U.S. 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: March 31, 2004
                                       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 0-24212


                         PRODUCTIVITY TECHNOLOGIES CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                               13-3764753
--------------------------------------------------------------------------------
   (State or Other Jurisdiction             (I.R.S. Employer Identification No.)
of Incorporation or Organization)

                   3100 Copper Avenue, Fenton, Michigan 48430
                    (Address of Principal Offices)(Zip Code)

Registrant's Telephone Number, Including Area Code         (248) 645-9700


Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes _______X_________       No ____________


Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes________________        No _____X________

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

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

Yes________________        No _____________

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 19, 2004: 2,475,000 shares, $ .001 par value common
stock.




                                       1
<PAGE>



                         Productivity Technologies Corp.

                                      INDEX

                                                                           Page
                                                                          Number

PART I  FINANCIAL INFORMATION..................................................3

Item 1. Financial Statements...................................................3

        Consolidated Balance Sheets at March 31, 2004 (unaudited)
                and June 30, 2003..............................................3

        Consolidated Statements of Operations for the three and nine
                months ended March 31, 2004 and 2003 (unaudited)...............5

        Consolidated Statement of Stockholders' Equity
                for March 31, 2004 (unaudited).................................6

        Consolidated Statements of Cash Flows for the nine months ended
                March 31, 2004 and 2003 (unaudited)............................7

        Notes to Unaudited Consolidated Financial Statements...................8

Item 2. Management's Discussion and Analysis of Financial Condition
                and Results of Operations.....................................10

Item 3. Quantitative and Qualitative Disclosure about Market Risk.............12

Item 4. Controls and Procedures...............................................12

PART II OTHER INFORMATION.....................................................12

Item 1. Legal Proceedings ....................................................12

Item 2. Changes in Securities, Use of Proceeds and
         Issuer Purchases of Equity Securities................................12

Item 3. Defaults Upon Senior Securities (not applicable) .....................12

Item 4. Submission of Matters to a Vote of Security Holders (not applicable)..12

Item 5. Other Information.....................................................12

Item 6. Exhibits and Reports on Form 8-K   ...................................13


SIGNATURES....................................................................14




                                       2
<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                              March 31, 2004      June 30, 2003
                                                                              --------------      -------------
                                                                                (Unaudited)

Assets

Current Assets
<S>                                                                                 <C>            <C>
     Cash                                                                           $445,897       $1,163,187
     Short-term investments, including accrued interest                              164,997          540,582
     Contract receivables, net of allowance for doubtful accounts of
          377,663 and $227,663                                                     4,753,639        3,620,852
     Costs and estimated earnings in excess of billings on
          uncompleted contracts                                                    3,128,994        3,423,457
     Inventories                                                                   1,111,571        1,154,512
     Prepaid expenses and other                                                      313,499          328,517
     Deferred income taxes                                                           290,000          290,000
                                                                                  ----------       ----------
Total current assets                                                              10,208,597       10,521,107
                                                                                  ----------       ----------


Property and equipment
     Land                                                                           $591,514         $591,514
     Buildings and improvements                                                    4,963,008        4,962,690
     Machinery and equipment                                                       4,247,086        4,215,036
     Transportation equipment                                                         21,000           21,000
                                                                                  ----------       ----------

                                                                                   9,822,608        9,790,240

          Less accumulated depreciation                                            4,088,977        3,631,717
                                                                                  ----------       ----------

Net property and equipment                                                         5,733,631        6,158,523
                                                                                  ----------       ----------


Other assets
     Goodwill                                                                      2,985,909        2,985,909
     Patent, net                                                                     281,265          354,384
     Deferred income taxes                                                           430,000          430,000
     Other assets                                                                    290,145          252,955
                                                                                  ----------       ----------

Total other assets                                                                 3,987,319        4,023,248
                                                                                  ----------       ----------

                                                                                 $19,929,547      $20,702,878
                                                                                 ===========      ===========

</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>


                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                               March 31, 2004     June 30, 2003
                                                                               --------------     -------------
                                                                                (Unaudited)
Liabilities and stockholders' equity

Current liabilities
<S>                                                                               <C>              <C>
     Current portion of long-term debt                                            $5,478,098       $8,385,918
     Accounts payable                                                              2,770,062        3,784,778
     Accrued expenses
          Commissions payable                                                        381,220          310,000
          Payroll and related withholdings                                                 -           62,464
          Warranty Reserve                                                           275,520          250,000
          Interest                                                                   256,775          610,957
          Other                                                                      473,119          143,574
Billings in excess of costs and estimated
     earnings on uncompleted contracts                                               773,754        1,864,980
Current maturities of executive deferred compensation agreements                           -          974,933
                                                                                           -      -----------

Total current liabilities                                                        $10,408,548      $16,387,604

Executive deferred compensation agreements, less current maturities                  974,933                -

Long-term debt, less current maturities                                            5,745,909        1,735,000
                                                                                 -----------      -----------

Total liabilities                                                                 17,129,399       18,122,604
                                                                                 -----------      -----------

Stockholders' equity
     Common stock, $.001 par value, 20,000,000
          shares authorized; 2,475,000 shares issued and outstanding                   2,475            2,475
     Additional paid-in capital                                                    9,966,408        9,966,408
     Accumulated deficit                                                         (7,168,726)      (7,388,609)
                                                                                 -----------      -----------

Total stockholders' equity                                                         2,800,157        2,580,274
                                                                                 -----------      -----------

                                                                                 $19,929,547      $20,702,878
                                                                                 ===========      ===========


</TABLE>

     See accompanying notes to unaudited consolidated financial statements.



                                       4
<PAGE>

                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>


                                            Three Months Ended               Nine Months Ended
                                        --------------------------      ---------------------------
                                         March 31,       March 31,       March 31,       March 31,
                                           2004            2003            2004            2003
                                        ----------      ----------      -----------     -----------

<S>                                     <C>             <C>             <C>             <C>
Revenues Earned                         $5,638,873      $6,663,341      $21,042,610     $21,017,260

Cost of Revenues Earned                  4,280,512       4,954,846       16,722,323      16,017,265
                                        ----------      ----------      -----------     -----------
Gross Profit                             1,358,361       1,708,495        4,320,287       4,999,995

Selling, general and
administrative expenses                  1,121,012       1,518,669        3,629,230       4,452,843
                                        ----------      ----------      -----------     -----------

Income (loss) from operations              237,349         189,826          691,057         547,152

Other income (expense)

Interest income                                371             485              655           8,890

Interest expense                          (216,472)       (144,875)        (562,656)       (507,740)

Miscellaneous                              (41,579)         61,838          (34,173)         89,003
                                        ----------      ----------      -----------     -----------
Total other expenses                      (257,680)        (82,552)        (596,174)       (409,847)

Income (loss) before income
taxes and extraordinary items              (20,331)        107,274           94,883         137,305

Income tax expense (benefit)                 4,050               0                0         (29,981)
                                        ----------      ----------      -----------     -----------

Net income (loss) before
extraordinary item                        ($16,281)       $107,274          $94,883        $167,286
                                        ==========      ==========      ===========     ===========
Extraordinary item, gain
on extinguishment of debt                       --              --          125,000              --

Net Income (loss)                         ($16,281)       $107,274         $219,883        $167,286

Basic earnings (loss) per share:
   Before extraordinary gain                ($0.01)          $0.04            $0.04           $0.07
   Extraordinary gain                           --              --             0.05              --
                                        ----------      ----------      -----------     -----------
        Total basic net income              ($0.01)          $0.04            $0.09           $0.07

Diluted earnings (loss) per share:
   Before extraordinary gain                ($0.01)          $0.04            $0.03           $0.07
   Extraordinary gain                           --              --            $0.05              --
                                        ----------      ----------      -----------     -----------
        Total diluted net income            ($0.01)          $0.04            $0.08           $0.07
                                        ==========      ==========      ===========     ===========

Weighted average number of
  Common Shares outstanding:
        Basic                            2,475,000       2,475,000        2,475,000       2,475,000
        Diluted                          2,629,000       2,475,000        2,629,000       2,475,000
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.



                                       5
<PAGE>

<TABLE>
<CAPTION>


                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                   (Unaudited)


                                      Common Stock              Additional                               Total
                                      ------------                Paid-In                             Stockholders'
                              Shares          Amount              Capital            Deficit             Equity
                              ------          ------            ----------           -------          -------------

<S>          <C> <C>        <C>               <C>            <C>               <C>                  <C>
Balance June 30, 2003       2,475,000         $2,475         $9,966,408        ($7,388,609)         $2,580,274

Net income                         --             --                 --            219,883             219,883
                            ---------         ------         -----------        ----------          ----------
March 31, 2004              2,475,000         $2,475         $9,966,408        ($7,168,726)         $2,800,157
                            =========         ======         ==========        ============         ==========

</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                       6
<PAGE>

                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                        Nine Months Ended
                                                                                 March 31,             March 31,
                                                                                   2004                  2003
                                                                                ----------            ----------

Cash flows from operating activities
<S>                                                                             <C>                     <C>
     Net income/(loss)                                                          $  219,883              $167,336
     Adjustments to reconcile net loss to net cash
          used in operating activities:
            Depreciation                                                           457,260               457,261
            Amortization                                                            73,119                73,119
            Gain on extinguishment of debt                                         125,000                   ---

     Changes in operating assets and liabilities:
          Contract receivables                                                  (1,132,787)           (1,527,714)
          Inventories, prepaid expenses and other                                   20,769               186,856
          Costs and estimated earnings in excess of billings
               on uncompleted contracts, net effect                               (796,763)            2,320,320
          Accounts payable, accrued expenses and other                          (1,005,077)             (116,396)
                                                                                ----------            ----------

Net cash used in operating activities                                           (2,038,596)            1,560,782
                                                                                ----------            ----------

Cash flows from investing activities
     Proceeds from sale (purchase of) short-term investments - net                 375,585                (2,678)
     Expenditures for property and equipment                                       (32,368)               54,940
                                                                                ----------            ----------

Net cash provided by (used in) investing activities                                343,217                52,262
                                                                                ----------            ----------

Cash flows from financing activities
     (Payments) or borrowings under revolving credit agreement                    (695,236)           (2,433,373)
     Borrowings (Payments) on long term debt                                     1,673,325            (1,100,000)
                                                                                ----------            ----------

Net cash provided by (used in) financing activities                                978,089            (3,533,373)
                                                                                ----------            ----------
Net decrease in cash                                                              (717,290)           (1,920,329)

Cash at the beginning of the period                                              1,163,187             4,971,837
                                                                                ----------            ----------
Cash at the end of the period                                                   $  445,897            $3,051,508
                                                                                ==========            ==========
Supplemental Cash Flow Information
     Cash paid during the period for interest                                   $  916,838            $  147,216
     Income Taxes Received                                                      $       --               $29,981

Schedule of Non-Cash Financing Activities
     Goodwill reduction and debt extinguishment                                 $        0            $1,940,538
                                                                                ----------            ----------

</TABLE>

     See accompanying notes to unaudited consolidated financial statements.




                                       7
<PAGE>

                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The unaudited  consolidated  financial  statements of Productivity  Technologies
Corp. and  Subsidiaries  (the  "Company")  have been prepared in accordance with
generally accepted accounting  principles for interim financial  information and
in accordance  with  instructions 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.  Operating results
for the nine months ended March 31, 2004, are not necessarily  indicative of the
results that may be expected for the year ending June 30, 2004.

The  consolidated  financial  statements  should be read in conjunction with the
Company's annual report on Form 10-K for the fiscal year ended June 30, 2003 (as
amended by amendment no. 1 on Form 10-K/A).  Information  provided  includes the
consolidated  audited  financial  statements,  including  footnotes for the year
ended June 30,  2003 and  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations.

2. Summary of Significant Accounting Policies

History of the Company and Basis of Presentation

The  Company was  incorporated  in June 1993 under the name  Production  Systems
Acquisition  Corporation  with the objective of acquiring an operating  business
engaged in the production  systems  industry.  The Company  completed an initial
public offering  ("IPO") 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.  and  acquired,   through  a  merger,   Atlas
Technologies, Inc. ("Atlas") as a wholly owned subsidiary. On February 23, 2000,
the  Company  purchased,  through  a  wholly-owned  subsidiary  formed  for this
purpose,  substantially  all of the assets of  Westland  Control  Systems,  Inc.
("Westland").  The Company has no other subsidiaries or operations. The Company,
which produces  industrial  machinery,  operates in a single segment through its
Atlas and Westland subsidiaries.

The accompanying  financial statements include the consolidated  accounts of the
Company,  Atlas  and  Westland.  All  significant   inter-company  accounts  and
transactions have been eliminated upon consolidation.

Nature of Business

The  Company  operates  in a single  segment  through  its  Atlas  and  Westland
subsidiaries.  Atlas is a leading  innovator  and  supplier of quick die change,
flexible transfer, and stacking/destacking equipment used to automate automotive
and other metal stamping operations.  Atlas operates two manufacturing plants in
Fenton,  Michigan and has sales and engineering offices in Michigan,  Europe and
China. Atlas also established locations in late 2003 in Brazil and Germany.

Westland  designs,  manufactures  and field installs custom  electrical  control
panels  primarily for use in production  machinery and machine tools utilized in
automotive,   adhesive  and  sealants,  food  processing  and  other  industrial
applications.  Westland operates one manufacturing plant in Westland,  Michigan,
which is located less than one hour from Atlas' plants in Fenton, Michigan.

Sales of Atlas products have principally been to automobile and automotive parts
manufacturers and appliance manufacturers. Other customers include steel service
centers  and  manufacturers  of lawn and  garden  equipment,  office  furniture,
heating,  ventilation and air  conditioning  equipment,  and large  construction
equipment.  Sales to automotive  related  customer's account for the majority of
sales.  Westland's  customers  participate in the automotive,  food  processing,
adhesive and sealants,  engine part machining and other industries.  Revenue and
Cost Recognition

                                       8
<PAGE>

At Atlas,  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.  Atlas  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.
Westland recognizes sales and cost of sales upon shipment to the customer.

Earnings Per Share

Earnings  per share have been  computed by dividing  the income by the  weighted
average number of common shares outstanding.  The per share amounts reflected in
the  consolidated  statements  of operations  are  presented in accordance  with
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings per share."

3. Subsequent Events

In May 2004, the Company signed two term sheets with an institutional  investor,
one for a standby equity distribution agreement proposed to be entered into (the
"Equity Line"), and the second for a convertible  redeemable  debenture proposed
to be issued by the Company to this investor (the "Debenture").  Consummation of
these transactions will be subject to the investor's completion of due diligence
and  to  the  negotiation  and  execution  of  definitive   documents  on  terms
satisfactory  to the investor and the  Company.  No assurance  can be given that
these transactions will be completed.

Under the term sheet for the proposed  Equity Line,  the investor will commit to
purchase,  solely at the Company's  option,  up to $5.0 million of the Company's
common  stock during the 24 months after the  effective  time of a  registration
statement  therefor,  at a price  equal to 99% of the market  price.  The market
price is to be the lowest daily volume  weighted  average  price during the five
trading days immediately prior to the Company's election to require the investor
to purchase  shares under the Equity  Line.  The Company is required to issue to
the investor at closing  restricted  common shares (with  piggy-back  and demand
registration  rights) having a market price of $175,000,  and upon each election
made by the Company to require the investor to purchase shares,  5% of the gross
proceeds received therefrom will be paid to the investor.

Under the term sheet for the  proposed  Debenture,  the Company  would issue its
debenture in the principal  amount of $500,000 to be funded $250,000 at closing,
and the balance upon the satisfaction of specified  conditions.  The outstanding
principal  amount of the Debenture plus accrued interest thereon at 5% per annum
will be convertible into the Company's common stock based upon the lowest of (i)
120% of the final closing  price for the common stock on the closing date,  (ii)
80% of the lowest closing price for the common stock:  for the five trading days
immediately  prior to the conversion  date or redemption  date, or (iii) 100% of
the average of the three lowest closing prices for the 30 days immediately prior
to the  conversion  date.  The Company has the option to redeem the Debenture at
any time upon giving the specified  notice,  including  following receipt of the
investor's notice of election to convert into common stock at a conversion price
equal to 120% of the outstanding  principal amount of the Debenture plus accrued
interest  thereon.  If the Company  redeems the Debenture,  the investor will be
entitled to receive a warrant to purchase 50,000 of the Company's  common shares
(with piggy-back and demand registration rights) for each $100,000 invested. The
Company is required to  register  the shares  issuable  upon  conversion  of the
Debenture. The Debenture will also include provisions relating to collateral and
fees and other terms to be agreed upon.


                                       9
<PAGE>

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

Results of Operations

Three and Nine Months  Ended  March 31,  2004  Compared to Three and Nine Months
Ended March 31, 2003

Unaudited  revenues earned for the quarter ended March 31, 2004 were $5,638,873,
as compared to  $6,663,341  for the quarter  ended March 31, 2003, a decrease of
15%. This decrease was principally attributable to lower Atlas's revenues in the
quarter  ended March 31,  2004,  partially  offset by an increase in  Westland's
revenues.  Westland's revenues increased in the quarter from the addition of new
customers which began ordering from Westland for the first time, or which placed
orders in greater volume,  compared to the prior period of time. Revenues earned
for the nine months ended March 31, 2004 of $21,042,610 were virtually unchanged
from the nine  months  ended  March 31,  2003,  for which  revenues  earned were
$21,017,260.

Gross profit for the quarter ended March 31, 2004 was $1,358,361, representing a
21% decrease compared to the $1,708,495 gross profit for the quarter ended March
31,  2003.  The  decrease  in gross  profits was  principally  due to the volume
decrease and mix of products sold at Atlas.  For the nine months ended March 31,
2004,  gross profit was  $4,320,287,  down 14% compared to the nine months ended
March 31,  2003,  for which  gross  profit  was  $4,999,995.  The  decrease  was
attributable to a change in the mix of products sold by Atlas.

Consolidated selling, general and administrative (SG&A) expenses were $1,121,012
or 26% lower than the quarter ended March 31, 2003, for which SG&A expenses were
$1,518,669. For the nine months ended March 31, 2004 SG&A expense was $3,629,230
or 19% lower than the nine months  ended March 31, 2003.  The  reduction in SG&A
expenses  for the  quarter  and nine  months  ended  March  31,  2004 was due to
continued control of operating expenses.

The income from  operations  for the quarter  ended March 31, 2004 was $237,349,
compared to an income from  operations  for the quarter  ended March 31, 2003 of
$189,826.  The increase in income from  operations  in the third quarter of 2004
resulted from lower SG&A, which was partly offset by lower volume and a changing
product mix at Atlas.  For the nine months  ended  March 31,  2004,  income from
operations was $691,057 or $143,905  higher than the nine months ended March 31,
2003.  The  increase in income from  operations  for nine months ended March 31,
2004 was also primarily due to lower SG&A expenses as explained above.

Interest expense for the quarter ended March 31, 2004 was $216,472,  as compared
to $144,875  for the quarter  ended March 31,  2003.  For the nine months  ended
March  31,2004  interest  expense was  $562,656 as compared to $507,740  for the
prior nine  months  ended  March 31,  2003.  The  higher  interest  expense  was
attributable  to an increase  in funded  debt at  Westland  under its new credit
facility  with  Spectrum  Commercial   Services,   Inc.  (the  "Spectrum  Credit
Facility")  and at Atlas  under  its new  credit  facility  with  Merrill  Lynch
Business  Financial  Services Inc. (the "MLB Credit  Facility") and higher costs
associated therewith.

The net loss for the quarter  ended March 31, 2004 was $16,281  ($0.01 per share
basic and diluted)  compared to a net income of $107,274  for the quarter  ended
March 31, 2003 ($0.04 per share basic and diluted).  The net income for the nine
months ended March 31, 2004 was $219,883  ($0.09 per share (basic) and $0.01 per
share  (diluted) as compared to a net income of $167,286 ($0.07 per share (basic
and diluted)  for the nine months  ended March 31, 2003.  The net income for the
nine months ended March 31, 2004 included a $125,000 gain on  extinguishment  of
debt..


                                       10
<PAGE>

The  gross  carrying  amount  and  accumulated  amortization  of  the  Company's
intangible assets other than goodwill as of March 31, 2004 is as follows:

                                              March 31, 2004
                              -----------------------------------------------
                                   Gross                            Net
                                 Carrying        Accumulated       Book
                                  Amount         Amortization      Value
                                  ------         ------------      -----

Patents                              $573,132          $291,867     $281,265
Non-compete Agreements                348,750           257,112       91,638
Bank Closing Fees                     293,388           152,787      140,601
                              -----------------------------------------------
Total                              $1,215,270          $701,766     $513,504
                              ===============================================


Liquidity and Capital Resources

At March 31, 2004, the Company had (1) $3,461,111 outstanding under a commercial
mortgage  loan  for  Atlas  as part of the MLB  Credit  Facility,  (2)  $472,222
outstanding  under an  equipment  term loan for Atlas as part of the MLB  Credit
Facility,  (3) debt of $4,581,622  outstanding under a revolving credit facility
for  Atlas  as  part  of  the  MLB  Credit  Facility,   (4)  deferred  executive
compensation  obligations of $974,933 originally scheduled to be paid over three
equal  annual  installments  during the period from July 2000 through July 2002,
(5) $431,965 outstanding under the Spectrum Credit Facility,  and (6) $2,212,584
outstanding under the Westland Loan. This total of $12,134,437 at March 31, 2004
compares to a total combined long-term debt financing and line of credit balance
of $11,140,428 at December 31, 2003. As noted in previous  filings,  the Company
completed refinancings for both Atlas and Westland,  with two new lenders, as of
December 12, 2003.

Working  capital  deficit at March 31, 2004 was ($199,951) and the current ratio
was (.98) to 1, as compared to a working capital  deficit of ($5,866,497)  and a
current ratio of (.64) to 1 for the Company at June 30, 2003.

Effective as of December 12, 2003,  Atlas entered into the MLB Credit  Facility,
which provided for borrowing  availability  of up to $8.0 million (based in part
upon eligible accounts receivable), of which $7.4 million was funded at closing,
and Westland  entered  into the Spectrum  Credit  Facility,  which  provided for
borrowing  availability  of up to $1.25 million  (based upon  eligible  accounts
receivable).  Effective  on March 4,  2004,  Merrill  Lynch  Business  Financial
Services Inc.  agreed to a modification  of the terms of the MLB Credit Facility
under which in which it increased the borrowing  availability  by $750,000 under
the revolving  credit  facility for a 60-day period (the "overline  period") and
increased  the  interest  rate by 0.5% per annum  during this  period.  With the
availability  of funds under the MLB Credit  Facility  and the  Spectrum  Credit
Facility,  the anticipated additional funding expected to be available under the
[ ], and  assuming  no adverse  business or  economic  developments,  management
believes that it will have sufficient  funds available to it to meet its working
capital needs for the next 12 months.

Off Balance Sheet Arrangements

During the three and nine  months  ended  March 31,  2004,  the  Company  had no
off-balance sheet  arrangements  other than operating leases entered into in the
normal course of business.

Forward-Looking Statements

Various  statements  in this Report  concerning  the manner in which the Company
intends to conduct its future  operations  and potential  trends that may affect
future results of operations are forward-looking  statements. The Company may be
unable to realize its plans and  objectives  due to various  important  factors.
These factors  include but are not limited to economic and business  conditions,
particularly in the automotive,  machine tool and other  industries  principally
served by the Company,  including the ongoing and permanent  (non-cyclical) loss
of manufacturing  capabilities in the United States to foreign competition,  and
continued  volatile  demand in the domestic and foreign  markets for automobiles
and automotive  parts, in each case resulting in reduced or uncertain demand for


                                       11
<PAGE>

the Atlas' automation  equipment;  potential  technological  developments in the
metal forming and handling automation  equipment markets which may render Atlas'
automation equipment noncompetitive or obsolete; the risk that Atlas or Westland
customers  may be  unwilling  or  unable  to  continue  ordering  products;  the
potential  inability  of the Company to achieve  adequate  operating  results or
obtain  needed  access to the credit  and  capital  markets  to  finance  future
operations or plans for capital improvement or growth.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  information  required by Item 3 has been disclosed in the Company's  Annual
Report on Form 10-K for the year ended June 30, 2003. There has been no material
change in the disclosure regarding market risk.

ITEM 4. CONTROLS AND PROCEDURES

The  Company's  management  evaluated,  with  the  participation  of  the  chief
executive  officer  and  chief  financial  officer,  the  effectiveness  of  the
Company's disclosure controls and procedures as of the end of the period covered
by this report.  The chief executive  officer and chief  financial  officer have
concluded  that,  to  their  knowledge  on the  basis  of that  evaluation,  the
Company's disclosure controls and procedures were effective as of the end of the
period  covered  by this  report.  There  has been no  change  in the  Company's
internal  control  over  financial  reporting  that  occurred  during the period
covered by this report that has materially affected,  or is reasonably likely to
materially affect, the Company's internal control over financial reporting.


                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Since the date of the filing of the Company's Annual Report on Form 10-K for the
year ended June 30,  2003,  there have been no  material  new legal  proceedings
involving the Company or any material  developments to the proceedings described
in such 10-K.

ITEM 2. CHANGES IN  SECURITIES,  USE OF PROCEEDS AND ISSUER  PURCHASES OF EQUITY
SECURITIES.

Reference is made to the disclosure  under note 3 to the Company's  consolidated
financial statements for certain proposed securities transactions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION.

In May 2004, the Company signed two term sheets with an institutional  investor,
one for a standby equity distribution agreement proposed to be entered into (the
"Equity Line"), and the second for a convertible  redeemable  debenture proposed
to be issued by the Company to this investor (the "Debenture").  Consummation of
these transactions will be subject to the investor's completion of due diligence
and  to  the  negotiation  and  execution  of  definitive   documents  on  terms
satisfactory  to the investor and the  Company.  No assurance  can be given that
these transactions will be completed.

Under the term sheet for the proposed  Equity Line,  the investor will commit to
purchase,  solely at the Company's  option,  up to $5.0 million of the Company's
common  stock during the 24 months after the  effective  time of a  registration
statement  therefor,  at a price  equal to 99% of the market  price.  The market
price is to be the lowest daily volume  weighted  average  price during the five
trading days immediately prior to the Company's election to require the investor
to purchase  shares under the Equity  Line.  The Company is required to issue to
the investor at closing  restricted  common shares (with  piggy-back  and demand
registration  rights) having a market price of $175,000,  and upon each election
made by the Company to require the investor to purchase shares,  5% of the gross
proceeds received therefrom will be paid to the investor.

Under the term sheet for the  proposed  Debenture,  the Company  would issue its
debenture in the principal  amount of $500,000 to be funded $250,000 at closing,
and the balance upon the satisfaction of specified  conditions.  The outstanding
principal  amount of the Debenture plus accrued interest thereon at 5% per annum
will be convertible into the Company's common stock based upon the lowest of (i)
120% of the final closing  price for the common stock on the closing date,  (ii)
80% of the lowest closing price for the common stock:  for the five trading days
immediately  prior to the conversion  date or redemption  date, or (iii) 100% of
the average of the three lowest closing prices for the 30 days immediately prior
to the  conversion  date.  The Company has the option to redeem the Debenture at
any time upon giving the specified  notice,  including  following receipt of the
investor's notice of election to convert into common stock at a conversion price
equal to 120% of the outstanding  principal amount of the Debenture plus accrued
interest  thereon.  If the Company  redeems the Debenture,  the investor will be
entitled to receive a warrant to purchase 50,000 of the Company's  common shares
(with piggy-back and demand registration rights) for each $100,000 invested. The
Company is required to  register  the shares  issuable  upon  conversion  of the
Debenture. The Debenture will also include provisions relating to collateral and
fees and other terms to be agreed upon.

As  previously  disclosed  by the  Company,  in February  2004,  William  Rogner
replaced James Kolinski as the president of Atlas.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

          (a)  Exhibits.

               10.1 Letter  Agreement  dated as of March 4,  2004  from  Merrill
                    Lynch   Business    Financial   Services   Inc.   to   Atlas
                    Technologies,  Inc.  modifying  the WCMA  Loan and  Security
                    Agreement dated as of November 25, 2003. (1)

               31.1 Rule 13a-14(a)  certification of chief executive  officer in
                    accordance  with  section 302 of the  Sarbanes-Oxley  Act of
                    2002.

               31.2 Rule 13a-14(a)  certification of chief financial  officer in
                    accordance  with  section 302 of the  Sarbanes-Oxley  Act of
                    2002.

               32.1 Section 1350  certification  of chief  executive  officer in
                    accordance  with  section 906 of the  Sarbanes-Oxley  Act of
                    2002.

               32.2 Section 1350  certification  of chief  financial  officer in
                    accordance  with  section 906 of the  Sarbanes-Oxley  Act of
                    2002.

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

               (1)  Filed as an exhibit  to the  Company's  quarterly  report on
                    Form 10-Q for the quarter ended September 30, 2003

          (b)  Reports on Form 8-K.

               None.


                                       13
<PAGE>



                                   SIGNATURES

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

                                    PRODUCTIVITY TECHNOLOGIES CORP.

Date:    May 20, 2004               By:  /s/  Samuel N. Seidman
                                    ---------------------------
                                    Samuel N. Seidman
                                    Chairman, Chief Executive Officer
                                    and President

Date:    May 20, 2004               By:  /s/  Jesse A. Levine
                                    -------------------------
                                    Jesse A. Levine
                                    Vice President, Secretary, Treasurer
                                    and Chief Financial Officer

                                       14