U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-K


         (Mark One)

 ------  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE | | SECURITIES
   X     EXCHANGE  ACT OF 1934 [FEE  REQUIRED]  For the fiscal year ended
 ------  June 30, 1997
                                                     OR
 ------
         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
 ------  THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from _____________ to _____________

                         Commission file number 0-24212

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

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

                  509 Madison Avenue, New York, New York 10022
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (212) 843-1480

             Securities registered pursuant to Section 12(b) of the
              Exchange Act: None Securities registered pursuant to
                       Section 12(g) of the Exchange Act:
                     Common Stock, par value $.001 per share
                                (Title of class)

 Redeemable Common Stock Purchase Warrants   Units, each consisting of one share
           (Title of class)                  of Common Stock and two Redeemable
                                             Common Stock Purchase Warrants
                                                     (Title of Class)

         Indicate  by check  mark  whether  the  Registrant:  (1) has  filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  Registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

         As of September  24,  1997,  the  aggregate  market value of the voting
stock held by non-affiliates of the Registrant was approximately $7,115,000.

         As  of  September  24,  1997,   there  were  2,125,000  shares  of  the
Registrant's Common Stock outstanding.



                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None
                               PAGE 1 OF 53 PAGES
                            EXHIBIT INDEX -- PAGE 22


<PAGE>



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS


         Productivity  Technologies  Corp.  (formerly named  Production  Systems
Acquisition Corporation),  a Delaware corporation ("Company"),  was organized in
June 1993 as a Specified Purpose Acquisition  Company(R)  ("SPAC(R)"),* with the
objective  of  acquiring  an  operating  business  ("Target  Business")  in  the
production  systems industry  ("Production  Systems  Industry").  The Production
Systems Industry  consists of companies which produce the machinery,  components
and systems for manufacturing.

         On May 23,  1996,  the Company  achieved  its  objective of acquiring a
Target Business with the acquisition of Atlas Technologies,  Inc.  ("Atlas"),  a
Michigan-based  corporation  incorporated in 1974 and engaged in the manufacture
and  sale  of  equipment  to  automate  metal  stamping  press  operations.  The
acquisition was accomplished through the merger of a wholly-owned  subsidiary of
the Company into Atlas,  with Atlas being the  surviving  company and becoming a
wholly-owned subsidiary of the Company. The Company has no other subsidiaries or
operations.

                                Business of Atlas

         Metal  stamping  presses are used to form a wide variety of sheet metal
components  used in  automobiles,  appliances  and other consumer and industrial
products.  Atlas offers a complete  range of products  within  three  categories
critical  to the  operation  of  metal  stamping  presses:  quick  die  changing
equipment,  press automation  equipment,  and stacking and destacking equipment,
which, together, have historically accounted for approximately 85% to 90% of its
sales  revenues.  It also sells,  on a turnkey  basis,  fully  integrated  metal
stamping   systems   comprised  of  components   provided  by  Atlas  and  other
manufacturers and is beginning a material handling product line.

         Metal  stamping  involves  setting  pieces of flat  sheet  metal over a
shaped die which is set in a press and then  lowering  a  matching  die onto the
sheet metal to form it into the desired shape.  The sheet metal pieces typically
pass through  several  stamping press  operations,  each  performing a different
shaping function.  Atlas' products stack cut sheet metal blanks for feeding into
the  presses,  move  components  from one  press  station  to  another  within a
multistation  transfer press or between  presses within a tandem line of presses
and facilitate the changing of dies on a press.

         In recent years,  the increasing  complexity and precision  required in
stamped metal components,  such as automobile body and appliance parts,  coupled
with  the  large  variety  of  such   components   necessary  to  meet  consumer
preferences,  has required the  manufacturers  of such  products to increase the
flexibility  and  efficiency of the  machinery  used in their  manufacture.  The
presses must  accommodate  rapid  changes in  production  schedules  and produce
profitable batch runs of varying sizes.  Equipment such as that made by Atlas is
important to meet the needs of the manufacturers.

         Sales of Atlas products have principally been to two customer  segments
- automobile and automotive parts  manufacturers,  and appliance  manufacturers.
Other  customers  include  manufacturers  of garden and lawn  equipment,  office
furniture,  heating,  air  conditioning  and  ventilation  (HVAC)  equipment and
aircraft.  In Atlas' 1995,  1996 and 1997 fiscal years,  the automotive  segment
accounted  for  approximately  79%,  86% and  90% of  sales,  respectively,  and
appliance manufacturers accounted for approximately 8%, 8% and 3%, respectively.
For such fiscal years, sales by Atlas to General Motors Corporation  represented
15%, 10% and 12%, respectively,  sales to Chrysler Corporation  represented 35%,
13% and 3%, respectively, and sales to The Ford
--------
* "Specified  Purpose  Acquisition  Company" and "SPAC" are  registered  service
marks of GKN Securities Corp.

                                     Page 2


<PAGE>



Motor Company  represented 4%, 11% and 9%,  respectively,  of total sales. Sales
are  predominantly  in the United States and Canada but, in recent years,  Atlas
has targeted sales efforts in Mexico,  Europe and Asia.  International sales for
the 1995, 1996 and 1997 fiscal years represented  approximately 10%, 13% and 20%
of total sales in such years.

         Atlas uses three marketing channels:  direct sales, with offices at its
headquarters  in Fenton,  Michigan,  Atlanta  and  Chicago;  commissioned  sales
representatives;  and original equipment  manufacturers  (OEMs)  specializing in
metal  presses  and  related   equipment.   Order  backlogs  were  approximately
$16,500,000,  $18,200,000  and  $19,000,000  at June 30,  1995,  1996 and  1997,
respectively.

Products

         Atlas offers critical, high technology products based on proven designs
and engineering,  which it believes offer superior  technology,  engineering and
features to those offered by its competitors. Atlas products are modular and may
be used with  existing  systems as well as with  completely  new  systems.  As a
result of their modular design, a variety of pieces of equipment can be combined
to form an appropriate solution for a customer's metal stamping needs. Virtually
all  of its  products  are on a  made-to-order  basis.  Because  of  their  many
desirable  features,  Atlas  products are positioned at an  above-average  price
comparative to its competitors.  Generally, there is a large number of suppliers
that are capable of providing the materials and components used by Atlas.

         Atlas personnel  perform  applications  engineering,  product design or
customization,  procurement, fabrication, machining, assembly, testing, shipping
and  installation  of the  products and systems it sells.  In 1993,  Atlas began
implementing  a continuing  program to achieve  greater  standardization  in the
engineering  and design of its  products.  To date,  the program has resulted in
faster order fulfillment and production,  improved  fabrication and,  management
believes,   increased  sales.  Atlas  believes  that  significant  cost-reducing
improvements can still be made in the manufacturing  process,  particularly from
further standardization.

         Quick die change equipment made by Atlas includes  automated die carts,
die tables and high rise automated  storage-retrieval  systems which are used to
maneuver   stamping   press  dies  and  molds  weighing  up  to  100  tons.  The
Atlas-developed  products  allow die swapping to be  accomplished  in minutes as
compared to hours if  conventional  equipment is used.  Atlas  storage-retrieval
systems  permit dies not in use to be stored in multiple level racks and readily
accessible to die carts for die swapping. Atlas' equipment can be configured for
use with either manually  controlled or fully automated presses.  Atlas believes
that its equipment is  instrumental in increasing the "up-time" of presses while
also facilitating short run capability,  gentle die handling, safer and improved
ergonomics and easier and more efficient die maintenance.

         Atlas'  transfer  press  automation  equipment  is sold by it under the
names  Flex  2000 and Flex  5000(R).  Transfer  presses  use as many as ten dies
within a single press to progressively form the component  (typically  including
tasks such as drawing or  forming,  trimming,  piercing  and  flanging).  Unlike
tandem press lines,  which use multiple  presses  arranged in a line and require
multiple devices to move a component,  transfer presses move the component being
processed  from one die  station to another  using a single  automation  device.
Compared  to  tandem  presses,  transfer  presses  generally  operate  at higher
production rates,  require less floor space,  consume less energy and allow more
component  processes  per press.  Because of this,  and because  they have fewer
parts and require less expensive quick die change equipment than tandem presses,
transfer  presses  have  become the  preferred  type of press for new  purchases
although  many  tandem  presses  will  remain  in use for many  years and can be
refitted with automation equipment.

         Stacking  and  destacking  automation  equipment  is used to handle the
sheet metal in the initial stages of the stamping  process.  Stackers stack flat
blanks  cut from the  coiled  rolls  which are  delivered  to the  manufacturer.
Destacking equipment feeds the flat blanks into the press and includes functions
to scrub or roll- coat the metal blanks and to que them to assure a steady flow.


                                     Page 3


<PAGE>



Competition

         Atlas  products  are sold in  specialized  markets  that  have  limited
customers and few  competitors.  In many instances,  Atlas products are procured
through  competitive  bidding.  Because  of the  capital  cost  and the need for
skilled personnel,  such as engineers,  designers,  mechanics and sales persons,
entry into this  industry is expensive  and  difficult to achieve and Atlas does
not expect competition to increase  significantly  over present levels.  Primary
competitors of Atlas include Volvo AB, Herwo Die Changing,  AB, Hirotec (Japan),
Verson All Steel Press, a division of Allied  Products  Corp.,  HMS Products Co.
and Aisaku (Japan). Each of these companies offers components which compete with
certain components  manufactured or sold by Atlas, but the Company believes that
none offers as  comprehensive  a line as Atlas. A number of the  competitors are
well established with substantial  financial resources,  recognized brand names,
customer  loyalty and  established  market  positions,  strong  engineering  and
distribution networks and comprehensive manufacturing capabilities.

Trademarks and Patents

         Atlas has an agreement to use  components in the Flex 5000(R)  transfer
press that it manufactures and sells that are based on patents owned by Mr. John
Maher, an individual.  The agreement grants Atlas an exclusive worldwide license
to use the patents for a term equal to the life of the  patents,  including  any
extensions as a result of modifications to the patents.  Currently,  the patents
registered with the United States Patent and Trademark  Office expire on various
dates  between  June 23, 2005 and June 21,  2007.  Atlas is obligated to pay Mr.
Maher a royalty  based on a portion of the sales price of the Flex 5000(R) as it
relates to the value of the patented  components.  For Atlas' fiscal years ended
June 30, 1996 and 1997,  Atlas  expensed  approximately  $320,000 and  $270,000,
respectively,  in license fees under this agreement. The agreement also provides
that Mr. Maher is responsible for defending Atlas for any patent  infringements.
Atlas believes that the terms of the agreement are industry competitive.

         Atlas has registered with the United States Patent and Trademark Office
a trademark on "Flex 5000(R)."

         Atlas  owns  and has  registered  with the  United  States  Patent  and
Trademark  Office two patents,  one for a power and free roller conveyer and one
for the  transfer  arm for  supporting  workpieces.  Atlas  also has  registered
patents  for the first of these in Canada and Great  Britain.  Atlas has applied
for two United  States  patents  for certain  apparatus  and methods for forming
workpieces and for magnetic sheet separator constructions.

Management and Employees

         Ronald M. Prime is currently the Chief  Executive  Officer of Atlas and
has been responsible for the overall  operations of Atlas,  managing the project
management,  engineering,  manufacturing,  controls,  service,  purchasing,  and
finance departments.  Mr. Prime has also been active in product development,  as
well  as  the  establishment  and  improvement  of  Atlas'  project  management,
engineering,  manufacturing,  and financial  processes.  From 1972 to 1984,  Mr.
Prime was President of Fluid & Electric Control Co.,  founding that business and
growing  it from one  person  to 150,  one of the  largest  industrial  controls
contractors in Michigan.  That company was merged with a predecessor of Atlas in
1984.  From  1970 to  1972,  Mr.  Prime  held  various  technical  and  controls
engineering positions.

         Michael D. Austin is currently  the President of Atlas and has been the
principal officer of Atlas,  chiefly  responsible for directing the sales of the
company,  for  determining  the overall  product  directions,  managing  product
research and development,  and managing the application engineering departments.
From 1977 to 1996, Mr. Austin held various other management  positions at Atlas,
including  Vice President of Operations,  Sales Manager,  and Controls  Manager.
From 1973 to 1977, Mr. Austin held various  controls  engineering and management
positions at Fluid & Electric Control Co., including Chief Engineer.

                                     Page 4


<PAGE>

         Neither Mr. Prime nor Mr. Austin performs any  policy-making  functions
for the Company.

         Atlas  employs  approximately  200 persons.  None of these persons is a
member of a union.  Atlas believes that its employee  relations are good.  Atlas
believes  that its location in Michigan is  beneficial in its access and ability
to hire qualified personnel because of the highly  industrialized  nature of the
area.


ITEM 2.  PROPERTIES

         Atlas  operates  its  manufacturing  facilities  in Fenton and  Linden,
Michigan.  It has  approximately  43,200 square feet of space in Fenton which is
used for  assembly  operations  and light and medium  machining  operations  and
electrical panel construction. Project management, engineering and sales offices
are also located in Fenton. In Linden, at one location,  Atlas has a welding and
fabrication  facility  located in  approximately  16,300 square feet and a heavy
machining and light and medium assembly facility located in approximately 21,000
square feet.  Atlas also  maintains  office  space at its site in Linden.  Atlas
rents approximately  1,200 square feet of space in Atlanta,  Georgia for a sales
office.

         Atlas recently  completed building a fourth facility on a new 10.9 acre
site  adjacent to its  existing  Fenton  location.  The new  facility  initially
provides  approximately  51,000  square  feet of  manufacturing  space and 8,000
square  feet of office  space,  but is capable of  expanding  at a later date to
approximately  130,000  square feet of  manufacturing  and 25,000 square feet of
office space. The new facility has higher roofs and heavier cranes to facilitate
manufacturing  of larger  equipment.  Project  costs  through June 30, 1997 were
funded through Industrial Revenue Bonds.

         The Company  recently sold the Linden plant facility for  approximately
$1,100,000.  Atlas  will  lease  back a  portion  of  the  facility  to  support
production operations during at least the next twelve months.

         The principal  executive  office of Atlas is located at 201 South Alloy
Drive, Fenton, Michigan 48430, and its telephone number is (810) 629-6663.


ITEM 3.  LEGAL PROCEEDINGS

         In 1996,  Atlas and John  Maher,  the owner of the  patent for the Flex
5000(R)  licensed to Atlas,  initiated an action  against  Orchid  International
Group Inc. ("Orchid") in the Federal Court of Canada,  Trial Division,  claiming
infringement and wrongful sale,  manufacture and use by Orchid of the inventions
protected by such patent and seeking, among other relief, a declaration that the
patents  are valid and have been  infringed  by  Orchid,  injunctive  relief and
damages of at least $5,000,000  (Cdn). The defendant has filed an answer denying
the  material   allegations  of  the  complaint  and  asserting  a  counterclaim
requesting that the patents be declared invalid.

         In October  1996, a demand for  arbitration  was filed against Atlas by
SWVA, Inc. for  $15,400,000  damages alleged to result from a breach of contract
and breach of warranty by Atlas with  respect to certain  equipment  supplied by
Atlas to the claimant. Atlas believes that it is not responsible for the alleged
defects and has denied the allegations of the complaint.  It also believes that,
if  repairs  to the  equipment  (which  had a  purchase  cost  of  approximately
$1,300,000) are required to be made by it under its contract and warranty,  such
repairs  can be made for less than  $100,000.  Prior to the  institution  of the
arbitration,  the parties were negotiating as to  responsibility  for payment of
the repairs.

         Except for such  matters,  neither the  Company nor Atlas is  currently
involved in any material legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

         Not Applicable.

                                     Page 5
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Effective August 2, 1996, the Common Stock (Symbol:  PRAC) and Warrants
(Symbol:  PRACW) were listed for trading on the Nasdaq SmallCap Market. Prior to
that date,  the Common  Stock and Warrants  were traded in the  over-the-counter
market and quoted on the OTC Bulletin Board. The Company's Units (Symbol:
PRACU) are quoted on the OTC Bulletin Board.

         The  following  table sets forth the range of high and low  closing bid
prices for Common  Stock and  Warrants,  as reported by the OTC  Bulletin  Board
through  August 1, 1996,  and  thereafter  as  reported  by the Nasdaq  SmallCap
Market, and for the Units, as reported by the OTC Bulletin Board. There has been
no material  trading in the Units since the quarter ended June 30, 1996. The OTC
Bulletin  Board is an  inter-dealer  automated  quotation  system  sponsored and
operated by the NASD for equity  securities  not included in the Nasdaq  System.
Such  over-the-counter  market quotations reflect inter-dealer  prices,  without
retail mark-up,  mark-down or commission and may not necessarily  reflect actual
transactions.
<TABLE>
<CAPTION>


                                                            Units               Common Stock               Warrants

                                                      High        Low         High          Low        High         Low
<S>                                                   <C>         <C>         <C>           <C>        <C>          <C>
Year ended March 31, 1996:
   First Quarter...................................   5 1/2      5 1/4       4 3/8        4 1/8         5/8        3/8
   Second Quarter .................................   5 1/4      5 1/4      4 11/16       4 3/8        9/16        3/8
   Third Quarter...................................   5 1/4      5 1/4       4 3/4       4 11/16        1/2        7/16
   Fourth Quarter..................................   5 3/4      5 1/4         5          4 3/4        15/16       5/16
Quarter ended June 30, 1996........................     9        5 3/4         6          4 5/8        1 5/8      1 3/16
Year ended June 30, 1997:
   First Quarter                                        9          9         6 3/8        4 5/8        1 7/8      13/16
   Second Quarter                                     8 3/4      7 1/4         5          3 1/4        1 1/2       1/2
   Third Quarter                                      6 7/8      6 5/8       4 3/8        2 1/2        1 1/4       1/2
   Fourth Quarter                                      --         --         3 1/4        1 3/4          1         3/8
</TABLE>


         As of September  26, 1997,  the Company had 10 holders of record of its
Common Stock.  The Company  believes that there are in excess of 500  beneficial
holders of the Company's Common Stock.

         The Company has not declared or paid any  dividends on its Common Stock
since its inception.

Recent Sales of Unregistered Securities

         The following  securities  were issued by the Company during the fiscal
year ended June 30, 1997 and were not  registered  under the  Securities  Act of
1933, as amended (the "Act").  Each of the  transactions is claimed to be exempt
from a  registration  under the Act  pursuant  to  Section  4(2) of the Act as a
transaction by an issuer not involving a public offering.

                           (a) On July 30, 1996, the Company  granted options to
                  purchase of an aggregate of 255,000 shares of its Common Stock
                  to  five  of its  directors  pursuant  to the  Company's  1996
                  Performance Equity Plan. Such options are exercisable at $5.00
                  per share until July 30, 2001.

                                     Page 6


<PAGE>



ITEM 6. SELECTED FINANCIAL DATA

         The  following  selected  financial  data  have been  derived  from the
Company's and its  predecessor's  consolidated  financial  statements which have
been audited by BDO Seidman, LLP, independent  certified public accountants,  as
of June 30, 1997 and 1996 and for the periods July 1, 1995 to May 23, 1996,  May
24,  1996 to June 30,  1996 and for the year  ended  June 30,  1997 and Dupuis &
Ryden,  independent  certified public  accountants,  who audited the years ended
June 30, 1995,  1994 and 1993.  The following data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and Notes thereto included
elsewhere in this Report.

                  (Dollars in thousands, except per share data)


Consolidated Statements of Operations Data
<TABLE>
<CAPTION>


                                              The Company                                   Predecessor
                                                                         July 1
                                               Year       May 24,          1995         Year          Year          Year
                                              Ended            to            to        Ended         Ended         Ended
                                           June 30,      June 30,       May 23,     June 30,      June 30,      June 30,
                                               1997         1996           1996         1995          1994          1993
<S>                                           <C>           <C>             <C>         <C>           <C>           <C>
Net sales                                   $34,438     $   4,404    $   31,598   $   29,077    $   21,186    $   22,830
Cost of sales                                24,825         3,029        21,773       21,034        16,320        16.774
Gross profit                                  9,613         1,375         9,825        8,043         4,866         6,056
Selling, general and
   administrative expenses                    7,081           729         6,007        5,119         4,872         4,663
Officers' bonuses                               711           197         2,1l7          ---           ---           ---
Income (loss) From operations                 1,821           448         1,701        2,924           (6)         1,393
Net income (loss)                               593           204           762        2,219         (297)           884
Net income per share of
   common stock                                $.28       $   .10
Weighted average common
   shares                                     2,125         2,125
</TABLE>

Consolidated Balance Sheet Data
<TABLE>
<CAPTION>


                                              The Company                            Predecessor


                                           June 30,      June 30,      June 30,     June 30,      June 30,
                                               1997          1996          1995         1994          1993
<S>                                          <C>            <C>           <C>           <C>           <C>  
Current assets                              $22,627    $   18,690    $   11,423    $   8,850    $   10,500
Current liabilities                           7,284        13,642         8,321        7,246         8,287
Working capital                              15,343         5,048         3,102        1,604         2,213
Property, plant and equipment,
   net                                        7,667         4,240         2,517        2,595         2,580
Total assets                                 33,410        26,023        14,550       11,774        13,417
Long-term debt, less current
   maturities                                15,327         2,228         2,717        1,666         1,855
Total liabilities                            23,444        16,650        11,037        8,912        10,143
Stockholders' equity                          9,966         9,373         3,513        2,862         3,274

</TABLE>


                                     Page 7


<PAGE>



ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

The Company

      The fiscal year ended June 30, 1997 is the first full year of consolidated
activities for Productivity  Technologies Corp. and its wholly-owned subsidiary,
Atlas Technologies, Inc.

      In June,  1997,  Atlas  commenced  its move into a new 59,000  square foot
facility  located on  approximately  11 acres of land  adjacent  to its  Fenton,
Michigan, facility. The additional acreage is sufficient to expand the new plant
by an additional 130,000 square feet. Production bays in the new plant have been
designed to accommodate larger projects,  while allowing for improved throughput
and better efficiency in constructing newly designed and standardized automation
equipment.  Atlas  operates  out of three  locations  and,  as of July 1,  1997,
conducts final assembly in the new facility.

      The Company believes its present customers continue seeking to pre-qualify
and reduce the number of their  suppliers.  To increase  efficiency and customer
service, Atlas plans to finalize the purchase and installation of a new computer
information  system  early in fiscal  1998.  Atlas  management  expects  the new
computer system will improve internal project tracking,  project  scheduling and
forecasting, decision making and project control processes.

      Atlas'  product  line has been  enhanced  with the  addition  of the first
automated  destacker  designed to feed an extra large  transfer press capable of
unloading pallets of steel blanks with varying shapes and sizes. Development and
production of several  automated  destackers has assisted Atlas in  establishing
further  design  and build  capabilities  for its  customers.  In turn,  quoting
opportunities  have increased.  Atlas also has applied for patents in connection
with newly  designed  accumulating  conveyors used in mass  production  material
handling  requirements  and has  received a patent for a new concept for between
press automation transferring of stamped parts and die changes.

      Atlas'  marketing  efforts  also have been  expanded.  The metal  stamping
industry is capital  intensive and many major world  stamping  facilities can be
identified  and  targeted  on a country by  country  basis.  Many U.S.  stamping
manufacturers   already   are   international   or  are   planning  to  increase
manufacturing  presence  in foreign  countries  by building  plants  overseas or
through  establishing  joint  ventures.  During fiscal 1997,  Atlas  established
direct  sales  presence  in Europe and China and closed more than $14 million in
orders for new foreign installations, over 40% of total new orders.

      Currently, automotive and auto related suppliers account for approximately
85% of new order closings and receive most of Atlas' recent  marketing  efforts.
At the same time,  Atlas remains  familiar and maintains  quoting  activity with
non-automotive  customers,  including producers of home appliances,  heating and
air  conditioning  sys  tems,   off-road  vehicles  and  equipment,   and  other
manufacturers which use significant amounts of sheet metal in their products.

      Production  capacity  afforded by Atlas' three  plants,  including the new
factory opened in July, 1997, is sufficient for current volume levels. Continued
foreign market  penetration  and the  possibility  of increased  future sales to
non-automotive  customers  could lead to the need for  additional  manufacturing
space.  Management believes,  however,  that project lead times of six months to
two years for  delivery  will provide  sufficient  time to bring new capacity on
line if required.

Results of Operations

      Results of  operations  for the year  ending  June 30,  1997 are not fully
comparable  to results for fiscal  1996.  PTC  acquired  Atlas on May 23,  1996.
Fiscal 1996 figures include  approximately eleven months of unconsolidated Atlas
operations. Consequently, fiscal 1996 data includes only 38 days of consolidated
PTC and

                                     Page 8


<PAGE>

Atlas  activities.  Fiscal 1997 is the first full year of  consolidated  PTC and
Atlas operations.

Sales  (Revenue and Cost Recognition)

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

Fiscal Year 1997 (Consolidated) Compared to Fiscal Year 1996

      Net sales for the fiscal year ending  June 30,  1997 were  $34,437,625,  a
decrease of 4% over net sales of $36,002,861  for fiscal year 1996. The decrease
resulted  primarily from two factors.  The first relates to shipments which were
delayed by a customer of Atlas' newly designed destacker. Atlas also experienced
reduced  production flow caused by the move to and start-up of the new facility.
Customer  demand  for  automation  solutions  that  enhance  production  speeds,
quality,  safety and provide  piece part cost  savings  remains  strong.  Atlas'
backlog at June 30, 1997 approximated $19.0 million, a 4% increase over June 30,
1996 backlog of $18.2 million.

      Cost of  products  sold for the  fiscal  year  ending  June 30,  1997 were
$24,824,582,  representing  72% of revenues,  compared to  $24,802,193 or 69% of
revenues,  for fiscal  year 1996.  The  increase  in cost of sales  relative  to
revenues was primarily due to Atlas' expensing, during the first two quarters of
fiscal  1997,  costs  associated  with  the  development  of its new  destacking
equipment,  and additional  expenses from increases in foreign sales,  including
redesign  requirements for foreign orders,  project management,  foreign travel,
and overseas shipping expenses.

      Gross  profits  for fiscal  year  ending  June 30,  1997 were  $9,613,043,
compared to 1996 gross profits of  $11,200,668,  a decrease of 14%. The decrease
was primarily due to development  expenses  related to the introduction of large
destacker equipment,  costs associated with increasing foreign market sales, and
lower overall sales levels.

      For fiscal 1997, selling,  general and administrative (SG&A) expenses were
$7,081,273,  as compared to $6,736,106  for 1996, an increase of 5%.  Changes in
Atlas' SG&A  included a reduction in legal  expenses of $148,000,  a decrease in
bad debt costs of $160,000 and an increase in goodwill  amortization  of $92,000
associated with the acquisition of Atlas by the Company. SG&A increases included
the Company's corporate  administrative and compensation expenses. The Company's
SG&A  expenses for the full 12 months of fiscal 1997 were  $679,446  compared to
$54,381 for approximately  one month during fiscal 1996. The Company's  expenses
increased in fiscal 1997  compared to 1996 due to the Company's  acquisition  of
Atlas in May, 1996. Corporate salaries for employees of the Company were $18,332
in fiscal year 1996 and $223,221 in fiscal year 1997. Corporate salaries in 1996
commenced  subsequent  to the  Company's  purchase of Atlas and covered  only 38
days,  from May 23, 1996 to June 30, 1996. In contrast,  the Company's  salaries
were paid for the entirety of fiscal year 1997.  Accounting  fees increased from
approximately  $8,000  in  fiscal  year  1996 to  $68,024  in 1997,  legal  fees
increased from $19,000 in 1996 to $29,960 in 1997, and travel related costs grew
from $13,237 to $60,057.  Professional  consulting and stock market related fees
increased  from $0 and $3,324,  respectively,  in 1996 to $60,976  and  $64,005,
respectively, in fiscal 1997.

      Officer bonuses to Ronald Prime and Michael Austin,  executives and former
owners of Atlas, amounted to a total of $711,000 during fiscal 1997. The bonuses
are contingent on the Company achieving certain levels of

                                     Page 9


<PAGE>

financial  profitability each year and are not accrued if the Company misses the
earnings targets. Bonuses during fiscal 1996 were $2,314,000,  of which $753,000
was expensed subsequent to January 1, 1996 when the employment agreement between
the Company and Messrs. Prime and Austin commenced.

      Interest  expense for fiscal year  ending June 30, 1997 was  $933,632,  an
increase of $363,450  relative to interest costs of $570,182 in fiscal 1996. The
significant  increase  in  interest  expense for the period was caused by higher
utilization of the line of credit to finance work-in-process, increased accounts
receivable,  distribution of officer bonuses and increases in borrowings related
to the  issuance of the  $4,500,000  Industrial  Revenue  Bond (IRB) in December
1996.  The IRB was  issued to pay for Atlas'  new plant  construction  and asset
acquisitions.

      Net Income  during  fiscal  year 1997 was  $592,730  compared  to 1996 net
income of $967,428. The decrease in net income of 39% was primarily due to lower
volume,  higher cost of sales, higher interest charges,  and increased corporate
overhead absorption for the full 1997 fiscal year.

      The Company used net cash of $1,389,788 in operating  activities in fiscal
1997 to support an increase in customer  receivables  of $1,123,172  and work in
process  of  $417,420.  Cash used in  investing  activities  of  $4,438,338  was
employed to purchase the land,  building and  equipment  for the  Company's  new
plant.  Company financing  activities during fiscal 1997 provided  $6,159,656 of
cash, and included a $4,500,000 Industrial Revenue Bond offering issued by Atlas
in  December   1996  to  finance  new  plant   construction,   furnishings   and
manufacturing  equipment.  The balance derived from increased  borrowings on the
revolving  line of credit  and a term note to  finance  a boring  mill.  The net
result of  financing  and usage  activity  resulted  in an  increase of cash and
equivalents of $331,530 compared to the balance at the end of fiscal 1996.

Fiscal Year 1996 compared to Fiscal Year 1995

      Net sales for the fiscal year ending  June 30, 1996 were  $36,002,861,  an
increase  of 24% over net sales of  $29,077,684  for  fiscal  year  1995.  Sales
increased  in fiscal  1996 due  largely to  increased  customer  needs for cost-
saving and  quality-enhancing  tooling,  as well as  general  growth in the auto
industry.  Gross profit for 1996 was $11,200,668,  compared to 1995 gross profit
of $8,043,402.  Gross profit increased $3,157,266,  or 39%, mainly due to higher
volumes and improved  product mix. Order backlogs at June 30, 1996 and 1995 were
$18,200,000 and $16,078,000  respectively,  an increase of 13% over the previous
year.

      Cost of  products  sold for fiscal year 1996 was  $24,802,193  compared to
$21,034,282  for fiscal year 1995.  The 18% increase in costs was lower than the
related 24% increase in sales,  resulting in an improved  cost of sales of 68.9%
in 1996, compared to 72.3% in 1995.

      For fiscal 1996, selling,  general and administrative expenses (SG&A) were
$6,736,106,  compared  to  $5,118,720  for  1995,  mainly  due to the  costs  of
administering  increases in volume. Other material SG&A increases were due to an
increase of  $398,730 in legal and  professional  services,  ESOP plan  proposed
termination,  and increased tax and audit work. Selling expenses and commissions
increased by $448,000 due to the higher volume of business and expenses  related
to increased  business  activity in Europe and Asia. In addition,  royalties for
the Flex 5000 product increased  $221,050 due to increased sales in this product
line.

      Officer bonuses to Ronald Prime and Michael Austin,  executives and former
principal owners of Atlas, amounted to $2,314,000 in fiscal 1996. Of this total,
$753,000  was  expensed  subsequent  to  January 1,  1996,  when the  employment
agreement between the Company and Messrs. Prime and Austin commenced. No bonuses
were paid to Messrs. Prime and Austin in earlier years.

      Interest  expense  decreased  to $570,182 in fiscal 1996 from  $644,853 in
1995.  The decrease was caused by reduced  long-term debt and a reduction in the
line of credit interest rate.

      Net income for fiscal 1996 was $967,428,  compared to a 1995 net income of
$2,219,974  (results for 1995  included a  non-recurring  gain of $308,565  from
disposal of assets, and a $319,000 one time adjustment in tax credit

                                     Page 10


<PAGE>

valuation allowance),  representing a net reduction of 56%. The reduction in net
income was largely caused by $1,715,600 in non-recurring  management bonuses and
expenses,  which were  related to the merger of Atlas and PTC.  Bonuses  paid to
management during the 1996 year reflect amounts retained by Atlas which were not
paid in 1994 or 1995.

      A total of $3,590,181 of cash was used in operating  activities during the
fiscal year ended June 30, 1996, as compared to $2,193,804 of cash provided from
operations  during  fiscal  1995.  Major  changes in cash  flows from  operating
activities  from the fiscal year ending June 30, 1995 to fiscal year ending June
30, 1996 include net income,  which  decreased from $2,219,974 in fiscal 1995 to
$967,428 in fiscal 1996 due  primarily to officers  bonuses,  growth in contract
receivables  of  $3,698,784  during  fiscal  1996,  and an increase in costs and
estimated  earnings in excess of billings on uncompleted  contracts,  which grew
$2,672,063  during fiscal 1996 to accommodate  increases in order  volumes.  Net
cash used in investing activities totaled $67,125 during fiscal 1996 as compared
to $606,925 in fiscal 1995.  Cash  investing was higher in fiscal 1995 primarily
due to  advances by the Company to certain  shareholders.  Net cash  provided by
financing  activities  totaled $3,264,061 during fiscal 1996, largely comprising
additional line of credit borrowings and proceeds from additional long-term debt
borrowings.  Net cash during fiscal 1996 increased  $494,926 as cash provided by
financing activities offset cash used by operations and investing activities.

Liquidity and Capital Resources

      The  Company  believes  Atlas'  future  short  term  capital   expenditure
requirements  can be met from the available funds remaining from the issuance of
the  Industrial  Revenue  Bond,  including  payments  required  for new computer
hardware and  software  upgrades and minor  manufacturing  equipment  additions.
Atlas' $14  million  dollar  revolving  line of credit and  required  supporting
collateral are expected to continue  supporting  its cash needs.  Atlas borrowed
from $9,636,000 to $12,700,000 under the revolver during fiscal 1997. Use of the
revolver depends on project invoicing. Delays in converting work in process into
customer invoices typically require increases in revolver borrowings.  From time
to  time,  Atlas'  bank  allows  for  temporary   increases  in  the  collateral
requirements as stated in the current agreement.

      The Company's working capital for June 30, 1997 was $15,343,022,  compared
to June  30,  1996  working  capital  of  $5,047,991.  The  increase  was due to
reclassification  of a  portion  of the  Company's  current  line of  credit  to
long-term debt due in over 12 months.  If this had been done during fiscal 1996,
June 30, 1996  working  capital  would have been  restated as  $12,236,549.  The
improvement in working capital at fiscal year end 1997 versus 1996 of $3,106,473
derived from increases in accounts  receivable,  work in process and assets held
for sale. The latter item includes a plant facility located in Linden, Michigan.
The Company  recently  sold the Linden  facility for  approximately  $1,100,000.
Atlas will lease back a portion  of the Linden  facility  to support  production
operations during at least the next twelve months.

      At June 30, 1997,  Atlas had  borrowings  outstanding  of  $16,041,393  on
various  loans,  of which the  current  portion  was  $714,140.  Details  on the
Company's borrowings at June 30, 1997 follow.

     (i) The bank  consolidated  all of Atlas'  long and short term bank  debts,
bundling  the various  notes and lines of credit  into a new two year  committed
line of credit,  with increased debt usage based on collateral  including  Atlas
receivables,  work-in-process,  and other assets. Interest rates were reduced to
the bank prime rate and a revised  amortization  of certain  asset based debt to
quarterly  payments of $62,500 has reduced the overall annual principal  payment
requirements.  This  improved the Company's  current ratio and working  capital.
Revolving line of credit outstanding on June 30, 1997 was $11,299,615.

     (ii) A new note with First Chicago NBD, N.A. was issued for the purchase of
a  horizontal  boring  mill.  The note was in the amount of  $205,000.  The note
balance at fiscal  year end 1997 was  $187,915.  The note bears  interest at the
bank's prime rate. The final note payment is due in January, 2002.

     (iii) Atlas had borrowings  outstanding of $37,424 from Concord Commercial,
a leasing  company,  secured by certain Atlas  equipment.  The  borrowings  bear
interest of 8.7% per annum.  Final payment on the  borrowings is due in October,
1999.

                                    Page 11
<PAGE>
     (iv)  Atlas  had  outstanding  borrowings  of  $4,500,000  relating  to the
issuance of the  Industrial  Revenue  Bonds  payable at the end of fiscal  1997.
Atlas  entered  into an  agreement  with First  Chicago  NBD,  N.A.  to fund the
construction  of the new building and  equipment  through the sale of tax exempt
Industrial Revenue Bonds. Proceeds were used to construct, furnish and equip the
new  manufacturing  facility.  The  bonds  are state  and  federal  tax  exempt.
Consequently, the floating rate of interest is significantly reduced compared to
conventional construction or real-estate financing. IRB terms are as follows:

                    Calendar Year
1997 -- Interest only
1998 -- $400,000  annual payment plus quarterly interest payments due
1999 -- $400,000  annual payment plus quarterly interest payments due 
2000 -- $400,000  annual payment plus quarterly interest payments due 
2001--2011  -- $300,000 annual payments plus quarterly interest payments are due

      IRB closing  costs of  $184,409  were  incurred  and booked as a long term
asset. These are being amortized over the 15 year life of the Industrial Revenue
Bonds.

      The  Company  believes  that,  as a result of the new loan  facility,  its
short-term credit availability is adequate to support its business operations at
current and near-term anticipated sales levels.

      At June 30, 1996,  Atlas had borrowings  outstanding  of $2,693,179  under
various term loans, of which the current portion was $464,393,  comprised of the
following  loans:  (i) borrowings of $955,050 from NBD Bank, N.A. secured by the
plant of Atlas with a payment due on February 2, 1998 of  $805,560,  which bears
interest at the rate of 1.25% over the bank's  prime rate;  (ii)  borrowings  of
$180,470  from NBD Bank,  N.A.  secured by the  equipment  of Atlas with a final
payment  due July 1998,  which bears  interest  at the rate of 7.75%;  and (iii)
borrowings of $78,492 from Concord  Commercial secured by the equipment of Atlas
with a final  payment due  October,  1999,  which bears  interest at the rate of
8.7%. In May 1996, as part of the credit  facility which Atlas entered into with
NBD Bank, N.A.,  Atlas can borrow up to $550,000 to finance future  acquisitions
of equipment and facilities.

Contingencies

      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  arbitration  demand is  without  merit and is
vigorously defending 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's 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  arbitration  demand  cannot  currently be
determined,  management believes that the final outcome will not have a material
adverse effect on the Company's results of operations or its financial position.
Atlas is not involved as a defendant in any other substantial litigation.

      Atlas is undergoing an Internal  Revenue Service audit for the fiscal year
ended June 30, 1995.  The main area of review is a research and  experimentation
tax credit the Company has calculated and filed for over the past six years. The
Company had applied  $383,000 of credit towards Federal taxes due for the fiscal
period

                                     Page 12


<PAGE>

ended June 1995 and had a carry  forward of  $481,400  expected  to be used as a
reduction in the calculation of 1996 and 1997 alternative  minimum tax payments.
Management   and  Atlas'   accountants   believe  this  issue  is  a  matter  of
interpretation  of the  research  and  experimentation  regulations.  Management
believes  that the IRS may seek a reduction  in the amount of credit  calculated
which may have an adverse effect to the financial statements of the Company. The
Company is  entitled  to  indemnification  (subject  to certain  exclusions  and
limitations) from the former principal  stockholders of Atlas for amounts it may
be  required  to pay as a result of such  audit.  Also,  to the  extent any such
amounts  have the effect of reducing the net worth of Atlas at December 31, 1995
below a specified  amount,  the Company is  entitled to  reimbursement  from the
former  stockholders  of Atlas and has  secured  such  reimbursement  obligation
through a $1,000,000 escrow account.

Recent Accounting Standards

      The Financial  Accounting  Standards Board (FASB) has issued SFAS No. 128,
"Earnings  per Share,"  which  modifies the  existing  standards  for  computing
earnings per share. The statement is effective for financial  statements  issued
for periods  ending after December 15, 1997,  including  interim  periods.  This
statement is not expected to have a material impact on the Company's computation
of earnings per share.

      In June 1997,  the FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
Income," which establishes  standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is defined
to include all changes in equity  except those  resulting  from  investments  by
stockholders and distributions to stockholders.  Among other  disclosures,  SFAS
130 requires  that all items that are required to be  recognized  under  current
account  standards as  components  of  comprehensive  income to be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial statements. SFAS 130 is effective for financial statements for periods
beginning  after  December 15, 1997 and  requires  comparative  information  for
earlier years to be restated.  Because of the recent  issuance of this standard,
management  has been unable to fully  evaluate the impact,  if any, the standard
may have on future financial  statement  disclosures.  Results of operations and
financial  position,  however,  will be  unaffected  by  implementation  of this
standard.

Forward-Looking Statements

      When used in this and in future filings by the Company with the Securities
and Exchange Commission,  in the Company's press releases and in oral statements
made with the approval of an authorized  executive  officer of the Company,  the
words  or  phrases  "will  likely   result,"   "plans,"  "will   continue,"  "is
anticipated,"   "estimated,"  "project"  or  "outlook"  or  similar  expressions
(including  confirmations by an authorized  executive  officer of the Company of
any such  expressions  made by a third party with  respect to the  Company)  are
intended  to  identify  "forward-looking  statements"  within the meaning of the
Private Securities  Litigation Reform Act of 1995. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speaks only as of the date made. Such statements are subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from historical earnings and those presently  anticipated or projected.  Factors
that may cause actual results to differ  materially  from those  contemplated by
such   forward-looking   statements   include,   among  others,  the  following:
competitive  pressures  in the  industry  in which the  Company is  engaged;  an
unfavorable  outcome of the IRS audit for the fiscal year ending June 30,  1995,
adverse changes in the Company's banking loan  requirements;  major fluctuations
in the strength of the U.S. dollar versus international currencies;  and general
economic  conditions.  The Company  has no  obligation  to publicly  release the
result of any revisions which may be made to any  forward-looking  statements to
reflect anticipated or unanticipated events or circumstances occurring after the
date of such statements.

                                     Page 13


<PAGE>


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

             Not Applicable.



ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

             Financial  Statements  of the  Company  as set forth on page F-1.



ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
          FINANCIAL DISCLOSURE

             Not applicable.

                                     Page 14


<PAGE>



                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The  current  directors  and  executive  officers  of the  Company  are as
follows:
<TABLE>
<CAPTION>


                                                           Director
Nominee                                         Age         Since     Position
<S>                                            <C>           <C>        <C>   
Ray J. Friant, Jr.........................      66          1993      Chairman of the Board
Samuel N. Seidman.........................      63          1993      President and Director
Joseph K. Linman..........................      58          1993      Director and Vice President
John S. Strance...........................      72          1993      Director and Vice President
Jesse A. Levine...........................      30          1993      Director, Chief Financial Officer,
                                                                      Vice President, Secretary and
                                                                      Treasurer
Alan H. Foster............................      71          1993      Director
Alan I. Goldman...........................      60          1993      Director
</TABLE>

     Ray J. Friant,  Jr. has been Chairman of the Board of the Company since its
inception.  Between 1988 and 1996, Mr. Friant was Managing  Director of Seidman,
Friant,  Levine Ltd.,  a crisis  management  company,  where he  specialized  in
corporate restructuring and reorganization.  In this capacity, he had management
control,  and successfully  restructured  and/or  stabilized the operations,  of
three public  companies,  CMI Corp.,  Mr. Gasket Co. and Advanced  Semiconductor
Materials   International  N.V.  ("ASM"),  which  companies  have  manufacturing
operations  in road  building  equipment,  automotive  aftermarket  products and
semiconductor  production  equipment,  respectively.  Since 1982, Mr. Friant has
also been President and Director of Friant  Associates,  Inc.,  specializing  in
corporate  turnarounds.  Mr. Friant was Group Vice President and General Manager
of  Gulf+Western  Industrial  Products  Group (IPG) from 1978 to 1982. IPG was a
group of ten companies involved in electronic  systems,  electronic  connectors,
electronic components,  electro-mechanical  components,  wire and cable, cutting
tools and  hardware  manufacturing.  From 1973 to 1978,  as an  employee  of ITT
Corp.,  Mr.  Friant  successfully   reorganized  several   multi-million  dollar
subsidiaries.  In  addition,  he had a number of special  worldwide  assignments
involving ITT Corp. headquarters  organization,  resource allocation for product
development,  and  management  succession.  At Western Union Corp.  from 1969 to
1972, Mr. Friant developed and implemented the business of  teleprocessing  at a
non-regulated subsidiary.  From 1953 to 1969, Mr. Friant was employed by General
Electric Co. ("GE"),  where he was  responsible for initiating GE's phased array
radar business,  for designing and implementing  GE's Program  Management System
for managing large,  complex military contracts and for the business  turnaround
of several  unsuccessful  organizations.  Mr. Friant earned B.S. degrees in both
Mechanical Engineering and Electrical Engineering from West Virginia University.
He also graduated  from General  Electric's  three-year  graduate level Advanced
Engineering program and General Electric Management School.

     Samuel N. Seidman has been  President  and a Director of the Company  since
its inception.  In 1970, Mr. Seidman  founded Seidman & Co., Inc., an investment
banking and  economic  consulting  firm,  and serves as its  President.  In this
capacity,  he has  provided  a  broad  range  of  investment  banking  services,
including financial analysis and valuations,  private financings,  and corporate
recapitalizations and debt restructurings. Mr. Seidman also serves as a director
of AMREP Corp.,  a real estate  development  corporation  listed on the New York
Stock Exchange.  He has acted as financial  advisor to  manufacturers of various
kinds of production systems and components for a number of industries, including
ASM, a  multi-national  producer  of  automated  equipment  and  systems for the
production of semiconductors,  traded on the Nasdaq National Market. Mr. Seidman
advised in the sale of ASM Fico Tooling,  Inc., a European-based  multi-national
manufacturer of specialized tooling for the semiconductor  industry. Mr. Seidman
was Co-Chairman of the Creditors'  Committee in the Chapter 11 reorganization of
Sharon Steel Corp., an integrated  manufacturer of finished steel products,  and
served as  financial  advisor  in  Chapter  11 to Chyron  Corp.,  a  specialized
production  systems company for video  productions  listed on the New York Stock
Exchange, and Mr. Gasket Co., a manufacturer of automobile aftermarket products.

                                     Page 15


<PAGE>

Prior to founding  Seidman & Co., Mr.  Seidman  worked in  corporate  finance at
Lehman  Brothers.  Mr.  Seidman has served as  director  of numerous  public and
private  companies,  including Penn Engineering  Corporation,  a manufacturer of
equipment for steel production and metal processing which had been listed on the
American Stock Exchange.  Mr. Seidman earned a B.A. degree from Brooklyn College
and a Ph.D. in economics from New York  University.  He was a Fulbright  Scholar
and a member of the graduate  faculty of the City  University  of New York.  Mr.
Seidman's nephew, Jesse A. Levine, is Vice President, Secretary, Treasurer and a
Director of the Company.

     Joseph K.  Linman has been Vice  President  and a Director  of the  Company
since its inception.  Mr. Linman retired from the Ford Motor Company ("Ford") in
1989 after 25 years with that  company,  preceded  by two years with RCA Defense
Electronics.  During his career with Ford,  Mr. Linman held numerous  managerial
and  executive  positions  in  financial,  marketing,  technical,   governmental
relations and external affairs capacities,  including Chief Financial Officer of
Ford Latin America, S.A. de C.V., a wholly-owned Ford subsidiary responsible for
automotive  operations  in Latin  America,  South Africa and Egypt.  Mr.  Linman
served as a member of the boards of directors or  executive  committees  of Ford
subsidiary companies in nine countries and as a member of the advisory committee
of the Council of the  Americas  and the  Mexico-U.S.  Business  Committee  that
pioneered  the North  American  Free Trade  Agreement.  Mr. Linman earned a B.S.
degree  from  Oregon  State  University  and  an  M.B.A.   degree  from  Indiana
University.

     John S. Strance has been Vice  President and a Director of the Company from
its inception. He is currently a private investor. From 1986 to 1992, he was the
President   of  Star   Controls   Corporation,   a  provider  of   sophisticated
microprocessor  control  products for process  control and  automation  systems,
which he founded.  From 1983 to 1986, Mr. Strance was an independent  consultant
assessing  technology and market trends and identifying and evaluating companies
for acquisition.  From 1980 to 1983, Mr. Strance  performed the same services as
Director of Planning and Development for Gulf+Western Manufacturing, responsible
for product development using new technology.  From 1954 until 1980, Mr. Strance
held management  positions as president of several subsidiaries of Gulf+Western.
Mr.  Strance  has been  granted  13 U.S.  letters  patent for new  products  and
production  systems.  Mr.  Strance  earned B.S. and M.S.  degrees in  Mechanical
Engineering  from the  University  of Oklahoma  and the  Carnegie  Institute  of
Technology, respectively.

     Jesse A. Levine has been Secretary, Treasurer and a Director of the Company
since  its  inception,  Chief  Financial  Officer  since  June  1995  and a Vice
President since May 1996.  Since January 1992, Mr. Levine has been Regional Vice
President-Midwest of Seidman & Co., Inc., specializing in financial and business
analysis, corporate finance, private placements and corporate advisory services.
From January 1991 to December  1991,  Mr.  Levine was  Contracts  Administration
Manager of The Newman Group Computer  Services Corp.,  Inc., a computer  systems
supplier.  Previously,  Mr.  Levine  served as a commercial  credit  analyst for
Society Bank,  Michigan.  Mr. Levine earned a B.A.  degree in economics from the
University  of  Michigan  and has been  elected a chartered  financial  analyst.
Samuel N. Seidman, the President of the Company, is Mr. Levine's uncle.

     Alan H.  Foster has been a Director  of the  Company  since its  inception.
Since 1986, he has been an Adjunct  Professor of Finance and Corporate  Strategy
at the University of Michigan.  In  conjunction  with the University of Michigan
School of  Engineering,  Mr.  Foster is  engaged  in the study of the  future of
"agile machines." Since 1978, Mr. Foster has been the principal of A.H. Foster &
Company,  a consulting firm which serves as a consultant in corporate finance to
foreign  governments  and domestic and  international  clients.  Currently,  Mr.
Foster is a director of Code-Alarm,  Inc., a manufacturer of automobile security
systems traded on the Nasdaq National Market.  For the last 12 years, Mr. Foster
has served  numerous times as a  court-appointed  trustee in bankruptcy for both
Chapter  7 and  Chapter  11  cases.  He  was  employed  by the  American  Motors
Corporation  from 1963 to 1978,  where he first  served as  Director,  Financial
Planning and Analysis and then as Vice  President and Treasurer for the last ten
of those  years.  From 1953 to 1963,  Mr.  Foster  worked at  Sylvania  Electric
Products  in various  capacities,  including  Manager,  Corporate  Planning  and
Control. Mr. Foster is the author of Practical Business Management, published in
1962.  Mr.  Foster  earned a B.S.B.A.  degree from Boston  College and an M.B.A.
degree from Harvard Business School.


                                     Page 16


<PAGE>

     Alan I.  Goldman has been a Director of the  Company  since its  inception.
Since 1985,  Mr.  Goldman has been  self-employed  as an  investment  banker and
management  consultant,  specializing  in mergers  and  acquisi  tions,  private
placements  and business and  organization  consulting.  From 1975 to 1985,  Mr.
Goldman  was Senior  Vice  President,  Finance  and Chief  Financial  Officer of
Management Assistance, Inc., a multi-national computer manufacturing,  marketing
and  maintenance  company and a purchaser  and user of  productions  systems and
components.  From  1970 to  1974,  Mr.  Goldman  was  Vice  President,  Finance,
Treasurer and Chief Financial Officer of Interway Corporation,  an international
company  engaged in trailer  and  container  leasing and fleet  management.  Mr.
Goldman is  presently a director  of  Substance  Abuse  Technologies,  Inc.  Mr.
Goldman earned a B.A. degree from Cornell  University and an M.B.A.  degree from
New York University.

      The Company's  Board of Directors is divided into three  classes,  each of
which  serves for a term of two years,  with only one class of  directors  being
elected  in each  year.  The term of  office of the  first  class of  directors,
consisting of Messrs. Goldman and Levine, will expire at the next annual meeting
of stockholders, the term of office of the second class of directors, consisting
of Messrs.  Friant and  Strance,  will  expire at the second  succeeding  annual
meeting of stockholders, and the term of office of the third class of directors,
consisting  of Messrs.  Seidman,  Linman and  Foster,  will  expire at the third
succeeding  annual meeting of  stockholders.  In each case, a director will hold
office  until the next  annual  meeting  of  stockholders  at which his class of
directors is to be elected.

Compliance with Section 16(a) of the Exchange Act

      Section 16(a) of the Exchange Act requires officers, directors and persons
who beneficially own more than 10% of a registered class of equity securities of
the Company  ("10%  stockholders")  to file reports of ownership  and changes in
ownership with the Commission. Officers, directors and 10% stockholders also are
required  to furnish the  Company  with  copies of all Section  16(a) forms they
file.  Based  solely on its review of the copies of such forms  furnished to it,
and written  representations  that no other reports were  required,  the Company
believes that during the fiscal year ended June 30, 1997,  each of its officers,
directors  and 10%  stockholders  complied  with  the  Section  16(a)  reporting
requirements  except that Mr. Friant filed in August 1997 a Report on Form 4 for
four  transactions  that  occurred  in June 1997 and  Messrs.  Friant,  Seidman,
Linman, Strance and Levine each filed late Reports on Form 4 with respect to the
stock options granted to them in July 1996.


ITEM 11.  EXECUTIVE COMPENSATION

      No  executive   officer  of  the  Company   received  any  cash  or  other
compensation for services  rendered from the Company since its inception through
May 22, 1996.  Until May 22, 1996,  Seidman & Co.,  Inc., a corporation of which
Samuel N. Seidman is President and Jesse A. Levine is Regional Vice  President -
Midwest,  was paid $5,000 per month as an  administrative  fee. It also received
and will  continue  to  receive  reimbursement  for any  out-of-pocket  expenses
incurred in  connection  with the Company's  business.  There is no limit on the
amount of such  out-of-pocket  expenses and there has not been nor will there be
any  review of the  reasonableness  of such  expenses  by anyone  other than the
Company's Board of Directors,  which includes persons who have received, and may
seek, reimbursement.

      On February 8, 1996,  the Board of Directors  of the Company  approved the
following  annual salaries for its executive  officers,  effective May 23, 1996,
upon consummation of the acquisition of Atlas:  Chairman (presently Mr. Friant),
$70,000;  President (presently Mr. Seidman),  $75,000;  Chief Financial Officer,
Secretary and Treasurer  (presently Mr.  Levine),  $25,000;  and Vice Presidents
(presently  Messrs.  Linman,  Strance and Levine)  $25,000.  Such  salaries  are
payable in equal monthly  installments.  An officer holding more than one office
will receive only the salary of the highest paying office. All of such officers,
in their capacities as directors, participated in the deliberations of the Board
of Directors concerning executive officer compensation.  The Board also approved
fees of $16,000 per year for each director who is not an employee of the Company
(presently  Messrs.  Foster and  Goldman),  which is payable in equal  quarterly
installments.  In  addition,  non-employee  directors  and  officers  other than
Messrs. Friant and Seidman will be paid at the rate of $1,000 to $2,000 per day,

                                     Page 17


<PAGE>

as determined by the Chairman and the  President,  for actual days spent by them
in consulting or other special assignments for the benefit of the Company or its
subsidiaries.  Officers and directors  are also eligible for other  compensation
and  benefits  as may be  approved  by the Board  from  time to time,  including
benefits under the Company's 1996  Performance  Equity Plan which was adopted by
the  stockholders of the Company on May 21, 1996. On July 30, 1996, the Board of
Directors awarded options under such plan to the Company's  officers as follows:
- Messrs. Friant and Seidman - 70,833.33 shares each; Messrs. Linman and Strance
-  42,500  shares  each;  Mr.  Levine  -  28,333.33  shares.  Such  options  are
exercisable until July 30, 2001, at an exercise price of $5.00 per share.

      The Company has no employment agreements with its executive officers, each
of whom presently serves at the discretion of the Board of Directors.

Atlas Employment Agreements

     Messrs.  Ronald M. Prime and Michael D. Austin have entered into employment
agreements with Atlas under which they serve as the Chief Executive  Officer and
President of Atlas, respectively.

     The  employment  agreements  with  Messrs.  Prime and Austin are  identical
except that the term of Mr.  Prime's  agreement  will  terminate on December 31,
1998 and that of Mr. Austin will terminate on December 31, 2001.  Each agreement
requires the  executive  to devote  substantially  all of his business  time and
attention to the affairs of Atlas.  The agreements  provide for base salaries of
$190,000 per year subject to  cost-of-living  increases after December 31, 1996,
for six weeks vacation per year,  reimbursement of business expenses,  use of an
automobile and mobile telephone,  medical and life insurance  benefits and other
benefits generally made available to other employees.

     The agreements  also provide for two bonuses based on the earnings of Atlas
before  interest and taxes,  adjusted in the manner set forth in the  agreements
("Adjusted  Earnings").  Under one bonus arrangement,  Messrs.  Prime and Austin
will each be paid $208,333 for each of the six years beginning  January 1, 1996,
in which  Atlas'  Adjusted  Earnings  exceed  $2,000,000  and,  if the  Adjusted
Earnings average at least $2,000,000 during such six-year period, they 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.  Based on the  Adjusted  Earnings of the Company for the fiscal year
ended June 30, 1997, the Company has accrued $208,333 for each of Messrs.  Prime
and Austin under this arrangement for such fiscal year.

     Under the second  bonus  arrangement,  if during  the five years  beginning
January 1, 1996, the Adjusted  Earnings average at least  $2,626,000,  they will
each be paid an  amount  equal to the  amount  by which  such  average  Adjusted
Earnings exceed  $2,626,000.  Based on the Adjusted  Earnings of the Company for
the fiscal year ended June 30, 1997,  the Company has accrued  $419,088 for each
of Messrs.  Prime and Austin under this  arrangement  for the period  January 1,
1996 through June 30, 1997.

     Both  bonus   arrangements   are  subject  to  liquidation  of  amount  and
acceleration  of  payment in the event of a sale by the  Company of the  capital
stock of Atlas or a sale by Atlas of all or a substantial  part of its assets or
issuance  of  capital  stock of Atlas  such  that a person  or group of  related
persons becomes the owner of 51% or more of the outstanding  stock of Atlas. The
bonuses are also subject to reduction to the extent of life  insurance  benefits
paid to an executive's estate pursuant to life insurance  maintained on the life
of the executive pursuant to the employment agreements.

     Each  employment   agreement  also  contains  provisions   restricting  the
disclosure of confidential information and non-competition covenants.



                                     Page 18


<PAGE>


                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                                                               Long-Term
                                                                                                              Compensation
                                                                                                                 Awards

          Name and Principal Position                         Period                         Salary ($)         Options (#)
<S>                                                            <C>                             <C>                <C> 
Samuel N. Seidman, President & CEO                        7/1/96-6/30/97                      75,000             70,833
                                                          4/1/96-6/30/96                       6,250
                                                          4/1/95-3/31/96                        --
                                                         6/24/94-3/31/95                        --
</TABLE>


                     OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)
<TABLE>
<CAPTION>

                                  Number of                Percent of
                                 Securities              Total Options/
                                 Underlying               SARs Granted              Exercise or
                                Options/SARs              to Employees               Base Price
          Name                     Granted                in Fiscal Year               ($/Sh)               Expiration Date
<S>                                 <C>                        <C>                      <C>                       <C>  
Samuel N. Seidman                  70,833                     27.8                      5.00                    7/30/2001

</TABLE>


                        AGGREGATE YEAR-END OPTION VALUES
                                 (June 30, 1997)

<TABLE>
<CAPTION>

                                      Number of unexercised options at            Value of unexercised in-the-money
                                             fiscal year-end(#)                     options at fiscal year-end($)
             Name                    Exercisable          Unexercisable         Exercisable            Unexercisable
<S>                                     <C>                    <C>                  <C>                     <C>  
Samuel N. Seidman                       70,833                  ---                  0                      ---

</TABLE>


                                     Page 19


<PAGE>

Stock Price Performance Comparison

      The  following  graph  compares  cumulative  total return of the Company's
Common Stock (symbol PRAC) with the cumulative  total return of (i) the Standard
& Poor's  Midcap 400 index ("S&P  Index") and (ii) an industry  peer group index
("Peer  Index")  consisting  of eight other  publicly held  SPAC(R)s.  The graph
assumes $100 was invested on July 6, 1994 (the date the Common began  trading on
the OTC Bulletin  Board) in shares of Common Stock,  stocks  comprising  the S&P
Index and stocks comprising the Peer Index and the reinvestment of dividends.

      The Company has used an index of other SPAC(R) stocks for an industry peer
group due to the unique business purpose of SPAC(R)s,  and the features of their
securities and rights of their security holders.  The SPAC(R) index includes HDS
Corporation,  Concord Health Group,  Inc.  (through  March 1996),  Source Media,
Inc.,  International Metals SPAC(R), Bogen Communications,  Inc., Zydeco Energy,
Inc., Kellstrom Industries and Restructuring SPAC(R) equally weighted.

<TABLE>
<CAPTION>


                                                     PRAC                      S&P Midcap 400                 SPAC Index
<S>                                                  <C>                              <C>                        <C>  
      7/6/94                                       $100.00                          $100.00                    $100.00
      6/30/95                                       108.82                           119.90                     107.16
      6/30/96                                       150.00                           143.37                     137.10
      6/30/97                                        61.76                           174.14                     152.37

</TABLE>

                                     Page 20


<PAGE>



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain  information  regarding  beneficial
ownership  of the  Company's  Common  Stock,  as of  October 9, 1996 by (i) each
stockholder  known by the Company to be beneficial  owner of more than 5% of the
outstanding  Common  Stock,  (ii) each  director  of the  Company  and (iii) all
directors and officers as a group.  Except as otherwise  indicated,  the Company
believes that the beneficial  owners of the Common Stock listed below,  based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
<TABLE>
<CAPTION>

                                                                          Number               Percentage
Name of Beneficial Owner                                               of Shares          Beneficially Owned
------------------------                                               ---------          ------------------
<S>                                                                       <C>                     <C>   
Ray J. Friant, Jr.......................................
  30 Boxwood Drive
  Convent Station, New Jersey 07960                                   218,083(1)                 9.8%

Samuel N. Seidman.......................................
  520 Madison Avenue
  New York, New York 10022                                            217,083(1)                 9.8%

Joseph K. Linman........................................              114,250(1)                 5.3%

John S. Strance.........................................              113,250(1)                 5.2%

Jesse A. Levine.........................................               71,583(1)                 3.3%

Alan H. Foster..........................................               21,250                      1%

Alan I. Goldman.........................................               21,250                      1%

All Officers and Directors                                            776,749(1)                32.0%
  as a group (7 persons)................................

-----------------------
<FN>

(1)   Includes  shares of Common Stock  issuable  upon  immediately  exercisable
      Warrants  and  options  as  follows:   Mr.   Friant--91,833   shares;  Mr.
      Seidman--90,833  shares; Mr.  Linman--46,500  shares; Mr.  Strance--44,500
      shares; Mr. Levine--28,333 shares.

</FN>
</TABLE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Seidman & Co., Inc., an affiliate of the Company,  makes  available to the
Company office space, as well as certain office,  administrative and secretarial
services as may be required by the Company. The Company paid Seidman & Co., Inc.
$5,000 per month for such services until May 22, 1996,  including  $8,000 during
the three  months  ended June 30,  1996.  During the fiscal  year ended June 30,
1997,  the  Company  paid  Seidman & Co.,  Inc.  approximately  $40,000 for such
services.  Samuel N.  Seidman,  a director  and  President  of the  Company,  is
President  of  Seidman & Co.,  Inc.,  and Jesse A.  Levine,  a  director,  Chief
Financial Officer,  Vice President,  Secretary and Treasurer of the Company,  is
Regional Vice President--Midwest of Seidman & Co., Inc.



                                     Page 21


<PAGE>

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

      (a) The following documents are filed as part of this report:

I. The  financial  statements  of the  Company  and  Atlas  listed in Item 8 are
submitted as a separate section of this report.

             1.     Financial Statement Schedules
                          Schedule II -- Valuation  and  Qualifying  Accounts

             2.     Exhibits as required by Item 601 of Regulation S-K:

<TABLE>
<CAPTION>

Exhibit No.         Description
<S>                    <C>   
    3.1             Certificate of Incorporation*
    3.1.1           Amendment to Certificate of Incorporation filed May 28, 1996**
    3.2             By-laws*
    4.1             Form of Common Stock Certificate of the Company*
    4.2             Form of Warrant Certificate of the Company*
    4.3             Unit Purchase Option between GKN Securities Corp. and the Company*
    4.4             Warrant Agreement between Continental Stock Transfer & Trust Company and the Company*
   10.1             Form of Underwriting Agreement between the Company and GKN Securities Corp.*
   10.3             Form of Share Escrow Agreement between the Company and Continental Stock Transfer &
                    Trust Company*
   10.4             Letter Agreement among each of the Stockholders of the Company, the Company and GKN
                    Securities Corp.*
   10.5             Letter Agreement between Seidman & Co., Inc. and the Company regarding administrative
                    support*
   10.6             Agreement of Merger dated as of December 18, 1995 (without  schedules or exhibits)***
   10.6.1           Amendment to  Agreement  of Merger  dated  December 18, 1995*** 
   10.7             Employment   Agreement  dated  May  23,  1996  between  Atlas Technologies, Inc. ("Atlas") and
                    Ronald M. Prime****
   10.8             Employment Agreement dated May 23, 1996 between Atlas Technologies, Inc. and Michael D.
                    Austin****
   10.9             1996 Performance Equity Plan of the Company****
   27               Financial Data Schedule (filed electronically only)*****


-----------------------------
(Footnotes on next page)


                                     Page 22


<PAGE>

<FN>


-----------------------------
*     Filed as Exhibits to Registration Statement on Form S-1, No. 33-78188, and incorporated herein by
      reference.

**    Filed as Exhibit to Report on Form 8-K (Event dated May 23, 1996) and incorporated herein by reference.

***   Filed as Exhibits to Report on Form 8-K (Event dated December 18, 1995) and incorporated herein by
      reference.

****  Filed as Exhibits to Report on Form 10-K for fiscal year ended March 31, 1996 and incorporated herein by
      reference

***** Filed herewith.

</FN>
</TABLE>

      (b) During the period covered by this Report, the Company did not file any
reports on Form 8-K.



                                     Page 23


<PAGE>



                 Productivity Technologies Corp. and Subsidiary
                               and the Predecessor

                                      Index
<TABLE>
<CAPTION>


<S>                                                                               <C>    
Reports of Independent Certified Public Accountants                               F-2


Financial Statements
      Consolidated Balance Sheets                                                 F-5
      Consolidated Statements of Operations of The Company
            and Statements of Operations of the Predecessor                       F-7
      Consolidated Statements of Stockholders' Equity of The
            Company and Statements of Stockholders' Equity of
            the Predecessor                                                       F-8
      Consolidated Statements of Cash Flows of The Company
            and Statements of Cash Flows of the Predecessor                       F-9


Notes to Financial Statements                                                     F-11


Schedule II - Valuation and Qualifying Accounts                                   F-29
</TABLE>


                                       F-1

<PAGE>

Report of Independent Certified Public Accountants



Productivity Technologies Corp.
New York, New York

We have audited the  accompanying  consolidated  balance sheets of  Productivity
Technologies Corp. and Subsidiary ("The Company"), as of June 30, 1997 and 1996,
and the related consolidated statements of operations,  stockholders' equity and
cash flows for the year ended June 30,  1997 and for the period May 24,  1996 to
June 30, 1996 (collectively,  the "Successor period").  We have also audited the
statements of operations, stockholders' equity and cash flows of the Predecessor
(see Note 1) for the period July 1, 1995 to May 23, 1996 ("Predecessor period").
We have  also  audited  the 1997 and 1996  information  in  Schedule  II.  These
financial  statements and Schedule II are the  responsibility  of the Companies'
managements.  Our  responsibility  is to express  an opinion on these  financial
statements and Schedule II based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the schedule are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial  statements and
the schedule.  An audit also includes  assessing the accounting  principles used
and significant estimates made by management,  as well as evaluating the overall
presentation of the financial  statements and the schedule.  We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the financial statements, all of the outstanding stock
of the  Predecessor  was  sold  in a  business  combination  accounted  for as a
purchase. As a result of the acquisition, the consolidated financial information
for the period after the acquisition is presented on a different cost basis than
that for the period before the acquisition and, therefore, is not comparable.

                                       F-2

<PAGE>

In our opinion,  The Company's  consolidated  financial  statements  referred to
above  present  fairly,  in all material  respects,  the  financial  position of
Productivity  Technologies  Corp.  and Subsidiary at June 30, 1997 and 1996, and
the results of their operations and their cash flows for the Successor period in
conformity  with  generally  accepted  accounting  principles.  Further,  in our
opinion,  the  Predecessor's  financial  statements  referred  to above  present
fairly,  in all material  respects,  the results of operations and cash flows of
the  Predecessor  for the  Predecessor  period,  in  conformity  with  generally
accepted accounting principles.

Also,  in our  opinion,  the 1997 and 1996  information  in Schedule II presents
fairly, in all material respects, the information set forth therein.





Troy, Michigan
August 29, 1997


                                       F-3

<PAGE>


Report of Independent Certified Public Accountants


To the Board of Directors and Stockholders
Atlas Technologies, Inc.
Fenton, Michigan

We have audited the accompanying statements of operations, stockholders' equity,
and cash flows of Atlas Technologies,  Inc. for the year ended June 30, 1995. We
have  also  audited  the  1995  information  in  Schedule  II.  These  financial
statements  and  the  Schedule  II  are  the  responsibility  of  the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and Schedule II based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance  about whether the financial  statements  and the schedule are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures  in the  financial  statements  and the
schedule.  An audit also includes  assessing the accounting  principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
presentation of the financial  statements and the schedule.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  results  of  operations  and cash  flows of Atlas
Technologies,  Inc.  for the  year  ended  June 30,  1995,  in  conformity  with
generally accepted accounting principles.

Also, in our opinion,  the 1995 information in Schedule II presents  fairly,  in
all material respects, the information set forth therein.




                                                           DUPUIS & RYDEN
Flint, Michigan
August 11, 1995

                                       F-4

<PAGE>




                 Productivity Technologies Corp. and Subsidiary

                           Consolidated Balance Sheets
<TABLE>
<CAPTION>


June 30,                                                                                1997                 1996
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>                  <C>    
Assets (Notes 7 and 8)

Current Assets
  Cash and cash equivalents                                                     $      843,709       $      512,179
  Short-term investments, including accrued interest                                   929,204              965,255
  Contract receivables (Note 3)                                                      9,199,302            7,958,159
  Notes receivable                                                                     160,631              240,606
  Costs and estimated earnings in excess of
    billings on uncompleted contracts (Note 4)                                       8,640,731            7,593,003
  Inventories                                                                          619,242              720,947
  Prepaid expenses and other                                                           675,070              220,494
  Deferred income taxes (Note 11)                                                      622,000              480,000
  Assets held for sale (Note 5)                                                        937,549                    -
-------------------------------------------------------------------------------------------------------------------
Total Current Assets                                                                22,627,438           18,690,643
-------------------------------------------------------------------------------------------------------------------
Property and Equipment
  Land                                                                                 591,514              216,000
  Buildings and improvements                                                         1,329,113            2,132,388
  Machinery and equipment                                                            1,909,879            1,888,479
  Construction in progress (Note 13)                                                 4,142,725                    -
  Transportation equipment                                                              31,500               31,500
-------------------------------------------------------------------------------------------------------------------
                                                                                     8,004,731            4,268,367
  Less accumulated depreciation                                                        337,350               27,928
-------------------------------------------------------------------------------------------------------------------
Net Property and Equipment                                                           7,667,381            4,240,439
-------------------------------------------------------------------------------------------------------------------
Other Assets
  Goodwill, net of accumulated amortization
    of $113,884 and $10,923 (Note 2)                                                 2,490,842            2,593,803
  Noncompetition agreement, net of accumulated
    amortization (Note 6)                                                              211,083              228,083
  Other assets                                                                         412,988              270,803
-------------------------------------------------------------------------------------------------------------------
Total Other Assets                                                                   3,114,913            3,092,689
-------------------------------------------------------------------------------------------------------------------
                                                                                $   33,409,732       $   26,023,771
-------------------------------------------------------------------------------------------------------------------
</TABLE>



                                 See accompanying notes to financial statements.

                                       F-5

<PAGE>




                 Productivity Technologies Corp. and Subsidiary

                           Consolidated Balance Sheets
<TABLE>
<CAPTION>


June 30,                                                                              1997                 1996
-------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>                  <C>   
Liabilities and Stockholders' Equity

Current Liabilities
  Accounts Payable
    Operating                                                                   $    2,472,828       $    2,444,411
    Capital expenditures                                                               157,000                    -
  Line-of-credit (Note 7)                                                                    -            7,188,558
  Accrued Expenses
    Executive bonus agreement (Note 13)                                              1,254,842              753,778
    Commissions payable                                                                437,185              544,248
    Payroll and related withholdings                                                   271,930              438,274
    Other                                                                              811,220            1,274,027
  Billings in excess of costs and estimated
    earnings on uncompleted contracts (Note 4)                                       1,165,271              534,963
  Current maturities of long-term debt (Note 8)                                        714,140              464,393
-------------------------------------------------------------------------------------------------------------------
Total Current Liabilities                                                            7,284,416           13,642,652

Deferred Income Taxes (Note 11)                                                        832,000              779,000

Long-Term Debt, less current maturities (Note 8)                                    15,327,253            2,228,786
-------------------------------------------------------------------------------------------------------------------
Total Liabilities                                                                   23,443,669           16,650,438
-------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Notes 13 and 14)

Stockholders' Equity (Notes 9 and 10)
  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                                                                    786,450              193,720
-------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity                                                           9,966,063            9,373,333
-------------------------------------------------------------------------------------------------------------------
                                                                                $   33,409,732       $   26,023,771
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                See accompanying notes to financial statements.

                                       F-6

<PAGE>

                 Productivity Technologies Corp. and Subsidiary
                               and the Predecessor

              Consolidated Statements of Operations of The Company
                 and Statements of Operations of the Predecessor

<TABLE>
<CAPTION>


                                                      The Company                                     Predecessor
                                           Year Ended              May 24, to            July 1, 1995               Year Ended
                                        June 30, 1997           June 30, 1996         to May 23, 1996            June 30, 1995
-------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                       <C>                   <C>                       <C> 
Net Sales                              $   34,437,625           $   4,404,192           $  31,598,669           $   29,077,684
-------------------------------------------------------------------------------------------------------------------------------
Cost of Sales                              24,824,582               3,029,113              21,773,080               21,034,282
-------------------------------------------------------------------------------------------------------------------------------
Gross Profit                                9,613,043               1,375,079               9,825,589                8,043,402

Selling, General and
  Administrative Expenses                   7,081,273                 729,141               6,006,965                5,118,720

Officers' Bonuses (Notes 2 and 13)            710,946                 197,290               2,117,251                        -
-------------------------------------------------------------------------------------------------------------------------------
Income From Operations                      1,820,824                 448,648               1,701,373                2,924,682
-------------------------------------------------------------------------------------------------------------------------------
Other Income (Expense)
  Interest expense                           (933,632)                (57,331)               (512,851)                (644,853)
  Interest income                             134,312                  20,274                  33,837                   32,971
  Gain (loss) on disposal of assets                 -                       -                  (2,976)                 308,565
  Miscellaneous                                21,226                 (41,744)                151,198                   63,609
-------------------------------------------------------------------------------------------------------------------------------
Total Other Expense                          (778,094)                (78,801)               (330,792)                (239,708)
-------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes                  1,042,730                 369,847               1,370,581                2,684,974

Income Tax Expense (Note 11)                  450,000                 165,000                 608,000                  465,000
-------------------------------------------------------------------------------------------------------------------------------
Net Income                             $      592,730           $     204,847           $     762,581           $    2,219,974
-------------------------------------------------------------------------------------------------------------------------------
Net Income Per Share of
  Common Stock                         $          .28           $         .10
--------------------------------------------------------------------------------
Weighted Average Common
  Shares                                    2,125,000               2,125,000

--------------------------------------------------------------------------------
</TABLE>

                                See accompanying notes to financial statements.

                                       F-7

<PAGE>


                 Productivity Technologies Corp. and Subsidiary
                               and the Predecessor

         Consolidated Statements of Stockholders' Equity of The Company
            and Statements of Stockholders' Equity of the Predecessor
<TABLE>
<CAPTION>


                                                                          Additional        Retained               Total
                                                Common Stock               Paid-In          Earnings           Stockholders'
                                          Shares            Amount         Capital          (Deficit)             Equity
-------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>             <C>                <C>               <C>   
Balance, July 1, 1994 (Predecessor)       34,901     $      34,901   $      73,465     $    2,753,684    $      2,862,050

Stock repurchase from former
  stockholder (Note 9)                    (9,218)           (9,218)              -         (1,559,925)         (1,569,143)

Net income                                     -                 -               -          2,219,974           2,219,974
-------------------------------------------------------------------------------------------------------------------------------


Balance, June 30, 1995 (Predecessor)      25,683            25,683          73,465          3,413,733           3,512,881

Distribution to former stockholder
  (Note 9)                                     -                 -               -           (700,000)           (700,000)


Net income                                     -                 -               -            762,581             762,581
-------------------------------------------------------------------------------------------------------------------------------



Balance, May 23, 1996 (Predecessor)       25,683     $      25,683   $      73,465     $    3,476,314    $      3,575,462
-------------------------------------------------------------------------------------------------------------------------------



Balance, May 24, 1996 (Company)        1,785,001     $       1,785   $   7,351,741     $      (11,127)   $      7,342,399


Reclassification of common stock
  subject to possible redemption
  (Note 9)                               339,999               340       1,825,747                  -           1,826,087


Net income                                     -                 -               -            204,847             204,847
-------------------------------------------------------------------------------------------------------------------------------



Balance, June 30, 1996 (Company)       2,125,000             2,125       9,177,488            193,720           9,373,333

Net income                                     -                 -               -            592,730             592,730
-------------------------------------------------------------------------------------------------------------------------------


Balance, June 30, 1997 (Company)       2,125,000     $       2,125   $   9,177,488     $      786,450    $      9,966,063
-------------------------------------------------------------------------------------------------------------------------------

</TABLE>


                               See accompanying notes to financial statements.

                                       F-8

<PAGE>



                 Productivity Technologies Corp. and Subsidiary
                               and the Predecessor

              Consolidated Statements of Cash Flows of The Company
                 and Statements of Cash Flows of the Predecessor

<TABLE>
<CAPTION>



                                                               The Company                                   Predecessor
                                                    Year Ended              May 24, to            July 1, 1995          Year Ended
                                                 June 30, 1997           June 30, 1996         to May 23, 1996        June 30, 1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                    <C>                     <C>                  <C> 
Cash Flows From Operating Activities
  Net income                                    $      592,730          $      204,847           $     762,581        $   2,219,974
  Adjustments to reconcile net income
   to net cash provided by (used in)
   operating activities
    Depreciation                                       346,873                  27,931                 360,726              355,088
    Amortization                                       119,961                  12,688                  15,235                9,917
    Provisions for losses on contract receivables     (117,971)                      -                 (68,649)             104,587
    Inventory net realizable value reserve             (80,000)                      -                 200,000                    -
    Deferred income taxes                              (89,000)                 46,000                 164,000             (202,000)
    (Gain) loss on disposal of assets                        -                       -                   2,976              (28,565)
    Changes in operating assets and liabilities
     Contract receivables                           (1,123,172)             (3,565,732)               (133,052)          (1,900,292)
     Inventories, prepaid expenses and other          (415,056)               (488,818)                 95,028            1,428,519
     Costs and estimated earnings in excess of
      billings on uncompleted contracts-net effect    (417,420)              1,365,906              (4,037,969)            (905,063)
     Accounts payable, accrued expenses
      and other                                       (206,733)              1,271,862                 174,259            1,111,639
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In)
  Operating Activities                              (1,389,788)             (1,125,316)             (2,464,865)           2,193,804
------------------------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
  Expenditures for property and equipment
   (including capitalized interest of
   $75,699 in fiscal 1997)                          (4,554,364)                (49,549)               (466,828)            (381,211)
  Collections on notes receivable                       79,975                   6,312                 219,540              175,144
  Proceeds from sale of short-term
   investments - net                                    36,051                       -                       -                    -
  Maturity of U.S. Government securities
   deposited in trust fund                                   -               7,120,000                       -                    -
  Purchase of Atlas                                          -              (6,900,000)                      -                    -
  Proceeds from sale of property
   and equipment                                             -                       -                   3,400              132,142
  Issuance of notes receivable                               -                       -                       -             (533,000)
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In)
  Investing Activities                              (4,438,338)                176,763                (243,888)            (606,925)
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                See accompanying notes to financial statements.

                                       F-9

<PAGE>

                 Productivity Technologies Corp. and Subsidiary
                               and the Predecessor

              Consolidated Statements of Cash Flows of The Company
                 and Statements of Cash Flows of the Predecessor

<TABLE>
<CAPTION>


                                                                The Company                                   Predecessor
                                                    Year Ended              May 24, to            July 1, 1995           Year Ended
                                                 June 30, 1997           June 30, 1996         to May 23, 1996        June 30, 1995
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>                      <C>                    <C>                   <C>  
Cash Flows From Financing Activities
  Proceeds from additions of long-term debt          5,255,000                    -               1,500,000                 110,000
  Net borrowings (payments) - line-of-credit           863,911              589,300               3,990,320              (1,019,562)
  Net borrowings - revolving credit agreement          262,751                    -                       -                       -
  Payments on long-term debt, capital
   leases and notes payable                           (222,006)             (43,161)             (2,072,398)               (557,148)
  Distribution to former stockholder                         -                    -                (700,000)                      -
  Purchase of company stock                                  -                    -                       -                (196,000)
------------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided By (Used In)
  Financing Activities                               6,159,656              546,139               2,717,922              (1,662,710)
------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) In Cash
  and Cash Equivalents                                 331,530             (402,414)                  9,169                 (75,831)

Cash and Cash Equivalents,
  at beginning of period                               512,179              914,593                  17,253                  93,084
------------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents,
  at end of period                              $      843,709          $   512,179           $      26,422           $      17,253
------------------------------------------------------------------------------------------------------------------------------------
Supplemental Cash Flow Information
  Cash Paid During the Period For
   Interest                                     $      878,207          $    57,331           $     522,637           $     628,689
   Income taxes                                        827,451                    -                 570,175                 777,458
------------------------------------------------------------------------------------------------------------------------------------
Supplemental Noncash Investing and
  Financing Activities
   Retirement of debt with proceeds from the
   revolving credit agreement                   $   11,036,864          $         -           $           -           $           -
   Construction in progress financed
    with accounts payable                              157,000                    -                       -                       -
   Purchase of stock with loan
    obligations                                              -                    -                       -               1,373,143
   Consummation of a noncompetition
    agreement with loan obligation                           -                    -                       -                 255,000
   Purchase of equipment with
    loan obligation                                          -                    -                       -                  97,941
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                See accompanying notes to financial statements.

                                      F-10

<PAGE>


                 Productivity Technologies Corp. and Subsidiary
                               and the Predecessor

                          Notes to Financial Statements


1.    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.

In December 1995, PSAC entered into a Merger Agreement with Atlas  Technologies,
Inc.  ("Atlas")  whereby Atlas would become a  wholly-owned  subsidiary of PSAC.
(The acquisition was consummated May 23, 1996 - see Note 2). Subsequently,  PSAC
changed its corporate name to Productivity  Technologies  Corp.  ("PTC").  PTC's
operating  results from inception  through May 23, 1996 are summarized below (in
thousands):
<TABLE>
<CAPTION>

                                                                                              June 1993
                                                                                             (Inception)
                                                             Year Ended      Year Ended        Through
                                           April 1, 1996      March 31,       March 31,         March 31,
                                          to May 23, 1996       1996           1995              1994
------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>               <C> 
Interest income                            $    56            $   503        $    343           $   -
Operating expenses                             (54)              (266)           (250)             (2)
Income taxes                                    (3)              (132)            (31)              -
------------------------------------------------------------------------------------------------------------
Net Income (Loss)                          $    (1)           $   105        $     62           $  (2)
------------------------------------------------------------------------------------------------------------
</TABLE>


The  above  operating  results  of PTC  are  not  included  in the  accompanying
financial statements.

The accompanying  consolidated  financial statements for the year ended June 30,
1997 and the period May 24 to June 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.

                                      F-11
<PAGE>

The accompanying  financial  statements presented for the period July 1, 1995 to
May 23,  1996,  and for the year ended June 30,  1995  represent  the  financial
statements of Atlas (the "Predecessor").

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. Sales are predominantly in the
United  States but, in recent years,  the Company has targeted  sales efforts in
Mexico,  Europe and Asia.  Export sales during the twelve  months ended June 30,
1997, 1996 and 1995 amounted to approximately 20%, 13% and 10%, respectively, of
annual sales.

Cash Equivalents

The Company  considers  all highly  liquid  debt  instruments  purchased  with a
maturity of three months or less to be cash equivalents.

Short-term Investments

Short-term  investments,  representing  U.S.  Treasury Bills with  maturities of
twelve months or less, are carried at cost, which approximates market.

                                      F-12
<PAGE>


Use of Estimates

In  preparing  financial   statements  in  conformity  with  generally  accepted
accounting principles,  management is required to make estimates and assumptions
that  affect  (1)  the  reported  amounts  of  assets  and  liabilities  and the
disclosure of contingent  assets and liabilities as of the date of the financial
statements,  and (2) revenues and expenses during the reporting  period.  Actual
results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of contract receivables. The Company attempts to
minimize its credit risk by reviewing all  customers'  credit  histories  before
extending  credit and by monitoring  customers'  credit exposure on a continuing
basis.  The Company  establishes  an allowance  for possible  losses on contract
receivables,  if necessary,  based upon factors  surrounding  the credit risk of
specific  customers,  historical  trends and other  information.  Allowances  of
approximately  $45,500 and $163,000  were deemed  necessary at June 30, 1997 and
1996, respectively.

Fair Values of Financial Instruments

The carrying  amounts of the  Company's  cash and cash  equivalents,  short-term
investments,   contract  receivables,  accounts  payable  and  accrued  expenses
approximate fair value because of the short maturity of these items.

The carrying  amounts of the  line-of-credit  and long-term debt pursuant to the
Company's  bank credit  agreements  approximate  fair value because the interest
rates on the majority of the loans outstanding change with market rates.

                                      F-13
<PAGE>

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.

Inventories

Inventories are stated at the lower of cost (first-in,  first-out) or market and
include mainly raw materials and spare parts.

Property and Equipment

Property and equipment are stated at cost. Beginning May 24, 1996,  depreciation
is computed on the straight-line method, generally using the following estimated
useful lives:

      Building and improvements             20- 40 years
      Machinery and equipment               3 - 10 years
      Transportation equipment              2 -  5 years

                                      F-14
<PAGE>
Prior  to May  24,  1996  depreciation  was  computed  using  straight-line  and
accelerated methods over the estimated useful lives of the assets.

Intangible Assets

Goodwill,  representing  the  excess of cost over the fair  value of net  assets
acquired in the acquisition of Atlas, is being amortized over twenty-five  years
using the straight-line method.

The noncompetition agreement is amortized using the straight-line method.

Warranty

The Company warrants under certain  circumstances that its products meet certain
agreed-upon  manufacturing  and material  specifications.  The Company records a
warranty liability based on anticipated future claims.

Income Taxes

Income taxes are calculated using the liability method specified by Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".

Net Income Per Share

Net income per share of common  stock has been  computed  based on the  weighted
average number of common and any dilutive common equivalent shares outstanding.

The  Financial  Accounting  Standards  Board  (FASB)  has issued  SFAS No.  128,
"Earnings  per Share,"  which  modifies the  existing  standards  for  computing
earnings per share. The statement is effective for financial  statements  issued
for periods  ending after December 15, 1997,  including  interim  periods.  This
statement is not expected to have a material impact on the Company's computation
of earnings per share.

                                      F-15

<PAGE>

Long-Lived Assets

Long-lived  assets,  such as goodwill and property and equipment,  are evaluated
for  impairment  when  events or  changes  in  circumstances  indicate  that the
carrying  amount of the  assets may not be  recoverable  through  the  estimated
undiscounted  future  cash  flows  from the use of these  assets.  When any such
impairment  exists,  the related assets will be written down to fair value. This
policy is in accordance  with SFAS No. 121,  "Accounting  for the  Impairment of
Long-Lived  Assets  and for  Long-Lived  Assets  to Be  Disposed  Of,"  which is
effective for fiscal years  beginning  after December 15, 1995. No impairment of
the Company's long-lived assets has occurred through June 30, 1997.

Reclassifications

Certain prior year amounts have been  reclassified  to conform with current year
presentation.

Recent Accounting Pronouncement

In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income",
which establishes  standards for reporting and display of comprehensive  income,
its  components and  accumulated  balances.  Comprehensive  income is defined to
include  all  changes in equity  except  those  resulting  from  investments  by
stockholders and distributions to stockholders.  Among other  disclosures,  SFAS
130 requires  that all items that are required to be  recognized  under  current
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial statements. SFAS 130 is effective for financial statements for periods
beginning  after  December 15, 1997 and  requires  comparative  information  for
earlier years to be restated.  Because of the recent  issuance of this standard,
management  has been unable to fully  evaluate the impact,  if any, the standard
may have on future financial  statement  disclosures.  Results of operations and
financial  position,  however,  will be  unaffected  by  implementation  of this
standard.


                                      F-16

<PAGE>



2.    Acquisition

On May 23, 1996,  PTC acquired all the  outstanding  shares of Atlas for cash of
$6,900,000,  and  related  acquisition  costs  of  approximately  $337,060.  The
acquisition,  which was pursuant to a Merger  Agreement dated December 18, 1995,
also included certain employment  agreements with bonus  arrangements  involving
the principal shareholders of Atlas (see Note 13).

The  acquisition  has been accounted for using the purchase method of accounting
and, accordingly,  the purchase price has been allocated to the assets purchased
and  liabilities  assumed  based on the  estimated  fair  values  at the date of
acquisition.  The excess of the purchase  price over the estimated fair value of
net  assets  acquired  of  $2,604,726  was  recorded  as  goodwill  and is being
amortized on a straight-line basis over twenty-five years.

The purchase price was allocated as follows:

Working capital                           $    2,238,011
Property and equipment                         4,218,818
Other assets                                     363,985
Goodwill                                       2,604,726
Liabilities                                   (2,188,480)
----------------------------------------------------------
Purchase Price                            $    7,237,060
-----------------------------------------------------------


Since the purchase price assigned to the net assets  acquired was based on their
estimated  fair  values at the May 23,  1996  acquisition  date,  the  financial
statements  for periods  subsequent to May 23, 1996 are presented on a different
cost basis than those for prior periods and, therefore, are not comparable.



                                      F-17

<PAGE>


Pro forma  results of  operations,  as if the  acquisition  had occurred July 1,
1994, are unaudited and are reflected  below.  Pro forma  adjustments  primarily
include (1) additional  depreciation  and  amortization  on the excess  purchase
price  allocated to property and  equipment  and goodwill,  (2)  elimination  of
interest income on the portion of PTC's investment in U.S. government securities
deposited in a trust fund and liquidated upon consummation of the acquisition of
Atlas, (3) elimination of management  bonuses and professional  fees incurred by
Atlas prior to the merger that would not have been incurred in the normal course
of business had it not been stated that the Merger  Agreement  contemplated  the
net worth of Atlas at a specific level at the date of the merger, (4) additional
salaries for PTC's management and additional bonuses to Atlas' senior management
under new  employment  agreements,  and (5)  provision  for  income  taxes at an
effective  rate  of 43%.  This  pro  forma  financial  data  is not  necessarily
indicative of the results that would have occurred had the acquisition  occurred
July 1, 1994.

Year Ended June 30,                             1996               1995
--------------------------------------------------------------------------------
Net sales                                 $    36,003,000   $     29,078,000
Net income                                      1,409,000            764,000
Net income per common share                           .66                .36
--------------------------------------------------------------------------------


3.    Contract Receivables

The contract receivables consisted of:


June 30,                                         1997                1996
--------------------------------------------------------------------------------
Billed
      Completed contracts                    $ 1,458,721        $  1,315,374
      Uncompleted contracts                    7,680,830           6,757,622
Unbilled                                         105,251              48,634
--------------------------------------------------------------------------------
Total Contracts Receivable                     9,244,802           8,121,630
Less allowance for doubtful accounts             (45,500)           (163,471)
--------------------------------------------------------------------------------
Total                                        $ 9,199,302        $  7,958,159
--------------------------------------------------------------------------------


                                      F-18

<PAGE>


4.    Costs and Estimated Earnings on Uncompleted Contracts

Costs  and  estimated  earnings  on  uncompleted   contracts  consisted  of  the
following:

June 30,                                         1997              1996
--------------------------------------------------------------------------------
Costs incurred on uncompleted contracts      $ 28,753,361      $  25,617,770
Estimated earnings                             10,512,171         10,217,972
--------------------------------------------------------------------------------
                                               39,265,532          35,835,742
Less billings to date                          31,790,072          28,777,702
--------------------------------------------------------------------------------
Total                                        $  7,475,460      $    7,058,040
--------------------------------------------------------------------------------


The above  totals are  included in the  accompanying  balance  sheets  under the
following captions:

June 30,                                         1997                  1996
--------------------------------------------------------------------------------
Costs and estimated earnings in excess
      of billings on uncompleted contracts   $  8,640,731      $    7,593,003

Billings in excess of costs and estimated
      earnings on uncompleted contracts        (1,165,271)           (534,963)
--------------------------------------------------------------------------------
Total                                        $  7,475,460      $    7,058,040
--------------------------------------------------------------------------------


5.    Assets Held For Sale

The  Linden  land  and  building  are  being  offered  for  sale at a  price  of
approximately  $1,100,000.  The  carrying  value of these assets was $937,549 at
June 30, 1997.  Accordingly,  no loss on the sale of these assets is expected by
management.  Since an offer to purchase for $1,100,000 has been received  during
fiscal 1998,  these assets have been  classified  as a current asset at June 30,
1997.




                                      F-19
<PAGE>


6.    Noncompetition Agreement

Atlas  has  paid  $255,000  to a  former  stockholder  in  connection  with  the
repurchase  of  Atlas  stock  under  a  ten-year  noncompetition  agreement.  In
connection  therewith,  Atlas  recorded  an asset for  $255,000,  which is being
amortized on a straight-line basis starting in December 1994.

7.    Line-of-Credit

At June  30,  1996,  Atlas  had an  $8,000,000  working  capital  line-of-credit
agreement with a bank, which was secured by substantially  all assets.  Interest
was  charged  at a rate  between  prime and 3/4% over  prime,  depending  on the
Company's  liabilities  to  tangible  capital  funds  ratio,  as  defined in the
borrowing  agreement.  The line-of-credit  balance outstanding was $7,188,558 at
June 30, 1996.

During  1997,  the  line-of-credit  balance  was repaid with  proceeds  from the
revolving credit agreement (see Note 8).

8.    Long-Term Debt

Long-term debt consisted of:
<TABLE>
<CAPTION>

June 30,                                                                                1997                  1996
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>                   <C>  
$14,000,000  revolving  credit  agreement  with a bank.  The amount  that may be
      borrowed  under this  agreement  is limited to  specified  percentages  of
      contract receivables, work in process and property and equipment of Atlas.
      The revolving credit agreement provides for outstanding borrowings to bear
      interest at a rate equal to the bank's  prime rate (which was 8.5% at June
      30, 1997).  In addition,  there is a commitment  fee of 1/4 % per annum on
      the unused  portion of the  revolving  credit which is payable  quarterly.
      Principal  payments on this  agreement  are due quarterly in the amount of
      $62,500 until  December 10, 1998, at which time the entire balance is due.
      Borrowings under this agreement are  collateralized  by substantially  all
      assets of Atlas. The revolving credit agreement
      also contains various financial covenants.                                    $   11,299,615          $        -

</TABLE>

                                      F-20
<PAGE>
<TABLE>
<CAPTION>

June 30,                                                                                 1997                 1996
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>                  <C>   
First mortgage note payable (see (1) below
      for details)                                                                       4,500,000                   -

Other (approximately $2.4 million of the June 30, 1996 balance was repaid during
      fiscal 1997 with
      proceeds of the revolving credit agreement)                                          241,778           2,693,179
-------------------------------------------------------------------------------------------------------------------------------
Total                                                                                   16,041,393           2,693,179

Less current maturities                                                                    714,140             464,393
-------------------------------------------------------------------------------------------------------------------------------
Long-Term Debt                                                                        $ 15,327,253      $    2,228,786
-------------------------------------------------------------------------------------------------------------------------------
<FN>


(1)   In January 1997, the Company borrowed $4,500,000 in connection with
      variable rate industrial revenue bonds issued by The Economic
      Development Corporation of the County of Genesee. The note is payable
      in amounts of $400,000 per year for fiscal years 1998-2000 and then
      $300,000 per year through 2011. Interest is payable quarterly and is set
      weekly by the remarketing agent at a level which allows the bonds to be
      sold at par. The interest rate at June 30, 1997 was approximately 4.0%.
      To enhance the marketability of the bonds and guarantee payment of the
      bonds on the Company's behalf, a bank has issued its letter of credit
      through December 2001. The commission on the letter of credit is 1%
      annually, and is payable quarterly. Also, the bonds are secured by a first
      mortgage note collateralized by substantially all assets of the Company.
</FN>
</TABLE>

Scheduled maturities of long-term debt for future years ending June 30 are as
follows: 1998 - $714,140; 1999 - $11,515,853; 2000 - $449,915; 2001 -
$341,004; 2002 - $320,482 and $2,699,999 thereafter.



                                      F-21

<PAGE>



9.    Stockholders' Equity

On July 5, 1994,  PTC  consummated  its Offering of 1,700,000  units  ("Units").
(425,000 shares had been previously  issued for $25,000.) Each Unit consisted of
one share of PTC's common  stock,  $.001 par value,  and two  Redeemable  Common
Stock  Purchase  Warrants  ("Warrants").  Each  Warrant  entitles  the holder to
purchase from PTC one share of common stock at an exercise price of $5.00 during
the period  commencing May 24, 1996, and ending June 24, 2001. The Warrants will
be  redeemable  at a price of $.01 per Warrant  upon 30 days notice at any time,
only in the event that the last sale price of the common stock is at least $8.50
per share for 20 consecutive  trading days ending on the third day prior to date
on which notice of redemption is given.

PTC also issued 300,000  warrants to certain  investors,  which are identical to
the Warrants discussed above.

At June 30,  1997,  4,210,000  shares  of common  stock  were  reserved  for (1)
issuance  upon  exercise  of the  warrants  described  above,  and  (2)  for the
securities underlying a purchase option granted the underwriter of the Offering.
This option,  which allows the  underwriter  the right to purchase up to 170,000
Units, is exercisable initially at $7.50 per Unit until June 23, 1999. Each Unit
consists of one share of PTC common stock and two Warrants.  The Units  issuable
upon  exercise of the purchase  option are  identical to those  described  above
except that the Warrants contained therein expire June 23, 1999.

No Warrants have been exercised or granted subsequent to May 23, 1996.

The Company is authorized to issue  1,000,000  shares of preferred  stock ($.001
par value) with such  designations,  voting and other rights and  preferences as
may be  determined  from time to time by the Board of  Directors.  No  preferred
stock has been issued by the Company.

In connection  with the May 23, 1996  acquisition  of Atlas,  a total of 339,999
shares of common stock that were previously subject to possible  redemption were
reclassified to permanent equity by the Company.

                                      F-22
<PAGE>

Atlas had  periodically  repurchased  its stock in prior years,  and in order to
comply with the Michigan Business Act, all such treasury stock was combined with
common stock,  paid-in capital,  and retained  earnings and was considered to be
retired, but available for reissue. During 1995, Atlas purchased 9,218 shares of
its own stock from a former stockholder for $1,569,143.

In  accordance  with  the  December  18,  1995  Merger  Agreement,   a  $700,000
distribution was paid to a former shareholder in May 1996.

10.   Employee Benefit Plans

Atlas  previously  sponsored an Employee Stock Ownership Trust (ESOT) for all of
the Company's  employees.  Atlas elected to contribute  $200,000 and $150,000 to
the ESOT during the periods ended May 23, 1996 and June 30, 1995,  respectively.
At May 23, 1996,  the Company's  stock owned by the ESOT was acquired as part of
the purchase  transaction.  The Company  liquidated  the ESOT during fiscal year
1997.

The  Company  has  a  401(k)  plan  covering  substantially  all  the  Company's
employees.  The plan allows for  eligible  employees to defer a portion of their
salary. In addition, discretionary contributions may be made by the Company. The
Company contributed  $148,700 for the year ended June 30, 1997. The Company made
no  contributions  for the  period  ended  May 23,  1996 or for the  Predecessor
periods.

PTC adopted a Performance  Equity Plan in 1996 to enable the Company to offer to
selected  personnel an opportunity to acquire an equity  interest in the Company
through the award of incentives such as stock options, stock appreciation rights
and/or  other  stock-based  awards.  The total  number of shares of common stock
reserved and available for  distribution  under the Plan is 330,000  shares.  On
July 30,  1996,  the Board of  Directors  awarded  255,000  options  to  certain
employees under such plan. Such options are exercisable  until July 30, 2001, at
an  exercise  price of $5.00 per share.  None of these  options  were  exercised
during fiscal 1997.

                                      F-23
<PAGE>

The  Company  has  adopted  the  disclosure-only  provisions  of SFAS  No.  123,
"Accounting for Stock-Based Compensation". Accordingly, no compensation cost has
been  recognized  for  the  Plan.  If  the  Company  had  elected  to  recognize
compensation  cost based on the fair value of the options  granted at grant date
as  prescribed  by SFAS No. 123, net income and income per share amounts for the
year ended June 30, 1997 would have been the pro forma amounts indicated below:

      Net income - as reported                $ 592,730
      Net income - pro forma                    259,445
      Net income per share - as reported            .28
      Net income per share - pro forma              .12

The fair  value of each  option  grant is  established  on the date of the grant
using the  Black-Scholes  option-pricing  model with the following  assumptions:
dividend yield of 0%;  expected  volatility of 23%;  risk-free  interest rate of
5.4%; and expected lives of 2 years.

The effects of applying SFAS No. 123 in the above pro forma disclosure are
not necessarily indicative of future amounts.

11.   Income Taxes

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
and the amounts used for income tax purposes.

                                      F-24
<PAGE>

Significant  components of the Company's deferred tax liabilities and assets are
as follows:

June 30,                                          1997             1996
--------------------------------------------------------------------------------
Depreciation and basis of assets             $  715,000      $   693,000
Other                                           117,000           86,000
--------------------------------------------------------------------------------
Deferred Tax Liability                       $  832,000      $   779,000
--------------------------------------------------------------------------------
Accrual for executive bonus agreement        $  285,000      $   185,000
Research credit carryforward                    218,000          178,000
Other                                           119,000          117,000
--------------------------------------------------------------------------------
Deferred Tax Asset                           $  622,000      $   480,000
--------------------------------------------------------------------------------

Significant components of taxes on income are as follows:
<TABLE>
<CAPTION>

                                                                     The Company                        Predecessor
                                                                            May 24, 1996     July 1, 1995
                                                            Year Ended          to                 to            Year Ended
                                                          June 30, 1997     June 30, 1996     May 23, 1996      June 30, 1995
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                <C>              <C>                <C>  
Federal
      Current                                            $  481,000          $ 108,000        $  401,000         $  561,000
      Deferred                                              (89,000)            46,000           164,000           (202,000)
      Other                                                       -                  -                 -             10,000

State
      Current                                                58,000             11,000            43,000             96,000
-------------------------------------------------------------------------------------------------------------------------------
Total                                                    $  450,000          $ 165,000        $  608,000         $  465,000
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      F-25

<PAGE>


The reconciliation of income tax computed at the federal statutory rate (34%) to
income tax expense is as follows:
<TABLE>
<CAPTION>

                                                                     The Company                          Predecessor
                                                                              May 24, 1996     July 1, 1995
                                                             Year Ended           to                 to          Year Ended
                                                           June 30, 1997     June 30, 1996     May 23, 1996     June 30, 1995
------------------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>                <C>              <C>               <C>   
Tax at statutory rate                                      $  355,000         $ 126,000         $ 466,000        $  913,000

Goodwill amortization and
      other non-deductible
      items                                                    55,000             6,000            70,000                 -

Research credit                                               (40,000)                -                 -          (208,000)

State income taxes, net
      of federal income tax
      benefit                                                  38,000             7,000            28,000            96,000

Change in valuation 
      allowance                                                     -                 -                 -          (319,000)

Other - net                                                    42,000            26,000            44,000           (17,000)
------------------------------------------------------------------------------------------------------------------------------
Income Tax Expense                                         $  450,000         $ 165,000         $ 608,000        $  465,000
------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Atlas has tax research credit  carryforwards  totalling $218,000 that will begin
to expire in 2008.

12.   Major Customers

For the twelve months ended June 30, 1997, 1996 and 1995, the Company's sales to
its  major  customers  (each  representing  more  than 10% of total  net  sales)
amounted to approximately  44%, 64% and 60% of total annual sales.  During 1997,
there were three  major  customers  representing  20%,  12% and 12% of total net
sales;  during 1996, there were four major customers  representing 30%, 13%, 11%
and 10% of total  net  sales;  and  during  1995,  there  were  three  customers
representing 35%, 15% and 10% of total net sales.



                                      F-26

<PAGE>

13.   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.


(2)  During fiscal 1997, the Company began constructing a new facility.  At June
     30, 1997,  the estimated  costs to complete the facility are  approximately
     $130,000.


                                      F-27

<PAGE>

14.   Contingencies

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 arbitration  demand is without merit and is vigorously
defending 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's  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  arbitration   demand  cannot  currently  be
determined,  management believes that the final outcome will not have a material
adverse effect on the Company's results of operations or its financial position.

Atlas is undergoing an Internal  Revenue Service audit for the fiscal year ended
June 30,  1995.  The main area of review is a research and  experimentation  tax
credit the Company  has  calculated  and filed for over the past six years.  The
Company has applied  $383,000 of credit toward  Federal taxes due for the fiscal
period ended June 1995 and had a carry  forward of $481,400  expected to be used
as a  reduction  in the  calculation  of 1996 and 1997  alternative  minimum tax
payments.  Management  believes this issue is a matter of  interpretation of the
research and experimentation  regulations.  Management believes that the IRS may
seek a reduction  in the amount of credit  calculated  which may have an adverse
effect to the financial  statements  of the Company.  The Company is entitled to
indemnification  (subject to certain exclusions and limitations) from the former
principal  stockholders  of Atlas for  amounts  it may be  required  to pay as a
result of such audit.  Also,  to the extent any such  amounts have the effect of
reducing the net worth of Atlas at December  31, 1995 below a specified  amount,
the Company is entitled to reimbursement  from the former  stockholders of Atlas
and has  secured  such  reimbursement  obligation  through a  $1,000,000  escrow
account.

                                      F-28

<PAGE>

                 Productivity Technologies Corp. and Subsidiary
                               and the Predecessor

                 Schedule II - Valuation and Qualifying Accounts
<TABLE>
<CAPTION>


                                                                              Additions
                                                        Balance at           Charged to                                   Balance
                                                         Beginning             Cost and                                    at End
Description                                              of Period             Expenses           Deductions             of Period
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                   <C>                  <C>                   <C> 
Year Ended June 30, 1997 (Company)
  Allowance for doubtful accounts
    (deducted from contract receivables)                $   163,471         $    (78,753)      (1)    $   (39,218)     $     45,500
  Inventory net realizable value reserve                    200,000                    -       (2)        (80,000)          120,000
------------------------------------------------------------------------------------------------------------------------------------
Period May 24, 1996 to June 30, 1996 (Company)
  Allowance for doubtful accounts
    (deducted from contract receivables)                $   163,471         $          -              $         -      $    163,471
  Inventory net realizable value reserve                    200,000                    -                        -           200,000
------------------------------------------------------------------------------------------------------------------------------------
Period July 1, 1995 to May 23, 1996 (Predecessor)
  Allowance for doubtful accounts
    (deducted from contract receivables)                $   232,120         $    180,337       (1)    $  (248,986)     $    163,471
  Inventory net realizable value reserve                          -              200,000                        -           200,000
------------------------------------------------------------------------------------------------------------------------------------
Year Ended June 30, 1995 (Predecessor)
  Allowance for doubtful accounts
    (deducted from contract receivables)                $   127,533         $    108,000       (1)    $    (3,413)     $    232,120
  Inventory net realizable value reserve                          -                    -                        -                 -
------------------------------------------------------------------------------------------------------------------------------------
<FN>

(1) Accounts  deemed to be  uncollectible  (net of accounts  collected that were
previously deducted). (2) Inventory disposed of, charged to reserve.
</FN>
</TABLE>

                                      F-29

<PAGE>

                                   SIGNATURES


             Pursuant to the  requirements  of the  Securities  Exchange  Act of
1934,  the Company has duly caused this report to be signed on its behalf by the
undersigned herewith duly authorized.


October 3, 1997                        PRODUCTIVITY TECHNOLOGIES CORP.


                                       By: /s/ Samuel N. Seidman
                                          ---------------------------
                                              Samuel N. Seidman
                                                 President


             Pursuant to the  requirements  of The  Securities  Exchange  Act of
1934,  this report has been signed below by the  following  persons on behalf of
the Company and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                                            <C>                                                        <C>  

  /s/  Ray J. Friant, Jr.                      Chairman of the Board                                 October 3, 1997
-----------------------------------------
Ray J. Friant, Jr.


  /s/  Samuel N. Seidman                       Chief Executive Officer,                              October 3, 1997
-----------------------------------------      President and Director 
Samuel N. Seidman                              


  /s/  Joseph K. Linman                        Vice President and Director                           October 3, 1997
-----------------------------------------
Joseph K. Linman


  /s/  John S. Strance                         Vice President and Director                           October 3, 1997
-----------------------------------------
John S. Strance


  /s/  Jesse A. Levine                         Vice President, Secretary,                            October 3, 1997
-----------------------------------------      Treasurer and Director and
Jesse A. Levine                                Chief Financial Officer
                                               


-----------------------------------------      Director
Alan H. Foster



-----------------------------------------      Director
Alan I. Goldman

</TABLE>


                                     Page 53

<PAGE>