UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 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 quarterly period ended - September 30, 1997

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE
    ACT

For the transition period from ________ to _________


                         Commission File Number 0-24242

                        PRODUCTIVITY TECHNOLOGIES CORP.
        (Exact name of small business issuer as specified in its charter)

          Delaware                                      13-3764753
-------------------------------              ---------------------------------
(State or other jurisdiction of              (IRS Employer Identification No.)
incorporation or organization)

                  509 Madison Avenue, New York, New York 10022
           -----------------------------------------------------------
                    (Address of principal executive offices)

                                 (212) 843-1480
                                 --------------
                           (Issuer's telephone number)

                               Not Applicable
                 ----------------------------------------------
                 (Former name, former address and former fiscal
                          if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
12, 13 or 15 (d) of the  Exchange Act during the past 12 months (or 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 [ ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.  Yes  No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of November 14, 1997: 2,125,000 shares $ .001 par value common stock.

<PAGE>
                                    CONTENTS
<TABLE>
<CAPTION>

                                                                                      Page
<S>                                                                                   <C>   
Part I : Financial Information for
         Productivity Technologies Corp. (PTC) and
         Subsidiary Atlas Technologies, Inc. (Atlas)

Item 1.  Interim Financial Statements                                                   3

         Consolidated Balance Sheets of PTC and Atlas                           .       4-5

         Consolidated Income Statements of PTC and Atlas                                6

         Consolidated Statement of Stockholders' Equity of PTC                          7

         Consolidated Statement of Cash Flows of PTC and Atlas                          8-9

         Notes to Financial Statements                                                  10-12

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.                                                     13-15

Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K                                               15

Signatures                                                                              16

</TABLE>



                                        2



<PAGE>


PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARY

PART I:           FINANCIAL INFORMATION


ITEM 1.           INTERIM FINANCIAL STATEMENTS


The  consolidated  financial  statements  have been prepared in accordance  with
generally accepted accounting  principles for interim financial  information and
in accordance  with  instruction to Form 10-Q and Article 10 of Regulation  S-X.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  omitted  from the  accompanying  interim  financial  statements.  The
information  furnished  in  the  accompanying  balance  sheets,   statements  of
operations,  stockholders'  equity and cash flows, reflect all adjustments which
are, in the opinion of  management,  necessary  for a fair  presentation  of the
aforementioned  financial statements for the interim periods.  Operation results
for the three months ended September 30, 1997, are not necessarily indicative of
the results that may be expected for the year ending June 30, 1998.

The  aforementioned   consolidated   financial  statements  should  be  read  in
conjunction with Productivity  Technologies Corp. and Subsidiary's Form 10-K for
the  fiscal  year  ended  June  30,  1997.  Information  provided  includes  the
consolidated  audited  financial statements,  including  footnotes, for the year
ended June 30,  1997 and  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations.


                                        3


<PAGE>

Productivity Technologies Corp. and Subsidiary
Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                        Unaudited                Audited
 Assets                                                            September 30, 1997         June 30, 1997
<S>                                                                       <C>                      <C>  
 Current Assets
    Cash and cash equivalents                                           $102,815                $843,709
    Short-term investments, and accrued interest                       1,466,675                 929,204
    Contracts receivable                                               5,980,774               9,199,302
    Notes receivable                                                           0                 160,631
    Costs and estimated earnings in excess of
      billings on uncompleted contracts                               11,807,586               8,640,731
    Inventories                                                          497,056                 619,242
    Prepaid expenses and other                                           200,921                 675,070
    Deferred income taxes                                                616,618                 622,000
    Assets held for sale                                                       0                 937,549
--------------------------------------------------------------------------------------------------------
 Total Current Assets                                                 20,672,445              22,627,438
--------------------------------------------------------------------------------------------------------

 Property and Equipment
    Land                                                                 591,514                 591,514
    Buildings and improvements                                         4,807,459               1,329,113
    Machinery and equipment                                            2,998,449               1,909,879
    Construction in progress                                                   0               4,142,725
    Transportation equipment                                              31,500                  31,500
--------------------------------------------------------------------------------------------------------
        Total Fixed Assets                                             8,428,922               8,004,731
        Less Accumulated Depreciation                                    445,144                 337,350
--------------------------------------------------------------------------------------------------------
 Net Property and Equipment                                            7,893,778               7,667,381
--------------------------------------------------------------------------------------------------------
 Other Assets
    Goodwill, net of accumulated amortization                          2,465,102               2,490,842
    Three months ending
    Non competition agreement, net of amortization                       206,833                 211,083
    Other assets                                                         756,439                 412,988
--------------------------------------------------------------------------------------------------------
 Total Other Assets                                                    3,428,374               3,114,913
------------------------------------------------------------------------------------------------------------
 Total Assets                                                        $32,084,597             $33,409,732
------------------------------------------------------------------------------------------------------------
</TABLE>

                 See accompanying notes to Financial Statements.


                                        4

<PAGE>

Productivity Technologies Corp. and Subsidiary
Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                         Unaudited                 Audited
                                                                     September 30, 1997         June 30, 1997
<S>                                                                         <C>                      <C> 
                      Liabilities and Stockholders' Equity

 Current Liabilities
    Accounts payable                                                      $2,443,368             $2,472,828
    Payroll and related withholdings                                         198,139                271,930
    Executive Bonus Agreement                                              1,093,241              1,254,842
    Commission payable                                                       521,265                437,185
    Other accrued liabilities                                                878,309                811,220
    Billings in excess of costs and estimated
    earnings on uncompleted contracts                                      1,184,322              1,165,271
    Current maturities of long term debt                                     712,216                714,140
-----------------------------------------------------------------------------------------------------------
 Total Current Liabilities                                                 7,030,860              7,284,416

 Deferred Income Taxes                                                       832,000                832,000

 Long Term Debt Less Current Maturities                                   14,081,829             15,327,253
 Total Liabilities                                                        21,944,689             23,443,669
-----------------------------------------------------------------------------------------------------------

 Stockholders' Equity
    Preferred Stock, .001 par value, 1,000,000 authorized                         --                     --
    authorized and non outstanding
    Common Stock, .001 par value, 20,000,000
    shares authorized and 2,125,000 outstanding                                2,125                  2,125
    Additional paid-in capital                                             9,177,488              9,177,488
    Retained earnings                                                        952,295                786,450
-----------------------------------------------------------------------------------------------------------
 Total Stockholders' Equity                                               10,131,908              9,966,063
-----------------------------------------------------------------------------------------------------------
 Total Liabilities Stockholders' Equity                                  $32,084,597            $33,409,732
-----------------------------------------------------------------------------------------------------------
</TABLE>


                 See accompanying notes to Financial Statements.


                                        5
<PAGE>


Productivity Technologies Corp. and Subsidiary
Consolidated Income Statements
<TABLE>
<CAPTION>

                                                  First Quarter Ending

                                             Sept 30, 1997        Sept 30,1996
<S>                                               <C>                  <C>  
 Net Sales                                      $9,352,486          $8,426,298
------------------------------------------------------------------------------
 Cost of Sales                                   6,635,080           6,325,350
------------------------------------------------------------------------------
 Gross Profit                                    2,717,406           2,100,948
 Selling, General and Administrative
 expenses, including officers' bonuses           2,267,554           1,912,618
------------------------------------------------------------------------------
 Income (Loss)  From Operations                    449,852             188,330
------------------------------------------------------------------------------
 Other Income ( Expenses)
    Interest income                                 25,498              19,157
    Interest expense                              (291,851)           (187,853)
    Miscellaneous                                   92,846              19,199
------------------------------------------------------------------------------
 Total Other Expenses                             (173,507)           (149,497)
------------------------------------------------------------------------------
 Income Before Income taxes                        276,345              38,833
 Income Taxes                                      110,500              24,500
------------------------------------------------------------------------------
 Net Income (Loss)                                 165,845              14,333
------------------------------------------------------------------------------
 Net Income Per Share of
    Common Stock                                     $0.08               $0.01
------------------------------------------------------------------------------
 Weighted Average Common
    Shares Outstanding                           2,125,000           2,125,000
------------------------------------------------------------------------------
</TABLE>


                 See accompanying notes to Financial Statements.


                                        6

<PAGE>
<TABLE>
<CAPTION>

                             Consolidated Statement of Stockholders' Equity of PTC(Unaudited)


                                                           Additional                          Total
                                            Common Stock     Paid-In        Retained       Stockholders'
                               Shares        Amount          Capital        Earnings           Equity
<S>                             <C>            <C>             <C>             <C>              <C>
Balance, July 1, 1996         2,125,000       $2,125       $9,177,488        $786,450        $9,966,063

Net Income                                                                   $165,845          $165,845
-------------------------------------------------------------------------------------------------------
Balance,                      2,125,000       $2,125       $9,177,488        $952,295       $10,131,908
September 30, 1997
-------------------------------------------------------------------------------------------------------
</TABLE>

                 See accompanying notes to financial statements.

                                        7




<PAGE>

Productivity Technologies Corp. and Subsidiary
Consolidated Statement of Cash Flows

<TABLE>
<CAPTION>


                                                                    Three Months Ended         Three Months Ended
                                                                    September 30, 1997         September 30, 1996
<S>                                                                     <C>                            <C>  
 Cash Flow From Operating Activities
    Net Income                                                          $165,845                    $14,333

 Adjustments to reconcile net income to net cash
 provided by (used in ) operating activities:
    Depreciation                                                         107,794                     96,912
    Amortization                                                        (417,271)                    29,991
    Deferred income tax                                                    5,382                          0

 Changes in operating assets and liabilities
    Contracts receivable                                               3,218,528                  1,674,528
    Inventories, prepaid expenses and other                              596,335                    155,154
    Costs and estimated earnings in excess of
    billings on uncompleted contracts                                 (3,147,804)                   489,675
    Accounts payable, accrued exp and other                             (262,683)                (1,366,753)
------------------------------------------------------------------------------------------------------------
 Net Cash Provided by (Used In) Operating Activities                     266,126                  1,093,840
------------------------------------------------------------------------------------------------------------
</TABLE>


                 See accompanying notes to financial statements.

                                        8

<PAGE>

Productivity Technologies Corp. and Subsidiary
Consolidated Statement of Cash Flows

<TABLE>
<CAPTION>


                                                                  Three Months Ended         Three Months Ended
                                                                  September 30, 1997         September 30, 1996
<S>                                                                      <C>                        <C>  
 Cash Flows From Investing Activities
    Collection of Notes Receivable                                       160,631                    240,606
    Investment of  US Securities                                        (537,471)                   235,133
    Expenditures for property and equipment                              513,358                   (127,721)
    Increase in notes receivable                                         103,810                   (261,613)
------------------------------------------------------------------------------------------------------------
 Net Cash Provided by (Used In) Investing Activities                     240,328                     86,405
------------------------------------------------------------------------------------------------------------
 Cash Flows From Financing Activities
    Net borrowings (payments) - line of credit                                 0                   (905,300)
   (Payments) or Borrowings  on long term                                 (1,924)                         0
    debt, capital leases and notes payable
    Proceeds from additional long-term debt                           (1,245,424)                  (115,891)
    Distribution to former stockholders                                        0                          0
------------------------------------------------------------------------------------------------------------
 Net Cash Provided by (Used In) Financing Activities                  (1,247,348)                (1,021,191)
------------------------------------------------------------------------------------------------------------
 Net Increase (Decrease) In Cash and Cash equivalents
                                                                        (740,894)                   159,054
 Cash and Cash equivalents at the beginning of the period
                                                                         843,709                    512,179
------------------------------------------------------------------------------------------------------------
 Cash and Cash equivalents at the end of the period                      102,815                    671,233
------------------------------------------------------------------------------------------------------------
    Supplemental Cash Flow Information
    Cash Paid during the period for:
    Interest                                                            $291,851                   $187,853
    Income Taxes                                                        $110,500                    $24,500
------------------------------------------------------------------------------------------------------------

</TABLE>

                 See accompanying notes to financial statements.

                                        9

<PAGE>

                    Notes to Financial Statements (Unaudited)


1.       Basis of Presentation

The  accompanying  unaudited  financial  statements  for the first quarter ended
September  30, 1997 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. Accordingly, they 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 (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  The consolidated  balance
sheet at June 30, 1997 has been derived from the audited consolidated  financial
statements at that date. Operating results for the first quarter ended September
30, 1997 are not necessarily  indicative of the results that may be expected for
the  year  ending June  30,  1998  or any  other  interim  period.  For  further
information,  refer  to the  consolidated  financial  statements  and  footnotes
thereto  included in the  Company's  Annual Report for the period ended June 30,
1997.

2.       Summary of Significant Accounting Policies

Formation of the Company and Basis of Presentation

The Company,  formerly named Production  Systems  Acquisition  Corporation,  was
incorporated in June 1993 with the objective of acquiring an operating  business
engaged in the production  systems  industry.  The Company  originally  selected
March 31 as its  fiscal  year-end.  The  Company  completed  an  initial  public
offering  ("Offering")  of common  stock in July 1994 and raised net proceeds of
approximately  $9.0  million.  In May  1996  The  Company  changed  its  name to
Productivity  Technologies,  Corp. (PTC), and acquired,  through a merger, Atlas
Technologies, Inc. ( Atlas ) as a wholly owned subsidiary.

The  accompanying  financial  statements  presented  for the first quarter ended
September  30, 1997  include  the  consolidated  accounts of PTC and Atlas.  All
significant  inter-company  accounts and transactions  have been eliminated upon
consolidation.

Nature of Business

Atlas is PTC's  sole  operating  subsidiary  at this  time.  Atlas is a  leading
innovator   and   supplier  of  quick  die  change,   flexible   transfer,   and
stacking/destacking  equipment used to automate  automotive and appliance  metal
stamping operations. Atlas operates three manufacturing plants and has sales and
engineering offices in Michigan, Georgia, England and China. The main plants are
located in Fenton, Michigan with an additional plant operating in nearby Linden,
Michigan.

Sales of products have  principally  been to  automobile  and  automotive  parts
manufacturers and appliance manufacturers. Other customers include manufacturers
of garden and lawn equipment,  office  furniture,  heating,  ventilation and air
conditioning equipment and aircraft.  Sales to automotive related customers have
accounted for the majority of sales during the past two years.

Revenue and Cost Recognition

Contract  revenues from fixed price  contracts,  and the related contract costs,
are    recognized    using    the    percentage-of-completion     method.    The
percentage-of-completion  method  measures  the  percentage  of  contract  costs
incurred to date and compares these costs to the total  estimated costs for each
contract. The Company estimates the status of individual contracts when progress
reaches a point where  experience is  sufficient to estimate  final results with
reasonable accuracy.

Contract  costs include all direct  material and labor costs and those  indirect
costs related to contract performance, such as indirect labor, supplies, repairs
and depreciation costs. Provisions for estimated losses on uncompleted contracts
are made in the  period in which  such  losses  are  determined.  Changes in job
performance,  job  condition,   estimated  profitability,   and  final  contract
settlement  may result in revisions to costs and income,  and are  recognized in
the period the revisions are determined.

Revenues from  time-and-material  contracts are recognized currently as the work
is performed.

                                       10

<PAGE>

Net Income Per Common Share

Net income per common share for the first quarter  ended  September 30, 1997 has
been computed based on the weighted  average number of common and diluted common
equivalent shares outstanding.


3.       Commitments

(1)  In connection with the merger agreement,  Atlas has entered into employment
     agreements  which changed the  compensation  of two  executive  officers of
     Atlas.  The  employment  agreements in regards to annual  compensation  are
     identical,  except that one agreement expires on December 31, 1998, and the
     other expires on December 31, 2001.  Each agreement  requires the executive
     to devote  substantially  all of his  business  time and  attention  to the
     affairs  of  the  Company.  Annual  compensation  under  each agreement  is
     $195,052, subject to cost of living increases after December 31, 1997.

     The employment  agreements also provide for two bonus calculations based on
     the earnings of Atlas before interest and taxes (as defined).  Under one of
     the bonus arrangements,  each of the two executives  mentioned in the above
     paragraph will be paid $208,333 for each of the six years beginning January
     1, 1996 in which  the  "Adjusted  Earnings"  of Atlas  (as  defined  in the
     related agreements) exceeds $2,000,000.

     Under the other  bonus  arrangement,  if during  the five  years  beginning
     January 1, 1996, the "Average Adjusted Earnings" (as defined in the related
     agreements)  are at least  $2,626,000,  each  executive  will be  paid,  on
     December  31,  2000,  an amount  equal to the amount by which such  average
     earnings exceed  $2,626,000.  Both bonus  arrangements  are also subject to
     various  conditions   described  in  the  related  agreements.   The  bonus
     arrangements  do not terminate in the event of death of the executive,  but
     payments  will be reduced by the amount of insurance  benefits  paid to the
     executive's estate pursuant to life insurance in effect.
                                               
                                       11

<PAGE>

4.       Contingencies

(1)  Atlas has received a "Demand For  Arbitration"  dated  October 1, 1996 by a
     former customer who alleges,  among other issues,  a $15,400,000  claim for
     damages  resulting  from a breach of  contract  and  breach  of  warranties
     related to the  design and  manufacture  of certain  industrial  equipment.
     Atlas believes the lawsuit is without merit and will vigorously  defend its
     position.  Further, with respect to the alleged damages, the total purchase
     amount  on  this  contract  was   $1,360,000.   The  former   customer  has
     acknowledged  receiving the Company's standard terms and conditions.  These
     terms and  conditions  provide in pertinent part that the Company will not,
     in any  event,  be liable  for any  incidental  or  consequential  damages,
     including loss of profits. Further, the Company warranty policy states that
     the buyer's sole remedy is limited to either repair or  replacement  of the
     equipment or defective parts, or, after  negotiated  settlement,  return of
     the goods to seller.  While the final outcome of the  litigation  cannot be
     determined at this early date in the proceedings,  management believes that
     the final outcome will not have a material  adverse effect on the Company's
     results of operations or its financial position. Atlas is not involved as a
     defendant in any other  substantial  litigation.  Initial  arbitration  was
     reported in PTCs' 10-K for the year ended June 30, 1997.

(2)  Atlas is undergoing an Internal  Revenue  Service audit for the fiscal year
     ended  June  30,  1995.   The  main  area  of  review  is  a  research  and
     experimentation tax credit Atlas has calculated and filed for over the past
     six years.  Atlas had applied  $383,000 of credit towards Federal Taxes due
     for the fiscal  period ended June 1995 and had a carry  forward of $481,400
     expected  to be used as a  reduction  in the  calculation  of 1996 and 1997
     alternative minimum tax payments. Management and Atlas' accountants believe
     this   issue  is  a  matter  of   interpretation   of  the   research   and
     experimentation  regulations.  Management  believes that the IRS may seek a
     reduction in the amount of credit calculated which may adversely affect the
     financial  statements of the Company. PTC has an established escrow account
     for  uncertainties  that  occur  from  activities  of  Atlas  prior  to the
     acquisition  date of May 23, 1996. Atlas may  contractually  participate in
     this audit.




                                       12

<PAGE>



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

Unaudited  sales  revenues  for  the  quarter  ended  September  30,  1997  were
$9,352,486,  up 11% from the quarter  ended  September  30, 1996 of  $8,426,298.
Increased  sales were  primarily  due to improved  capacity and product mix. The
order  backlog as of  September  30, 1997 was $18.2  million,  down 12% from the
September  30, 1996  back-log of $20.6  million,  mainly due to slightly  slower
closings of new orders.  The volume of new business  quotes,  both  domestic and
foreign, remains active.

Costs of products sold for the quarter ended September 30, 1997 were $6,635,080,
up 5% from  $6,325,350 for the quarter ended September 30, 1996. The increase in
cost of  sales  from a  quarter  a year ago  correspond  to an 11%  increase  in
quarterly  revenues  versus the quarter a year ago.  Cost of products  sold as a
percent of revenues  decreased to 71% of revenues during the quarter compared to
75% of revenues  during the first  quarter of fiscal  1996.  The  reduction  was
primarily due to lower development  expenses, a better product mix, and improved
production processing during the quarter relative to the quarter one year ago.

The reduction in cost of sales resulted in a 29% improvement in gross profit for
the quarter ended  September 30, 1997 to $2,717,406  compared to $2,100,948  for
the quarter ended  September  30, 1996.  Gross profit  margins  increased by 4%.
Gross  profits  improved  for  reasons  cited  in  the  paragraph  above  and an
improvement in international installation costs during the quarter.

Consolidated  selling,  general and  administrative  (SG&A) expenses,  including
officers' bonuses, during the quarter ended September 30, 1997, were $2,267,554,
up 19% from the quarter ended September 30, 1996 of $1,912,618.  Primary factors
for the SG&A increase included increases in executive  bonuses,  foreign travel,
international  office expenses not present in 1996,  higher volume related sales
commissions,  legal expenses,  and relocation  costs incurred due to the opening
and move to Atlas' new plant.

Consolidated  earnings from  operations  (net income before  interest and income
taxes) for the quarter ended September 30, 1997 were $449,852,  up 138% from the
quarter  ended a year ago of $188,330.  The increase  was  primarily  due to the
improved  product mix, lower  development  costs and improved  plant  production
processing.

Interest expenses for the quarter ended September 30, 1997 were $291,851, up 55%
from  $187,853 for the quarter  ended  September  30, 1996.  Increased  interest
expense was due to higher  utilization  of the line of credit to finance work in
process, account receivables, and the financing of the new plant.

Net  consolidated  income for the quarter ended September 30, 1997 was $165,845,
up 1,157% from $14,333 for the quarter ended September 30, 1996. The net profits
consisted of income from operations of $88,845 and  extraordinary  net income of
$77,000 from a gain on sale of the Argentine facility during the quarter.  Atlas
entered  into a one year  leaseback  agreement  on a  portion  of the  Argentine
facility  due  to  an  anticipated   temporary  need  for  increased  production
floorspace.  The one year  leaseback  agreement may be extended at Atlas' option
for an additional year.


                                       13


<PAGE>

Liquidity and Capital Resources

Atlas  believes it has  sufficient  capital to meet short and long term  funding
needs.  Management expects facilities currently in place, along with anticipated
continued  cash  available  from  operations,  will be  sufficient  for  general
operations and any required current year asset purchases.

During the fiscal year  ending  June 30,  1997,  Atlas  entered  into a new debt
financing  agreement  with First of Chicago  NBD. The bank  consolidated  all of
Atlas' long and short term debts, bundling the various notes and lines of credit
into one new two year  committed  line of credit,  with  increased  maximum debt
usage of $14,500,000 based on collateral of Atlas' receivables,  work-in-process
inventories,  and other  assets.  Interest  rates were reduced to the bank prime
rate and a  revised  amortization  of  certain  asset  based  debt to  quarterly
payments  of  $62,500  has  reduced  the  overall   annual   principal   payment
requirements, improving the current ratio and working capital.

Atlas also  entered  into an  agreement  with  First of Chicago  NBD to fund the
construction of the new building and equipment through the sale of $4,500,000 in
tax exempt Industrial Revenue Bonds (IRB). The proceeds, most of which have been
spent as of the end of the  first  quarter  of  fiscal  1998,  were used for the
construction,  furnishing and equipping of the new 59,000 sq. ft.  manufacturing
building.  Unused funds have been  invested and earn interest  until spent.  The
bonds are state and  federal  tax exempt so the  floating  rate of  interest  is
significantly  reduced  compared to  conventional  construction  or  real-estate
financing.

Terms: 1997    Interest only
       1998  $400,000  annual  principal  payment  plus  quarterly interest
             payments. 
       1999  $400,000  annual  principal  payment  plus  quarterly interest
             payments.
       2000  $400,000  annual  principal  payment  plus  quarterly interest 
             payments.
       2001 - 2011 $300,000 annual  principal  payment plus quarterly interest
             payments.

IRB  closing  costs of  $184,409  were  incurred  and were booked as a long term
asset. These are being amortized over the 15 year life of the Industrial Revenue
Bonds.

At September 30, 1997, Atlas had financed debt of $10,068,115  under the line of
credit, and $4,500,000 under the Industrial Revenue Bond, payable over 15 years,
and other debt of $225,930 for a total long term debt of  $14,794,045,  compared
to the June 30, 1997 total  combined long term debt financing and line of credit
balance of $15,327,253.

The Company believes that, as a result of the new loan facility,  its short-term
credit  availability  is adequate to support its business  operations at current
and near-term anticipated sales levels.

Working  capital at September 30, 1997 was $13,641,585 and the current ratio was
2.9 to 1, compared to $15.343,022 and 3.1 to 1, respectively,  at June 30, 1997.
The  modest  decline  primarily  reflects  the sale of the  Argentine  facility.
Accounts receivable also declined  considerably  during the quarter,  reflecting
customer cash payments of  $3,218,528.  Cash from the  conversion of receivables
was  mostly  offset by a  $3,147,804  increase  in work in  process  during  the
quarter,  reflecting greate equipment building activity during the period. Atlas
has  retained the proceeds  from the  Industrial  Revenue  Bond.  Under  certain
arbitrage guidelines,  Atlas is able to invest the IRB proceeds in US securities
until the funds are completely spent on the building and equipment.

                                       14


<PAGE>

Forward-Looking Statements

When used in this and in future  filings  by the  Company  with the SEC,  in the
Company's  press  releases and in oral  statements  made with the approval of an
authorized  executive officer of the Company,  the words or phrases "will likely
result,"  "expects,"  "plans," "will continue," "is  anticipated,"  "estimated,"
"project" or "outlook" or similar  expressions  (including  confirmations  by an
authorized  executive  officer of the Company of any such  expressions made by a
third   party  with   respect  to  the   Company)   are   intended  to  identify
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform Act of 1995.  The  Company  wishes to caution  readers not to
place undue reliance on any such forward-looking statements, each of which speak
only as of the date made.  Such  statements  are  subject  to certain  risks and
uncertainties  that  could  cause  actual  results  to  differ  materially  from
historical earnings and those presently  anticipated or projected.  Factors that
may cause actual results to differ  materially  from those  contemplated by such
forward-looking  statements include, among others, the following: (a) an adverse
outcome  from the IRS audit for the year ending June 30, 1995;  (b)  competitive
pressures  in  the  production  systems  industry;   and  (c)  general  economic
conditions.  The Company has no obligation to publicly release the result of any
revisions  which  may be  made  to any  forward-looking  statements  to  reflect
anticipated or unanticipated events or circumstances.

ITEM 6.  Exhibits and Reports on Form 8-K

        A.  Exhibits

         27     Financial Data Schedule (filed electronically only).

        B.  Reports on Form 8-K -- None

                                       15


<PAGE>


                                   Signatures

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                            PRODUCTIVITY TECHNOLOGIES CORP.


Date:     November 14, 1997                 By:  /s/  Samuel N. Seidman
                                            ----------------------------------
                                            Samuel N. Seidman, President



Date:     November 14, 1997                 By:  /s/  Jesse Levine
                                            ----------------------------------
                                           Jesse Levine, Chief Financial Officer




                                       16



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