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


                                  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, 2000
                                       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)
                                                              14620
  315 Science Parkway, Rochester New York                  (Zip Code)
 (Address of principal executive offices)

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

       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
13,247,763 as of May 1, 2000.
     ---------------------------------------------------------------------



                                       1
<PAGE>





             Performance Technologies, Incorporated and Subsidiaries

                                      Index


                                                                            Page

Part I.  Financial Information

Item 1.  Consolidated Financial Statements

              Consolidated Balance Sheets as of March 31, 2000
              (unaudited) and December 31, 1999                              3

              Consolidated Statements of Income For The Three Months
              Ended March 31, 2000 and 1999 (unaudited)                      4

              Consolidated Statements of Cash Flows For The Three
              Months Ended March 31, 2000 and 1999 (unaudited)               5

              Notes to Consolidated Financial Statements For The Three
              Months Ended March 31, 2000 (unaudited)                        6

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


Part II. Other Information

Item 4.  Submission of Matters to a Vote of Security Holders                11

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

Signatures                                                                  12



                                       2
<PAGE>


             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>

<CAPTION>
                                     ASSETS


                                                     March 31,     December 31,
                                                       2000            1999
                                                   ------------    ------------
                                                    (unaudited)
<S>                                                 <C>             <C>
Current assets:
  Cash and cash equivalents                         $19,087,000     $ 9,792,000
  Marketable securities                              14,966,000      22,007,000
  Accounts receivable, net                            8,780,000       9,474,000
  Inventories, net                                    3,840,000       3,910,000
  Prepaid expenses and other                            555,000         684,000
  Deferred taxes                                      1,129,000       1,129,000
                                                   ------------    ------------
       Total current assets                          48,357,000      46,996,000

Equipment and improvements, net                       1,792,000       1,695,000
Software development, net                               501,000         451,000
                                                   ------------    ------------
       Total assets                                 $50,650,000     $49,142,000
                                                   ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long term debt                 $     3,000     $     6,000
  Accounts payable                                    1,587,000         904,000
  Income taxes payable                                1,798,000       1,990,000
  Accrued expenses                                    3,425,000       5,087,000
                                                   ------------    ------------
       Total current liabilities                      6,813,000       7,987,000
  Deferred taxes                                        327,000         327,000
                                                   ------------    ------------
       Total liabilities                              7,140,000       8,314,000
                                                   ------------    ------------
Stockholders' equity:
  Preferred stock
  Common stock                                          132,000         132,000
  Additional paid-in capital                         12,899,000      12,665,000
  Retained earnings                                  30,439,000      28,003,000
  Cumulative translation adjustments                     40,000          28,000
                                                   ------------    ------------
       Total stockholders' equity                    43,510,000      40,828,000
                                                   ------------    ------------
       Total liabilities and stockholders' equity   $50,650,000     $49,142,000
                                                   ============    ============

</TABLE>


                                       3
<PAGE>




             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (unaudited)
<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                              March 31,
                                                        2000            1999
                                                   ------------    ------------
                                                                     (restated)
<S>                                                 <C>              <C>
Sales                                               $11,594,000      $8,689,000
Cost of goods sold                                    3,801,000       3,192,000
                                                   ------------    ------------
Gross profit                                          7,793,000       5,497,000
                                                   ------------    ------------
Operating expenses:
  Selling and marketing                               1,255,000       1,134,000
  Research and development                            2,268,000       2,164,000
  General and administrative                            803,000         905,000
                                                   ------------    ------------
      Total operating expenses                        4,326,000       4,203,000
                                                   ------------    ------------
Income from operations                                3,467,000       1,294,000

Other income, net                                       461,000         325,000
                                                   ------------    ------------
Income before income taxes                            3,928,000       1,619,000

Provision for income taxes                            1,492,000         674,000
                                                   ------------    ------------
      Net income                                    $ 2,436,000      $  945,000
                                                   ============    ============


Basic earnings per share                            $       .18      $      .07
                                                    ===========    ============
Diluted earnings per share                          $       .17      $      .07
                                                   ============    ============



Net income available to common
  stockholders                                      $ 2,436,000      $  945,000
                                                   ============    ============
Weighted average number of
  common shares used in basic
  earnings per share                                 13,234,016      13,029,622
Common equivalent shares                                909,887         365,717
                                                   ------------    ------------
Weighted average number of
  common shares used in diluted
  earnings per share                                 14,143,903      13,395,339
                                                   ============    ============
</TABLE>


                                       4
<PAGE>







             PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (unaudited)
<TABLE>
<CAPTION>                                                 Three Months Ended
                                                              March 31,
                                                        2000            1999
                                                   ------------    ------------
                                                                     (restated)
<S>                                                  <C>             <C>
Cash flows from operating activities:
 Net income                                          $2,436,000      $  945,000
 Non-cash adjustments:
   Depreciation and amortization                        221,000         243,000
   Other                                                  5,000           2,000
   Compensation expense                                                 715,000
 Changes in operating assets and liabilities:
   Accounts receivable                                  695,000      (1,101,000)
   Inventories                                           71,000        (900,000)
   Prepaid expenses and other                           129,000         610,000
   Accounts payable                                     684,000        (300,000)
   Accrued expenses                                  (1,661,000)        441,000
   Income taxes payable                                (192,000)        539,000
                                                   ------------    ------------
    Net cash provided by operating activities         2,388,000       1,194,000
                                                   ------------    ------------
Cash flows from investing activities:
Purchases of equipment and improvements, net           (268,000)       (118,000)
Capitalized software development                        (98,000)        (73,000)
Purchase of marketable securities                    (5,959,000)    (15,008,000)
Maturities of marketable securities                  13,000,000
                                                   ------------    ------------
    Net cash provided (used) by investing             6,675,000     (15,199,000)
      activities                                   ------------    ------------

Cash flows from financing activities:
Repayment of notes payable                               (3,000)         (3,000)
Proceeds from issuance of common stock                  235,000          34,000
                                                   ------------    ------------
      Net cash provided by financing activities         232,000          31,000
                                                   ------------    ------------
      Net increase (decrease) in cash
        and cash equivalents                          9,295,000     (13,974,000)

Cash and cash equivalents at beginning of period      9,792,000      25,741,000
                                                   ------------    ------------
Cash and cash equivalents at end of period          $19,087,000     $11,767,000
                                                   ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash financing activity:
Exercise of stock options using 100 shares of
  common stock in 2000                              $     4,000
                                                   ============    ============
</TABLE>


                                       5
<PAGE>




             Performance Technologies, Incorporated and Subsidiaries
                   Notes to Consolidated Financial Statements
                    For The Three Months Ended March 31, 2000
                                   (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, 1999,  as reported in its Annual  Report on Form 10-K filed with
the Securities and Exchange Commission.

Note - B  There  were  13,237,488  shares  and  13,186,526  shares   issued  and
outstanding  at March 31,  2000 and  December  31,  1999,  respectively,  of the
Company's  $.01 par value Common Stock.  During the three months ended March 31,
2000, 50,962 common shares were issued upon the exercise of stock options.

Note - C  Inventories  consisted of the following at March 31, 2000 and December
31, 1999:
<TABLE>
<CAPTION>
                                                     March 31,      December 31,
                                                       2000            1999
                                                    ----------      -----------
<S>                                                 <C>             <C>
Purchased parts and components                      $ 2,042,000     $ 1,822,000
Work in process                                       2,392,000       2,893,000
Finished goods                                          232,000         113,000
                                                   ------------    ------------
                                                      4,666,000       4,828,000
Less:  reserve for inventory obsolescence              (826,000)       (918,000)
                                                   ------------    ------------
   Net                                              $ 3,840,000     $ 3,910,000
                                                   ============    ============
</TABLE>


                                       6
<PAGE>






             Performance Technologies, Incorporated and Subsidiaries

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

Overview

All 1999 financial information contained herein has been restated to reflect the
December 1999 acquisition of MicroLegend Telecom Systems, Inc., accounted for as
a pooling of  interests.  Furthermore,  per share  amounts have been adjusted to
reflect a three-for-two stock split effected in September 1999.

The Company's first quarter revenue increased 33% to $11.6 million,  compared to
$8.7  million  for the same  period in 1999.  Net income  for the first  quarter
increased to $2.4  million,  from $945,000 in the first quarter 1999 and diluted
earnings per share rose to $.17 per share, from $.07 per share in the respective
1999 period.  During the first quarter 1999,  MicroLegend Telecom Systems,  Inc.
recorded compensation expense of $715,000, or $.05 per share for the issuance of
stock options.  At March 31, 2000,  the Company had $34.1 million of cash,  cash
equivalents  and  marketable  securities  and no long-term  debt.  For the three
months  ended March 31,  2000,  the Company  generated  income from  operations,
excluding depreciation and amortization  (EBITDA), of $3.7 million,  compared to
$1.5 million for the same period of 1999. International sales amounted to 29% of
total sales for the first quarter  2000,  compared to 24% for the same period in
1999.

The Company is primarily focused on providing  enabling  technology for wireless
telecommunications  and for  next-generation  networks to support  Voice-over-IP
(VoIP).  During  2000,  management  expects the  Company's  revenue  growth will
primarily  be  derived  from  its  Signaling  System  7 and  WAN  communications
products.  These  products are  positioned  to take  advantage of  opportunities
presented by the convergence of voice and data communications, the growth of the
Internet and new  wireless  telephone  services.  These  products are  primarily
targeted  at  telecommunications  equipment  manufacturers,   telecommunications
service providers and operators, and international wireless carriers.  Signaling
System 7 and WAN communications  products represented $8.9 million of revenue in
the first  quarter of 2000,  compared to $6.9  million in the fourth  quarter of
1999 and $4.9 million in the first quarter a year ago.

As  the  next-generation   telecom  platform  architecture  is  implemented  for
Voice-over-IP,  there is a requirement to handle IP traffic.  Management expects
its capabilities in fault tolerant Ethernet switch architectures, cPCI packaging
and "Hot Swap"  availability to be implemented  into a third  generation  switch
subsystem.  This subsystem will initially find application as a data aggregation
device  integrated  in  carrier-class  Voice-over-IP  systems or in network edge
access  devices.  Management  expects these new switch products to contribute to
revenue growth in late 2000 and beyond.

Quarter  Ended March 31,  2000,  compared  with the Quarter Ended March 31, 1999

Sales.  Sales for the quarter March 31, 2000  increased  33.4% to $11.6 million,
from $8.7 million for the first quarter 1999.  Beginning in 2000,  the Company's
products are being grouped into three distinct categories in one market segment:
Signaling System 7 and WAN communications products, LAN interface products (U.S.
Government/COTS),   and  other  products   (combining  LAN  interface   products
(non-COTS),  Network  Switching  and  older/legacy  products).  During the first
quarter  of  2000,  Signaling  System  7 and WAN  communications  products,  LAN
interface products (U. S. Government/COTS),  and other products represented 77%,
9% and 14% of revenue, respectively.


                                       7
<PAGE>


Signaling System 7 and WAN communications  revenue increased 81% to $8.9 million
during the first quarter 2000, from $4.9 million for the first quarter 1999. The
markets for the  Company's  Signaling  System 7 Gateways and WAN  communications
products  appear to be  expanding  rapidly  and the  Company is gaining  greater
recognition for its enabling technology in these markets.

Shipments of LAN interface products (U. S. Government/COTS) in the first quarter
2000 amounted to $1 million, or 9% of sales, compared to $2.4 million, or 27% of
sales for the first quarter 1999. First quarter shipments completed  performance
on the $10.9 million Department of Defense procurement contract awarded in early
1999 which is the sole source of revenue for this product category.  Discussions
are currently  being held to determine the customer's  procurement  requirements
after this contract  expires in June 2000. At the present time,  management does
not expect any  additional  funds to be  allocated  to this  contract  before it
expires and is not projecting  additional  revenue from this customer during the
remainder of 2000.

Other products  represented  $1.7 million,  or 14% of sales in the first quarter
2000,  compared  to $1.4  million,  or 16% of sales for the same period in 1999.
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 and amortization of software development
costs.  Gross margin improved to 67.2% of sales for the first quarter 2000, from
63.3% in the first quarter of 1999. The improvement in gross margin is primarily
attributable to increased  revenue from higher margin  Signaling  System 7 (SS7)
Gateway  products,   higher  communications  software  sales  and  manufacturing
efficiencies, based on higher volumes.

Operating  expenses.  Total  operating  expenses were $4.3 million,  or 37.3% of
sales for the first  quarter 2000,  compared to $4.2 million,  or 48.4% of sales
for the comparable 1999 quarter.  During the first quarter of 1999,  MicroLegend
recorded compensation expense of $715,000, or $.05 per share for the issuance of
stock options.

Selling and  marketing  expenses  were $1.3  million,  or 10.8% of sales for the
first  quarter 2000  compared to, $1.1  million,  or 13.1% of sales for the same
quarter in 1999.  Management intends to aggressively market its Signaling System
7 Gateway and WAN  communications  products  during 2000 and expects selling and
marketing expenses to increase as a percentage of sales for the year. During the
first quarter 2000,  the Company  participated  in one  significant  trade show,
Comnet in  Washington,  D.C.,  and is  preparing to attend two major trade shows
during the second quarter:  the  Networld+Interop  Networking  Conference in Las
Vegas and the SuperComm trade show in Atlanta.

Research and development  expenses were $2.3 million,  or 19.6% of sales for the
first  quarter  2000,  compared  to $2.2  million,  or 24.9%  of  sales  for the
comparable 1999 quarter.  During 2000, the Company's development efforts will be
focused on new SS7 Gateway applications,  integrating the Signaling Gateway with
CompactPCI  (cPCI) to enhance its applicability in the marketplace and to expand
its WAN product  offerings.  In  addition,  the  Company is  applying  its fault
tolerant Ethernet switch architectures, cPCI packaging and "Hot Swap" capability
to a third generation switch subsystem for Voice-over-IP gateway systems.

General and  administrative  expenses  were  $800,000,  or 6.9% of sales for the
first  quarter  2000,  compared  to  $900,000,  or 10.4% of sales  for the first
quarter 1999.  The Company  continues to maintain tight control over its general
and  administrative  expenses and management  expects general and administrative
expenses to decline as a percentage of sales as revenue increases.

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.

                                       8
<PAGE>

Income taxes. The provision for income taxes for the first quarter 2000 is based
on the combined  federal,  state and foreign effective tax rate of 38%, compared
to 41.6% for the first quarter 1999.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2000, the Company's  primary source of liquidity  included cash and
cash equivalents of $19.1 million, marketable securities with a maturity of less
than one year of $15.0 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 March 31, 2000. The Company had working  capital of $41.5
million at March 31, 2000, compared to $39.0 million at December 31, 1999.

Cash  provided  by  operating  activities  for the first  quarter  2000 was $2.4
million,  compared to $1.2 million for the same period in 1999.  The increase in
cash provided by operating activities for the three months ended March 31, 2000,
over the respective  1999 period,  is primarily  attributable to the increase in
net income and changes in working capital.

Capitalization of certain software development costs amounted to $98,000 for the
three months  ended March 31,  2000,  compared to $73,000 for the same period in
1999.

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,  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.

Impact of the Year 2000 Issue

The Company has not  experienced any material Year 2000 issues  internally,  nor
with key  suppliers or customers  and it appears  that such  organizations  have
successfully  transitioned to the Year 2000. However,  there can be no assurance
that problems will not arise for the Company,  its  suppliers,  its customers or
others with whom the Company does  business  later in 2000, or with systems that
have not yet been fully tested.  The Company  intends to continue to monitor its
compliance, as well as the compliance of others whose operations are material to
the Company's business.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

The Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for  certain  forward-looking  statements.  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, as amended,  and Section 21E of the
Securities Act of 1934, as amended, and is subject to the safe harbor provisions
of those Sections.

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,"
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.


                                       9
<PAGE>


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,  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. 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, 1999 and "Risk  Factors"
as  reported  in the  Company's  Annual  Report on Form 10-K,  as filed with the
Securities and Exchange Commission.



                                       10
<PAGE>



             Performance Technologies, Incorporated and Subsidiaries

                           Part II. Other Information



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

A special meeting of stockholders was held on February 9, 2000. The stockholders
voted to approve an amendment to the Restated  Certificate of  Incorporation  to
increase  of the number of  authorized  shares of Common  Stock from  15,000,000
shares, to 50,000,000  shares.  11,129,185 shares of common stock voted in favor
of the proposal,  557,033 shares of common stock voted against the proposal, and
28,726 shares of common stock abstained.

The  stockholders  also  voted  to  approve  an  amendment  to  the  Performance
Technologies,  Incorporated Stock Option Plan increasing the number of shares of
the  Company's  common  stock  reserved  for  issuance  under the Option Plan to
3,200,000.  10,699,460  shares of common  stock voted in favor of the  proposal,
869,728 shares of common stock voted against the proposal, and 145,756 shares of
common stock abstained.


Item 6.           Exhibits and Reports on Form 8-K

                  A.       Exhibits

                           None.

                  B.       Reports on Form 8-K

There were no reports  filed on Form 8-K during  the three  month  period  ended
March 31, 2000.




                                       11
<PAGE>



                                   SIGNATURES






     Pursuant  to the  requirements  of  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 10, 2000                                        By:/s/ DONALD L. TURRELL
                                                    ------------------------
                                                    Donald L. Turrell
                                                    President and
                                                    Chief Executive Officer

May 10, 2000                                        By:/S/ DORRANCE W. LAMB
                                                    ------------------------
                                                    Dorrance W. Lamb
                                                    Chief Financial Officer and
                                                    Vice President, Finance


                                       12
<PAGE>