SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q

(Mark One)

 X   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
---  Act of 1934

     For the quarterly period ended September 30, 1997

     Transition  report  pursuant  to  Section 13  or 15(d)  of  the  Securities
---  Exchange Action of 1934

     For the transition period from                     to
                                    -------------------    ---------------------


                         Commission File Number 0-19266

                        ALLIED HEALTHCARE PRODUCTS, INC.

                              1720 Sublette Avenue

                            St. Louis, Missouri 63110
                                  314/771-2400

                        I.R.S. Employment I.D. 25-1370721

     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  twelve  months (or for such shorter  periods that the
registrant  was required to file such reports,  and (2) has been subject to such
filing requirements for the past ninety days.

                            Yes       X       No
                                ------------     ------------

     The number of shares of common  stock  outstanding  at November 14, 1997 is
7,806,682 shares.

<PAGE>

                                      INDEX
                                                                        Page
Part I - Financial Information                                         Number

         Item 1.    Financial Statements

                    Consolidated  Statement
                    of Operations - three months                        3
                    ended September 30, 1997
                    and 1996 (Unaudited)

                    Consolidated Balance Sheets -
                    September 30, 1997 (Unaudited) and                 4 - 5
                    June 30, 1997

                    Consolidated Statetments of Cash
                    Flow - three months ended                          6 - 7
                    September 30, 1997 and 1996 (Unaudited)

                    Consolidated Statement of Changes
                    in Stockholders' Equity for three months            8
                    ended September 30, 1997 (Unaudited)

                    Notes to Consolidated
                    Financial Statements                               9 - 10

         Item 2.    Management's Discussion and
                    Analysis of Financial Condition                    11 - 18
                    and Results of Operations

Part II - Other Information

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

Signature                                                              19

<PAGE>

PART I.   FINANCIAL INFORMATION
          Item 1.   Financial Statements



                        ALLIED HEALTHCARE PRODUCTS, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)

                                           Three months ended
                                              September 30,
                                        ------------  ------------
                                            1997          1996
                                        ------------  ------------

Net sales                               $30,172,904   $29,133,723
Cost of sales                            20,943,624    19,893,622
                                        ------------  ------------
Gross profit                              9,229,280     9,240,101

Selling, general and
  administrative expenses                 7,252,587     8,377,834
                                        ------------  ------------

Income from operations                    1,976,693       862,267

Other expenses:
  Interest expense                        1,859,819     1,115,430
  Other, net                                 46,939        25,956
                                        ------------  ------------
                                          1,906,758     1,141,386
                                        ------------  ------------
Income (loss) before provision
  (benefit) for income taxes and
  extraordinary loss                         69,935      (279,119)

Provision (benefit) for income taxes        177,123      (101,850)
                                        ------------  ------------

Loss before extraordinary loss             (107,188)     (177,269)

Extraordinary loss on early
  extinguishment of debt, net of
  income tax benefit of $373,191            530,632             0
                                        ------------  ------------
Net Loss                                  ($637,820)    ($177,269)
                                        ============  ============

Loss per share:
  Loss before extraordinary loss             ($0.01)       ($0.02)
  Extraordinary loss                         ($0.07)         ---
                                        ------------  ------------
Net Loss                                     ($0.08)       ($0.02)
                                        ============  ============

Weighted average shares                   7,800,095     7,796,682
                                        ============  ============

          See accompanying Notes to Consolidated Financial Statements.

<PAGE>

                        ALLIED HEALTHCARE PRODUCTS, INC.
                           CONSOLIDATED BALANCE SHEET
                                     ASSETS

<TABLE>
<CAPTION>
                                                                Sept 30,          June 30,
                                                                  1997              1997
                                                              -------------     -------------
                                                               (Unaudited)
<S>                                                           <C>               <C> 
Current Assets:
   Cash                                                           $879,083          $988,436
   Accounts receivable, net of allowance for doubtful
      accounts of $1,159,674 and $1,225,326, respectively       24,000,055        23,093,037
   Inventories                                                  24,524,459        26,052,991
   Other current assets                                          1,496,699         1,544,811
                                                              -------------     -------------
      Total current assets                                      50,900,296        51,679,275
                                                              -------------     -------------
   Property, plant and equipment, net                           20,154,812        20,848,870
   Goodwill, net                                                50,402,329        50,763,511
   Deferred income taxes-noncurrent                              1,665,069         1,665,069
   Other assets, net                                             1,054,915         1,386,291
                                                              -------------     -------------
      Total assets                                            $124,177,421      $126,343,016
                                                              =============     =============
</TABLE>

          See accompanying Notes To Consolidated Financial Statements.

<PAGE>

                        ALLIED HEALTHCARE PRODUCTS, INC.

                           CONSOLIDATED BALANCE SHEET
                                   (CONTINUED)
                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                Sept 30,          June 30,
                                                                  1997              1997
                                                              -------------     -------------
                                                               (Unaudited)
<S>                                                           <C>               <C> 
Current liabilities:
   Accounts payable                                            $11,213,754       $14,048,235
   Current portion of long-term debt                            13,842,025        12,890,772
   Other current liabilities                                     4,754,355         5,997,670
                                                              -------------     -------------
      Total current liabilities                                 29,810,134        32,936,677
                                                              -------------     -------------
Long-term debt                                                  35,571,318        34,041,300


Commitments and contingencies

Stockholders' equity:
   Preferred stock; $.01 par value; 1,500,000 shares  
    authorized; no shares issued and outstanding; 
    including 200,000 authorized shares of Series A
    preferred stock; $.01 par value, none of which 
    are issued and outstanding
   Common stock; $.01 par value; 30,000,000 shares  
    authorized; 7,806,682 and 7,796,682 shares issued 
    and outstanding at September 30, 1997 and
    June 30, 1997, respectively                                    101,102           101,002
   Additional paid-in capital                                   47,014,621        46,945,971
   Common stock in treasury, at cost                           (20,731,428)      (20,731,428)
   Retained earnings                                            32,411,674        33,049,494
                                                              -------------     -------------
                                                                58,795,969        59,365,039
      Total stockholders' equity                              -------------     -------------
                                                              $124,177,421      $126,343,016
      Total liabilities and stockholders' equity              =============     =============

</TABLE>

          See accompanying Notes To Consolidated Financial Statements.

<PAGE>

                        ALLIED HEALTHCARE PRODUCTS, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  Three Months ended
                                                                    September 30,
                                                            -----------------------------
                                                                1997            1996
                                                            -------------   -------------
<S>                                                         <C>             <C>
Cash flows from operating activities:
   Net loss                                                    ($637,820)      ($177,269)
   Adjustments to reconcile net loss to net 
       cash provided by (used in) operating
       activities:

      Depreciation and amortization                            1,339,043       1,241,126
      Loss on refinancing of long-term debt                      903,823               0
      Decrease (increase) in accounts receivable, net           (907,018)      1,475,224
      Decrease in inventories                                  1,528,532         829,454
      Decrease in income taxes receivable                              0       1,724,352
      Decrease (increase) in other current assets                 48,112        (303,970)
      Increase (decrease) in accounts payable                 (2,834,481)        511,896
      Decrease in accrued income taxes                          (147,500)              0
      Decrease in other current liabilities                   (1,095,815)       (586,682)
                                                            -------------   -------------
       Net cash provided by (used in) operating activities    (1,803,124)      4,714,131
                                                            -------------   -------------

Cash flows from investing activities:
   Capital expenditures, net                                    (135,282)       (983,176)
                                                            -------------   -------------
       Net cash used in investing activities                    (135,282)       (983,176)
                                                            -------------   -------------
</TABLE>

                                   (CONTINUED)

<PAGE>

                        ALLIED HEALTHCARE PRODUCTS, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (CONTINUED)
<TABLE>
<CAPTION>
                                                                  Three Months ended
                                                                    September 30,
                                                            -----------------------------
                                                                1997            1996
                                                            -------------   -------------
<S>                                                         <C>             <C>
Cash flows from financing activities:
   Proceeds from issuance of long-term debt                   26,000,000       5,000,000
   Payments of long-term debt                                (16,341,599)     (1,124,438)
   Borrowings under revolving credit agreement                40,502,205       4,000,000
   Payments under revolving credit agreement                 (47,679,335)    (10,500,000)
   Issuance of common stock                                       68,750               0
   Debt issuance costs                                          (720,968)       (449,125)
   Dividends paid on common stock                                      0        (545,768)
                                                            -------------   -------------
       Net cash provided by (used in) financing activities     1,829,053      (3,619,331)
                                                            -------------   -------------

   Net increase (decrease) in cash and equivalents              (109,353)        111,624
   Cash and equivalents at beginning of period                   988,436       1,489,133
                                                            -------------   -------------
   Cash and equivalents at end of period                        $879,083      $1,600,757
                                                            =============   =============


Supplemental  disclosures of cash flow information:  
   Cash paid during the period for:
       Interest                                               $2,281,473      $1,149,750
       Income taxes                                               $2,118          $4,000

</TABLE>

          See accompanying Notes To Consolidated Financial Statements.

<PAGE>

                        ALLIED HEALTHCARE PRODUCTS, INC.
                      CONSOLIDATED STATEMENT OF CHANGES IN
                              STOCKHOLDERS' EQUITY
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                             Additional
                              Preferred         Common        paid-in          Treasury          Retained
                                stock           stock         capital            stock           earnings
                              ----------     ----------     ------------     -------------     ------------
<S>                           <C>            <C>            <C>              <C>               <C>

Balance, June 30, 1997               $0       $101,002      $46,945,971      ($20,731,428)      $33,049,494

Issuance of common stock                           100           68,650
Net loss for the
   Three Months ended
   September 30, 1997                                                                             (637,820)
                              ----------     ----------     ------------     -------------     ------------
Balance,
September 30, 1997                   $0       $101,102      $47,014,621      ($20,731,428)     $32,411,674
                              ==========     ==========     ============     =============     ============

</TABLE>

          See accompanying Notes To Consolidated Financial Statements.

<PAGE>

                        ALLIED HEALTHCARE PRODUCTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   Unaudited Financial Statements


     The  accompanying  unaudited  financial  statements  have been  prepared in
accordance  with the  instructions  for Form 10-Q and do not  include all of the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial   statements.   In  the  opinion  of  management,   all
adjustments,   consisting  only  of  normal  recurring  adjustments   considered
necessary for a fair presentation, have been included. Operating results for any
quarter are not  necessarily  indicative of the results for any other quarter or
for the full  year.  These  statements  should be read in  conjunction  with the
financial statements and notes to the consolidated  financial statements thereto
included in the Company's Form 10-K for the year ended June 30, 1997.

2.   Inventories

          Inventories are comprised as follows:

                         September 30,  1997           June 30, 1997
                             (Unaudited)


Work-in-progress             $ 2,009,537                $ 2,726,585
Component Parts               15,558,400                 18,679,482
Finished Goods                 6,956,522                  4,646,924
                             -----------                 ----------
                             $24,524,459                 $26,052,991
                             -----------                 -----------


The above  amounts are net of a reserve for  obsolete  and excess  inventory  of
approximately  $1.7 million and $1.7 million at September  30, 1997 and June 30,
1997, respectively.

3.   Debt Refinancing

     On August 8, 1997,  the Company  refinanced its existing debt through a new
$46.0 million credit facility with Foothill Capital Corporation ("Foothill"),  a
division of Norwest Bank. The Foothill credit  facility,  with a blended average
interest  rate of 10.2%,  is comprised of a $25.0 million  three-year  revolving
line of  credit,  three-year  term  loans of  $10.0  million  and $7.0  million,
respectively,  and a $4.0 million loan maturing in February 1998. In conjunction
with the new financing  agreement,  Allied placed an additional  $5.0 million in
subordinated  debt  financing,  which  matures in February  1998,  with  several
related parties to the Company. In addition, the Company issued 112,500 warrants
with an exercise price of $7.025 per share,  62,500 of which are being issued to
the holders of the subordinated debt and the balance to Foothill. In conjunction
with the debt refinancing, the Company recorded a $0.5 million, net of


<PAGE>


taxes,  extraordinary  expense  to write off the  unamortized  loan costs of the
previous credit facility.

4.   Subsequent Events

     On  October  31,  1997,  subsequent  to the end of the first  quarter,  the
Company  sold the  assets of Bear  Medical  Systems  and its  subsidiary  BiCore
Monitoring  Systems,  to Thermo  Electron  Corporation for  approximately  $36.5
million,  net of transaction costs, plus the assumption of certain  liabilities.
Estimated  net proceeds  from the sale of  approximately  $25.0  million,  after
taxes,  were  utilized to repay a  significant  portion of its term notes and to
repay all of its  subordinated  debt, 16.0 million of which had a coupon rate of
14.0% per annum.

     On November 3, 1997,  the Company  repaid two term notes and  significantly
reduced the outstanding  balance of its revolving line of credit and on November
4, 1997,  repaid its subordinated  debt from proceeds  obtained from the sale of
certain assets as discussed below.

     The sale of these assets  resulted in an estimated  net gain for  financial
reporting purposes of approximately $4.9 million,  which will be recorded in the
Company's  quarter  ending  December  31,  1997.  Such  estimated  net  gain  is
preliminary in nature and may be subject to further  revision upon  finalization
of the accounting for the sale transaction.  On a pro forma basis, excluding the
results of  operations  of the divested  assets and including the effects of the
reduction in the Company's  indebtedness  as a result of  application of the net
proceeds  from  the  sale,  net  sales,  income  from  operations,  loss  before
extraordinary item, and loss per share before extraordinary item would have been
$23.1 million, $0.9 million, ($0.4) million and ($0.04), respectively.  Such pro
forma results do not include the net gain on the sale described  above,  and are
not intended to reflect what the Company's  results of operations would actually
have been if the sale had  occurred on July 1, 1997 or to project the  Company's
results of operations for any future period.

<PAGE>

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

GENERAL

The  following  discussion  summarizes  the  significant  factors  affecting the
consolidated  operating  results and  financial  condition of Allied  Healthcare
Products,  Inc. ("Allied" or the "Company") for the three months ended September
30, 1997 compared to the three months ended  September 30, 1996. This discussion
should be read in  conjunction  with the June 30,  1997  consolidated  financial
statements and  accompanying  notes thereto  included in the Company's Form 10-K
for the year ended June 30, 1997.

Certain  statements  contained  herein are  forward-looking  statements.  Actual
results could differ  materially  from those  anticipated as a result of various
factors, including cyclical and other industry downturns, the effects of federal
and state  legislation  on health care reform,  including  Medicare and Medicaid
financing,   the  ability  to  realize  the  full  benefit  of  recent   capital
expenditures or consolidation and  rationalization  activities,  difficulties or
delays  in  the   introduction  of  new  products  or  disruptions  in  selling,
manufacturing and/or shipping efforts.

The Company recently refinanced its existing credit facility and sold the assets
of its ventilation  products  division as part of its ongoing efforts to improve
its  operating  results and capital  structure.  These  financial  and operating
initiatives are addressed below.


Debt Refinancing

On August 8, 1997, the Company  refinanced its existing debt through a new $46.0
million  credit  facility  with Foothill  Capital  Corporation  ("Foothill"),  a
division of Norwest Bank. The Foothill credit  facility,  with a blended average
interest  rate of 10.2%,  is comprised of a $25.0 million  three-year  revolving
line of  credit,  three-year  term  loans of  $10.0  million  and $7.0  million,
respectively,  and a $4.0 million loan maturing in February 1998. In conjunction
with the new financing  agreement,  Allied placed an additional  $5.0 million in
subordinated  debt  financing,  which  matures in February  1998,  with  several
related parties to the Company. In addition, the Company issued 112,500 warrants
at an  exercise  price of $7.025 per share,  62,500 of which were  issued to the
holders of the subordinated debt and the balance to Foothill . The proceeds from
the new financing were used to replace the Company's  outstanding  debt with its
previous commercial bank syndicate, and to provide additional liquidity. The new
credit  facility  became  necessary  as the  Company  was unable to  negotiate a
long-term  agreement  with its previous  commercial  bank syndicate and had been
required to pay fees in excess of $2.5  million  from  September  1996 to August
1997 to  obtain  waivers  for  technical  covenant  violations.  The new  credit
facility  reduced the Company's  interest expense in the first quarter of fiscal
1998 as compared to the previous quarter,  provided  additional  liquidity,  and
reflected  technical  covenants  consistent with the Company's current financial
projections.  In conjunction  with the debt  refinancing the Company  recorded a
$0.5 million, net of taxes,  extraordinary  expense to write-off the unamortized
loan costs of the previous  credit  facility.  On November 3, 1997,  the Company
repaid two term notes and significantly  reduced the outstanding  balance of its
revolving line of credit and on November 4,  1997,repaid its  subordinated  debt
from proceeds obtained from the sale of certain assets as discussed below.

<PAGE>

Sale of Ventilation Products Operations

On October 31, 1997,  subsequent  to the end of the first  quarter,  the Company
sold the assets of Bear Medical Systems, Inc. ("Bear") and its subsidiary BiCore
Monitoring  Systems,   Inc.  ("BiCore")  to  Thermo  Electron   Corporation  for
approximately $37.5 million plus the assumption of certain liabilities. The sale
enabled the Company to eliminate a significant  portion of its term notes and to
repay all of its subordinated  debt, $16.0 million of which had a coupon rate of
14.0% per annum.  As  previously  discussed,  $9.0 million of the debt which was
repaid, would have matured in February 1998.

The sale also  enables  the  Company  to focus on its core  businesses.  Selling
efforts  related to Bear and BiCore  ventilation  products  required  technical,
demonstration  based selling  efforts,  a selling skill set different than those
required for the Company's core products.  In addition,  the high-tech nature of
the ventilation  products required  significant  ongoing investments in research
and development. Such investments put pressure on the limited liquidity position
the Company experienced prior to the sale of these assets.

The  sale of these  assets  resulted  in an  estimated  net  gain for  financial
reporting purposes of approximately $3.8 million,  which will be recorded in the
Company's  quarter  ending  December  31,  1997.  Such  estimated  net  gain  is
preliminary in nature and may be subject to further  revision upon  finalization
of the accounting for the sale transaction.  On a pro forma basis, excluding the
results of  operations  of the divested  assets and including the effects of the
reduction in the Company's  indebtedness  as a result of  application of the net
proceeds  from  the  sale,  net  sales,  income  from  operations,  loss  before
extraordinary item and loss per share before  extraordinary item would have been
$23.1  million,  $0.9 million,  ($0.3)  million and ($0.04) per share.  Such pro
forma results do not include the net gain on the sale described  above,  and are
not intended to reflect what the Company's  results of operations would actually
have been if the sale had occurred on July 1, 1997,  or to project the Company's
results of operations for any future period.


Financial Information

The following table sets forth, for the fiscal period indicated,  the percentage
of  net  sales   represented  by  certain  items   reflected  in  the  Company's
consolidated  statement of operations,  which included the ventilation  products
operations for both periods:

                                                       Three Months Ended
                                                          September 30,
                                                     1997              1996
                                                     ----              ----

Net Sales                                            100.0%            100.0%
Cost of sales                                         69.4              68.3
                                                     -------           -------
Gross profit                                          30.6              31.7
Total SG&A expenses                                   24.0              28.7
                                                     -------           -------
Income from operations                                 6.6               3.0
Interest expense                                       6.3               3.9
                                                     -------           -------
Income(loss)before provision
     (benefit) for income taxes                        0.3              (0.9)
Provision (benefit) for income taxes                   0.6              (0.3)
                                                     -------           -------
Net income (loss) before extraordinary item           (0.3)             (0.6)
Extraordinary loss                                    (1.8)              0.0
                                                     -------           -------
Net loss                                              (0.6)%            (2.1)%
                                                     -------------------------

<PAGE>

Results of Operations

Allied  manufactures  and markets  medical gas  equipment,  respiratory  therapy
equipment,   and  emergency  medical  products.   Set  forth  below  is  certain
information  with respect to amounts  (dollars in thousands) and  percentages of
net sales attributable to medical gas equipment,  respiratory therapy equipment,
including  ventilation  products,  and emergency  medical products for the three
months ended September 30, 1997 compared to the three months ended September 30,
1996.

                                  Three Months Ended         Three Months Ended
                                  September 30, 1997         September 30, 1996
                                              % of                      % of
                                              total                     total
                                    Net        net           Net         net
                                   sales      sales         sales       sales
                                   -----      -----         -----       -----

Medical Gas Equipment             $12,136      40.2%        $10,096      34.6%
Respiratory Therapy Equipment      15,058      49.9%         15,932      54.7%
Emergency Medical Products          2,979       9.9%          3,106      10.7%
                                  --------    -------       --------    -------
Total                             $30,173     100.00%       $29,134     100.00%
                                  --------    -------       --------    -------


Three months ended  September 30, 1997 compared to three months ended  September
30, 1996.

Net  sales  for the three  months  ended  September  30,  1997 of $30.2  million
increased $1.1 million,  or 3.6%, compared to net sales of $29.1 million for the
three months ended  September 30, 1996.  Certain  internal and external  factors
that have  adversely  impacted the  Company's  operations  in the latter part of
fiscal  1996  and  throughout  fiscal  1997  appear  to be  improving.  Internal
operating  improvements include efficiencies realized from a new computer system
in the  Company's St. Louis  facility,  the new  machining  center,  also in St.
Louis, and selling cost reductions resulting from sales force consolidations and
changes  in  selling  strategies  to the home  healthcare  market.  The  capital
expenditure  project in the Company's Toledo,  Ohio facility  continues to be in
progress and has taken longer than management's expectations due to direct labor
constraints.   Certain   external  issues  continued  to  impact  the  Company's
operations  during  the  first  quarter  of  fiscal  1998.  The  impact  of  the
consolidation of health care providers  appears to be slowing;  however the cost
containment  initiatives of health care  providers  continue to put pressures on
pricing.   Finally,   the  possibility  of  changes  in  Medicaid  and  Medicare
reimbursement  rates, has continued to impact sales. While the Company is unable
to predict when these issues will be resolved,  management believes that, over a
long-term  horizon,  Allied is well positioned to capitalize on the need for its
respiratory  products and meet the demands for these products caused by an aging
population,  an increase in the  occurrence  of lung  disease,  and  advances in
treatment of other respiratory  illnesses in the home,  hospital,  and sub-acute
care facilities.

New orders, or the pace of incoming business, continued to improve as orders for
the three months ended September 30, 1997 of $31.0 million were $1.1 million, or
3.7%, over orders of $30.0 million for the prior year comparable period. This is
the fifth  consecutive  quarter in which new orders have exceeded the prior year
comparable period orders.

<PAGE>

Medical gas equipment sales in the first quarter of fiscal 1998 of $12.1 million
were $2.0 million, or 20.2%, over same period prior year sales of $10.1 million.
Medical gas  construction  sales,  headwall  sales,  and medical gas suction and
regulation  device sales all had double digit growth over the comparable  period
prior  year  sales.  It  appears  the  impact of  consolidation  of health  care
providers is slowing and their rationalization process for facility protocol and
inventory consolidation is nearing completion. Management, however, is unable to
predict when such consolidations will be complete or the ramifications  thereof.
Orders for medical gas construction  products  exceeded the prior year's orders.
Both headwall orders, which are subject to frequent  fluctuations from period to
period,  and  medical  gas  suction and  regulation  device  orders,  which were
adversely  impacted by the UPS shipping  strike in August  1997,  were below the
prior year levels.

Respiratory therapy equipment sales in the first quarter of fiscal 1998 of $15.0
million were $0.9  million,  or 5.5%,  below the prior year same period sales of
$15.9 million. Sales to the home healthcare market declined by 16.0% as a result
of continued manufacturing inefficiencies in the Company's Toledo, Ohio facility
combined with competitive  pressures relating to home use of durable respiratory
products. In addition,  pricing pressures caused by the ongoing consolidation of
home health care dealers and  continued  concerns over  potential  reductions in
home oxygen therapy reimbursement rates continued to impact sales of home health
care  products.  While the  Company is unable to predict  when these  latter two
macroeconomic  factors  will be resolved,  until there is a resolution  of these
issues,  current  customer  patterns  are likely to  continue.  The  Company has
continued  to  experience  capacity  limitations  at the Toledo  facility due to
direct labor  constraints,  which are being addressed by the addition of a third
shift.  The  decline in home  healthcare  sales was  partially  offset by a 3.2%
increase in sales to the hospital market. Orders of respiratory therapy products
in the first quarter of fiscal 1998 of $16.4 million were $0.2 million, or 1.4%,
above orders in the prior year same period. Home healthcare orders declined 8.9%
while hospital orders increased 8.6% during these periods.

Emergency  medical  product  sales in the first  quarter of fiscal  1998 of $3.0
million  were $0.1  million,  or 4.1%,  less than  sales of $3.1  million in the
comparable prior year period.  Orders for emergency medical  products,  however,
increased  to $3.8 million in the first  quarter of fiscal 1998,  an increase of
$1.3 million, or 52.1%, over orders of $2.5 million in the comparable prior year
period.  The Company  was unable to ship at the level of customer  demand due to
the UPS  strike  in  August  1997 and  partially  due to  certain  manufacturing
constraints in the St. Louis facility.  No significant orders have been canceled
as a result of the shipping delays.

The Company  continued to increase its presence in world wide markets during the
first  quarter of fiscal 1998.  International  sales,  which are included in the
product line sales discussed  above,  increased $1.5 million,  or 18.2%, to $9.6
million in the first quarter of fiscal 1998 compared to  international  sales of
$8.1 million in the comparable  prior year period.  Advances in medical protocol
in various  countries  throughout the world  combined with the Company's  strong
international dealer network has enabled the Company to respond to the increased
world wide  demand for  respiratory  products.  Approximately  one fourth of the
Company's international sales have historically come from Pacific Rim countries.
A number  of those  countries  have  recently  experienced  volitility  in their
currencies,  as well  as,  a  general  decline  relative  to the  United  States
dollar.The Company, which principally sells its products in United States dollar
based  terms,  is unable to predict  the  impact,  if any,  on future net sales,
cancellation of accounts  receivable or demand as a result of currency  exchange
rates.

<PAGE>

Gross profit for the first  quarter of fiscal 1998 of $9.2 million was unchanged
from the first quarter of fiscal 1997. Gross profit as a percentage of net sales
was 30.6% and 31.7% for the first quarter of fiscal 1998 and 1997, respectively.
The decline in gross margin as a percentage of net sales was attributable to the
increase in  international  sales,  which have lower margins than domestic sales
due to the large quantity  bid-based  nature of these sales,  pricing  pressures
brought on by  consolidations  and cost  containment  initiatives  of healthcare
providers,  and the Company's  planned  reductions in  inventories  which led to
reduced manufacturing throughput resulting in lower per unit absorption of plant
overhead.  Partially offsetting the margin decline was an improvement in the mix
of medical gas construction and regulation  products combined with higher prices
on these products and the  improvements in manufacturing  efficiencies  realized
from capital expenditure projects.

Selling,  General and Administrative  ("SG&A") expenses for the first quarter of
fiscal 1998 were $7.3 million,  a decrease of $1.1 million,  or 13.4%, from $8.4
million in the first  quarter of fiscal 1997.  The decline in SG&A  expenses was
the result of the Company's  initiatives to consolidate  its sales and marketing
operations.  Costs to train the Company's sales force and investments in product
literature  which  were  incurred  in the prior year did not repeat in the first
quarter  of fiscal  1998.  In  addition,  certain  expenses  related  to the new
computer implementation did not repeat in the first quarter of fiscal 1998. As a
percentage of net sales,  SG&A expenses  decreased to 24.0% in the first quarter
of fiscal 1998 from 28.8% in the comparable prior year period as a result of the
combination of the increase in sales and the decrease in SG&A spending.

Income from operations in the first quarter of fiscal 1998 were $2.0 million, an
increase of $1.1 million,  or 129.2%,  over $0.9 million in the first quarter of
fiscal 1997. As a percentage of net sales,  income from operations  increased to
6.6% in the first quarter of fiscal 1998 from 3.0% in the comparable  prior year
period.

Other expenses  increased $0.8 million,  or 67.1%,  to $1.9 million in the first
quarter of fiscal 1998 from $1.1  million in the first  quarter of fiscal  1997.
This  increase is  attributable  to the increase in interest  expense  primarily
resulting from fees paid to the Company's previous bank group. On August 8, 1997
the Company  entered into a $46.0  million  credit  facility  with  Foothill and
obtained  $5.0  million  in  subordinated  debt  in a  private  placement.  This
refinancing provided additional liquidity to the Company.

Allied had income before provision for taxes and extraordinary loss in the first
quarter of fiscal 1998 of $0.1  million.  The company  recorded a provision  for
income taxes of $0.2  million,  resulting in a net loss after taxes,  but before
extraordinary loss, of $0.1 million.  The provision for income taxes recorded in
the first quarter  relates to the discrete period  estimated  effective tax rate
which was impacted by the anticipated reduction in certain tax credits caused by
the increased interest expense noted above, and the non-deductibility of certain
goodwill amortization.  Results for the first quarter of fiscal 1997 were a loss
before  taxes and  extraordinary  loss of $0.3  million,  a tax  benefit of $0.1
million and a net loss of $0.2 million.

Allied recorded an  extraordinary  loss on the early  extinguishment  of debt of
$0.5 million,  which is net of a tax benefit of $0.4  million.  The net loss for
the first quarter was $0.6 million, or $0.08 per share, consisting of $0.01 loss
from operations and a $0.07 loss per share for the  extraordinary  item. The net
loss for the three months ended  September 30, 1996 was $0.2  million,  or $0.02
per share.   The  weighted  average  number  of  common shares  outstanding used

<PAGE>

in the  calculation  of earnings per share was  7,800,095  and 7,796,682 for the
first quarter of fiscal 1998 and fiscal 1997, respectively.


Financial Condition

The  following  table  sets  forth  selected  information   concerning  Allied's
financial condition:

Dollars in thousands              September 30, 1997              June 30, 1997
--------------------              ------------------              -------------
Cash                              $879                            $988
Working Capital                   $21,090                         $18,743
Total Debt                        $49,413                         $46,932
Current Ratio                     1.71:1                          1.57:1

The Company's  working  capital was $21.1 million at September 30, 1997 compared
to $18.7  million at June 30,  1997.  Inventories,  other  current  assets,  and
accounts  payable all  decreased  during the first  quarter of fiscal 1998 while
accounts  receivable  and the current  portion of long term debt both  increased
during this period.  Accounts receivable increased to $24.0 million at September
30,  1997  from  $23.1  million  at June 30,  1997.  The  increase  in  accounts
receivable was due to increased sales and timing of  intra-quarter  sales as the
days sales  outstanding  for September 30, 1997 of 71 days,  was unchanged  from
June 30, 1997. Inventories decreased to $24.5 million at September 30, 1997 from
$26.1 million at June 30, 1997. Inventories as measured in Days on Hand ("DOH"),
were 130 DOH at September  30, 1997  compared to 128 DOH at June 30,  1997.  The
company made modest improvements in the mix of its inventories by increasing the
safety  stock  levels  of high  volume  products,  for which  customers  require
shortened  delivery  times,  and reducing  the  stocking  status of lower volume
products. The Company plans to continue these  inventory-related  initiatives in
fiscal 1998.  Accounts payable decreased to $11.2 million at September 30, 1997,
down $2.8 million from the June 30, 1997 balance of $14.0  million.  The Company
experienced limited liquidity during fiscal 1997 due to a reduction in borrowing
availability  related to principal payments made on its term loans combined with
the high level of fees paid to the Company's previous  commercial bank group, as
previously  discussed.  Consequently,  payments to vendors and other obligations
were extended,  causing some disruption in vendor  deliveries and services.  The
Company's limited liquidity  situation was alleviated with the completion of its
debt  refinancing,  on  August 8, 1997 and was even  further  improved  upon the
completion of the sale of its ventilation products operations  subsequent to the
end of the first  quarter.  The  Company is current on all its  obligations  and
disruptions of vendor deliveries and services have been eliminated.  The current
portion of long term debt was $13.8  million at September  30, 1997  compared to
$12.9 million at June 30, 1997.  Both periods include $4.0 million of term notes
and $5.0  million of  subordinated  debt which were due to mature on February 1,
1998, but were repaid on November 3, 1997 and November 4, 1997, respectively, in
conjunction with the sale of the ventilation products operations.

The net increase/(decrease)  in cash  for the three months  ended  September 30,
1997 and  September 30, 1996 was ($0.1)  million and $0.1 million  respectively.
Net cash provided by (used by)  operations  was ($1.8)  million and $4.7 million
for the same  periods.  Cash  used by  operations  for the  three  months  ended
September 30, 1997 consisted of a net loss of $0.6 million,  which was offset by
the  non-cash  charges  to  operations  of $1.3  million  for  depreciation  and
amortization,  as well as changes in working  capital  accounts  which used $2.5
million, principally relating to the payments to vendors, which reduced accounts
payable  by $2.8  million  during  the  quarter.  The  cash  used  by  operating
activities was funded by a net increase in aggregate debt of $2.5 million, which
was also  utilized to pay for debt  issuance  costs of $0.7  million and capital

<PAGE>

expenditures  of $0.1 million,  which resulted in a net decrease in cash of $0.1
million,  for the three  months  ended  September  30,  1997.  Cash  provided by
operations for the comparable  prior year period consisted of a net loss of $0.2
million  which  was  offset  by  the  non-cash   charges  of  $1.2  million  for
depreciation and  amortization,  as well as cash generated by changes in working
capital accounts, which included a tax refund of $1.8 million and an increase in
accounts  payable of $0.5 million.  The cash provided by operations  was used to
repay debt by $2.6  million,  debt issuance  costs of $0.5 million,  and capital
expenditures  of $1.0 million for a net increase in cash of $0.1 million for the
three months end September 30, 1996.  The adverse  results of operations  during
the latter half of fiscal 1996 and during  fiscal 1997  impacted  the  Company's
liquidity and the availability of the Company to continue  historical  levels of
fixed payments. Accordingly, on August 21, 1996 the Company's Board of Directors
voted to suspend quarterly  dividends  effective  immediately  subsequent to the
payment of  dividends  for the fourth  quarter of fiscal 1996.  In addition,  to
improve the liquidity of the Company and to reduce interest  expense,  on August
8, 1997 the Company  refinanced  its existing debt,  which is discussed  further
below.

At September 30, 1997 the Company had aggregate  indebtedness  of $49.4 million,
including  $13.8 million of short-term debt and $35.6 million of long-term debt.
At June 30,  1997,  the Company had  aggregate  indebtedness  of $46.9  million,
including  $12.9 million of short-term debt and $34.0 million of long-term debt.
Throughout  fiscal  1996 the Company  entered  into a series of  amendments  and
waiver  negotiations  with its previous  bank group.  During  fiscal  1997,  the
Company  paid fees of  approximately  $2.2 million for the  September  1996 debt
amendment,  to obtain waivers for technical covenant  violations at December 31,
1996 and March 31, 1997 and for related matters and paid additional fees of $0.4
million in the first quarter of fiscal 1998. The Company was  ultimately  unable
to  negotiate  a  long-term   agreement  with  its  commercial  bank  syndicate.
Accordingly,  on August 8, 1997 the Company refinanced its existing debt through
a new $46.0 million credit facility with Foothill. The new credit facility, with
a blended  average  interest  rate of 10.2%,  was  comprised of a $25.0  million
three-year revolving line of credit,  three-year term loans of $10.0 million and
$7.0  million,  respectively,  and a $4.0 million term loan maturing in February
1998.  In  conjunction  with  the new  financing  agreement,  Allied  placed  an
additional  $5.0  million  in  subordinated  debt  financing,  which  matures in
February 1998,  with several related  parties to the Company.  In addition,  the
Company issued 112,500 warrants at an exercise price of $7.025 per share, 62,500
of which  are being  issued  to the  holders  of the  subordinated  debt and the
balance to Foothill  Capital  Corporation.  The proceeds  from the new financing
were used to replace the Company's  outstanding  debt with the  commercial  bank
syndicate,  and to provide additional liquidity. On October 31, 1997 the Company
completed the sale of its ventilation division assets, as previously  discussed.
On November 3, 1997 the Company repaid two term notes and a significant  portion
of its revolving  credit  facility to Foothill.  On November 4, 1997 the Company
repaid its $5.0 million  subordinated  debt.  Amendments to the Foothill  credit
facility  are  expected to be  completed  in the fiscal  1998 second  quarter to
reflect  the impact of the  significant  reductions  in  outstanding  debt.  The
Company  believes that cash flow from operations and available  borrowings under
its credit  facilities  will be sufficient to finance fixed payments and planned
capital expenditures in fiscal 1998.

As of September 30, 1997, the Company had a backlog of $24.8 million compared to
a  backlog  of  $23.9  million  at June  30,  1997.  The  Company's  backlog,  a
significant  portion  of which is  attributable  to the  Company's  medical  gas
equipment  products,  consists of firm  customer  purchase  orders  which may be
subject to cancellation by the customer subject to  notification.  The Company's
backlog  increased   in  emergency  medical  products  and  respiratory  therapy

<PAGE>

products in the first quarter of fiscal 1998 which increase was partially offset
by a decline in backlog for medical gas equipment products.

Inflation has not had a material effect on the Company's  business or results of
operations.


PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits - none

(b)  Reports on Form 8-K - none

<PAGE>

                                    SIGNATURE

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


                                    ALLIED HEALTHCARE PRODUCTS, INC.

Date:  November 14, 1997                         /s/ Barry F. Baker
                                    --------------------------------------------
                                    Barry F. Baker
                                    Vice President - Finance and Chief Financial
                                    Officer
                                    (Principal Accounting and Financial Officer)