributable  to the mix of
product shipments for the quarter and manufacturing and purchasing  efficiencies
attributable to higher volumes.

         OPERATING  EXPENSES.  Total operating expenses increased to $2,347,000,
or 30.9% of sales for the third quarter 1997, from $2,252,000, or 35.1% of sales
for  the  comparable  1996  quarter.   Total  operating  expenses  increased  to
$7,700,000,  or  34.1%  of  sales  for the  first  nine  months  of  1997,  from
$6,536,000, or 35.5% of sales for the nine months ended September 30, 1996.

Selling and marketing  expenses  increased to $1,004,000,  or 13.2% of sales for
the third quarter 1997, from $732,000, or 11.4% of sales for the same quarter in
1996. Selling and marketing expenses increased to $3,015,000,  or 13.4% of sales
for the nine months ended September 30, 1997, from $2,300,000, or 12.5% of sales
for the first nine months of 1996. Beginning in late 1996, the Company increased
spending in its  marketing  program for industry  trade shows,  etc. in order to
promote its new product introductions.

Research and development expenses were $791,000, or 10.4% of sales for the third
quarter of 1997, compared to $801,000, or 12.5% of sales for the comparable 1996
quarter.  Research and development  expenses were $2,705,000,  or 12.0% of sales
for the nine months ended September 30, 1997,  compared to $2,124,000,  or 11.5%
of sales for the nine months ended September 30, 1996.  Research and development
expenses  consist  primarily  of  employee  salary and  benefit  costs,  cost of
materials consumed in developing and designing new products and contract product
development.  Certain  engineering  expenses  associated with the development of
software are  capitalized  and amortized to cost of goods sold.  The net benefit
derived from the  capitalization  of certain software  development  costs,  less
applicable  amortization,  amounted  to  $119,000  for  the  nine  months  ended
September 30, 1997,  compared to $38,000 for the nine months ended September 30,
1996.  The  increase of research  and  development  expenses for the nine months
ended  September 30, 1997 compared to the same period in 1996 is attributable to
hiring  engineers  needed to accelerate the  development of new products and the
development  of a new network ASIC  developed in connection  with the new switch
products.  As expected,  research and development expenses declined in the third
quarter  1997 from the  second  quarter,  because  development  on  certain  new
products was completed early in the third quarter.

General and  administrative  expenses  were  $552,000,  or 7.3% of sales for the
third  quarter  1997,  compared  to  $719,000,  or 11.2% of sales  for the third
quarter 1996.  General and administrative  expenses were $1,980,000,  or 8.8% of
sales for the nine months ended September 30, 1997,  compared to $2,112,000,  or
11.5% of sales for the first nine  months of 1996.  The  decrease in general and
administrative  expenses  for  the  third  quarter  1997,  compared  to  1996 is
primarily  attributable  to the Company  recognizing a benefit of  approximately
$130,000 as a result of a state sales tax audit.

         INCOME TAXES.  The provision for income taxes was $860,000 in the third
quarter  of 1997,  compared  to  $544,000  for the  same  quarter  in 1996.  The
effective  corporate  income  tax rate for the third  quarter of 1997 was 38.0%,
compared  to 37.4% for the third  quarter  of 1996.  For the nine  months  ended
September  30, 1997,  the  provision  for income taxes  amounted to  $2,278,000,
compared  to  $1,631,000  for the  first  nine  months  of 1996.  The  effective
corporate income tax rate was 38.0%, compared to 37.3% for the first nine months
of 1996.


LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1997, the Company's  primary source of liquidity  included cash
and cash  equivalents of $6,638,000,  marketable  securities  with a maturity of
less than one year of $12,614,000 and available borrowings of $3,000,000 under a
revolving  credit facility with a bank. No amounts were  outstanding  under this
credit  facility as of September  30, 1997.  The Company had working  capital of
$24,862,000  at September 30, 1997, as compared to  $23,223,000 at June 30, 1997
and $20,965,000 at December 31, 1996.

                                       9
<PAGE>

Cash provided by operating  activities  for the nine months ended  September 30,
1997 was  $4,074,000,  compared to $2,761,000 for the same period in 1996.  Cash
used in investing  activities was $7,505,000 for the nine months ended September
30, 1997,  compared to $999,000 for the nine months  ended  September  30, 1996.
During the nine months ended September 30, 1997,  investing  activities included
the  purchase of  marketable  securities  of  $6,512,000  and capital  equipment
purchases  of  $456,000.   Capital  equipment  purchases  consist  primarily  of
manufacturing  equipment,  office  equipment and computer and related  equipment
used in  engineering  . During the nine months ended  September  30, 1996,  cash
payments  of  $93,000  were  made to  purchase  the  remaining  interest  in its
subsidiary, UCONx Corporation.

Cash provided by financing  activities  for the nine months ended  September 30,
1997 was $42,000 as  compared  to  $11,384,000  of cash  provided  by  financing
activities  for the same period in 1996.  During the first quarter of 1996,  the
Company completed its initial public offering of Common Stock.

Many companies are facing a potential issue regarding the ability of information
systems to  accommodate  the coming  year 2000.  The Company is  evaluating  its
information  systems and believes that all critical systems can, or will be able
to  accommodate  the  coming  century  without  material  adverse  effect on the
Company's  financial  condition,  results of  operations,  capital  spending  or
competitive position.

Assuming there is no significant  change in the Company's  business,  management
believes  that its current cash and  marketable  securities  together  with cash
generated  from  operations  and available  borrowings  under the Company's loan
agreement 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, it is the Company's intention to continue aggressive new
product  introductions  for the remainder of 1997 and into 1998 for a variety of
markets served by the Company.  Management has initiated a strategic acquisition
program to further accelerate new product and market penetration  efforts.  This
program  could have an impact on the  Company's  working  capital  requirements,
liquidity or capital resources.




                                       10
<PAGE>





             Performance Technologies, Incorporated and Subsidiaries

                           Part II. Other Information



Item 2.           Changes in Securities and Use of Proceeds

The following table  summarizes the proceeds from the sale of securities and use
of  proceeds  therefrom  in  connection  with the  Registrant's  Initial  Public
Offering on January 24,  1996.  Amounts  reported  represent  an estimate of the
amount of these expenditures.

<TABLE>
<CAPTION>
<S>                                              <C>

Proceeds from the sale of securities:

Gross proceeds ...........................................   $12,800,000
Less:    Underwriter's commission                                896,000
         Finder's fees ...................................             0
         Underwriter's expenses ..........................        27,000
         Payments to Directors, Officers, General Partners             0
         Other ...........................................       461,000
                                                             -----------
Net proceeds .............................................   $11,416,000
                                                             ===========

Use of Proceeds:

Construction of facilities ...............................   $         0
Purchase of machinery ....................................     1,563,000
Purchase of real estate ..................................             0
Acquisition of other business(es) ........................             0
Repayment of debt ........................................             0
General working capital purposes .........................             0
Temporary investments ....................................     3,471,000
Inventory for new products ...............................     1,265,000
Software development .....................................       917,000
Product development ......................................     4,200,000
                                                             -----------
Total use of proceeds ....................................   $11,416,000
                                                             ===========
</TABLE>





Item 6.           Exhibits and Reports on Form 8-K

                  A.       Exhibits

                           Exhibit 11 - Computation of earnings per share.

                  B.       Reports on Form 8-K

                           Report  on Form 8-K  dated  July 30,  1997 was  filed
during the three month period  ended September  30,  1997. Item 5 - Other items;
reported the declaration of the three-for-two stock split in the form of a stock
dividend and distribution on shares of the Registrant's Common Stock.



                                       11
<PAGE>





             Performance Technologies, Incorporated and Subsidiaries
                 Exhibit 11 - Computation of Earnings Per Share
        For the Three and Nine Months Ending September 30, 1997 and 1996


<TABLE>
<CAPTION> 
<S>                                        <C>             <C>             <C>           <C>


                                               Three Months Ended             Nine Months Ended
                                                 September 30,                  September 30,
                                                1997          1996            1997             1996
                                             ----------    ----------      ----------       ----------
        

Weighted average common and common 
  share equivalents (1):

Weighted average common shares
  outstanding during the period .            7,238,000     7,182,000       7,170,000        7,128,000

Weighted average common share equivalents ..   387,000       235,000         248,000          247,000
                                            ----------    ----------      ----------       ----------

                                             7,625,000     7,417,000       7,418,000        7,375,000
                                            ==========    ==========      ==========       ==========
                                                                        

Net Income ... ..........................   $1,402,000    $  912,000      $3,714,000       $2,719,000
                                            ==========    ==========      ==========       ==========



Earnings per share (1) ............         $     .18     $     .12       $     .50        $     .37
                                            ==========    ==========      ==========       ==========                  


(1) All share and per share data have been restated to reflect a three-for-two
stock split effected on September 15, 1997.

</TABLE>



                                       12
<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





November 14, 1997                              By: s/ Donald L. Turrell
                                               ------------------------
                                                      Donald L. Turrell
                                                       President and
                                                  Chief Executive Officer




November 14, 1997                              By: s/ Dorrance W. Lamb
                                               -----------------------
                                                      Dorrance W. Lamb
                                                 Chief Financial Officer and
                                                   Vice President, Finance