SECURITIES AND EXCHANGE COMMISSION 
                                WASHINGTON, D.C.  20549
                                      FORM 10-QSB
(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 ACT OF 1934
		For the transition period from ____________ to ____________

Commission file number 1-11236

		      XEROGRAPHIC LASER IMAGES CORPORATION
		      ------------------------------------
	    (Exact name of registrant as specified in its charter)
		
		Delaware                               51-0319174
		--------                               ----------
	 (State or other jurisdiction      (I.R.S. Employer Identification No.)
	     of incorporation or
	      organization)

101 Billerica Avenue, 5 Billerica Park, North Billerica, MA           01862    
-----------------------------------------------------------           -----   
	 (Address of principal executive offices)                   (Zip Code)

				  (508) 670-5999 
				  --------------
		 (Registrant's telephone number, including area code)





									
	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 requirement for the past 90 days.

YES  X               NO  
   -----               -----                                                   




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

	 Class                                Outstanding at October 23, 1997
	-------                              ---------------------------------

Common Stock, $.01 par value
	      per share                                     2,039,310  *

Series A Convertible Preferred
	Stock, $.01 par value
	per share                                             315,238
	
	* Common stock including equivalents, options and warrants exercisable 
at current market price or lower equal 3,600,969 shares.

Transitional Small Business Disclosure Format:
	Yes        No   X  
	   -----      -----


                           XEROGRAPHIC LASER IMAGES CORPORATION

                                        INDEX

                                                                        PAGES
PART I          FINANCIAL INFORMATION

     Item 1     Financial Statements

                Balance Sheets as of September 30, 1997                    
                (unaudited) and December 31, 1996                          4
			
                Statements of Operations for the nine and three
                month periods ended September 30, 1997 and
                1996 (unaudited)                                           5

                Statements of Cash Flows for the nine month 
                periods ended September 30, 1997 and 1996 
                (unaudited)                                                6
			
                Notes to Financial Statements
                (unaudited)                                                7-8

     Item 2     Management's Discussion and Analysis of
                Financial Condition and Results of 
                Operations                                                 9-10

PART II         OTHER INFORMATION
	
     Item 1     Legal Proceedings
     Item 2     Changes in Securities
     Item 3     Defaults Upon Senior Securities
     Item 4     Submission of Matters to a Vote of Security     
                Holders
     Item 5     Other Information
     Item 6     Exhibits and Reports on Form 8-K                           11

     Signatures                                                            12

<TABLE>

                           Xerographic Laser Images Corporation
                                      Balance Sheets

<CAPTION>
                                          September 30     December 31
                                              1997             1996
                                          ------------     -----------
                                           (unaudited)
<S>
                  ASSETS                   <C>              <C>
                 --------
Current assets:
     Cash                                     $15,328         $219,723
     Accounts receivable, less allowance
        for doubtful accounts of $2,000 in
        1997 and $5,000 in 1996                19,237           20,314
     Other current assets                       9,040                -
                                           -----------      -----------
     Total current assets                      43,605          240,037
                                           -----------      -----------
Property and equipment, net                    21,157           35,191
Other assets                                    2,798            4,432
                                           -----------      -----------
     Total assets                              67,560          279,660
                                           ===========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
     Accounts payable                        $300,703         $352,346
     Deferred revenue                               -          101,000
     Accrued expenses                         238,841          179,943
     Accrued severance costs                    3,750           68,704
     Current portion of capital leases         11,731           11,731
                                           -----------      -----------
     Total current liabilities                555,025          713,724
                                           -----------      -----------
Capital lease obligations                       6,488           16,908
Subordinated notes payable                    283,688          283,688
                                           -----------      -----------
     Total liabilities                        845,201        1,014,320
                                           -----------      -----------
Stockholder's equity (deficit)
     Series A Preferred stock, $.01 par
       value; authorized 1,000,000 shares;
       315,238 issued and outstanding at
       September 30, 1997 and December 31,
       1996.                                    3,152            3,152
     Common stock, $.01 par value;
       30,000,000 shares authorized:
       2,039,310 issued and outstanding at
       September 30, 1997 and 1,778,646
       issued and outstanding at
       December 31, 1996                       20,393           17,786
     Additional paid-in capital             8,463,323        8,434,353
     Accumulated deficit                   (9,264,509)      (9,189,951)
                                           -----------      -----------
     Total stockholders' equity (deficit)    (777,641)        (734,660)
                                           -----------      -----------
     Total liabilities and stockholders'
       equity (deficit)                       $67,560         $279,660
                                           ===========      ===========

The accompanying notes are an integral part of the financial statements

</TABLE>


<TABLE>
                           Xerographic Laser Images Corporation
                                 Statements of Operations

<CAPTION>

                                        Three Months Ended                Nine Months Ended
                                   ----------------------------      ----------------------------
                                   September 30    September 30      September 30    September 30
                                       1997            1996              1997            1996
                                   ------------    ------------      ------------    ------------
                                   (unaudited)     (unaudited)       (unaudited)     (unaudited)

<S>                                   <C>             <C>               <C>             <C>

Product revenues                        $25,843         $57,654           $94,545        $166,495
Contract and license revenues           266,823         225,000           957,541         250,000
                                      ----------      ----------        ----------      ----------
    Total revenues                      292,666         282,654         1,052,086         416,495

Cost and expenses:
    Cost of product revenues              4,232          33,319            26,983         105,395
    Cost of contract and license rev     20,200               -           222,155               -
    Research and development            125,567          90,701           393,614         248,467
    Sales and marketing                  11,468          13,518            32,834          33,381
    General and administrative          149,257         122,693           445,700         391,212
                                      ----------      ----------        ----------      ----------
    Total cost and expenses             310,725         260,231         1,121,286         778,455

Loss from operations                    (18,059)         22,423           (69,200)       (361,960)

Other income                                  -             326             5,789           1,826
Net interest expense                     (7,722)        (17,132)          (11,147)        (29,821)
                                       ----------     ----------        ----------      ----------  
Net (loss)                             ($25,781)         $5,617          ($74,558)      ($389,955)
                                       ==========     ==========        ==========      ==========
Net loss per common share                ($0.01)          $0.00            ($0.04)         ($0.26)

Weighted average common and common
    equivalent shares outstanding     2,039,310       1,778,647         1,908,978       1,493,925



The accompanying notes are an integral part of the financial statements.

</TABLE>

<TABLE>
                           Xerographic Laser Images Corporation
                                Statements of Cash Flows


<CAPTION>
                                         Nine Months Ended   Nine Months Ended
                                           September 30        September 30
                                               1997                1996
                                         -----------------   -----------------
                                            (unaudited)         (unaudited)

<S>                                             <C>              <C>
Cash flows from operating activities:
     Net loss                                   ($74,558)        ($389,955)
     Adjustments to reconcile net loss to
     net cash used in operating activities:
     Depreciation and amortization                14,034            23,259
     Issuance of common stock as compensation     31,577            15,325
     (Increase) decrease:
        Accounts receivable                        1,077           123,250
        Inventory                                      -             9,154
        Other assets                              (7,406)            4,177
     Increase (decrease):
        Accounts payable                         (51,643)           89,202
        Deferred revenues                       (101,000)                -
        Accrued expenses                          58,897            12,822
        Accrued severance costs                  (64,954)          (54,113)
                                                ---------         ---------
Net cash used in operating activities           (193,975)         (166,879)
                                                ---------         ---------
Cash flows from financing activities:
     Cash overdraft                                    -            (1,432)
     Proceeds from issuance of subordinated
        notes                                          -           195,000
     Payments of notes payable                         -            (5,500)
     Payments under capital lease obligations    (10,420)           (9,228)
                                                ---------         ---------
Net cash provided (used in investing activities) (10,420)          178,840
                                                ---------         ---------

Net increase (decrease) in cash                 (204,395)           11,961
Cash at beginning of period                      219,723                 -
                                                ---------         ---------
Cash at end of period                            $15,328           $11,961
                                                =========         =========

Supplemental disclosure of cash flow information:
   Cash paid for interest                        $11,147           $22,003

The accompanying notes are an integral part of the financial statements.

</TABLE>


              		       XEROGRAPHIC LASER IMAGES CORPORATION

                     			   Notes to Financial Statements

                           				 September 30, 1997

1.  Nature of Business and Basis of Presentation
    --------------------------------------------

The Company continues to focus on the implementation and commercialization of 
the XLI SuperChip Enhancement Technology ("SuperChip Technology") in ASIC 
(Application Specific Integrated Circuit) and VHDL (Virtual Hardware 
Description Language) product forms.  These products are targeted for the 
large printer and printer controller OEM's that provide products to mass 
markets.  SuperChip Technology products is expected to provide the Company 
with a line of Increased revenue levels for the next several years.  

Prototype SuperChip ASICs (now being marketed as the XLI-2050 Chip) were 
received late in the third quarter and are undergoing qualification testing 
by the Company's engineers.  During the fourth quarter of this year the sales 
activity of the XLI-2050 will be the major focus for the Company including 
the release of an XLI-2050 Test & Evaluation board for OEMs to directly 
evaluate the XLI ASIC driving their own print engines.  The Company has hired 
a Vice President of Sales and Marketing to lead the marketing and sales of 
the SuperChip Enhancement Technology on a worldwide basis.  XLI plans to 
provide engineering samples of the XLI-2050 to several potential OEM customers 
during the fourth quarter and to have production XLI-2050 chips available in 
the first quarter of 1998.  

During the third quarter, the Company also completed a design (funded through 
a licensee non-recurring engineering development project) for a scaling/
enhancement ASIC for flat-panel displays.  Prototype ASIC chips are expected 
in the fourth quarter of this year.  Although this is an extension of the 
Company's Technology outside the printer market, there are no current plans 
to market such a product and, if done so, there is no assurance that this 
product would have market acceptance.

In October 1997, the Company entered into a license agreement with Pixel 
Magic, Inc. (a provider of ASIC's and controller designs to OEMs) for the 
SuperChip Enhancement Technology in both the VHDL and ASIC forms.  Including 
the agreement with Pixel Magic, the Company has entered into six license 
agreements for its SuperChip Technology to date.

The information furnished has been prepared from the Company's accounts 
without audit.  In the opinion of management, all adjustments and accruals 
(consisting only of normal recurring adjustments), which are necessary for a 
fair presentation of operating results, are reflected in the accompanying 
financial statements.  Certain information and footnote disclosures normally 
included in the Company's annual financial statements have been condensed or 
omitted.  These interim financial statements should be read in conjunction 
with the audited financial statements for the year ended December 31, 1996, 
which are contained in the Company's 1996 Form 10-KSB filed with the 
Securities and Exchange Commission.
	
2.  Net Loss per Common Share
    -------------------------    

Net loss per share is computed based upon the weighted average number of 
common shares outstanding.  Common equivalent shares are not included in the 
per share calculations as the effect of their inclusion would be nondilutive.



3.  Management's Discussion and Analysis of Financial Condition and 
    ---------------------------------------------------------------
Results of Operations
---------------------

Results of Operations

The Company's strategy is to design and develop products for the OEM market 
derived from the Company's proprietary high resolution technology in 
collaboration with strategic partners.

Revenues for the third quarter of 1997, which ended September 30, 1997 were 
$292,666, an increase of $10,012 from 1996's third quarter revenues of 
$282,654.  Revenues for the nine-month period ended September 30, 1997 were 
$1,052,086 an increase of $635,591 from the $416,495 of revenue recorded for 
the nine months ended September 30, 1996.  The Company recognized $266,823 in 
contract and license revenues in connection with agreements with three major 
licensees in the third quarter of 1997 and $225,000 in the third quarter 
of 1996.

The Company recorded a net loss of $25,781 for the third quarter of 1997, as 
compared to a net profit of $5,617 for the same period in 1996.  The decrease 
in profitability is attributable to an increase in cost associated with 
generating  contract and license revenues and an increase in research and 
development expense of $34,866 and an increase in general and administrative 
expense of $26,564 offset by the increase in contract and license revenue of 
$41,823 in the third quarter of 1997.

The Company's gross margin on product sales was 84% for the third quarter of 
fiscal year 1997 compared to 42% for the same period in 1996.  The gross 
margin for the nine months ended September 30, 1997 was 71% compared to 37% 
for the same period in 1996.  This was mainly due to the board inventory 
being written off in December 1996.

Research and development costs for the three month period ended September 30, 
1997 were $125,567 or approximately 43% of revenues as compared to $90,701 or 
approximately 32% of revenues for the third quarter of 1996.  Research and 
development costs for the nine months ended September 30, 1997 were $396,614, 
as compared to $248,467 for the same period in 1996.  The increase in 
research and development costs from September 30, 1996 to September 30, 1997 
of $145,147 was due to the hiring of additional engineering personnel and 
purchase of engineering development supplies.  The Company's engineering 
emphasis will continue to be on the development of ASICs incorporating the 
Company's proprietary high resolution technology for the OEM market.

Selling and marketing expenses for the three month period ended September 30, 
1997 were $11,468 or approximately 4% of revenues as compared to $13,518 or 
approximately 5% of revenues for the three month period ended September 30, 
1996.  Selling and marketing expenses for the nine months ended September 30, 
1997 were $32,834, as compared to $33,381 for the same period in 1996.  

General and administrative expenses for the three-month period ended 
September 30, 1997 were $149,257 or approximately 51% of revenues as compared 
to $122,693 or approximately 43% of revenues for the three-month period ended 
September 30, 1996.  The increase of $26,564 is attributable to an increase 
in payroll expense and the increased use of independent consultants.   General 
and administrative expenses for the nine months ended September 30, 1997 were 
$445,700 as compared to $391,212 for the same period in 1996.  This increase 
of $54,488 was primarily due to an increase in payroll expense and the 
increased use of independent consultants. 

Liquidity and Capital Resources

At September 30, 1997 the Company had current assets of $43,605, current 
liabilities of $555,025 and cash of $15,328.  

The Company has the option of prepaying subordinated notes at 50% interest 
($141,844) prior to November 30, 1998.  

The Company continues to fund its operations from available cash and from 
cash flow provided from contract development agreements and technology 
licenses.  On October 15, 1997, the Company received a cash payment of 
$375,000 as a license fee and prepaid royalties in connection with a 
nonexclusive license agreement entered into by the Company.  

The Company has no current plans to undertake a debt or equity financing in 
1997.  Funds for operations and development efforts will come from the 
Company's available cash and from current or anticipated licensing and 
royalty fees.  If the Company is unable to fund its operations from cash 
flow, the Company's development efforts and operations will be materially 
adversely effected.

The Company has no current commitments for any material capital expenditures.



                            PART II OTHER INFORMATION

Item 1.         Legal Proceedings

                The Company is not currently involved in any material    
                legal proceedings.

Item 2.         Changes in Securities
	
                Not Applicable
	
Item 3.         Defaults Upon Senior Securities
	
                Not Applicable

Item 4.         Submission of Matters to a Vote of Security Holders

                No matters were submitted to a vote of security holders during 
                the period covered by this report.

Item 5.         Other Information
		
                Not Applicable

Item 6.         Exhibits and Reports on Form 8-K

                (a)  The following exhibit is filed herewith.

                      Exhibit Number    Title
                      --------------    -----
				
                          10.45         Technology License and Supply
                                        Agreement dated October 15, 1997,
                                        between the Company and Pixel
                                        Magic, Inc.

	
                (b)  There were no reports on Form 8-K filed by the Company 
                     during the quarter ended September 30, 1997.








Signatures


Pursuant to the requirements of the Securities Exchange Act of 1934, the 
Registrant has caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.
						
                                   Xerographic Laser Images Corporation  
                                   ------------------------------------
                                                (Company)





Date: October 29, 1997             By:         /s/ James L. Salerno 
     --------------------             --------------------------------------  
                                   James L. Salerno, Chief Financial Officer   
                                  (Principal Financial and Accounting Officer)