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


                                  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 June 30, 2002
                                       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)

205 Indigo Creek Drive, Rochester, New York               14626
 (Address of principal executive offices)               (Zip Code)

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

       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 .


     The  number of shares  outstanding  of the  registrant's  common  stock was
12,280,853 as of July 31, 2002.
     ---------------------------------------------------------------------


<PAGE>



             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES

                                      INDEX


                                                                         Page

PART I.  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

           Consolidated Balance Sheets as of June 30, 2002 (unaudited) and
            December 31, 2001                                              3

           Consolidated Statements of Income For The Three and Six Months
           Ended June 30, 2002 and 2001 (unaudited)                        4

           Consolidated Statements of Cash Flows For The Six
           Months Ended June 30, 2002 and 2001 (unaudited)                 5

           Notes to Consolidated Financial Statements For The Six
           Months Ended June 30, 2002 (unaudited)                          6

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


Item 3.  Quantitative and Qualitative Disclosures About Market Risk       13



PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                14

Item 4.  Submission of Matters to a Vote of Security Holders              14

Item 6.  Exhibits and Reports on Form 8-K                                 14

Signatures                                                                15



<PAGE>


ITEM 1.         CONSOLIDATED FINANCIAL STATEMENTS

             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


                                     ASSETS


                                             June 30,            December 31,
                                               2002                  2001
                                         ---------------      ------------------
                                           (unaudited)

Current assets:
  Cash and cash equivalents                $26,479,000             $26,913,000
  Marketable securities                      2,016,000
  Accounts receivable, net                   5,470,000               6,905,000
  Inventories, net                           4,180,000               3,756,000
  Prepaid expenses and other                   258,000                 359,000
  Deferred taxes                               620,000                 608,000
                                         ---------------      ------------------

       Total current assets                 39,023,000              38,541,000

Property, equipment and improvements, net    2,582,000               2,465,000
Software development costs, net              2,214,000               1,948,000
                                         ---------------      ------------------

       Total assets                        $43,819,000             $42,954,000
                                         ===============      ==================





                      LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:
  Accounts payable                           $ 778,000              $  417,000
  Income taxes payable                         571,000                 350,000
  Accrued expenses                           2,199,000               3,046,000
                                         ---------------      ------------------

       Total current liabilities             3,548,000               3,813,000

Deferred taxes                                 886,000                799,000
                                         ---------------      ------------------

       Total liabilities                     4,434,000               4,612,000
                                         ---------------      ------------------

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                10,934,000              11,305,000
  Retained earnings                         41,039,000              40,239,000
  Treasury stock - at cost; 979,185 and
  1,024,547 shares held at June 30, 2002
  and December 31, 2001, respectively      (12,663,000)            (13,284,000)
  Accumulated other comprehensive loss         (58,000)                (51,000)
                                         ---------------      ------------------
       Total stockholders' equity           39,385,000              38,342,000
                                         ---------------      ------------------

       Total liabilities and
       stockholders' equity                $43,819,000             $42,954,000
                                         ===============      ==================


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


<PAGE>



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

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

                                                    Three Months Ended                      Six Months Ended
                                                         June 30,                               June 30,
                                                  2002               2001               2002                2001
                                             ---------------    ----------------   ----------------    ---------------


Sales                                            $6,619,000          $9,444,000       $13,026,000        $19,144,000
Cost of goods sold                                2,676,000           3,611,000         5,328,000          7,420,000
                                             ---------------    ----------------   ----------------    ---------------

Gross profit                                      3,943,000           5,833,000         7,698,000         11,724,000
                                             ---------------    ----------------   ----------------    ---------------

Operating expenses:
  Selling and marketing                           1,210,000           1,388,000         2,273,000          2,898,000
  Research and development                        1,683,000           1,975,000         3,181,000          4,260,000
  General and administrative                        582,000             832,000         1,159,000          1,564,000
  Restructuring charge                                                                    163,000
                                             ---------------    ----------------   ----------------    ---------------
      Total operating expenses                    3,475,000           4,195,000         6,776,000          8,722,000
                                             ---------------    ----------------   ----------------    ---------------
Income from operations                              468,000           1,638,000           922,000          3,002,000

Other income, net                                   121,000             241,000           237,000            596,000
                                             ---------------    ----------------   ----------------    ---------------

Income before income taxes                          589,000           1,879,000         1,159,000          3,598,000

Provision for income taxes                          182,000             620,000           359,000          1,187,000
                                             ---------------    ----------------   ----------------    ---------------

      Net income                                 $  407,000          $1,259,000       $   800,000        $ 2,411,000
                                             ===============    ================   ================    ===============


Basic earnings per share                         $      .03          $      .10       $       .07        $       .20
                                             ===============    ================   ================    ===============

Diluted earnings per share                       $      .03          $      .10       $       .06        $       .19
                                             ===============    ================   ================    ===============



Weighted average number of
  common shares used in basic earnings
  per share                                      12,260,554          12,196,674        12,249,325         12,335,344
Common equivalent shares                            124,782             453,630           219,162            453,231
                                             ---------------    ----------------   ----------------    ---------------

Weighted average number of
  common shares used in diluted earnings
  per share                                      12,385,336          12,650,304        12,468,487         12,788,575
                                             ===============    ================   ================    ===============
</TABLE>




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


<PAGE>


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

                                                        Six Months Ended
                                                             June 30,
                                                     2002                2001
                                                --------------    --------------

Cash flows from operating activities:
Net income                                        $  800,000       $ 2,411,000

Non-cash adjustments:
  Depreciation and amortization                      861,000           804,000
  Other                                              246,000           265,000

Changes in operating assets and liabilities:
  Accounts receivable                              1,261,000           (92,000)
  Inventories                                       (424,000)        1,264,000
  Prepaid expenses and other                         101,000           124,000
  Accounts payable and accrued expenses             (486,000)       (1,100,000)
  Income taxes payable                               221,000          (219,000)
                                                --------------    --------------

   Net cash provided by operating activities       2,580,000         3,457,000
                                                --------------    --------------

Cash flows from investing activities:
  Purchases of property, equipment and improvements (615,000)         (712,000)
  Capitalized software development costs            (633,000)         (832,000)
  Purchase of marketable securities               (2,016,000)           (5,000)
  Maturities of marketable securities                                10,000,000
                                                --------------    --------------

   Net cash (used) provided by investing
   activities                                     (3,264,000)        8,451,000
                                                --------------    --------------

Cash flows from financing activities:
  Exercise of stock options and warrants             250,000           318,000
  Purchase of treasury stock                                        (6,821,000)
                                                --------------    --------------
   Net cash provided (used) by financing activities  250,000        (6,503,000)
                                                --------------    --------------

   Net (decrease) increase in cash and
   cash equivalents                                 (434,000)        5,405,000

Cash and cash equivalents at beginning of period  26,913,000        17,187,000
                                                --------------    --------------

Cash and cash equivalents at end of period       $26,479,000       $22,592,000
                                                ==============    ==============




     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 SIX MONTHS ENDED JUNE 30, 2002
                                   (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, 2001,  as reported in its Annual  Report on Form 10-K filed with
the Securities and Exchange Commission.

Note - B    During the six months ended June 30, 2002, 45,362 common shares were
issued upon the exercise of stock options.

Note - C    Inventories consisted of the following at June 30, 2002 and December
31, 2001:


                                                  June 30,         December 31,
                                                    2002               2001
                                                ------------        ------------

Purchased parts and components                  $1,394,000          $1,329,000
Work in process                                  3,038,000           2,778,000
Finished goods                                     652,000             468,000
                                                ------------        ------------
                                                 5,084,000           4,575,000
Less:  reserve for inventory obsolescence         (904,000)           (819,000)
                                                ------------        ------------
   Net                                          $4,180,000          $3,756,000
                                                ============        ============

Note - D    On January 15, 2002, the Company announced plans to improve its cost
structure  primarily  through  reductions in the Company's staff.  This plan has
been  completed and resulted in a reduction in workforce of  approximately  10%.
During the first quarter of 2002, the Company  recorded a restructuring  charge,
primarily related to severance costs, of $163,000.


<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.  Actual results of operations  could
differ materially from those discussed in the forward-looking statements.

Overview

Business Strategy:  Performance Technologies,  Incorporated (the "Company") is a
global supplier of innovative  embedded  hardware and software  systems products
for a broad range of communications  infrastructure  including  traditional data
communications and  wireline/wireless  telecommunication  systems. The Company's
products fall into three distinct areas:  SS7 signaling,  IP Ethernet switch and
network access. The Company's  development efforts are directed at future growth
opportunities  that utilize the evolving IP (Internet  Protocol)  standards  for
communications  and networking  equipment.  IP based  communications and systems
products  are  generally   viewed  in  the  industry  as  the   foundation   for
next-generation  telecommunications  systems and  services,  as well as embedded
systems for video, data communications and mass storage applications.  Customers
who use the  Company's  products and  technologies  include:  telecommunications
equipment  manufacturers  (TEMs),  communications  service  providers/operators,
international  mobile/cellular  wireless operators and embedded systems platform
suppliers/integrators.  The Company's  products are based on  open-architectures
and are focused on high availability requirements.

Financial  Information:  Revenue in the second  quarter  2002 was $6.6  million,
compared to $9.4 million in the corresponding quarter a year earlier. Net income
for the second quarter 2002 amounted to $.4 million, or $.03 per share, compared
to $1.3 million,  or $.10 per share for the second  quarter 2001,  based on 12.4
million and 12.7 million shares outstanding, respectively.

Revenue for the six months  ended June 30, 2002 was $13.0  million,  compared to
$19.1 million in the  corresponding  period a year  earlier.  Net income for the
first six months of 2002  amounted to $.8 million,  or $.06 per share  including
expenses  associated with a  restructuring  charge recorded in the first quarter
amounting  to  $.2  million  (pre-tax),   or  $.01  per  share.   Excluding  the
restructuring  charge, net income for the six months amounted to $.9 million, or
$.07 per share on 12.5 million shares  outstanding.  Net income amounted to $2.4
million,  or $.19 per share  for the  comparable  period in 2001,  based on 12.8
million shares outstanding.

Cash, cash  equivalents and marketable  securities  amounted to $28.5 million at
June 30,  2002,  compared to $26.9  million at the end of 2001 and no  long-term
debt  existed  at either  date.  For the first six months of 2002,  the  Company
generated income from operations,  excluding interest,  taxes,  depreciation and
amortization  (EBITDA),  of $1.8 million,  compared to $3.8 million for the same
period in 2001.

During  January  2002,  the  Company  improved  its cost  structure  by reducing
annualized  expenses by approximately $1.6 million due to the uncertainty of the
economic conditions and lack of visibility for orders from its customers.  These
reductions were primarily  personnel  related and were initiated  throughout the
organization.

During  April  2002,  the  Company's  Rochester  operations  completed  a smooth
transition to a new,  larger  facility and new  manufacturing  equipment  became
operational  to  accommodate  several new  products  that  require  leading-edge
manufacturing  processes.  The  incremental  expense  for  the new  facility  is
expected to be approximately $.1 million per quarter.

Following  increased order momentum for the Company's products in general during
the first quarter 2002, the Company  experienced  continuing momentum during the
second quarter for its IPnexusTM switch products,  which address broader markets
than just telecommunications,  but the order momentum for its other products was
not sustained. The largest single customer during the second quarter represented
10% of revenue and the largest four customers  represented  33% of the Company's
revenue. Two of these four customers sell into non-telecommunications markets.

During the second quarter,  the Company  continued to focus on realizing "design
wins"  with its  customers  and  prospective  customers.  A design win is when a
customer or prospective  customer notifies the Company that its product has been
selected to be integrated  with their  product.  During the second quarter 2002,
the Company  realized five new "design wins" for its products,  following  seven
new "design  wins" in the first quarter 2002 and  thirty-five  new "design wins"
during 2001. Recently announced design wins include Siemens Carrier Networks LLC
for an IPnexus network access product and NexusWareTM  software for use in their
softswitch platform; Optibase for an IPnexus embedded Ethernet switch for use in
its video  streaming  platform;  net.com  for using an  IPnexus  network  access
product in its telephony platform;  and Northrop Grumman Information  Technology
for a network  access  product  for use within the  National  Weather  Service's
Advanced Weather  Interactive  Processing  System.  Management  believes that as
economic  conditions  improve,  a greater number of customers will begin to move
their new products into production  thereby  accelerating the pace of orders for
the Company's products.

SEGwayTM SS7 link replacement  products offer wireless and wireline carriers the
ability to reduce operating costs, enhance services and expand their networks by
utilizing  lower cost IP networks for  signaling.  The SEGway  Edge,  introduced
fifteen  months ago, was the first product in this family.  General  release and
initial  shipments  of the  SEGway  Link  Concentrator  began  during the second
quarter of 2002.  In May, the Company  announced  the SEGway  IP-STP,  the third
product in this family.  This new product is a modular SS7 signaling router that
enables carriers to reliably perform traditional STP functions over IP networks.
This  product is being  deployed  by one  European  customer  and is  generating
interest from a number of prospective customers.

On August 5,  2002,  the  Company  announced  that its  Board of  Directors  had
authorized  the Company to repurchase up to an additional  one million shares of
its common stock. Under this new program, shares may be repurchased through open
market  purchases over the next twelve months and may be used for the Company's
stock  option  plan,  ongoing  acquisition  initiatives  and  general  corporate
purposes.

The Company also disclosed that it is currently  negotiating an acquisition that
would  expand  its line of  embedded  system  level  products.  The terms of the
acquisition  are being  negotiated  and the Company is still  engaged in its due
diligence review.

The  Company  further  disclosed  that it is  completing  details  of a minority
investment  in  an  organization   that  provides   custom  embedded   processor
technology.  The  investment  includes  an option to purchase  the  organization
within 24 months based on a performance related valuation model.

The two initiatives  noted above, if successful,  represent a total cost of less
than $10 million dollars to the Company.

FAS 144 - In August  2001,  the FASB issued SFAS No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets." SFAS No. 144 addresses  financial
accounting and reporting for the impairment or disposal of long-lived  assets to
be held and used, to be disposed of other than by sale, and to be disposed of by
sale.  On January 1, 2002 the Company  adopted  SFAS No.  144.  Adoption of this
statement  did not have an impact on the results of  operations or the financial
position of the Company.

FAS 145 - In April  2002,  the FASB issued  SFAS No.  145,  "Rescission  of FASB
Statements No. 4, 44, and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections  as of April  2002." SFAS No. 145  rescinds  FASB  Statement  No. 4,
Reporting  Gains and Losses from  Extinguishments  of Debt,  and an amendment of
that Statement,  FASB Statement No. 64,  Extinguishments of Debt Made to Satisfy
Sinking-Fund  Requirements.  This Statement also rescinds FASB Statement No. 44,
Accounting for Intangible  Assets of Motor Carriers.  This Statement also amends
FASB Statement No. 13,  Accounting for Leases,  as it relates to  sale-leaseback
transactions.  This Statement  also amends certain other existing  authoritative
pronouncements.  On May 15, 2002 the Company  adopted SFAS No. 145.  Adoption of
this  statement  did not have an  impact on the  results  of  operations  or the
financial position of the Company.


Forward Looking Guidance for the Third Quarter 2002 (published July 24, 2002):

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 are subject to the safe harbor provisions of the Private  Securities
Litigation Reform Act of 1995.

Performance   Technologies  provides  products  to  communications  and  network
equipment suppliers that are integrated into current and next-generation network
infrastructure  products.  Design wins are an important metric for management to
judge the Company's  success in its  marketplace.  Design wins reach  production
volumes at varying rates,  typically  beginning  twelve to eighteen months after
the  design  win  occurs.   A  variety  of  risks  such  as   schedule   delays,
cancellations,  changes in customer markets and general economic  conditions can
adversely affect a design win before production is reached or during deployment.
Not all design wins can be expected to result in production orders. Furthermore,
when economic conditions  deteriorate,  customers' visibility also 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 often shipped in the final month of the quarter.

Performance  Technologies  continued to experience  the effects of the difficult
economic  conditions  and  slowdown of capital  spending  in the  communications
market  during the second  quarter  2002.  New  project  deployments  and design
activity  were  sluggish and a number of customers  requested  cancellations  or
delays in shipments.

Based upon the current distribution of business, the current backlog,  review of
sales  forecasts,  possible  postponement of product  deliveries to a particular
customer,  and the  general  softness  of  European  business  during the summer
months,  management expects revenue in the third quarter 2002 to be $6.0 million
to $7.5  million.  Gross margin is expected to be  approximately  57% to 62% and
diluted earnings per share for the third quarter is expected to be $.02 to $.06.

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 and Six Months Ended June 30, 2002, Compared with
                 the Quarter and Six Months Ended June 30, 2001

The following table presents the percentage of sales represented by each item in
the Company's consolidated statements of income for the periods indicated:
<TABLE>
<S>                       <C>                <C>                <C>                 <C>


                              Three Months Ended                       Six Months Ended
                                   June 30,                                June 30,
                             2002                2001               2002                2001
                          ----------         -----------        -----------         ------------
Sales                      100.0%              100.0%             100.0%               100.0%
Cost of goods sold          40.4                38.2               40.9                 38.8
                          ----------         -----------        -----------         ------------
Gross profit                59.6                61.8               59.1                 61.2
                          ----------         -----------        -----------         ------------
Operating expenses:
  Selling and marketing     18.3                14.7               17.4                 15.1
  Research and development  25.4                20.9               24.4                 22.2
  General and administrative 8.8                 8.8                8.9                  8.2
  Restructuring charge                                              1.3
                          ----------         -----------        -----------         ------------
   Total operating expenses 52.5                44.4               52.0                 45.5
                          ----------         -----------        -----------         ------------
Income from operations       7.1                17.4                7.1                 15.7

Other income, net            1.8                 2.5                1.8                  3.1
                          ----------         -----------        -----------         ------------
Income before income taxes   8.9                19.9                8.9                 18.8

Provision for income taxes  (2.8)               (6.6)              (2.8)                (6.2)
                          ----------         -----------        -----------         ------------
    Net income               6.1                13.3                6.1                 12.6
                          ==========         ===========        ===========         ============
</TABLE>

Sales.  Total revenue for the second quarter 2002 was $6.6 million,  compared to
$9.4 million for the same  quarter in 2001.  Revenue for the first six months of
2002 was $13.0  million,  compared to $19.1 million for the same period in 2001.
For the  periods  indicated,  the  Company's  products  are  grouped  into three
distinct  categories  in  one  market  segment:  Signaling  and  network  access
products,  IP Switching  products and Other products.  Revenue from each product
category  is  expressed  as a  percentage  of sales for the three and six months
ending June 30, 2002 and 2001:
<TABLE>
<S>                                   <C>                <C>                <C>                 <C>


                                          Three Months Ended                     Six Months Ended
                                                June 30,                              June 30,
                                         2002               2001               2002                2001
                                      ----------         ---------          ----------          -----------

Signaling and network access products     89%                87%                88%                 85%
IP Switching products                     10%                 5%                 9%                  4%
Other                                      1%                 8%                 3%                 11%
                                      ----------         ---------          ----------          -----------
   Total                                 100%               100%               100%                100%
                                      ==========         =========          ==========          ===========
</TABLE>

Signaling  and  Network  Access  Products:  During the past twelve  months,  the
decline in capital expenditure investments by carriers has significantly reduced
the Company's signaling and network access products revenue.

IP Switching  Products:  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,  IP switch product revenue increased by 34%
to $.6 million in the second quarter 2002, compared to the respective quarter in
2001.  During the second  quarter,  the Company  began  shipping the  production
version of the CPC5400, an 8-port gigabit switch and pre-production units of the
CPC6400,  a 24 port gigabit  switch.  The Company also realized its first design
win for the CPC5400 during the second quarter 2002.

Other  product  revenue:  This revenue is related to legacy  products.  Customer
demand for these products has declined significantly over the past twelve months
as  customers  move to newer  technology.  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.  Gross margin was 59.6% of sales for the second quarter 2002,
compared  to 61.8% in the second  quarter of 2001.  Fixed  expenses  spread over
lower sales  volumes  impacted  gross margin as a percentage of sales during the
second quarter 2002.

Selling and marketing expenses were $1.2 million and $1.4 million for the second
quarter 2002 and 2001,  respectively.  For the six months, selling and marketing
expenses were $2.3 million and $2.9 million in 2002 and 2001, respectively.  The
decrease in expense  during 2002 is primarily the result of lower  personnel and
commission  expenses,  and  reductions  in  advertising,  travel  and trade show
participation.  During  the second  quarter  2002,  the  Company  increased  its
allowance  for doubtful  accounts by $.1 million to reserve a specific  customer
receivable.

Research  and  development  expenses  were $1.7 million and $2.0 million for the
second quarter 2002 and 2001, respectively.  During the second quarter 2002, the
Company continued to focus engineering  development  efforts on new products for
IP networks  and  signaling  applications.  New products  introduced  during the
quarter include the SEGway IP-STP and the IPnexus  Signaling  Blade. For the six
months,  research and development expenses were $3.2 million and $4.3 million in
2002 and 2001, respectively.  The reduction in expense is primarily attributable
to lower  headcount.  In  addition,  the Company  capitalizes  certain  software
development  costs which  reduce the amount of software  development  charged to
operating  expense.  During the second  quarter,  amounts  capitalized  were $.3
million and $.5 million for 2002 and 2001, respectively.  During the six months,
amounts  capitalized  were $.6  million  and $.8  million  for  2002  and  2001,
respectively.

General  and  administrative  expenses  were $.6 million and $.8 million for the
second quarter 2002 and 2001,  respectively.  For the first six months,  general
and administrative expenses were $1.2 million and $1.6 million in 2002 and 2001,
respectively.  This decrease in expense is the result of tightened  control over
general and administrative expenses and lower personnel related expenses.

Restructuring charges were $.2 million and zero for the first six months of 2002
and 2001, 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 and U.S. Treasury securities with maturities of less than
one  year.  Over the past  twelve  months,  interest  rates  have  declined  and
investment balances have increased.

Income taxes.  The  provision for income taxes for the second  quarter and first
six months of 2002 is based on the combined federal, state and foreign effective
tax rate of 31%,  compared to 33% for the comparable  periods in 2001.  Canadian
tax incentives contributed to a lower effective tax rate in 2002.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2002, the Company's primary source of liquidity included cash and
cash  equivalents  of $26.5 million,  marketable  securities of $2.0 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 June 30,
2002.  The  Company  had  working  capital of $35.5  million  at June 30,  2002,
compared to $34.7 million at December 31, 2001.

Cash provided by operating  activities for the first six months of 2002 was $2.6
million, compared to $3.5 million for the same period in 2001.

Capital equipment  purchases amounted to $.6 million for the first six months of
2002,  compared to $.7 million  for the same period in 2001.  Capitalization  of
certain  software  development  costs  amounted to $.6 million for the first six
months of 2002, compared to $.8 million for the same period in 2001.

In August 2000,  the Board of Directors  authorized  the  repurchase  of up to 1
million  shares of the  Company's  Common Stock and the Company  completed  this
repurchase  program  in  March  2001.  In March  2001,  the  Board of  Directors
authorized a one-year plan to repurchase up to an additional  500,000  shares of
the Company's Common Stock under which the Company  repurchased  206,000 shares.
Based on deteriorating  economic  conditions and an effort to preserve cash, the
Company  did not  repurchase  any  shares  during  the first six months of 2002,
compared to 541,000  shares  repurchased  at a total cost of $6.8 million during
the first six months of 2001. In August 2002, the Board of Directors  authorized
a plan to repurchase up to 1 million shares of the Company's Common Stock.

Assuming there is no significant  change in the Company's  business,  management
believes that its current  cash,  cash  equivalents  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,  an  unfavorable  determination  in the
outstanding  class action litigation could have a material adverse effect on the
Company's working capital.  Furthermore,  management is continuing its strategic
acquisition  program to further  accelerate  new product and market  penetration
efforts.  This program  could have an impact on the Company's  working  capital,
liquidity or capital resources.


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 are 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 and customer  delays in  qualification  of products.
Furthermore,  an  unfavorable  determination  in the  outstanding  class  action
litigation  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,
2001 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.



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 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.

<PAGE>

             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES

                           PART II. OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

No material changes have transpired since the Company's last filing relative  to
the class action lawsuits filed on May 19, 2000.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The 2002 Annual  Meeting of  Stockholders  was held June 4, 2002.  The Directors
elected at the meeting were as follows:
                                   Votes Cast
Nominees                                           For                 Withheld

Bernard Kozel                                    11,089,508             110,184
Charles E. Maginness                             11,089,508             110,184
Arlen Vanderwel                                  11,089,508             110,184

John M. Slusser, Stuart B. Meisenzahl,  John E. Mooney, Paul L. Smith and Donald
L. Turrell continue as Directors until the next Annual Meeting, or such times as
their respective terms expire.

The stockholders also voted to ratify the appointment of  PricewaterhouseCoopers
LLP as independent  accountants for 2002. 11,106,908 shares of common stock were
voted in favor of the proposal,  85,609 voted  against the  proposal,  and 7,175
shares of common stock abstained.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

                  A.       Exhibits

99.1     Chief Executive Officer Certification
99.2     Chief Financial Officer Certification

                  B.       Reports on Form 8-K

There were no reports filed on Form 8-K during the three month period ended June
30, 2002.


<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





August 8, 2002                   By: /s/               Donald L. Turrell
                                 -----------------------------------------------
                                                       Donald L. Turrell
                                                         President and
                                                    Chief Executive Officer




August 8, 2002                   By: /s/               Dorrance W. Lamb
                                 -----------------------------------------------
                                                       Dorrance W. Lamb
                                                   Chief Financial Officer and
                                                     Vice President, Finance



<PAGE>


                                                                 Exhibit 99.1





          Form of Certification Pursuant to Section 1350 of Chapter 63

                      Of Title 18 of the United States Code



     I,  Donald  L.  Turrell,   the  Chief  Executive   Officer  of  Performance
Technologies, Incorporated, certify that (i) the Form 10-Q for the quarter ended
June 2002 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.

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

                                                          August 8, 2002


<PAGE>


                                                                 Exhibit 99.2





          Form of Certification Pursuant to Section 1350 of Chapter 63

                      Of Title 18 of the United States Code



     I,  Dorrance  W.  Lamb,   the  Chief   Financial   Officer  of  Performance
Technologies, Incorporated, certify that (i) the Form 10-Q for the quarter ended
June 2002 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.

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

                                                         August 8, 2002