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, 1999
                                       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 small business issuer as specified in its charter)

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

509 Madison Avenue, New York, New York                        10022          
  (Address of                                               (Zip Code)
Principal Offices)                                           

Registrant's Telephone Number, Including Area Code   (212) 843-1480
                                                   
                                 Not Applicable
               Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report

     Indicate  by check [X] 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 ___

                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 10, 1999:  2,475,000  shares,  $ .001 par value common
stock.


                                       
<PAGE>


                                TABLE OF CONTENTS


                                                                          Page

Part I.  Financial Information for Productivity Technologies Corp.
          ("PTC" or "Company") and Subsidiary Atlas
         Technologies, Inc. ("Atlas")

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

         Consolidated Balance Sheets........................................4

         Consolidated Statements of Operations..............................6

         Consolidated Statement of Stockholders' Equity.....................7

         Consolidated Statements of Cash Flows..............................8

         Notes to Financial Statements......................................9

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.........................................11


Part II. Other Information

Item 3.  Exhibits and Reports on Form 8-K..................................15

Signatures.................................................................15

                                       2
<PAGE>



PRODUCTIVITY TECHNOLOGIES CORP. AND SUBSIDIARY

PART I: FINANCIAL INFORMATION


ITEM 1. INTERIM FINANCIAL STATEMENTS

The  consolidated  financial  statements  have been prepared in accordance  with
generally accepted accounting  principles for interim financial  information and
in accordance  with  instruction to Form 10-Q and Article 10 of Regulation  S-X.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  omitted  from the  accompanying  interim  financial  statements.  The
information  furnished  in  the  accompanying  balance  sheets,   statements  of
operations,  stockholders'  equity and cash flows, reflect all adjustments which
are, in the opinion of  management,  necessary  for a fair  presentation  of the
aforementioned  financial statements for the interim periods.  Operation results
for the nine months ended March 31, 1999, are not necessarily  indicative of the
results that may be expected for the year ending June 30, 1999.

The  aforementioned   consolidated   financial  statements  should  be  read  in
conjunction with the Productivity  Technologies Corp. Annual Report on Form 10-K
for the fiscal year ended June 30, 1998.  Information  provided therein includes
the consolidated audited financial statements,  including footnotes for the year
ended June 30,  1998 and  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations.




                                       3
<PAGE>



Productivity Technologies Corp. and Subsidiary
Consolidated Balance Sheets ( Unaudited)

<TABLE>
<CAPTION>
                                                                   March 31,    June 30,
                                                                     1999         1998 
                                                                  ----------   -----------
<S>                                                               <C>           <C>
Assets

Current assets
    Cash and cash equivalents                                       $184,014    $2,172,457
    Short-term investments and accrued interest                    1,024,658       482,280
    Contracts receivable                                           6,049,901     5,217,421
    Notes receivable                                                       0        86,415
    Costs and estimated earnings in excess of billings on
       uncompleted contracts                                       7,345,382     5,435,957
    Inventories                                                    1,048,203       628,481
    Prepaid expenses and other                                       126,717       773,522
    Deferred income taxes                                            846,239       475,000
                                                                  ----------   -----------

Total current assets                                              16,625,114    15,271,533
                                                                  ----------   -----------



Property and equipment

    Land                                                            $591,514      $591,514
    Buildings and improvements                                     4,854,798     4,854,799
    Machinery and equipment                                        3,827,030     3,676,415
    Transportation equipment                                          31,500        31,500
                                                                  ----------   -----------
        Total fixed assets                                         9,304,842     9,154,228
        Less accumulated depreciation                              1,279,549       865,473
                                                                  ----------   -----------


Net property and equipment                                         8,025,293     8,288,755
                                                                  ----------   -----------



Other assets

    Goodwill, net of accumulated amortization  of $289,041 and
    $237,562                                                       2,547,886     2,587,164
    Other assets                                                     550,935       661,936
                                                                  ----------   -----------

Total other assets                                                 3,098,821     3,249,100
                                                                  ----------   -----------
Total assets                                                     $27,749,228   $26,809,388
                                                                  ==========   ===========
</TABLE>



See accompanying notes to financial statements.



                                       4

<PAGE>



Productivity Technologies Corp. and Subsidiary

Consolidated Balance Sheets (Unaudited), continued 
             
<TABLE>
<CAPTION>
                                                                            March 31,        June 30,
                                                                              1999             1998
                                                                            ----------      ----------
<S>                                                                        <C>             <C>       
Liabilities and stockholders' equity

Current liabilities

    Accounts payable                                                        $2,348,850      $1,970,769
    Accrued expenses
       Executive bonus agreement                                                     0         810,000
       Commissions payable                                                     729,057         482,512
       Payroll and related withholdings                                        153,901         240,329
       Other                                                                   749,004         770,096
    Billings in excess of costs and estimated
       earnings on uncompleted contracts                                       587,011         580,262
    Current maturities of long term debt                                       769,034         615,677
                                                                            ----------      ----------
Total current liabilities                                                   $5,336.857      $5,469,645


Executive deferred compensation                                              1,436,383       1,436,383

Long-term debt less current maturities                                      12,068,080      11,254,127
                                                                            ----------      ----------

Total liabilities                                                           18,841,320      18,160,155
                                                                            ----------      ----------

Stockholders' equity

    Preferred  Stock, $.001  par  value, 1,000,000  
    shares  authorized; none outstanding 

    Common Stock, .$001 par value, 20,000,000
    shares authorized; 2,425,000 and 2,125,000 shares
    outstanding                                                                  2,425           2,125
    
    Common Stock to be issued                                                        0         695,520
    Additional paid-in capital                                               9,872,708       9,177,488
    Retained Earnings (deficit)                                               (967,225)     (1,225,900)
                                                                            ----------      ----------
Total stockholders' equity                                                   8,907,908       8,649,233
                                                                            ----------      ----------


Total liabilities and stockholders' equity                                 $27,749,228     $26,809,388
                                                                           ===========     ===========
</TABLE>



See accompanying notes to financial statements.


                                       5

<PAGE>


Productivity Technologies Corp. and Subsidiary

Consolidated Statements of Operations (Unaudited)



<TABLE>
<CAPTION>
                                                                     Third Quarter Ended                     Nine Months Ended
                                                                 ----------------------------        -------------------------------
                                                                  March 31,         March 31,          March 31,           March 31,
                                                                   1999               1998               1999                1998   
                                                                 ---------          ---------          ---------          ---------
<S>                                                               <C>               <C>                 <C>                <C>     
Net sales                                                       $8,193,888         $9.097,216        $24,194,140        $29,786,043

Cost of sales                                                    5,988,940          7,006,476         17,611,494         21,515,345
                                                                 ---------          ---------         ----------         ----------
Gross profit                                                     2,204,948          2,090,740          6,582,646          8,270,698

Selling, general and administrative expenses                     1,773,725          2,324,258          5,678,402          6,605,101

Officers' bonuses                                                        0           (201,380)                 0            458,445
                                                                 ---------          ---------         ----------         ----------
Income (loss) from operations                                      431,223            (32,138)           904,244          1,207,152
                                                                 ---------          ---------         ----------         ----------

Other income (expenses)

    Interest income                                                  5,621             28,641             45,047             91,093
    Interest expense                                              (233,815)          (251,763)          (620,514)          (825,949)
    Miscellaneous                                                  (10,050)           (26,856)            22,398            118,165
                                                                 ---------          ---------         ----------         ----------
Total other expenses                                              (238,244)          (249,978)          (553,069)          (616,691)
                                                                 ---------          ---------         ----------         ----------

Income before income taxes                                         192,979           (282,116)           351,175            590,461

Income taxes                                                        46,838            (81,500)            92,500            201,000
                                                                 ---------          ---------         ----------         ----------

Net income                                                        $146,140          ($200,616)          $258,675           $389,461
                                                                 =========          =========         ==========         ==========

Net income per share of Common Stock                                 $0.06             ($0.09)             $0.11              $0.18
                                                                 =========          =========         ==========         ==========

Weighted average number of
    common shares outstanding                                    2,425,000          2,125,000          2,425,000          2,125,000
</TABLE>



See accompanying notes to financial statements.




                                       6
<PAGE>



Productivity Technologies Corp. and Subsidiary

   Consolidated Statement of Stockholders' Equity (Unaudited)

<TABLE>
<CAPTION>
                                                  Common  Stock             Common         Additional                     Total
                                               ---------------------       Stock to be       Paid-In                   Stockholders'
                                               Shares          Amount        Issued          Capital       Deficit        Equity
------------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>               <C>          <C>           <C>           <C>              <C>       
Balance July 1, 1998                          2,125,000         $2,125       $695,520      $9,177,488    ($1,225,900)     $8,649,233

Common Stock issued                             300,000           $300      ($695,520)       $695,220

Net income (unaudited)                                                                                       258,675        $258,675
                                              ---------         ------       --------      ----------    -----------      ----------
Balance as of March 31, 1999                  2,425,000         $2,425             $0      $9,872,708      ($967,225)     $8,907,908
                                              =========         ======       ========      ==========    ===========      ==========
</TABLE>



See accompanying notes to financial statements.



                                       7
<PAGE>

Productivity Technologies Corp. and Subsidiary
  Consolidated Statement of Cash Flows  (Unaudited)



<TABLE>
<CAPTION>
                                                                                                         Third Quarter Ended
                                                                                                ------------------------------------
                                                                                                  March 31,              March 31,
                                                                                                   1999                    1998
                                                                                                 -----------            ------------
<S>                                                                                              <C>                     <C>       
Cash flows from operating activities

    Net income                                                                                      $258,675               $389,461
    Adjustments to reconcile net income to net cash
    Provided by (used in) operating activities: 
         Depreciation                                                                                414,076                386,781
         Amortization                                                                                 39,278                 89,969
         Deferred income tax                                                                        (371,239)                 5,382
    Changes in operating assets and liabilities:
         Contract receivables                                                                       (832,480)             1,309,494
         Inventories, prepaid expenses and other                                                     227,083                521,441
         Costs and estimated earnings in excess of
            billings on uncompleted contracts                                                     (1,902,676)             3,496,925
         Accounts payable, accrued expenses and other                                               (292,894)            (1,675,360)
                                                                                                 -----------            ------------
Net cash provided by (used in) operating activities                                              ($2,460,177)            $4,524,093
                                                                                                 ===========            ===========

Cash flows from investing activities

    Collection of notes receivable                                                                   $86,415               $160,631
    Maturity of US securities in deposited trust fund                                               (542,378)            (1,732,272)
    Expenditures for property and equipment                                                         (150,614)                78,610
    Increase in notes receivable                                                                     111,001                152,598
                                                                                                 -----------            ------------
Net cash provided by (used in) investing activities                                                ($495,576)           ($1,340,433)
                                                                                                 ===========            ===========

Cash flows from financing activities

    (Payments) or borrowings on long-term debt                                                       813,953             (3,149,944)
    Proceeds from additional long-term debt                                                          153,357                 (1,924)
                                                                                                 -----------            ------------
Net cash provided by (used in) financing activities                                                 $967,310            $(3,151,868)
                                                                                                 ===========            ===========

Net increase (decrease) in cash and cash equivalents                                              (1,988,443)               $31,792

Cash and cash equivalents at the beginning of the period                                           2,172,457                843,709
                                                                                                 -----------            ------------

Cash and cash equivalents at the end of the period                                                  $184,014               $875,501
                                                                                                 ===========            ===========
Supplemental cash flow Information                                    
    Cash paid during the period for interest                                                        $620,514               $825,949
</TABLE>

See accompanying notes to financial statements.


                                        8

<PAGE>



Notes to Financial Statements (Unaudited)

1.   Basis of Presentation

The  accompanying  unaudited  financial  statements  for the third quarter ended
March  31,  1999  have been  prepared  in  accordance  with  generally  accepted
accounting   principles  for  interim   financial   information   and  with  the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  The consolidated  balance
sheet at June 30, 1998 has been derived from the audited consolidated  financial
statements at that date. Operating results for the third quarter ended March 31,
1999 are not necessarily  indicative of the results that may be expected for the
year ended June 30, 1999 or any other interim period.  For further  information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the period ended June 30, 1998.


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  originally  selected
March 31 as its  fiscal  year-end.  The  Company  completed  an  initial  public
offering  ("Offering")  of common  stock in July 1994 and raised net proceeds of
approximately  $9.0  million.  In May  1996,  the  Company  changed  its name to
Productivity Technologies Corp. ("PTC" or the "Company"),  and acquired, through
a merger, Atlas Technologies, Inc. ("Atlas") as a wholly owned subsidiary.

The  accompanying  financial  statements  presented  for the third quarter ended
March  31,  1999  include  the  consolidated  accounts  of PTC  and  Atlas.  All
significant  inter-company  accounts and transactions  have been eliminated upon
consolidation.

Nature of Business

Atlas,  PTC's sole  operating  subsidiary,  is a leading  supplier  of quick die
change,  flexible transfer, and  stacking/destacking  equipment used to automate
automotive  and  appliance  metal  stamping   operations.   Atlas  operates  two
manufacturing  plants in Fenton,  Michigan and has sales and engineering offices
in the United States, Europe and China.

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



                                        9

<PAGE>



Revenue and Cost Recognition

Contract  revenues from fixed price  contracts,  and the related contract costs,
are    recognized    using    the    percentage-of-completion     method.    The
percentage-of-completion  method  measures  the  percentage  of  contract  costs
incurred to date and compares these costs to the total  estimated costs for each
contract. The Company estimates the status of individual contracts when progress
reaches a point where  experience is  sufficient to estimate  final results with
reasonable accuracy.  Contract costs include all direct material and labor costs
and those  indirect  costs  related to  contract  performance,  such as indirect
labor, supplies, repairs and depreciation costs. Provisions for estimated losses
on  uncompleted  contracts  are made in the  period  in which  such  losses  are
determined.  Changes in job performance, job condition, estimated profitability,
and final contract  settlement may result in revisions to costs and income,  and
are recognized in the period that the revisions are determined.

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

Net Income Per Common Share

Net income per common share for the third  quarter ended March 31, 1999 has been
computed based on the weighted  average  number of 2,425,000  common and diluted
common equivalent  shares  outstanding.  In September 1998,  300,000 shares were
issued as partial  consideration  for the  restructuring  of the Atlas executive
bonus program. The issuance of the 300,000 shares was effective as of June 1998.
The bonus restructuring agreement is described in detail in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 1998.

3.   Commitments

Atlas is a party to employment  agreements with its principal executive officer,
which  expires on March 31, 2001.  Annual  compensation  under the  agreement is
$203,776,  subject to cost of living  increases  after  December 31,  1999.  The
employment  agreement  also  provides that the  executive,  regardless of future
employment,  will receive four annual  payments of $207,571  commencing July 30,
1999. The executive also received  150,000 shares of restricted  common stock of
the Company,  which were issued  effective as of June 1998. The following  items
related  to the  employment  agreement,  and a similar  agreement  with a former
executive  which expired on December 31, 1998, are included in the  accompanying
financial statements as of and for the year ended June 30, 1998:

Balance Sheet
Executive Deferred Compensation Agreement                         $1,436,383
Common stock issued (.001 par value)                                     300
Paid in capital                                                      696,320

Statement of Operations
Bonus restructuring expense                                       $2,131,903


                                       10

<PAGE>


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

Results of Operations

Net sales for the quarter  ended March 31, 1999 were  $8,193,888,  down 10% from
$9,097,216  for the quarter ended March 31, 1998.  Net sales for the nine months
ended March 31, 1999 were $24,194,140, down 19% from nine months ended March 31,
1998 net sales of $29,786,043.  These decreases reflect lower order closings and
production  delays  related to certain key projects which began during the first
half of the year and continued into the third fiscal quarter.  The order backlog
as of March 31, 1999 was $13.0 million,  down 29% from the June 30, 1998 backlog
of $18.2  million.  The  decline in backlog  was due to slower  closings  of new
orders.

Cost of sales for the quarter ended March 31, 1999 was $5,988,940, down 15% from
$7,006,476 for the quarter ended March 31, 1998. For the nine months ended March
31,  1999,  cost of sales  was  $17,611,494,  down 18% from the cost of sales of
$21,515,345  for the quarter ended March 31, 1998. Cost of sales declined versus
one year ago due  principally  to lower net sales versus that of the  comparable
periods of the prior year.  Cost of sales as a percent of net sales decreased to
73% of  revenues  during  the  quarter  compared  to 77% one  year ago due to an
improved product mix and reduction in new product design compared to the quarter
ended March 31, 1998. For the nine months ended March 31, 1999, cost of sales as
a percent of revenues  was 73%  compared to 72% for the nine months  ended March
31, 1998.

Gross profit for the quarter ended March 31, 1999 was $2,204,948,  a 5% increase
compared to $2,090,740 for the quarter ended March 31, 1998. For the nine months
ended March 31, 1999,  gross profit was $6,582,646,  a 20% decrease  compared to
$8,270,698 for the nine months ended March 31, 1998.  The gross profit  increase
for the quarter  versus one year ago  derived  from  improved  product mix and a
reduction in new product design costs.  The decline in gross profit for the nine
months  ended  March 31, 1999 was due  principally  to a decline in net sales as
well as increased  research and development  costs and warranty  expenses versus
the nine months period one year ago.

Consolidated selling, general and administrative (SG&A) expenses for the quarter
ended March 31, 1999 were $1,773,725,  down 24% from the quarter ended March 31,
1998 of $2,324,258. For the nine months ended March 31, 1999, SG&A expenses were
$5,678,402,  a 14% decline from SG&A expenses of $6,605,101  for the nine months
ended March 31,  1998.  SG&A  expenses  during the quarter  ended March 31, 1999
declined  versus a year ago as the Company  began to implement a cost  reduction
program  during the third  quarter of fiscal 1999.  During the first part of the
nine month  period  ended March 31,  1998,  the Company  incurred  approximately
$780,000 in legal defense and settlement  expenses with a lawsuit and relocation
expenses related to the opening of and moving to a new  manufacturing  facility.
Lawsuit defense and settlement  costs and relocation  expenses were not incurred
in the nine months ended March 31, 1999.  While overall SG&A expenses  decreased
during the nine  months  ended March 31,  1999,  direct  sales  costs  increased
approximately $265,000 due principally to increased commissions and royalties.

There  were no  officers'  bonuses  during the  quarter  ended  March 31,  1999,
compared to a reversal of previously  incurred officers' bonuses of $201,380 for
the quarter  ended March 31,  1998.  For the nine months  ended March 31,  1999,
there were no officer bonuses,  compared to officers' bonuses of $458,445 during
the nine months ended March 31, 1998. Officer bonuses were eliminated  effective
as of the fourth quarter of fiscal 1998 as part of the bonus restructuring plan,
as more fully  described  in the  Company's  Annual  Report on Form 10-K for the
fiscal year ended June 30, 1998.

                                       11

<PAGE>


Income  from  operations  for the quarter  ended  March 31,  1999 was  $431,223,
compared to a loss of $32,138  for the  quarter  ended a year ago as a result of
the increased gross profit and reduced SG&A expenses  described  above.  For the
nine months ended March 31, 1999, income from operations was $904,244, which was
25% lower than income from operations of $1,207,152 reported for the nine months
ended March 31, 1998. As adjusted for the elimination of officer bonuses, income
from operations  during the nine month period was  approximately  66% lower than
the  previous  year.  The  decrease  resulted  from slower than  expected  sales
combined  with the increases in direct sales,  research,  and warranty  expenses
described above.

Interest expense for the quarter ended March 31, 1999 was $233,815, down 7% from
$251,763 for the quarter  ended March 31, 1998.  For the nine months ended March
31, 1999  interest  expense was  $620,514,  down 25% from  $825,949 for the nine
month  period ended March 31, 1998.  Interest  expense  decreased as a result of
reductions in the Company's borrowings under its line of credit due to a decline
in the  average  volume  of  work  in  process  and the  levels  of  outstanding
receivables  during the three months and nine months ended March 31, 1999 versus
the respective periods one year ago. In addition, the Company's bank lowered the
interest rates it charged the Company during fiscal 1999.

The  Company's  net income for the quarter  ended  March 31, 1999 was  $146,140,
compared to net loss of $200,616 for the quarter  ended March 31, 1998.  For the
nine  months  ended  March 31,  1999,  net  income was  $258,675,  down 34% from
$389,461 for the nine month period ended March 31, 1998. Net income for the nine
months  one year ago  included a one-time  $77,000  profit  from the sale of the
Company's  Argentine,  Michigan  facility  during the first  quarter.  The third
quarter  fiscal 1999 earnings per share of $0.06 compared to a loss per share of
$0.09 for the third quarter of fiscal 1998.  For the nine months ended March 31,
1999 earnings per share were $0.11, down  approximately 39% from $0.18 per share
earnings  reported for the  nine-month  period ended March 31, 1998.  There were
2,425,000  weighted average common shares outstanding during the quarter and the
nine months ended March 31,1999,  compared to 2,125,000  weighted average common
shares  outstanding  during the quarter  and the nine months  ended at March 31,
1998.

Liquidity and Capital Resources

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

During the fiscal year ended June 30, 1998, the Company  entered into a new debt
financing  agreement with First of Chicago NBD. The bank consolidated all of the
Company's  long and short term debts,  bundling  the various  notes and lines of
credit into one new three year committed line of credit,  with increased maximum
debt usage of  $16,000,000  based on collateral  of the  Company's  receivables,
work-in-process inventories, and other assets.
Interest rates were reduced to 0.25 percent below the bank's prime rate.

First of  Chicago  NBD also  funded the  construction  of the new  building  and
equipment through the sale of $4,500,000 in tax exempt Industrial Revenue Bonds.
Except for  approximately  $280,000  reserved for capital  expenditures over the
next 12 months,  all of the proceeds  were spent as of March 31, 1999,  and were
used for the  construction,  furnishing  and  equipping of the new 59,000 square
foot  manufacturing  building and the purchase of a new  manufacturing  resource
planning  system for the Company's Atlas  subsidiary.  The unused funds reserved
for capital  expenditures  have been invested and earn interest until spent. The
bonds are state and federal tax exempt and,  consequently,  the floating rate of
interest is significantly reduced compared to conventional  construction or real
estate financing. The terms of the bonds are as follows for each fiscal year:


                                       12
<PAGE>


 1991--2001 $400,000 annual principal payments plus quarterly interest payments.
 2001--2012 $300,000 annual principal payments plus quarterly interest payments.

At March 31,  1999,  the  Company had (a) debt of  $8,152,665  under the line of
credit and $4,100,000 under the Industrial Revenue Bonds, payable over 15 years,
(b) deferred executive compensation of $1,436,382 scheduled to be paid over four
equal  annual  installments  commencing  July 1999,  (c)  $560,000  due to Atlas
executives and held as a corresponding current asset on the books of the Company
in escrow awaiting written  confirmation of the IRS audit results, and (d) other
debt of  $24,450.  Long  term debt  totaled  $14,273,497  as of March 31,  1999,
compared to $13,306,187 at June 30, 1998.

Working  capital at March 31, 1999 was  $11,288,257 and the current ratio (i.e.,
the ratio of current assets to current  liabilities) was 3.1 to 1.0, compared to
working capital of $9,801,888 and a current ratio of 2.8 to 1 for the Company at
June 30, 1998.

Year 2000 Compliance

The  Company is  installing  an  "enterprise  resource  planning"  system at the
Company,  which  includes  computer  systems  for its  internal  accounting  and
reporting  activities and its  manufacturing  operations and processes which are
"Year  2000  compliant"  (which  means  that  such  computer  systems  and other
information  technology  will  accurately  process  date/time data regardless of
whether the date is in the twentieth or twenty-first  century).  The acquisition
and installation of the system are expected to cost approximately  $340,000,  of
which  approximately  $270,000 was  expensed as of March 31,  1999.  Because the
system is being  implemented as an overall  upgrade to the Company's  operations
and not  specifically to address Year 2000 compliance  concerns,  management has
not  estimated  the  portion  of the cost  which may be  allocable  to Year 2000
compliance.  The  Company  management  has not yet  assessed  whether or not the
failure  of the  Company's  internal  information  technology  to be  Year  2000
compliant  would have a material  adverse  effect upon the  Company's  financial
position,   liquidity  or  results  of  operations  although  it  believes  that
installation  and operation of the new system will be accomplished in advance of
December 31, 1999.

The Company is also  assessing  its  vendors,  customers,  utilities,  banks and
others with whom it does  business to determine if their failure to be Year 2000
compliant would have a material adverse effect upon the Company or its financial
position,  liquidity or results of operations.  To date, nothing has come to the
attention of management  that leads it to conclude  that the  likelihood of such
adverse  effect  reasonably  exists.  The Company and the  Company's  operations
utilize  relatively little  electronic data interchange with vendors,  customers
and other  third  parties.  However,  to the  extent  that such  third  parties,
particularly  utilities and banks,  may not be Year 2000 compliant,  the Company
and the Company may be adversely effected, although the magnitude of such effect
cannot be estimated. The cost to the Company of making its third-party Year 2000
compliance assessment is not expected to be material.

Certain Company products contain  processors which address and utilize date/time
data.  Management  believes that such processors  incorporated in equipment sold
within the past five years are virtually all Year 2000 compliant. However, it is
not able to determine the compliance status of processors used in equipment sold
in earlier  periods  with any  reasonable  degree of  certainty.  Although  such
equipment is beyond the warranty periods  applicable to the Company's  products,
it is possible that customers who purchased  equipment from the Company which is
not Year 2000  compliant may  nevertheless  assert claims against the Company to
correct the compliance  deficiencies or for resulting damages.  While management
believes  that the Company  would not be legally  responsible  to such  persons,
based on the  terms of its  purchase  orders  and  warranties,  there  can be no
assurance that this position  would prevail if challenged.  Management is unable
to estimate the potential cost that the Company might incur if such

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<PAGE>


claims  are made and  successfully  sustained  or whether or not such cost would
have a material adverse effect upon its financial position, liquidity or results
of operations.

Forward-Looking Statements

When used in this and in future  filings by the Company with the  Securities and
Exchange Commission, in the Company's press releases and in oral statements made
with the approval of an authorized  executive officer of the Company,  the words
or phrases "will likely  result,"  "plans," "will  continue," "is  anticipated,"
"estimated,"   "project"  or  "outlook"   or  similar   expressions   (including
confirmations  by an  authorized  executive  officer of the  Company or any such
expressions  made by a third party with  respect to the Company) are intended to
identify  "forward-looking   statements"  within  the  meaning  of  the  Private
Securities  Litigation Reform Act of 1995. The Company wishes to caution readers
not to place undue  reliance  on any such  forward-looking  statements,  each of
which speaks only as of the date made.  Such  statements  are subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from historical earnings and those presently  anticipated or projected.  Factors
that may cause actual results to differ  materially  from those  contemplated by
such   forward-looking   statements   include,   among  others,  the  following:
competitive  pressures in the industry in which the Company is engaged;  adverse
changes in the Company's banking loan  requirements;  major  fluctuations in the
strength of the U.S.  dollar  versus  international  currencies;  the  Company's
inability  to fully  become Year 2000  compliant;  any claims  made  against the
Company for  products  delivered  to its  customers in prior years for not being
Year 2000  compliant;  and  general  economic  conditions.  The  Company  has no
obligation to publicly  release the result of any revisions which may be made to
any forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements.

                                       14

<PAGE>


ITEM 3.   EXHIBITS AND REPORTS ON FORM 8-K

A.   Exhibits

     27   Financial Data Schedule (filed electronically only).

B.   Reports on Form 8-K -- None


                                   SIGNATURES

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


                                        PRODUCTIVITY TECHNOLOGIES CORP.


Date:    May 17, 1999                   By:  /s/  Samuel N. Seidman         
                                        ---------------------------------------
                                        Samuel N. Seidman, President



Date:    May 17, 1999                   By:  /s/  Jesse Levine                 
                                        ---------------------------------------
                                        Jesse Levine, Chief Financial Officer

                                       15