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: December 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 0-24242

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

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

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

Registrant's Telephone Number, Including Area Code       (810) 714-0200
                                                   -----------------------------

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

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 February 18, 2005: 2,747,500 shares of common stock.


                                       1
<PAGE>

                         Productivity Technologies Corp.

                                      INDEX

                                                                           Page
                                                                          Number

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

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

         Condensed Consolidated Balance Sheets at December 31, 2004
             (Unaudited) and June 30, 2004.....................................3

         Condensed Consolidated Statements of Operations for the three and
             six months ended December 31, 2004 and 2003 (Unaudited)...........5

         Condensed Consolidated Statement of Shareholders' Equity
             for the six months ended December 31, 2004 (Unaudited)............6

         Condensed Consolidated Statements of Cash Flows for the
             six months ended December 31, 2004 and 2003 (Unaudited)...........7

         Notes to Unaudited Condensed 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............13

Item 4.  Controls and Procedures..............................................13

PART II  OTHER INFORMATION....................................................14

Item 1.  Legal Proceedings ...................................................14

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds..........14

Item 3.  Defaults upon Senior Securities (not applicable).....................14

Item 4.  Submission of Matters to a Vote of Security Holders (not applicable).14

Item 5.  Other Information  (not applicable)..................................14

Item 6.  Exhibits  ...........................................................14

SIGNATURES....................................................................15

                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                             December 31, 2004    June 30, 2004
                                                                                 (Unaudited)

Assets

Current Assets
<S>                                                                               <C>                <C>
     Cash                                                                         $1,397,713         $233,882
     Short-term investments, including accrued interest                              273,832          450,080
     Contract receivables, net of allowance for doubtful accounts of
          $377,663 and $377,663                                                    4,659,045        4,479,656
     Costs and estimated earnings in excess of billings on
          uncompleted contracts                                                    1,448,069        3,759,498
     Inventories                                                                   1,078,057        1,151,703
     Prepaid expenses and other                                                      215,816          268,005
     Deferred income taxes                                                           173,000          173,000
                                                                                   ---------       ----------
Total current assets                                                               9,245,532       10,515,824
                                                                                   ---------       ----------


Property and equipment
     Land                                                                           $591,514         $591,514
     Buildings and improvements                                                    4,962,690        4,962,690
     Machinery and equipment                                                       4,235,958        4,235,503
     Transportation equipment                                                         34,079           21,000
                                                                                   ---------       ----------
                                                                                   9,824,241        9,810,707

          Less accumulated depreciation                                            4,548,238        4,241,399
                                                                                   ---------        ---------
Net property and equipment                                                         5,276,003        5,569,308
                                                                                   ---------        ---------


Other assets
     Goodwill                                                                      2,985,909        2,985,909
     Patent, net                                                                     208,147          256,893
     Deferred income taxes                                                           752,000          722,000
     Other assets                                                                    439,867          299,570
                                                                                   ---------       ----------
Total other assets                                                                 4,385,923        4,264,372
                                                                                   ---------        ---------
                                                                                  18,907,458      $20,349,504
</TABLE>



See accompanying notes to unaudited condensed consolidated financial statements.

                                       3
<PAGE>

<TABLE>
<CAPTION>

                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                             December 31, 2004    June 30, 2004
                                                                                 (Unaudited)
Liabilities and stockholders' equity

Current liabilities
<S>                                                                               <C>              <C>
     Current portion of long-term debt                                            $7,184,076       $7,305,936
     Accounts payable                                                              1,830,115        3,427,383
     Accrued expenses
          Commissions payable                                                        190,729          251,648
          Payroll and related withholdings                                            19,433           85,665
          Warranty Reserve                                                           150,000          225,000
           Interest                                                                  397,212          240,755
          Other                                                                      325,418          271,199
Billings in excess of costs and estimated
     earnings on uncompleted contracts                                             1,141,869          652,849
                                                                                   ---------          -------

Total current liabilities                                                        $11,238,852      $12,460,435

Executive deferred compensation agreements, less current maturities                  974,933          974,933
Long-term debt, less current maturities                                            3,873,983        3,613,326
                                                                                   ---------        ---------

Total liabilities                                                                 16,087,768       17,048,694
                                                                                  ----------       ----------

Stockholders' equity
     Common stock, $.001 par value, 20,000,000 shares authorized;
          2,747,500 shares and 2,475,000 issued and outstanding at                     2,748            2,475
December 31, 2004 and June 30, 2004 respectively.
     Additional paid-in capital                                                   10,075,135        9,966,408
     Accumulated deficit                                                         (7,258,193)      (6,668,073)
                                                                                 -----------      -----------

Total stockholders' equity                                                         2,819,690        3,300,810
                                                                                   ---------        ---------

Total liabilities and shareholders' equity                                       $18,907,458      $20,349,504
                                                                                 ===========      ===========
</TABLE>






See accompanying notes to unaudited condensed consolidated financial statements.


                                       4
<PAGE>
<TABLE>
<CAPTION>

                PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                      Three Months Ended                           Six Months Ended
                                               December 31,       December 31,            December 31,         December 31,
                                                   2004               2003                    2004                 2003



<S>                                                 <C>                 <C>                  <C>                  <C>
Revenues Earned                                     $5,381,164          $7,839,274           $10,717,042          $15,403,737

Cost of Revenues Earned                              4,342,238           6,491,408             8,755,698           12,441,811
                                            ---------------------------------------      ----------------     ----------------

Gross Profit                                         1,038,926           1,347,866             1,961,344            2,961,926
Selling, general and
administrative expenses                              1,148,187           1,287,599             2,301,168            2,508,218
                                            ---------------------------------------      ----------------     ----------------

Income (loss) from operations                        (109,261)              60,267             (339,824)              453,708

Other income (expense)

          Interest income                                  158                  45                   421                  284

          Interest expense                           (196,412)           (174,435)             (366,558)            (346,184)

          Miscellaneous                                 94,082              11,701               115,841                7,406

                                            ---------------------------------------      ----------------     ----------------
Total other expenses                                 (102,172)           (162,689)             (250,296)            (338,494)
                                            ---------------------------------------      ----------------     ----------------

Income (loss) before income taxes
and extraordinary items                              (211,433)           (102,422)             (590,120)              115,214

Income tax expense                                           0                   0                     0                4,050
                                            ---------------------------------------      ----------------     ----------------

Net income (loss) before
extraordinary item                                  ($211,433)          ($102,422)            ($590,120)             $111,164
                                            =======================================      ================     ================

Extraordinary item, gain on
extinguishment of debt                                      --             125,000                    --              125,000
Net Income (loss)                                   ($211,433)             $22,578            ($590,120)             $236,164
Basic earnings (loss) per share:
      Before extraordinary gain                        ($0.08)             ($0.04)               ($0.21)                $0.05
      Extraordinary gain                                    --               $0.05                    --                $0.05

         Total basic net income                        ($0.08)               $0.01               ($0.21)                $0.10

Diluted earnings (loss) per share
      Before extraordinary gain                        ($0.08)             ($0.04)               ($0.21)                $0.04
      Extraordinary gain                                    --               $0.05                    --                $0.05

         Total diluted net income                      ($0.08)               $0.01               ($0.21)                $0.09


Weighted average number of
common shares outstanding:
         Basic                                       2,747,500           2,475,000             2,747,500            2,475,000
         Diluted                                     2,747,500           2,629,000             2,747,500            2,629,000

</TABLE>




See accompanying notes to unaudited condensed consolidated financial statements.


                                       5
<PAGE>
<TABLE>
<CAPTION>

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


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

<S>          <C> <C>          <C>               <C>            <C>               <C>                  <C>
Balance June 30, 2004         2,475,000         $2,475         $9,966,408        ($6,668,073)         $3,300,810

Net loss                             --             --                 --                               (590,120)
                                     --             --                 --        -----------          ----------
                                                                                    (590,120)
Issuance of common stock        272,500            273            108,727                                109,000
                                -------            ---            -------                                -------

                                                                                   --

December 31, 2004             2,747,500         $2,748        $10,075,135        ($7,258,193)         $2,819,690
                              =========         ======        ===========         ===========         ==========
</TABLE>





See accompanying notes to unaudited condensed consolidated financial statements.


                                       6
<PAGE>

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


                                                                                      Six Months Ended
                                                                               December 31,          December 31,
                                                                                  2004                  2003
                                                                                  ----                  ----
Cash flows from operating activities
<S>                                                                              <C>                     <C>
     Net income/(loss)                                                           ($590,120)              $236,164
     Adjustments to reconcile net loss to net cash provided by
          (used in) operating activities:
            Depreciation                                                           306,839               304,840
            Amortization                                                            70,644                48,746
            Gain on extinguishment of debt                                               -             (125,000)

     Deferred income tax                                                           (30,000)                     -
     Changes in operating assets and liabilities:
          Contract receivables                                                    (179,389)              (32,714)
          Inventories, prepaid expenses and other                                   76,390               103,519
          Costs and estimated earnings in excess of billings
               on uncompleted contracts, net effect                              2,800,449           (2,281,369)
          Accounts payable, accrued expenses and other                          (1,588,744)               452,563
                                                                               -----------               -------

Net cash provided by (used in) operating activities                                866,069           (1,293,251)
                                                                                                     -----------

Cash flows from investing activities
     Proceeds from sale (purchase of) short-term investments - net                 176,248               444,403
     Expenditures for property and equipment                                       (13,534)              (31,119)
                                                                                  --------              --------

Net cash provided by investing activities                                          162,714               413,284
                                                                                   -------               -------

Cash flows from financing activities
     Net repayments under revolving credit agreement                              (121,860)             (512,275)
     Borrowings on long term debt                                                  256,907             4,000,000
     Payments on long term debt                                                          -           (3,293,148)
                                                                                         -           -----------

Net cash provided by financing activities                                          135,047               194,577
                                                                                   -------               -------
Net increase (decrease) in cash                                                  1,163,830             (685,390)

Cash at the beginning of the period                                                233,882             1,163,187
                                                                                   -------             ---------
Cash at the end of the period                                                   $1,397,713              $477,797
                                                                                ==========              ========

Supplemental Cash Flow Information
     Cash paid during the period for interest                                     $210,101              $726,478
     Cash paid during the period for income taxes                                     $---                  $---

Schedule of Non-Cash Financing Activities
     Securities issued for commitment fees                                        $109,000                  $---
                                                                                  --------                  ----
</TABLE>




See accompanying notes to unaudited condensed consolidated financial statements.



                                       7
<PAGE>

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


1.   Basis of Presentation

The  unaudited  condensed  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  six  months  ended  December  31,  2004,  are  not
necessarily  indicative  of the results that may be expected for the year ending
June  30,  2005.  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, 2004.  Information  provided  includes the  consolidated  audited
financial  statements,  including footnotes for the year ended June 30, 2004 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. In March 2004, Atlas formed a German subsidiary, Atlas Technologies GmbH,
in order to facilitate its operations in Europe.

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,  packaging,  adhesive
and sealants, engine part machining and other industries.



                                       8
<PAGE>

Revenue and Cost Recognition

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."
Options to purchase  shares of common stock were  outstanding as of December 31,
2004 but were not  included in the  computation  of diluted  earnings  per share
because the shares would be anti-dilutive.

3.   Stock Option Plan

SFAS No. 123, "Accounting for Stock-Based  Compensation," prescribes a method of
accounting for stock-based  compensation that recognizes compensation cost based
on the fair value of options at grant date.  In lieu of applying this fair value
based method, a company may elect to disclose only the pro forma effects of such
application.  The Company has adopted the disclosure-only provisions of SFAS No.
123. In December 2002,  SFAS No. 148,  "Stock-Based  Compensation,"  was issued,
which requires that the Company illustrate the effect on net income and earnings
per share if it had applied the fair value  principles  included in SFAS No. 123
for both annual and interim financial  statements.  Accordingly,  if the Company
had  elected  to  recognize  compensation  cost  based on the fair  value of the
options at grant  date,  the  Company's  earnings  and  earnings  per share from
continuing  operations,  assuming dilution,  for the three and six month periods
ended December 31, 2004 and 2003 would have been the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
                            ----------------------------------------- -- ----------------------------------------
                                Three months ended December 31,               Six months ended December 31,
                            ----------------------------------------- -- ----------------------------------------
                                   2004                  2003                  2004                  2003
                            -------------------    ------------------ -- ----------------- -- -------------------
Net earnings:
<S>                               <C>                    <C>                 <C>                   <C>
     As reported                  $  (378,687)           $   213,587         $(590,120)            $236,164
     Pro forma                    $  (378,687)           $   213,587         $(590,120)            $236,164

Net earnings per share:
As reported:
     Basic                          $   (0.14)             $    0.09            $(0.21)               $0.10
     Diluted                        $   (0.14)             $    0.08            $(0.21)               $0.09

Pro forma:
     Basic                          $   (0.14)             $    0.09            $(0.21)               $0.10
     Diluted                        $   (0.14)             $    0.08            $(0.21)               $0.09

</TABLE>

                                       9
<PAGE>

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

Results of Operations

Three and Six Months Ended  December  31, 2004  Compared to Three and Six Months
Ended December 31, 2003

Unaudited  revenues  earned  for  the  quarter  ended  December  31,  2004  were
$5,381,164, as compared to $7,839,274 for the quarter ended December 31, 2003, a
decrease of 31%. Atlas' revenues  decreased by 35% due to slower activity during
the  summer  of 2004  and  Westland's  revenues  declined  by 22% due to  slower
activity during the beginning of the quarter.  Unaudited revenues earned for the
six months  ended  December  31,  2004 were  $10,717,042,  down 30% from the six
months ended December 31, 2003 revenues earned of $15,403,737.  The reduction in
revenues was due to slower order activity as noted above.

Gross  profit  for  the  quarter  ended   December  31,  2004  was   $1,038,926,
representing  a 23%  decrease  compared to the  $1,347,866  gross profit for the
quarter  ended  December 31, 2003.  The decrease in gross profits was due to the
lower volumes reported by both Atlas and Westland.  Gross profit as a percentage
of sales  increased by 2%, due  principally  to a more favorable mix of products
sold by Westland.  For the six months  ended  December 31, 2004 gross profit was
$1,961,344,  down 34% compared to the six months  ended  December 31, 2003 gross
profit of  $2,961,926.  The decrease in gross profit for the six month period as
compared to one year ago was due to lower revenues during the six month period.

Consolidated selling, general and administrative (SG&A) expenses were $1,148,187
or 11%  lower  than the  quarter  ended  December  31,  2003  SG&A  expenses  of
$1,287,599.  For the six months  ended  December  31,  2004,  SG&A  expense  was
$2,301,168 or $207,050  lower than the six months ended  December 31, 2003.  The
company  continued to reduce SG&A  expenses for the quarter and six months ended
December  31,  2004  due  to the  lower  revenues  reported  by  both  operating
subsidiaries.

The loss from  operations  for the quarter ended December 31, 2004 was $109,261,
compared to income from  operations  for the quarter ended  December 31, 2003 of
$60,267. For the six months ended December 31, 2004 the loss from operations was
$339,824,  compared to income  from  operations  of $453,708  for the six months
ending  December  31,  2003.  The loss from  operations  for the quarter and six
months ended  December 31, 2004 resulted  from lower sales  volumes  reported by
both operating  subsidiaries  which was partly offset by the lower SG&A expenses
described above.

Interest  expense  for the  quarter  ended  December  31,  2004 was  $196,412 as
compared to $174,435 for the same time period ending  December 31, 2003. For the
six months ended December  31,2004  interest expense was $366,558 as compared to
$346,184 for the prior six months  ended  December  31,  2003.  Atlas'  interest
expenses for the quarter and year to date periods ending  December 31, 2004 were
lower due to lower  borrowing  levels which resulted from lower revenues  during
the  subject  periods.   Westland's  interest  expenses  increased  due  to  its
utilization of line of credit  financing which Westland did not have for most of
the quarter and six months ended December 31, 2003.

The net loss for the quarter ended December 31, 2004 was $211,433  compared to a
net income of $22,578 for the quarter ended  December 31, 2003. The net loss for
the six months ended  December 31, 2004 was $590,120 as compared to a net income
of $236,165  for the six months ended  December 31, 2003.  The reported net loss
for the quarter of $0.08 per share and  year-to-date net loss of $0.21 per share
was based on 2,747,500  weighted  average common shares  outstanding  (basic and
diluted) during both time periods. This compared to a net income for the quarter
and six months  ended  December  31, 2003 of $0.01 per share (basic and diluted)
and  $0.10  (basic)  and  $0.09 per  share  (diluted),  respectively,  with both
calculations  based upon 2,475,000  shares  outstanding for these periods ending
December  31,  2003.  The net income for the three  months and six months  ended
December 31, 2003 included a $125,000 gain on extinguishment of debt.

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

                                       10
<PAGE>

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


Patents                         $573,132          $364,985     $208,147

Non-compete Agreements           348,750           283,932       64,818

ML Closing Fees                  154,603            34,428      120,175

                              -----------------------------------------------
Total                         $1,076,485          $683,345     $393,140
                              ===============================================

Liquidity and Capital Resources

Between 2000 and 2003, the Company was scheduled to repay approximately $974,833
due to the  former  owners of Atlas.  Repayments  of all of these  amounts  were
postponed for an indefinite period of time. Instead, cash is being conserved for
ongoing  operations.  These  borrowings are subordinated to Atlas' senior lender
and are subject to  subordination  agreements  executed by the former  owners of
Atlas in favor of Atlas' senior lender.

At December  31,  2004,  the Company had (1) $3.3  million  outstanding  under a
commercial mortgage loan for Atlas as part of a credit facility (the "MLB Credit
Facility")  with  Merrill  Lynch  Business  Financial  Services  Inc.  ("Merrill
Lynch"),  (2) $0.347 million  outstanding under an equipment term loan for Atlas
as part of the MLB Credit Facility, (3) debt of $4.0 million outstanding under a
revolving  credit  facility  for Atlas as part of the MLB Credit  Facility,  (4)
deferred executive  compensation  obligations of approximately $0.975 originally
scheduled to be paid over three equal annual installments during the period from
July 2000 through July 2002,  (5) $0.97 million  outstanding  under the Spectrum
Credit Facility,  (6) $2.2 million  outstanding under the Westland Loan ,and (7)
$0.3 million outstanding in convertible  subordinated debentures which mature in
June 2007.  This total of $12.1  million of debt  compares  to a total  combined
indebtedness approximating $11.1 million as of December 31, 2003.

Working  capital deficit at December 31, 2004 was  ($1,993,320)  and the current
ratio was (.82) to 1, as compared to a working  capital  deficit of ($1,913,000)
and a current ratio of (.85) to 1 for the Company at June 30, 2004.

On December 12, 2004, the MLB Credit  Facility  matured and was not repaid.  The
Company is in  discussions  with  Merrill  Lynch to obtain an  extension of this
facility.  Merrill Lynch has not demanded repayment of the outstanding  amounts.
While Atlas expects a renewal of the revolver,  no assurances  can be given that
the Company  will be  successful  in  obtaining  an  extension of the MLB Credit
Facility  or in  finding  alternative  financing.  Unless  it is  successful  in
renewing the revolver or in obtaining  revolving  financing from another source,
the Company may be unable to satisfy its current liabilities.

Off Balance Sheet Arrangements

During the quarter and six months ended  December  31, 2004,  the Company had no
off-balance sheet  arrangements  other than operating leases entered into in the
normal course of business, as indicated in the table below.

Summary of Contractual Commitments

The following table represents contractual commitments associated with operating
agreements  (excluding  interest  on  debt  obligations)  for the  fiscal  years
indicated, and thereafter. With respect to the lines of credit borrowed by Atlas
and Westland,  at December 31, 2004,  these  amounted to $4.0 million in maximum
revolving   commitments  for  Atlas  and  $1.25  million  in  maximum  revolving
commitments  for Westland which will be up for renewal in December  2005.  Atlas
has been in discussions with its senior lender  concerning  renewal of the Atlas
revolver.

                                       11
<PAGE>
<TABLE>
<CAPTION>


                             2005         2006         2007         2008         2009       There-after     Total
                           ---------    ---------    ---------    ---------    ----------   ----------    ----------
<S>                          <C>          <C>          <C>          <C>           <C>        <C>           <C>
Real estate term loan        233,342      233,333      233,333      233,333       233,333    2,236,105     3,402,780
Equipment term loan          166,667      166,667       97,222           --            --           --       430,555
Revolver - Atlas           3,998,177           --           --           --            --           --     3,998,177
Revolver - Westland                       977,438                                                            695,167
Subordinated term loan     2,212,583           --           --           --            --           --     2,212,583
Debentures                       --            --           --      300,000            --           --       300,000
                           ---------    ---------    ---------    ---------    ----------   ----------    ----------
         Total debt        7,305,936    1,377,438      330,555      533,333       233,333    2,236,105    11,039,262

Building lease               214,867      214,867                                                            429,734
                           ---------    ---------    ---------    ---------    ----------   ----------    ----------
          Total            6,610,769      614,867      330,555      533,333       233,333    2,236,105    11,468,996
                           =========    =========    =========    =========    ==========   ==========    ==========
</TABLE>


Impact of Recently Issued Accounting Standards

In March 2004,  the  Financial  Accounting  Standards  Board  ("FASB")  issued a
proposed statement, "Share-Based Payment--an Amendment to Statement Nos. 123 and
95" that would require  stock based  employee  compensation  to be recorded as a
charge to earnings  using a fair value based method.  The proposed  statement is
effective  for interim or annual  periods  beginning  after June 15,  2005.  The
Company  will  continue to monitor the FASB's  progress on this  issuance of the
proposed  statement  and its  impact  on the  Company's  consolidated  financial
statements.

In December  2004,  the FASB issued SFAS  No.123  (revised  2004),  "Share-Based
Payment".  Statement 123(R) will provide  investors and other users of financial
statements  with more complete and neutral  financial  information  by requiring
that the  compensation  cost relating to  share-based  payment  transactions  be
recognized in financial statements. That cost will be measured based on the fair
value of the equity or  liability  instruments  issued.  This  Statement  123(R)
covers a wide range of share-based  compensation  arrangements  including  share
options,  restricted share plans,  performance-based  awards, share appreciation
rights,  and employee  share  purchase  plans.  Statement  123(R)  replaces FASB
Statement No. 123, Accounting for Stock-Based  Compensation,  and supersedes APB
Opinion No. 25,  Accounting  for Stock Issued to  Employees.  Statement  123, as
originally issued in 1995,  established as preferable a fair-value-based  method
of accounting for share-based payment transactions with employees. However, that
Statement  permitted  entities the option of continuing to apply the guidance in
Opinion 25, as long as the footnotes to financial  statements disclosed what net
income  would have been had the  preferable  fair-value-based  method been used.
Public  entities  (other than those filing as small  business  issuers)  will be
required to apply Statement  123(R) as of the first interim or annual  reporting
period that begins after June 15, 2005. The Company is currently  evaluating the
financial statement impact of the adoption of SFAS 123(R).

In November 2004, the FASB issued SFAS No. 151 "Inventory Costs, an amendment of
ARB No.  43,  Chapter 4. The  amendments  made by  Statement  151  clarify  that
abnormal amounts of idle facility expense,  freight,  handling costs, and wasted
materials (spoilage) should be recognized as current-period  charges and require
the allocation of fixed  production  overheads to inventory  based on the normal
capacity of the production  facilities.  The guidance is effective for inventory
costs  incurred  during  fiscal years  beginning  after June 15,  2005.  Earlier
application  is permitted  for  inventory  costs  incurred  during  fiscal years
beginning  after  November 23, 2004.  The Company is  currently  evaluating  the
financial statement impact of the adoption of SFAS 151.

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 rising raw  material  prices for
steel  and  commodities  which  depend  upon  or use oil in  their  manufacture,
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 the Atlas'  automation  equipment;  potential
technological   developments  in  the  metal  forming  and  handling  automation
equipment markets which may render Atlas' automation e


                                       12
<PAGE>

quipment noncompetitive or obsolete; the risk that Atlas' senior lender will not
agree to renew its  revolver;  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  refinance  or extend the MLB Credit  Facility or
otherwise 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, 2004. 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,  and
excluding  the  conditions  discussed  below,  the  remainder  of 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;  however,
management  has begun to implement  the changes  necessary to address the issues
identified below.

In connection with its audit of the Company's  consolidated financial statements
as of and for the year ended June 30, 2004,  the Company's  auditor  advised the
Company's management and its Audit Committee that it had identified deficiencies
which were  designated as "reportable  conditions"  but which did not constitute
"material  weaknesses".  Areas  requiring  improvement  include (1)  reconciling
intercompany   accounts  and  balances  between   consolidated   entities,   (2)
recordkeeping  over  property,   plant  and  equipment,  (3)  recordkeeping  and
evaluation  of deferred  tax assets and  liabilities  and  analysis of valuation
allowance against net deferred tax assets, and (4) reviewing accounting activity
performed  on  amounts  appearing  in  the  Company'  s  consolidated  financial
statements. In addition, in the past the Company has not filed on a timely basis
certain of its  quarterly  reports  on Forms 10-Q and its annual  report on Form
10-K with the Securities  Exchange  Commission within the required due dates. An
extension of time to file was  requested  for the annual report on Form 10-K for
the year ended June 30, 2004, the quarterly  report on Form 10-Q for the quarter
ended September 30, 2004 (as well as this quarterly report on Form 10-Q), which,
under  Section  404 of the  Sarbanes  Oxley Act,  constitutes  a  deficiency  in
internal controls over financial reporting.  The Company has assigned a priority
to the short- and long-term  correction of these internal  control  deficiencies
and believes it can make significant progress toward correction of these matters
in fiscal 2005.

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;
however,  management has begun to implement the changes necessary to address the
issues identified below.




                                       13
<PAGE>

                           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,  2004,  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.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

On December 12, 2004, the MLB Credit  Facility  matured and was not repaid.  The
Company is in  discussions  with  Merrill  Lynch to obtain an  extension of this
facility.  Merrill Lynch has not demanded repayment of the outstanding  amounts.
While Atlas expects a renewal of the revolver,  no assurances  can be given that
the Company  will be  successful  in  obtaining  an  extension of the MLB Credit
Facility  or in  finding  alternative  financing.  Unless  it is  successful  in
renewing the revolver or in obtaining  revolving  financing from another source,
the Company may be unable to satisfy its current liabilities.

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

Not applicable.

ITEM 5.  OTHER INFORMATION.

Not applicable.

ITEM 6.  EXHIBITS.

         31.1  Certification of chief executive officer under section 302 of the
               Sarbanes-Oxley Act of 2002.

         31.2  Certification of chief financial officer under section 302 of the
               Sarbanes-Oxley Act of 2002.

         32.1  Certification of chief executive officer under section 906 of the
               Sarbanes-Oxley Act of 2002.

         32.2  Certification of chief financial officer under section 906 of the
               Sarbanes-Oxley Act of 2002.

                                       14
<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:    February 18, 2005          By:  /s/  Samuel N. Seidman
                                       ---------------------------
                                       Samuel N. Seidman
                                       Chairman, Chief Executive Officer
                                        and President

Date:    February 18, 2005          By:  /s/  Jesse A. Levine
                                       -------------------------
                                       Jesse A. Levine
                                       Vice President, Secretary, Treasurer
                                        and Chief Financial Officer



                                       15