UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-Q

(Mark One)

[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended - September 30, 1996

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

For the transition period from ________ to _________


                         Commission File Number 0-24242
                           PRODUCTIVITY TECHNOLOGIES CORP.
        (Exact name of small business issuer as specified in its charter)

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

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

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

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

Check  whether the issuer (1) filed all reports  required to be filed by Section
12, 13 or 15 (d) of the  Exchange Act during the past 12 months (or such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.   Yes [X]   No [ ]

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

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of November 15, 1996: 2,125,000 shares $ .001 par value common stock.


<PAGE>


                                    CONTENTS


Part I: Financial Information                                            Page

Item 1. Interim Financial Statements                                      3

        Consolidated Balance Sheets of The Company                      4-5

        Consolidated Statement of Operations of The
        Company and Statement of Operations of the Predecessor            6

        Consolidated Statement of Stockholders' Equity of The Company     7

        Consolidated Statement of Cash Flows of The Company and
        Statement of Cash Flows of the Predecessor                      8-9

        Notes to Financial Statements                                 10-15

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations.                                    16-17

Part II: Other Information

Item 6.  Exhibits and Reports on Form 8-K                                18

Signatures                                                               19

                                        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  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.
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 three months ended September 30, 1996, are not necessarily indicative of
the results that may be expected for the year ending June 30, 1997.

The  aforementioned   consolidated   financial  statements  should  be  read  in
conjunction   with  the  notes  to  the   consolidated   financial   statements,
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations and Productivity  Technologies  Corp. and Subsidiary's  Form 10-K for
the year ended June 30, 1996.


                                                         3

<PAGE>


                                    Consolidated Balance Sheets of The Company
<TABLE>
<CAPTION>


                                                                  September 30, 1996        June 30, 1996
----------------------------------------------------------------------------------------------------------
                                                                       (Unaudited)             (Audited)
<S>                                                                       <C>                      <C>

Assets
Current Assets
  Cash and cash equivalents                                         $   671,233               $  512,179
  Short-term investments, including accrued interest                    730,122                  965,255
  Contract receivables                                                6,283,631                7,958,159
  Notes receivable                                                         -                     240,606
  Costs and estimated earnings in excess of
    billings on uncompleted contracts                                 8,196,573                7,593,003
  Inventories                                                           742,216                  720,947
  Prepaid expenses and other                                             44,071                  220,494
  Deferred income taxes                                                 480,000                  480,000
-------------------------------------------------------------------------------------------------------------------
Total Current Assets                                                 17,147,846               18,690,643
-------------------------------------------------------------------------------------------------------------------
Property and Equipment
  Land                                                                  231,000                  216,000
  Buildings and improvements                                          2,178,028                2,132,388
  Machinery and equipment                                             1,955,560                1,888,479
  Transportation equipment                                               31,500                   31,500
-------------------------------------------------------------------------------------------------------------------
                                                                      4,396,088                4,268,367
  Less accumulated depreciation                                         124,840                   27,928
-------------------------------------------------------------------------------------------------------------------
Net Property and Equipment                                            4,271,248                4,240,439
-------------------------------------------------------------------------------------------------------------------
Other Assets
  Goodwill, net of accumulated amortization of $25,740
    and $10,923                                                       2,568,062                2,593,803
  Noncompetition agreement, net of accumulated
    amortization                                                        223,833                  228,083
  Other assets                                                          532,416                  270,803
-------------------------------------------------------------------------------------------------------------------
Total Other Assets                                                    3,324,311                3,092,689
-------------------------------------------------------------------------------------------------------------------
                                                                    $24,743,405            $  26,023,771
-------------------------------------------------------------------------------------------------------------------
</TABLE>



                 See accompanying notes to financial statements.


                                        4

<PAGE>


                   Consolidated Balance Sheets of The Company

<TABLE>
<CAPTION>

                                                              September 30, 1996     June 30, 1996
----------------------------------------------------------------------------------------------------------
                                                                (Unaudited)            (Audited)
<S>                                                                   <C>                  <C>

Liabilities and Stockholders' Equity
Current Liabilities
  Accounts payable                                                $ 2,161,356       $  2,444,411
  Line-of-credit                                                    6,283,258          7,188,558
  Accrued expenses
    Executive bonus agreement                                         618,805            753,778
    Commissions payable                                               479,267            544,248
    Payroll and related withholdings                                  283,135            438,274
    Federal and state income taxes                                       -               221,790
    Other                                                             545,422          1,052,237
  Billings in excess of costs and estimated
    earnings on uncompleted contracts                               1,628,208            534,963
  Current maturities of long-term debt                                464,393            464,393
-------------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                          12,463,844         13,642,652
Deferred Income Taxes                                                 779,000            779,000
Long-Term Debt, less current maturities                             2,112,895          2,228,786
-------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                  15,355,739         16,650,438
-------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
  Preferred stock, $.001 par value, 1,000,000 authorized
    and none outstanding                                                -                  -
  Common stock, $.001 par value, 20,000,000 shares
    authorized and 2,125,000 outstanding                                2,125              2,125
  Additional paid-in capital                                        9,177,488          9,177,488
  Retained earnings                                                   208,053            193,720
-------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                          9,387,666          9,373,333
-------------------------------------------------------------------------------------------------------------------
                                                               $   24,743,405        $26,023,771
-------------------------------------------------------------------------------------------------------------------
</TABLE>


                 See accompanying notes to financial statements.

                                        5


<PAGE>

               Consolidated Statement of Operations of The Company
           and Statement of Operations of the Predecessor (Unaudited)


                                     The Company                Predecessor
                                  Three Months Ended         Three Months Ended
                                  September 30, 1996         September 30, 1995
-------------------------------------------------------------------------------
Net Sales                            $ 8,426,298             $  8,898,617
-------------------------------------------------------------------------------
Cost of Sales                          6,325,350                6,109,930
-------------------------------------------------------------------------------
Gross Profit                           2,100,948                2,788,687
Selling, General and Administrative
 Expenses                              1,842,258                1,775,256
Officers' Bonuses                         70,360                  654,665
-------------------------------------------------------------------------------
Income From Operations                   188,330                  358,766
-------------------------------------------------------------------------------
Other Income (Expense)
  Interest income                         19,157                   11,772
  Interest expense                      (187,853)                (152,356)
  Miscellaneous                           19,199                    3,806
-------------------------------------------------------------------------------
Total Other Expenses                    (149,497)                (136,778)
-------------------------------------------------------------------------------
Income Before Income Taxes                38,833                  221,988
Income Taxes                             (24,500)                 (96,486)
-------------------------------------------------------------------------------
Net Income                                14,333                  125,502
-------------------------------------------------------------------------------
Net Income Per Share of
 Common Stock                              $ .01
-------------------------------------------------------------------------------
Weighted Average Number of
 Common Shares Outstanding             2,125,000
-------------------------------------------------------------------------------

                 See accompanying notes to financial statements.


                                        6

<PAGE>



    Consolidated Statement of Stockholders' Equity of The Company (Unaudited)

<TABLE>
<CAPTION>

                                                                           Additional                       Total
                                                 Common Stock               Paid-In        Retained      Stockholders'
                                             Shares          Amount         Capital        Earnings          Equity
---------------------------------------------------------------------------------------------------------------------
<S>                                           <C>             <C>           <C>              <C>              <C>
Balance, July 1, 1996                     2,125,000        $ 2,125      $ 9,177,488        $193,720      $9,373,333

Net income                                     -              -                 -            14,333          14,333
-------------------------------------------------------------------------------------------------------------------
Balance, September 30, 1996               2,125,000        $ 2,125      $ 9,177,488$        208,053      $9,387,666
-------------------------------------------------------------------------------------------------------------------
</TABLE>



                 See accompanying notes to financial statements.

                                        7

<PAGE>

               Consolidated Statement of Cash Flows of The Company
           and Statement of Cash Flows of the Predecessor (Unaudited)
<TABLE>
<CAPTION>


                                                           The Company                 Predecessor
                                                         Three Months Ended        Three Months Ended
                                                         September 30, 1996        September 30, 1995
----------------------------------------------------------------------------------------------------------

<S>                                                             <C>                      <C>
Cash Flows From Operating Activities
  Net income                                                 $ 14,333               $  125,502
  Adjustments to reconcile net income to net cash
   provided by (used in) operating activities
    Depreciation                                               96,912                   76,862
    Amortization                                               29,991                    4,250
    Deferred income taxes                                         -                         92
    Changes in operating assets and liabilities
     Contract receivables                                   1,674,528                 (505,430)
     Inventories, prepaid expenses and other                 (106,459)                  (3,703)
     Costs and estimated earnings in excess of
      billings on uncompleted contracts - net effect          489,675               (1,933,736)
     Accounts payable, accrued expenses and other          (1,366,753)                 514,836
-------------------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In) Operating Activities           832,227               (1,721,327)
-------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
  Collection of notes receivable                              240,606                      -
  Maturity of U.S. Government securities deposited
   in trust fund                                              235,133                      -
  Expenditures for property and equipment                    (127,721)                (79,902)
  Increase of notes receivable                                   -                    (30,625)
-------------------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In) Investing Activities           348,018                (110,527)
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                 See accompanying notes to financial statements.

                                        8

<PAGE>

               Consolidated Statement of Cash Flows of The Company
           and Statement of Cash Flows of the Predecessor (Unaudited)

<TABLE>
<CAPTION>

                                                                          The Company                   Predecessor
                                                                   Three Months Ended             Three Months Ended
                                                                   September 30, 1996             September 30, 1995
--------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                            <C>
Cash Flows From Financing Activities
  Net borrowings (payments) - line-of-credit                           (905,300)                       1,973,620
  Payments on long-term debt, capital
   leases and notes payable                                            (115,891)                        (148,679)
-------------------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In) Financing Activities                  (1,021,191)                       1,824,941
-------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) In Cash and Cash Equivalents                    159,054                           (6,913)
Cash and Cash Equivalents, at beginning of period                       512,179                           17,253
-------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, at end of period                           $ 671,233                         $ 10,340
-------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information
  Cash Paid During the Period For
   Interest                                                           $ 187,853                        $ 152,356
   Income taxes                                                          24,500                           96,486
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                 See accompanying notes to financial statements

                                       9

<PAGE>

                    Notes to Financial Statements (Unaudited)


1.    Basis of Presentation

The accompanying unaudited financial statements as of September 30, 1996 and for
the three months then ended and for the three months  ended  September  30, 1995
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, 1996
has been  derived from the audited  consolidated  financial  statements  at that
date.  Operating results for the three month period ended September 30, 1996 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending June 30, 1997 or any other interim period. For further information, refer
to the consolidated  financial  statements and footnotes thereto included in the
Company's Annual Report for the period ended June 30, 1996.

2. Summary of Significant Accounting Policies

Formation of the Company and Basis of Presentation

Production  Systems  Acquisition  Corporation  ("PSAC") was incorporated in June
1993 with the  objective  of  acquiring  an  operating  business  engaged in the
production  systems  industry.  PSAC originally  selected March 31 as its fiscal
year-end. PSAC completed an initial public offering ("Offering") of common stock
in July 1994 and raised net proceeds of approximately $9.0 million.

The  accompanying  financial  statements  presented  for the three  months ended
September 30, 1996 include the accounts of PTC and its wholly-owned  subsidiary,
Atlas (collectively,  the "Company").  All significant intercompany accounts and
transactions have been eliminated upon consolidation.

The  accompanying  financial  statements  presented  for the three  months ended
September  30,  1995   represent   the   financial   statements  of  Atlas  (the
"Predecessor").

                                       10
<PAGE>
Nature of Business

The  Company is a  manufacturer  of  automated  industrial  systems,  machinery,
equipment,   components  and   engineering   services.   It  operates  with  two
manufacturing  plants and three sales and engineering offices. The main plant is
located in Fenton, Michigan with an additional plant operating in nearby Linden,
Michigan.

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

Revenue and Cost Recognition

Contract  revenues from fixed price  contracts,  and the related contract costs,
are  recognized  using  the  percentage-of-completion  method,  measured  by the
percentage of contract costs incurred to date to 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  conditions,   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.

                                       11
<PAGE>

Net Income Per Common Share

Net income per common share for the three months ended September 30, 1996
has been computed based on the weighted average number of common and
diluted common equivalent shares outstanding.

3.    Commitments

(1)   In connection with the Merger Agreement, the Company has entered into
      employment agreements which changed the compensation of two executive
      officers of Atlas.  These employment agreements are identical except that
      one agreement expires on December 31, 1998, and the other expires on
      December 31, 2001.  Each agreement requires the executive to devote
      substantially all of his business time and attention to the affairs of the
      Company.  Annual compensation under each agreement is $190,000,
      subject to cost of living increases after December 31, 1996.


      The employment agreements also provide for two bonus calculations based on
      the earnings of the Company before interest and taxes (as defined).  Under
      one of the bonus arrangements, each of the two executives mentioned in the
      above  paragraph will be paid $208,333 for each of the six years beginning
      January 1, 1996 in which the Company's  "Adjusted Earnings" (as defined in
      the  related  agreements)  exceed  $2,000,000.  If the  Adjusted  Earnings
      average  at  least  $2,000,000  during  such  six-year  period,   the  two
      executives  will each be paid, at the end of the six year period,  the sum
      of  $1,250,000  less the  aggregate of the amounts paid to them under such
      bonus arrangement for the prior five years.


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

                                       12
<PAGE>

(2)   As of September 30, 1996, the Company had outstanding  commitments for the
      purchase of real estate and the  construction  of a new facility  totaling
      approximately $3,500,000.

4.    Contingencies

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

5. Pro Forma Condensed Consolidated Statement of Operations

     The following unaudited pro forma condensed statement of operations for the
     three  months ended  September  30, 1995 is presented as if the Company had
     completed the merger of Atlas on July 1, 1995.

     This unaudited pro forma financial statement is not necessarily  indicative
     of what the actual results of operations of the Company would have been. In
     management's opinion, all adjustments necessary to reflect the formation of
     the  Company  and  the  effects  of the  offering  have  been  made.  These
     adjustments include the following:

                                       13
<PAGE>

(1)  The  unaudited pro forma  consolidated  statement of operation is presented
     assuming that no PSAC stockholders will request conversion of their shares.
     No such requests were made.

(2)  The excess of the purchase price over the book value of Atlas' stockholders
     equity is allocated to property and equipment (based on a recent appraisal)
     and to goodwill.  Additional depreciation on property,  plant and equipment
     based on a 20-year life,  and  amortization  of goodwill based on a 25-year
     life has been charged to operations.

(3)  Pro forma amounts payable to Atlas senior  management  under new employment
     agreements after the merger (based on Atlas operating income, as adjusted).

(4)  The elimination of interest income on the portion of PSAC's investment in a
     U.S. government security deposited in the Trust Fund.

(5)  Consolidated  income tax  provision at an effective  rate of 40% on taxable
     income after adding back non-deductible amortization of goodwill.

                                       14

<PAGE>

                                                       Pro Forma
                                                       Three Months Ended
                                                       September 30, 1995
-------------------------------------------------------------------------------
Net Sales                                              $8,898,617
------------------------------------------------------------------------------
Cost of Sales                                           6,109,930
-------------------------------------------------------------------------------
Gross Profit                                            2,788,687
Selling, General and Administrative Expenses            1,653,244
Officers' Bonuses                                         380,142
-------------------------------------------------------------------------------
Income From Operations                                    755,301
------------------------------------------------------------------------------
Other Income (Expense)
    Interest income                                        33,831
    Interest expense                                     (152,356)
    Miscellaneous                                           3,806
-------------------------------------------------------------------------------
Total Other Expenses                                     (114,719)
-------------------------------------------------------------------------------
Income Before Income Taxes                                640,582
Income Taxes                                             (264,000)
-------------------------------------------------------------------------------
Net Income                                                376,582
-------------------------------------------------------------------------------
Net Income Per Share of Common Stock                   $      .18
-------------------------------------------------------------------------------
Weighted Average Number of Common Shares
   Outstanding                                          2,125,000
-------------------------------------------------------------------------------


                                                        15

<PAGE>


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


Effective May 23, 1996, the Company  entered into a Merger  Agreement with Atlas
Technologies,  Inc.  whereby  Atlas  became  a  wholly-owned  subsidiary  of the
Company.  Financial  statements  after that date are those of the new  reporting
entity and are not fully comparable to pre-merger periods.

Unaudited  sales  revenues  for the  quarter  ending  September  30,  1996  were
$8,426,298,  down 5% from sales of $8,898,617 for the quarter  ending  September
30, 1995.  Lower sales in the first quarter of fiscal 1997 were primarily due to
lower levels of job completion recognized under Atlas's percentage-of-completion
accounting  method.  See "Revenue and Cost Recognition"  explained in footnote 2
above.  Atlas's lower  percentage  of completion  levels in the first quarter of
1996 are attributable  primarily to a change in product mix and the introduction
of a new line of destackers.  Order  bookings and backlog  continued to increase
during the first quarter  ending  September  30, 1996,  compared to the year ago
period  ending  September  30,  1995.  Net new  orders  for the  quarter  ending
September 30, 1996 were  approximately  $10.8 million,  a 40% increase from 1995
first quarter order bookings of $7.7 million.  Backlog at September 30, 1996 was
approximately  $20.6 million up 17% from the $17.6 million  backlog at September
30, 1995.

Costs of products  sold for the first quarter 1996 was  $6,325,350,  compared to
$6,109,930  for the first  quarter  1995.  The 4%  increase  on lower  sales was
primarily  due to a  change  in  the  mix  of  products  as  well  as  the  high
standardization  and product  development  costs related to the introduction and
shipment  of the first of a series of new  destacker  units.  Excluding  the new
destacker units,  which accounted for  approximately 30% of first quarter sales,
the cost of sales  levels  associated  with the  remainder  of revenues  were at
levels consistent with prior periods.

Higher  cost of sales  resulted in gross  profit for the quarter  ending 1996 of
$2,100,948,  down 25% relative to gross profit of $2,788,687 for the quarter one
year ago.

Consolidated  selling,  general and administrative  expenses including officers'
bonuses  during the first  quarter  were  $1,912,618  during the first  quarter,
compared to  $2,429,921  for Atlas  alone  during the first  quarter of 1995,  a
decrease  approximating  22%.  Primary  factors  for  the  decrease  were  lower
executive compensation expenses and bonus accruals, as well as smaller legal and
accounting  expenses  in the  first  quarter  of  1996  as  compared  to  higher
professional  fees incurred by both PTC and Atlas in the first quarter of fiscal
1995 for the acquisition of Atlas by PTC during the last fiscal year.

Consolidated  earnings before interest and taxes  decreased  approximately  14%,
from  $38,833  during the first  quarter  1996  compared to $221,988  during the
quarter one year ago, due primarily to lower gross margins on the first shipment
of this new destacker units.

Atlas' net income for the quarter  ending  September 30, 1996 was  approximately
$160,400,  an increase of 28% compared to first quarter 1995  adjusted  earnings
approximating $14,300, or $0.01 per share.


                                                        16

<PAGE>

Liquidity and Capital Resources

The Company believes that its principal  long-term capital  requirement has been
and is expected to continue to be the funding of capital expenditures to improve
and expand Atlas' facility and marketing efforts and the financing of day-to-day
Atlas operations.

At September  30, 1996,  the Company had  borrowings  outstanding  of $2,527,288
under  various  term loans,  of which the current  portion  was  $464,393.  This
compares with Atlas'  borrowings at September 30, 1995 of  $3,160,060,  of which
the current  portion  was  $577,050.  In addition to the term loans,  during the
first quarter of fiscal 1997,  the Company  entered into a new revolving  credit
agreement with its primary lender,  which increased the available revolving bank
line of credit from $8.0 million to $14 million and a two year revolving line of
credit  including  long-term  debt and lowered the interest  rate from the level
charge  previously.  At September 30, 1996,  borrowings under this facility were
$8,787,186.   Borrowings  under  this  credit  facility  bear  interest  at  the
adjustable  rate of 1.2% over the bank's prime rate and are due on May 31, 1997.
The Company believes that, as a result of its revolving facility, its short-term
credit facilities are adequate to support its business  operation at current and
near-term anticipated sales levels.

The Company  believes  Atlas is reaching  capacity at its present  manufacturing
facilities. Construction on Atlas' third manufacturing plant, located across the
street from its main manufacturing  facility in Fenton,  Michigan,  presently is
underway.  Construction  is expected to be completed early in the fourth quarter
of the current  fiscal year.  The  expansion  will  increase  plant  capacity by
approximately  80% and gives Atlas the capability to handle its growing backlog.
The  expansion  is expected to cost $3.5  million,  and the funding is in place.
Atlas'  primary lender  assisted with a $3.5 million  revenue bond financing for
the new plant.


                                       17

<PAGE>
Item 6.  Exhibits and Reports on Form 8-K

     A.  Exhibits

         27    Financial Data Schedule (filed electronically only).

     B.  Reports on Form 8-K -- None

                                       18

<PAGE>
                                   SIGNATURES

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

                                    PRODUCTIVITY TECHNOLOGIES CORP.

Date:  November 21, 1996            By: /s/ Samuel N. Seidman
                                       ------------------------------
                                       Samuel N. Seidman, President


Date:  November 21, 1996            By: /s/ Jesse Levine
                                        ------------------------------
                                        Jesse Levine, Chief Financial Officer

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