<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549

                                   FORM 10-QSB

(Mark One)

/X/   Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934.

For the quarterly period ended March 31, 2001.


/ /   Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.

For the transition period from ______________to ______________.


Commission File No.           0-1921
                   -----------------

                               POWER DESIGNS INC.
--------------------------------------------------------------------------------
           (Name of Small Business Issuer as specified in its charter)

      DELAWARE                                        11-1708714
------------------                              ----------------
(State or other jurisdiction of                 (I.R.S. Employer Identification
incorporation or organization)                   Number)

14 COMMERCE DRIVE, DANBURY, CONNECTICUT                           06810
------------------------------------------                        -----
(Address of principal executive offices)                          (Zip Code)

                                 (203) 748-7001
 -------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

 -------------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                     report)
 -------------------------------------------------------------------------------

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



                                       1
<PAGE>

                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 Sections 12, 13 and 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.

      Yes /X/      No / /

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

      2,391,493 as of November 17, 1998

Transitional Small Business Issuer Format  (check one):

      Yes / /      No /X/



                                       2
<PAGE>

                       POWER DESIGNS, INC. AND SUBSIDIARY
            FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                      INDEX

PART I - FINANCIAL INFORMATION                                          PAGE NO.


Item 1.     FINANCIAL STATEMENTS

            Consolidated Balance Sheets as of
            March 31, 2001 and June 30, 2000.................................5

            Consolidated Statements of Operations for
            the three and nine months ended March 31, 2001 and 2000..........6

            Consolidated Statements of Changes
            in Stockholders' Deficit for the three and nine months ended
            March 31, 2001 and 2000..........................................7

            Consolidated Statements of Cash Flows for
            the nine months ended March 31, 2001 and 2000....................8

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

Item 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................15

PART II - OTHER INFORMATION

Item 3.     DEFAULTS ON SENIOR SECURITIES...................................20
Item 6.     EXHIBITS AND REPORTS ON FORM 8-K................................21

Signatures..................................................................23



                                       3
<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements



                                       4
<PAGE>

                       POWER DESIGNS, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                               March 31, 2001    June 30, 2000
                                                                (Unaudited)
                                                               --------------    -------------
<S>                                                             <C>               <C>
 ASSETS

Current Assets
 Cash                                                           $         --      $     47,307
 Accounts receivable, less allowance for doubtful accounts           453,925           466,748
 Inventories                                                         960,235           822,564
 Prepaid expenses                                                     34,275            52,124
                                                                ------------      ------------
    TOTAL CURRENT ASSETS                                           1,448,435         1,388,743

Equipment and Leasehold Improvements, net                            164,635           268,178

Other Assets                                                         152,786           177,815
                                                                ------------      ------------
    TOTAL ASSETS                                                $  1,765,856      $  1,834,736
                                                                ===============   ============

LIABILITIES AND STOCKHOLDERS'
              DEFICIT

Current Liabilities
 Cash deficit                                                   $        965      $         --
 Debtor in possession facility                                       245,000           245,000
 Advances under factoring agreement                                   91,337                --
 Accounts payable                                                    395,573           187,192
 Accrued expenses                                                     98,720           132,392
 Accrued legal fees                                                   75,557           165,994
 Accrued interest                                                      4,162             4,027
                                                                ------------      ------------
    TOTAL CURRENT LIABILITIES                                        911,314           734,605


Long-Term Liabilities
 Liabilities subject to compromise (Note 3)                       19,540,764        18,436,107
                                                                ------------      ------------

    TOTAL LIABILITIES                                             20,452,078        19,170,712
                                                                ------------      ------------

Stockholders' Deficit
 Common stock , $.0001 par value, 10,000,000 shares authorized;          240               240
 2,391,493 shares issued and outstanding
 Preferred stock, $.01 par value, 1,000,000 shares authorized;         3,167             3,167
 316,743 shares issued and outstanding
 Additional paid-in capital                                        1,382,807         1,382,807
 Accumulated deficit                                             (20,072,436)      (18,722,190)
                                                                ------------      ------------

    TOTAL STOCKHOLDERS' DEFICIT                                  (18,686,222)      (17,335,976)
                                                                ------------      ------------

    TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                 $  1,765,856      $  1,834,736
                                                                ============      ============
</TABLE>

See Notes to Consolidated Financial Statements.


                                        5
<PAGE>

                       POWER DESIGNS, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations
                                   (Unaudited)

          For The Three and Nine Months Ended March 31, 2001 and 2000

<TABLE>
<CAPTION>

                                                   3 months ended    3 months ended   9 months ended    9 months ended
                                                   March 31, 2001    March 31, 2000   March 31, 2001    March 31, 2000
                                                   --------------    --------------   --------------    --------------

<S>                                                  <C>              <C>              <C>              <C>
Net Sales                                            $   803,391      $   790,108      $ 2,162,627      $ 2,485,579

Cost of Sales                                            523,788          474,382        1,350,536        1,447,306
                                                     -----------      -----------      -----------      -----------

              GROSS PROFIT                               279,603          315,726          812,091        1,038,273

Operating Expenses
     Selling, general and admin. expense                 250,457          201,712          676,023          604,556
     Research and development                             54,979           44,278          148,395          132,707
     Depreciation and amortization                         7,903            8,692           23,186           26,122
                                                     -----------      -----------      -----------      -----------
                                                         313,339          254,682          847,604          763,385

              INCOME (LOSS) BEFORE OTHER INCOME
              (EXPENSE) AND REORGANIZATION ITEMS         (33,736)          61,044          (35,513)         274,888
                                                     -----------      -----------      -----------      -----------

Other income (expense):
  Investment income                                            0            2,352           37,081            2,352
  Interest expense                                      (374,811)        (380,482)      (1,144,037)      (1,157,291)
  Other                                                     (230)              --           (1,623)         (10,320)
                                                     -----------      -----------      -----------      -----------
              OTHER EXPENSE                             (375,041)        (378,130)      (1,108,579)      (1,165,259)
                                                     -----------      -----------      -----------      -----------

              LOSS BEFORE REORGANIZATION ITEMS          (408,777)        (317,086)      (1,144,092)        (890,371)

Reorganization items                                     122,098           65,223          206,154          131,382
                                                     -----------      -----------      -----------      -----------

              NET LOSS                               $  (530,875)     $  (382,309)     $(1,350,246)     $(1,021,753)
                                                     ===========      ===========      ===========      ===========

Weighted average number of common
shares outstanding                                     2,391,493        2,391,493        2,391,493        2,391,493
                                                     ===========      ===========      ===========      ===========

Net loss per common share                            $     (0.22)     $     (0.16)     $     (0.56)     $     (0.43)
                                                     ===========      ===========      ===========      ===========
</TABLE>


See Notes to Consolidated Financial Statements.


                                       6
<PAGE>

                       POWER DESIGNS, INC. AND SUBSIDIARY

           Consolidated Statements of Changes in Stockholders' Deficit
                                   (Unaudited)

           For The Three and Nine Months Ended March 31, 2001 and 2000

<TABLE>
<CAPTION>

                                       Common Stock                   Preferred Stock
                               -------------------------------------------------------------------------------------------------
                                                                                                   Additional
                                 Shares             Par            Shares             Par            Paid In        Accumulated
                                 Issued            Value           Issued            Value           Capital          Deficit
                               -------------------------------------------------------------------------------------------------

<S>                               <C>           <C>                   <C>         <C>              <C>              <C>
Balance, June 30, 1999            2,391,493     $        240          316,743     $      3,167     $  1,382,807     $(17,361,337)

Net loss                                 --               --               --               --               --         (639,444)

Balance, December 31, 1999        2,391,493              240          316,743            3,167        1,382,807      (18,000,781)

Net loss                                 --               --               --               --               --         (382,309)
                               ------------     ------------     ------------     ------------     ------------     ------------

Balance, March 31, 2000           2,391,493     $        240          316,743     $      3,167     $  1,382,807     $(18,383,090)
                               ============     ============     ============     ============     ============     ============



Balance, June 30, 2000            2,391,493     $        240          316,743     $      3,167     $  1,382,807     $(18,722,190)

Net loss                                 --               --               --               --               --         (819,371)

Balance, December 31, 2000        2,391,493              240          316,743            3,167        1,382,807      (19,541,561)

Net Loss                                 --               --               --               --               --         (530,875)
                               ------------     ------------     ------------     ------------     ------------     ------------

BALANCE, MARCH 31, 2001           2,391,493     $        240          316,743     $      3,167     $  1,382,807     $(20,072,436)
                               ============     ============     ============     ============     ============     ============
</TABLE>


See Notes to Consolidated Financial Statements.


                                       7
<PAGE>

                       POWER DESIGNS, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                                   (Unaudited)

                For The Nine Months Ended March 31, 2001 and 2000

<TABLE>
<CAPTION>

                                                                          9 months ended     9 months ended
                                                                          March 31, 2001     March 31, 2000
                                                                          --------------     --------------
<S>                                                                         <C>              <C>
Cash Flows From Operating Activities
  Net loss                                                                  $(1,350,246)     $(1,021,753)
  Adjustments to reconcile net loss to net cash (used in) provided by
     operating activities
        Depreciation and amortization                                           110,354          113,650
        Provision for bad debts                                                   4,274               --
        Reorganization items                                                    206,154          131,382
        Changes in operating assets and liabilities:
               Decrease in accounts receivable                                    8,549           32,404
               Increase in inventories                                         (137,671)         (88,422)
               Decrease (increase) in prepaid expenses                           17,849             (590)
               Decrease (increase) in other assets                               25,029           (2,452)
               Increase in accounts payable and accrued expenses              1,056,910        1,112,265
                                                                            -----------      -----------
                    NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
                       BEFORE REORGANIZATION ITEMS                              (58,798)         276,484

        Reorganization items
               Reorganization items paid                                        (74,000)         (57,139)
                                                                            -----------      -----------
                    NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES        (132,798)         219,345
                                                                            -----------      -----------

Cash Flows From Investing Activities
       Purchase of property and equipment                                        (6,811)         (21,861)
                                                                            -----------      -----------
                    NET CASH USED IN INVESTING ACTIVITIES                        (6,811)         (21,861)
                                                                            -----------      -----------

Cash Flows From Financing Activities
       Advances (repayments) under factoring agreement                           91,337         (129,203)
                                                                            -----------      -----------
                    NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES          91,337         (129,203)
                                                                            -----------      -----------

                    NET (DECREASE) INCREASE IN CASH                             (48,272)          68,281

Cash, beginning of period                                                        47,307           53,395
                                                                            -----------      -----------

Cash (deficit), end of period                                               $      (965)     $   121,676
                                                                            ===========      ===========
</TABLE>


See Notes to Consolidated Financial Statements.



                                       8

<PAGE>

POWER DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 1. BASIS OF PRESENTATION

The consolidated financial statements included herein have been prepared by
Power Designs, Inc. (the "Company"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission applicable to a going
concern. These rules assume that assets will be realized and liabilities will be
discharged in the normal course of business. The Company and its wholly-owned
subsidiary filed petitions for relief under Chapter 11 of the United States
Bankruptcy Code ("Chapter 11") on January 22, 1998 (the "Filing"). The Debtors
have operated their business as debtors-in-possession subject to the
jurisdiction of the United States Bankruptcy Court for the Bridgeport District
of Connecticut (the "Bankruptcy Court") through the date reported on the
consolidated financial statements. On April 6, 2001 a Fourth Amended Plan of
Reorganization, as confirmed by the Bankruptcy Court, became effective.

Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
management of the Company believes that the disclosures are adequate to make the
information presented not misleading. These consolidated financial statements
should be read in conjunction with the notes thereto. In the opinion of the
management of the Company, the consolidated financial statements include all
adjustments, consisting of only normal recurring adjustments, necessary to
fairly present the results for the interim periods to which these financial
statements relate.

The results of operations for the nine months ended March 31, 2001 are not
necessarily indicative of the results to be expected for the full year.

The consolidated statements of operations for the periods ended March 31, 2001
and March 31, 2000 include the operations of PDIXF Acquisition Corporation for
these same periods respectively.

NOTE 2. - PETITION FOR RELIEF UNDER CHAPTER 11

In the Chapter 11 case, substantially all liabilities as of the date of the
Filing are subject to resolution under a plan of reorganization which has been
voted upon by the Debtors' creditors and stockholders and confirmed by the
Bankruptcy Court. Schedules have been filed by the Debtors with the Bankruptcy
Court setting forth the assets and liabilities of the Debtors as of the Filing
as shown by the Debtors' accounting records. Differences between amounts shown
by the Debtors and claims filed by creditors have been investigated and
reconciled. The amount and settlement terms for such disputed liabilities are
ultimately subject to a Bankruptcy Court approved plan of reorganization.
Objections to creditor claims were filed by the Debtors with the Bankruptcy
Court on


                                       9
<PAGE>

POWER DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


April 5, 2001, and the Bankruptcy Court has scheduled a hearing on those
objections for May 15, 2001. Accordingly, the final amount of such liabilities
is not presently determinable. The debtor's estimate of these liabilities is
contained in Note 7 to Consolidated Financial Statements.

Under the Bankruptcy Code, the Debtors have elected to assume or reject real
estate leases, employment contracts, personal property leases, service contracts
and other executory pre-petition contracts, subject to Bankruptcy Court
approval. The Debtors have reviewed leases and contracts, as well as other
operational changes, and have proposed rejections and settlements, which have
been incorporated into the Plan of Reorganization. Claims secured against the
Debtors' assets ("secured claims") also have been stayed during the Chapter 11
proceeding, although the holders of such claims have the right to move the Court
for relief from the stay. Secured claims are secured primarily by liens on the
Debtor's machinery, equipment and accounts receivable.

NOTE 3. LIABILITIES SUBJECT TO COMPROMISE

Liabilities subject to compromise are as follows:

<TABLE>
<S>                                                   <C>            <C>
Notes payable - affiliated companies                  $  7,015,553   (a)
Notes payable - preferred shareholders                   1,087,415   (a)
Notes payable - seller of assets acquired                  990,000   (a)
Notes payable - others                                   2,266,500
Accounts payable                                         2,342,401
Accrued expenses                                           401,621
Accrued interest                                         5,105,816
Capital lease obligation                                   142,872   (a)
Payables related to 1994 reorganization including
      accrued interest                                     188,586
                                                        -----------

Total                                                   $19,540,764
                                                        ===========
</TABLE>

----------

(a)   Notes payable to affiliated companies, preferred shareholders and seller
      of assets acquired, as well as capital lease obligations, include secured
      debt, which should be considered, due to various factors, subject to
      compromise. The Fourth Amended Plan of Reorganization effective April 6,
      2001 provides for the continuance of allowed secured claims of $1,800,000
      against outstanding secured notes of $9,092,968. As a result of this
      compromise, the Debtor has accrued interest on these, as well as other
      secured obligations in the amount of $5,105,816 through March 31, 2001.



                                       10
<PAGE>

POWER DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 4. OPERATING CASH RECEIPTS AND PAYMENTS

The following schedule depicts the operating cash receipts and payments for the
post-petition period of January 1, 2001 through March 31, 2001.

<TABLE>
<S>                                                                     <C>
Cash flows from operating activities:
  Cash received from customers                                          $ 676,255
  Cash paid to suppliers and employees                                   (796,258)
  Interest paid                                                           (12,178)
                                                                        ---------

    Net cash used in operating activities before
      reorganization items                                               (132,181)
                                                                        ---------

  Operating cash flows from reorganization items:
  Professional fees paid for services in connection with
    the Chapter 11 proceeding                                             (17,000)
                                                                        ---------
     Net cash used in reorganization items                                (17,000)
                                                                        ---------

     Net cash used in operating activities                               (149,181)
                                                                        ---------

Cash flows from investing activities:
    Purchase of property and equipment                                     (5,211)
                                                                        ---------
    Net cash used in investing activities                                  (5,211)
                                                                        ---------

Cash flows from financing activities:
    Net borrowings under post-petition short-term credit facility          91,337
                                                                        ---------
    Net cash provided by financing activities                              91,337
                                                                        ---------


     Net decrease in cash                                                 (63,055)

Cash
  Beginning                                                                62,090
                                                                        ---------
  Ending                                                                $    (965)
                                                                        =========
</TABLE>



                                       11
<PAGE>

POWER DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 5.  SIGNIFICANT EVENTS

On May 12, 1998 a Plan of Reorganization was filed by the debtors with the
Office of the U.S. Trustee. Negotiations pertaining to the specifics of the Plan
of Reorganization among the creditors committee(s) and the debtor resulted in an
Amended Plan of Reorganization, which was filed on November 24, 1999 and a
Second, Third, and Fourth Amended Plan of Reorganization which were filed on
August 22, 2000, December 22, 2000 and January 23, 2001 respectively. The
confirmation hearing for the plan of reorganization was continued to January 23,
2001. After further court requests for documentation, the debtors received final
court approval of the plan on March 15, 2001 with an effective date set for
April 6, 2001.

NOTE 6.  ENTERPRISE WIDE DISCLOSURES

The following table presents revenue from external customers for each of the
Company's groups of products for the three and nine month periods ended March
31, 2001 and 2000:

<TABLE>
<CAPTION>

                                    9 months ended          9 months ended
                                    March 31, 2001          March 31, 2000
                                    --------------          --------------

<S>                                    <C>                     <C>
      Military power supplies          $1,190,407              $1,492,361
      Variable autotransformers           574,436                 582,683
      Linear power supplies               361,224                 320,506
      Service support                      36,560                  90,029
                                       ----------------------------------

                                       $2,162,627              $2,485,579
                                       ----------------------------------

<CAPTION>

                                    3 months ended          3 months ended
                                    March 31, 2001          March 31, 2000
                                    --------------          --------------

<S>                                    <C>                     <C>
      Military power supplies          $   469,923             $   505,038
      Variable autotransformers            186,814                 119,070
      Linear power supplies                140,720                 155,717
      Service support                        5,934                  10,283
                                       -----------------------------------

                                       $   803,391             $   790,108
                                       ===================================
</TABLE>

NOTE 7.  PLAN OF REORGANIZATION

On March 15, 2001 the Bankruptcy Court confirmed the Company's Fourth Amended
Plan of Reorganization. The confirmed plan was effective on April 6, 2001 and
provided for the following:


                                       12
<PAGE>

POWER DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Secured Debt: The Company's $7,158,425 of secured debt and $4,191,553 in accrued
interest thereon was exchanged for a $1,800,000 secured note, payable over a two
year term in monthly installments of interest only at 10% per annum, with the
balance due on April 6, 2003; and 48.9% of the new issue of outstanding voting
common stock of the Company.

Subordinated Debt- Secured: The Company's $2,077,415 of subordinated secured
debt and $766,007 in accrued interest thereon was exchanged for a $150,000
unsecured note, payable over a two year term in monthly installments of interest
only at 10% per annum, with the balance due on April 6, 2003; and a prorata
portion of the remaining 50.1% of the new issue of outstanding voting common
stock of the Company.

Subordinated Debt- Unsecured: The Company's $2,266,500 of subordinated unsecured
debt and $148,256 in accrued interest thereon was exchanged for a prorata
portion of the remaining 50.1% of the new issue of outstanding voting common
stock of the Company.

Priority Tax Claims: Payroll taxes and interest thereon of $147,552 and $4,799
are payable in equal monthly installments commencing thirty days following the
effective date for a six year term with interest at 7.5%, and in equal monthly
installments commencing thirty days following the effective date for a
thirty-one month term with interest at 7%, respectively.

Trade and Other Miscellaneous Claims: The holders of approximately $2,066,898 of
trade and other miscellaneous claims received a cash settlement equivalent to 5%
of the amount of their allowed claims in complete and full satisfaction of their
claims. The holders of approximately $865,710 of trade and other miscellaneous
claims received a prorata portion of the remaining 50.1% of the new issue of
outstanding voting common stock of the Company.

Administrative Claim: Porter Capital Corporation, a secured post-petition
noteholder and the holder of an administrative claim in the amount of $105,902,
received 1% of the new issue of outstanding voting common stock of the Company.

Preferred Stock: The equity interests of 316,743 shares of preferred stock were
deemed cancelled as of the effective date of the plan, and the holders of these
interests did not receive any distribution on account of such interests.

Common Stock: The equity interests of 2,391,493 shares of common stock were
deemed cancelled as of the effective date of the plan, and the holders of these
interests did not receive any distribution on account of such interests.


                                       13
<PAGE>

POWER DESIGNS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

As a result of the above transaction, the Company recognized a gain of
approximately $18,500,000 on restructuring of debt. This gain will be recognized
as an extraordinary item in the statement of operations for the year ended June
30, 2001.

Upon the final approval of the Company's plan of reorganization, the Company
ceased operating as a debtor-in-possession.



                                       14
<PAGE>

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

      Current Developments

            During the third quarter of fiscal year 2001, the issuer, as
Debtors-in-Possession, has continued operations on a limited scale. Pursuant to
a court order, the issuer retains The Vantage Partners LLC, a management
consulting firm, who, together with Melvin A. Becker, Vice President of
Operations, have comprised senior management since the petition filing. Anthony
F. Intino II, a principal of The Vantage Partners LLC, and general manager of
the issuer, was appointed President of the issuer on December 20, 2000.
Approximately twenty-nine individuals are presently employed in the production
of the three core product lines. Management's efforts continue in the following
areas: streamlining operating costs, improving manufacturing quality and
material procurement efficiencies, and furthering credit availability with
vendors and suppliers. Increased resources have been directed toward the areas
of new customer relationships, enhanced promotional efforts and definition of
market channels.

      The company has successfully resolved issues of material procurement with
key suppliers and reinstated deteriorating relationships with distributors and
customers. Despite these improvements, reduced shipments in the current year
have impacted liquidity conversely. The continuing decline in domestic military
spending, offset by only modest increases in commercial sales, has resulted in a
continued reduction in product orders during the third fiscal quarter of 2001.
Both military and commercial orders for product fail to exhibit stable levels of
predictability. Open sales orders at March 31, 2001 total $226,343.

      To combat the declining flow of new orders for military product, the
issuer continues its efforts to expand the sale of its off-the-shelf
autotransformer and laboratory power supply products. In addition to various
advertising measures and several additions to its internal sales force, the
issuer has likewise retained the services of various outside sales consultants
and manufacturer's representatives in an effort to expand the customer base and
increase product revenue. While these efforts are focused on generating
increased commercial order levels, there are, however, no assurances that the
issuer will be able to effectuate these measures, or that such measures will
produce the desired results.

      Coupled with overhead cost containment measures, the issuer has also
completed an engineering effort to redesign certain products in its linear power
supply family. These new designs have proven easier and more cost effective to
manufacture, and they provide a greater range of product features and
reliability than their predecessors. To date, however, orders for this family of
products continue to languish below the issuer's expectations. Current
initiatives to expand the market share include competitive product analysis and
significant price reductions, coupled with a redirection of product from the
distribution channel to direct customer sales via telemarketing.


                                       15
<PAGE>

      On May 12, 1998 the Issuer and its wholly-owned subsidiary, PDIXF
Acquisition Corporation, filed a Plan of Reorganization with the Office of
the U.S. Trustee.

      The Plan is a proposal of Power Designs, Inc. and PDIXF to their Creditors
and holders of Equity Interests. The Plan is the product of discussions with the
Debtors' senior secured creditor, Inverness, which has agreed to support the
Plan. The Plan undertakes to resolve all secured claims, administrative claims,
priority claims, unsecured claims and equity interests. The Debtors believe that
the distributions to be made, pursuant to the terms of this Plan, will produce
for Creditors not less than they would receive if the Debtors' cases were
converted to cases under Chapter 7 of the Code, the Debtors' assets liquidated
and appropriate distributions therein were made as required by the Code.

      A copy of the Plan of Reorganization for Power Designs, Inc. and PDIXF
Acquisition Corporation has been attached as an exhibit to the Form 10-QSB for
the period ended March 31, 1998. Ongoing negotiations between the Debtors and
various creditor committee constituencies resulted in an Amended Plan of
Reorganization, which was filed on November 24, 1999 and has been attached as an
exhibit to the Form 10-KSB for the period ended June 30,1999.

      The amended plan provides for the cancellation of all existing equity
interests, and the issuance of 2,000,000 new common shares to be divided among
Inverness Corporation, Hayes Corporation, and certain unsecured creditors.
Approximately $1.80 million of secured debt is proposed to remain
post-confirmation and will bear interest at 10% annually. Administrative claims,
priority tax claims, and employee priority claims will be paid in accordance
with the terms negotiated with the claimants, or in certain cases, those
provided by law. Certain unsecured claims of PDIXF Acquisition Corporation will
receive a 5% cash settlement in full satisfaction of their outstanding claims.
All remaining claims will be deemed unsecured non-priority claims, and their
holders will receive a proportionate number of common shares in the reorganized
corporation.

      A Second Amended Plan of Reorganization for Power Designs, Inc. and PDIXF
Acquisition Corporation was filed with the Office of the U.S. Trustee on August
22, 2000. This amendment modifies repayment terms for allowed federal and state
employee and tax claims, and modifies certain releases and indemnification
granted to third party affiliates of the issuer. The Second Amended Plan of
Reorganization has been attached as an exhibit to the Form 10-KSB for the period
ended June 30, 2000. Third and Fourth Amended Plans of Reorganization were
subsequently filed on December 22, 2000 and January 23, 2001 respectively. These
amendments finalize the terms for administrative and other claims settlements
and certain mutual releases between the issuer and remaining objecting
creditors, inclusive of the issuer's current landlord and Porter Capital
Corporation.

      Concurrent with the filing of the Third Amended Plan of Reorganization,
the


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<PAGE>

board of directors of the issuer approved a resolution to indemnify and hold
harmless the defendants in an action, brought outside the venue of the
bankruptcy court, by a creditor of the issuer, against all claims, damages,
settlements and awards that the defendants may incur or pay as a result of the
action taken. The defendants are comprised of various directors, affiliates and
officers of the issuer. Similar indemnification was also resolved for the same
defendants against any damages, which may be sustained as a result of any future
actions brought by this creditor relating to the issuer, inclusive of any and
all costs and attorney's fees incurred in defending the action. While the
defendants have, to date, disputed the alleged complaint, there are, however, no
assurances that the defendants will be able to effectuate a favorable judgment,
or that such judgment will not result in a liability for the issuer.

      A settlement hearing on the amended plan was held on January 23, 2001. In
anticipation of a confirmation of the plan, the issuer filed a Findings of Fact,
Conclusions of Law, and Order Under Sections 1129 (a) and (b) of the Bankruptcy
Code Confirming Fourth Amended Plan of Reorganization with the office of the
U.S. Trustee on February 13, 2001. The Fourth Amended Plan of Reorganization
was subsequently confirmed by the Bankruptcy Court on March 15, 2001. Should
the issuer prove unable to execute the terms of its Plan, there is
significant probability that the issuer may proceed to a Chapter 7 case. In
the instance of a filing of a Chapter 7 liquidation, there is little
likelihood of any value remaining to satisfy the existing equity interests of
the Debtors.

      Liquidity and Capital Resources

      Pursuant to a court order, the issuer, as debtor-in-possession, has
entered into a financing agreement with Venture Partners Ltd., as agent, to
borrow working capital, up to a maximum of $400,000. The terms of this agreement
call for interest at 20% and a term of 120 days. This debt is collateralized
firstly by the machinery and equipment of the issuer, and secondarily by its
accounts receivable. A total of $245,000 is presently outstanding on this loan.
As of this date, this indebtedness was not paid in full, thereby placing the
issuer in default. As of this date, no demand for repayment has been made and
all interest payments are current. There are no renewal negotiations pending.

      Similarly, the issuer, pursuant to a court order, has entered into a
receivable factoring agreement with Porter Capital Corporation ("Porter"),
whereby trade receivables are sold to Porter at 94% of face value. A 4% and 2%
rebate is returned to the issuer if the receivable is collected within 60 and 90
days respectively. Fees to Porter include a minimum of 2% of the face amount of
the receivables factored, and an annual interest rate of prime on the
outstanding amount advanced. Collateral for this obligation comprises the
factored receivables, with a secondary lien on the machinery and equipment of
the issuer. In September of 1998 the initial six-month term had elapsed and the
right to extend the agreement for a period of one year had been exercised. With
this renewal the before mentioned agreement has been modified to a minimum fee
of 2.5% for receivables collected within 60 days and an additional 1% for each
additional 15 days outstanding to a maximum of 90 days. Unless terminated with
written notice, the agreement automatically renews at the end of each six-month
term. Pursuant to the Fourth Amended Plan of Reorganization, the agreement was
extended for a one-year term


                                       17
<PAGE>

beginning March 27, 2001. At March 31, 2001 the issuer had $91,337 in
outstanding advances under this factoring agreement.

      The issuer currently has a net stockholders' deficit of approximately
$18,700,000, meaning that amounts owed to its creditors exceed the issuer's
assets.

      Results of Operations

      Third quarter of fiscal 2001 versus third quarter of fiscal 2000.

      Net sales increased by 1.7% to $803,391 for the quarter ended March 31,
2001 as compared with $790,108 for the same period in 2000.

      However, gross profit decreased from $315,726 for the third quarter in
fiscal 2000 to $279,603 for the same quarter in fiscal 2001. The resulting
decrease was primarily due to the proportional decline in new product orders for
military grade power supplies experienced in fiscal 2001. These orders were
replaced by orders for commercial autotransformer and instrumentation products
with greater direct material and labor costs. Cost of sales increased
correspondingly from $474,382 for the third quarter of fiscal 2000 to $523,788
for the same period in fiscal 2001. Quarterly interest and other expense
decreased only slightly from $378,130 as of March 31, 2000 to $375,041 as of
March 31, 2001 primarily the result of a final receipt of minimal investment
income related to a New York limited partnership interest previously owned by
the issuer. Increased deployment of resources into the areas of engineering and
sales and marketing contribute to the increase in operating expenses from
$254,682 for the quarter ending March 31, 2000 as compared to $313,339 for the
quarter ended March 31, 2001. As the Chapter 11 proceeding nears its conclusion,
greater legal and professional fees were incurred in the quarter ended March 31,
2001, than those incurred in the quarter ended March 31, 2000. Therefore,
reorganization expense increased from $65,223 in fiscal 2000 to $122,098 for the
same period in fiscal 2001. As a result of these conditions, the net loss for
the three months ended March 31, 2001 is $530,875, as compared to $382,309 for
the same period in the prior year.

      First nine months of fiscal 2001 versus first nine months of fiscal 2000.

      Net sales decreased from $2,485,579 for the nine months ended March 31,
2000 to $2,162,627 for the nine months ended March 31, 2001.

      Likewise, gross profit decreased from $1,038,273 for the nine months ended
March 31, 2000 to $812,091 for the nine months ended March 31, 2001 the result
of the same trends comparatively as those noted in the paragraphs above. In
accordance with the decrease in revenue, cost of sales decreased from $1,447,306
for the period ended March 31, 2000 to $1,350,536 for the same period in fiscal
2001. A substantial portion of the decrease is due to reduction in military
product sales, offset by the comparatively inferior gross margins inherent in
the production of the commercial products, both power supply and
autotransformer, over the military products. A one-time receipt of investment


                                       18
<PAGE>

income related to a New York limited partnership interest sold by the issuer,
coupled with a modest reduction in outstanding advances under the factoring
agreement, accounts for the decrease in interest and other expense to $1,108,579
as of March 31, 2001 from $1,165,259 as of March 31, 2000. As a result of these
conditions, the net loss for the nine months ending March 31, 2001 is
$1,350,246, as compared to $1,021,753 for the same period in fiscal 2000.

      It is the intention of the present management of the issuer to concentrate
its resources on the production of its existing three product lines, to reduce
operating and occupancy costs where possible, to improve marketing strategies
and establish additional customer relationships, and to continue the
debtor-in-possession financing provided in the confirmation of the plan of
reorganization, and to ultimately replace said financing with more conventional
debt instruments in future periods. However, there can be no assurances that the
issuer will be able to obtain such additional debt financing, or be successful
at streamlining and improving operating results.

      Certain statements contained in this Item 2 regarding matters that are not
historical facts, including, among others, statements regarding the future
adequacy of the issuer's working capital, its ability to raise capital through
debt or equity offerings, its ability to maintain or improve its present cash
flow, are "forward-looking statements". Such forward-looking statements involve
risks and uncertainties, which may cause the actual results, performance or
achievements of the issuer to be materially different from any future results,
performance or achievements, express or implied by such forward-looking
statements.

      These forward-looking statements are identified by their use of forms of
such terms and phrases as "expects," "intends," "goals," "estimates,"
"projects," "plans," "anticipates," "should," "future," "believes," and
"scheduled". The variables which may cause differences include, but are not
limited to, the following: general economic and business conditions;
competition; success of operating initiatives; operating costs; advertising and
promotional efforts; the existence or absence of adverse publicity; changes in
business strategy or development plans; the ability to retain management;
availability, terms and deployment of capital; business abilities and judgement
of personnel; availability of qualified personnel; labor and employee benefit
costs; availability and costs of raw materials and supplies; and changes in, or
failure to comply with, government regulations. Although the issuer believes
that the assumptions underlying the forward-looking statements contained herein
are reasonable, any of the assumptions could be inaccurate, and therefore, there
can be no assurance that the forward-looking statements included in this filing
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by the issuer or any
other person that the objectives and expectations of the issuer will be
achieved.


                                       19
<PAGE>

                           PART II. OTHER INFORMATION

Item 3.     Defaults Upon Senior Securities

      As of this date the principal amount of the Venture Partners Ltd., as
agent indebtedness described at Part I, Item 2 above was not paid in full,
thereby placing the issuer in default. As of this date no demand for repayment
has been made and all interest payments are current. There are no renewal
negotiations pending.



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<PAGE>

Item 6.           Exhibits and Reports on Form 8-K


(10)  MATERIAL CONTRACTS

(i)   Plan of Reorganization for Power Designs, Inc. and PDIXF Acquisition
      Corporation
            (INCORPORATED BY REFERENCE TO EXHIBIT
            10(XV) TO FORM 10-QSB FOR THE FISCAL
            PERIOD ENDED MARCH 31, 1998)

(ii)  Disclosure Statement for the Plan of Reorganization for Power Designs,
      Inc. and PDIXF Acquisition Corporation
            (INCORPORATED BY REFERENCE TO EXHIBIT
            10(XV) TO FORM 10-QSB FOR THE FISCAL
            PERIOD ENDED MARCH 31, 1998)

(iii) Amended Plan of Reorganization for Power Designs, Inc. and PDIXF
      Acquisition Corporation
            (INCORPORATED BY REFERENCE TO EXHIBIT
            10(V) TO FORM 10-KSB FOR THE FISCAL
            YEAR ENDED JUNE 30, 1999)

(iv)  Disclosure Statement for the Amended Plan of Reorganization for Power
      Designs, Inc. and PDIXF Acquisition Corporation
            (INCORPORATED BY REFERENCE TO EXHIBIT
            10(VI) TO FORM 10-KSB FOR THE FISCAL
            YEAR ENDED JUNE 30, 1999)

(v)   Second Amended Plan of Reorganization for Power Designs, Inc. and PDIXF
      Acquisition Corporation
            (INCORPORATED BY REFERENCE TO EXHIBIT
            10(VI) TO FORM 10-KSB FOR THE FISCAL
            YEAR ENDED JUNE 30, 2000)

(vi)  Fourth Amended Plan of Reorganization for Power Designs, Inc. and PDIXF
      Acquisition Corporation
            (INCORPORATED BY REFERENCE TO EXHIBIT
            10(VI) TO FORM 10-QSB FOR THE FISCAL
            PERIOD ENDED DECEMBER 31, 2000)


                                       21
<PAGE>

(vii) Findings of Fact, Conclusions of Law, and Order Under Sections 1129(a) and
      (b) of the Bankruptcy Code Confirming Fourth Amended Plan of
      Reorganization of Power Designs, Inc. and PDIXF Acquisition Corp. Under
      Chapter 11 of the Bankruptcy Code
            (INCORPORATED BY REFERENCE TO EXHIBIT
            10(VII) TO FORM 10-QSB FOR THE FISCAL
            PERIOD ENDED DECEMBER 31, 2000)




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<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.



Date: May 15, 2001                              POWER DESIGNS, INC.
      Danbury, Connecticut                            (Registrant)


                                          By: /s/ Anthony F. Intino II
                                             -----------------------------------
                                                Anthony F. Intino II
                                                President


                                          By: /s/ Allison E. Bertorelli
                                             -----------------------------------
                                                Allison E. Bertorelli
                                                Chief Financial Officer



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