<PAGE>
                                       
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC  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, 1998 or


[ ]  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: 0-28236


                         INVISION TECHNOLOGIES, INC.
            (Exact name of registrant as specified in its charter)

                  DELAWARE                              94-3123544
      (State or other jurisdiction of                (I.R.S. Employer 
       incorporation or organization)               Identification No.)


                                          
                   7151 GATEWAY BOULEVARD, NEWARK, CA 94560
         (Address of principal executive offices, including zip code)


                                (510) 739-2400
             (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 requirements for the past 90 days.  Yes   X   No 
                                                    -----    -----

On September 30, 1998, there were 12,068,827 shares of the Registrant's 
Common Stock outstanding.

<PAGE>

                         INVISION TECHNOLOGIES, INC.
                                  FORM 10-Q
                                    INDEX
                                          
<TABLE>
<CAPTION>
ITEM                                                                         PAGE
----                                                                         ----
<S>                                                                          <C>
PART  I:  FINANCIAL INFORMATION

1.   Condensed Consolidated Financial Statements (unaudited)

          a.   Condensed Consolidated Balance Sheets - September 30, 1998 
               and December 31, 1997 .......................................   3

          b.   Condensed Consolidated Statements of Income - Three months 
               and nine months ended  September 30, 1998 and 1997 ..........   4

          c.   Condensed Consolidated Statements of Cash Flows - Nine 
               months ended September 30, 1998 and 1997 ....................   5
     
          d.   Notes to Condensed Consolidated Financial Statements ........   6


2.   Management's  Discussion  and Analysis of  Financial
     Condition and Results of Operations ...................................   9



PART  II.  OTHER INFORMATION

6.   Exhibits and Reports on Form 8-K ...................................... 19

Signature Page ............................................................. 20

Exhibits ................................................................... 21
</TABLE>



                                       2
<PAGE>
                                       
                         INVISION TECHNOLOGIES, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                        (Unaudited)
                                                       September 30, December 3l,
                                                           1998          1997
                                                       ------------- ------------
<S>                                                    <C>           <C>
Assets

Current assets:
   Cash and cash equivalents                             $ 10,524     $ 14,111
   Restricted cash                                            256        1,556
   Short-term investments                                   2,045        5,079
   Accounts receivable                                     22,980       16,847
   Inventories                                             11,653       10,781
   Other current assets                                     2,365          531
                                                         --------     --------
      Total current assets                                 49,823       48,905

Long-term restricted cash                                   1,000          800
Property and equipment, net                                 8,136        7,180
Other assets                                                1,326          366
                                                         --------     --------
                                                         $ 60,285     $ 57,251
                                                         --------     --------
                                                         --------     --------
Liabilities and stockholders' equity

Current liabilities:
   Accounts payable                                         4,122        5,097
   Accrued liabilities                                      5,369        4,032
   Short-term debt                                          3,608        4,168
   Deferred revenue                                           769        3,376
   Current maturities of long-term obligations                361          426
                                                         --------     --------
                                                           14,229       17,099
                                                         --------     --------
Long-term obligations                                       1,253        1,336
                                                         --------     --------
Stockholders' equity:
   Common stock, $0.001 par value, 20,000 shares               12           12
    authorized; 12,069 and 11,906 issued and outstanding
   Additional paid-in capital                              57,235       56,602
    deferred compensation expense                            (148)        (199)
   Accumulated deficit                                    (11,608)     (17,599)
   Treasury stock, at cost (81 shares in 1998)               (688)           -
                                                         --------     --------
      Total stockholders' equity                           44,803      38,816,
                                                         --------     --------
                                                         $ 60,285     $ 57,251
                                                         --------     --------
                                                         --------     --------
</TABLE>
                                       
                The accompanying notes are an integral part of 
              these condensed consolidated financial statements.

                                       3
<PAGE>
                                       
                         INVISION TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Three Months Ended             Nine Months Ended
                                                              September 30,                 September 30,
                                                         -----------------------       -----------------------
                                                           1998           1997           1998           1997
                                                         --------       --------       --------       --------
<S>                                                      <C>            <C>            <C>            <C>
Revenues                                                 $ 16,464       $ 15,458       $ 47,776       $ 38,243
Cost of Revenues                                            8,906          7,731         26,194         19,132
                                                         --------       --------       --------       --------
  Gross profit                                              7,558          7,727         21,582         19,111
                                                         --------       --------       --------       --------

  Operating expenses:
  Research and development                                  1,932          1,762          5,241          5,189
  Sales and marketing                                       1,604          1,399          4,842          4,242
  General and administrative                                1,647          1,457          5,077          4,486
  Acquisition costs                                             -            685              -            685
                                                         --------       --------       --------       --------
    Total operating expenses                                5,183          5,303         15,160         14,602
                                                         --------       --------       --------       --------

Income from operations                                      2,375          2,424          6,422          4,509
Interest expense                                             (158)           (58)          (240)          (346)
Interest and other income, net                                191           (132)           626             70
                                                         --------       --------       --------       --------
Income before provision for income taxes                    2,408          2,234          6,808          4,233

Provision for income taxes                                    289            246            817            720
                                                         --------       --------       --------       --------

Net income                                               $  2,119       $  1,988       $  5,991       $  3,513
                                                         --------       --------       --------       --------
                                                         --------       --------       --------       --------

Net Income per share:
  Basic                                                  $   0.18       $   0.17       $   0.50       $   0.32
                                                         --------       --------       --------       --------
                                                         --------       --------       --------       --------
  Diluted                                                $   0.17       $   0.15       $   0.47       $   0.29
                                                         --------       --------       --------       --------
                                                         --------       --------       --------       --------

Weighted average shares outstanding:
  Basic                                                    12,048         11,877         12,040         10,886
  Diluted                                                  12,760         12,853         12,853         11,943
</TABLE>


                The accompanying notes are an integral part of 
              these condensed consolidated financial statements.

                                       4
<PAGE>

                         INVISION TECHNOLOGIES, INC.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            Nine months ended
                                                                              September 30,
                                                                         ----------------------
                                                                           1998           1997
                                                                         -------        -------
<S>                                                                      <C>            <C>
Net cash used in operating activities                                    $(3,739)       $(2,220)
                                                                         -------        -------
Cash flows from investing activities:

 Purchases of property and equipment                                      (2,259)        (4,928)
 Sales (purchases) of short-term investments, net                          3,034         (3,990)
 Release of (additions to) restricted cash, net                            1,100           (800)
 Additions to other assets                                                  (960)             -
                                                                         -------        -------
  Net cash provided by (used in) investing activities                        915         (9,718)
                                                                         -------        -------
Cash flows from financing activities:
  Proceeds from debt financing                                             4,081          4,287
  Repayments of debt financing                                            (4,789)        (2,376)
  Repurchases of common stock                                               (688)             -
  Proceeds from issuance of common stock, net                                633         22,298
                                                                         -------        -------
  Net cash provided by (used in) financing activities                       (763)        24,209
                                                                         -------        -------
Net increase (decrease) in cash and cash equivalents for the period       (3,587)        12,271
Cash and cash equivalents at beginning of period                          14,111          2,471
                                                                         -------        -------
Cash and cash equivalents at end of period                               $10,524        $14,742
                                                                         -------        -------
                                                                         -------        -------

Supplemental disclosures of cash flow information:
  Interest paid                                                           $  238        $   150
  Income taxes paid                                                       $  757        $   116

Supplemental disclosures of noncash financing and investing activities:
  Property and equipment acquired under capital leases                    $    -        $     9
  Sale of fixed assets in exchange for note receivable                    $    -        $   100
  Purchase of intangibles and fixed assets for note payable               $    -        $   330
  Warrants issued in connection with financing agreements                 $    -        $    56
  Issuance of common stock as compensation                                $    -        $   240
</TABLE>




                The accompanying notes are an integral part of 
              these condensed consolidated financial statements.

                                       5

<PAGE>

                                       
                         INVISION TECHNOLOGIES, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)
                                          
                                          
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.   INTERIM UNAUDITED FINANCIAL INFORMATION

     The accompanying interim unaudited condensed consolidated financial 
statements have been prepared in accordance with generally accepted 
accounting principles and with the instructions to Form 10-Q and Rule 10-01 
of Regulation S-X.  Accordingly, they do not contain all of the information 
and footnotes required by generally accepted accounting principles for 
complete financial statements.  In the opinion of management, the 
accompanying unaudited condensed consolidated financial statements reflect 
all adjustments (consisting only of normal recurring adjustments) considered 
necessary for fair presentation.  These financial statements should be read 
in conjunction with the audited consolidated financial statements of InVision 
Technologies Inc. and its subsidiaries (the "Company") as of December 31, 
1997 and 1996 and for each of the three years in the period ended December 
31, 1997, including notes thereto, included in the Company's Annual Report on 
Form 10-K (Commission File No. 0-20815).

     Operating results for the three month and nine month periods ended 
September 30, 1998 may not necessarily be indicative of the results that may 
be expected for the year ended December 31, 1998 or any other future period. 

     Certain prior period amounts have been reclassified to conform to the 
current period presentation.

2.   NET INCOME PER SHARE

     In December 1997, the Company adopted Statement of Financial Accounting 
Standards No. 128 ("FAS 128"), "Earnings Per Share." All historical earnings 
per share information has been restated as required by FAS 128.

     Basic earnings per share is computed by dividing income available to 
common stockholders by the weighted-average common shares outstanding for the 
period. Diluted earnings per share reflects the weighted-average common 
shares outstanding plus the potential effect of dilutive securities or 
contracts which are convertible to common shares such as options, warrants, 
convertible debt and preferred stock.

     The  following  is a  reconciliation  between  the  components  of the 
basic and diluted net income per share calculations for the periods presented 
below (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                       Three months ended September 30,                Nine months ended September 30,
                                ----------------------------------------------  ----------------------------------------------
                                         1998                    1997                    1998                    1997
                                ----------------------  ----------------------  ----------------------  ----------------------  
                                                 Per                     Per                     Per                     Per
                                                Share                   Share                   Share                   Share
                                Income  Shares  Amount  Income  Shares  Amount  Income  Shares  Amount  Income  Shares  Amount
                                ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------  ------
<S>                             <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     
Basic net income per share:
Income available to
 common stockholders            $2,119  12,048   $0.18  $1,988  11,877  $0.17   $5,991  12,O40   $0.50  $3,513  10,886   $0.32
Effect of dilutive securities
Options                                    712                     976                     813                   1,057
                                ------  ------          ------  ------          ------  ------          ------  ------
Diluted net income per share:
Income available to common
 stockholders plus assumed
 conversions                    $2,119  12,760   $0.17  $1,988  12,853  $0.15   $5,991  12,853   $0.47  $3,513  11,943   $0.29
                                ------  ------          ------  ------          ------  ------          ------  ------
</TABLE>

The computation of diluted net income per share for the three months and nine 
months ended September 30, 1998 does not include shares issuable upon 
exercise of options in the amounts of 341,038 and 271,492, respectively, 
because to do so would have been anti-dilutive for the periods presented. 

                                       6
<PAGE>

                                          
                         INVISION TECHNOLOGIES, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)
                                          
                                          

3. ACCOUNTS RECEIVABLE

     The components of accounts receivable consist of the following (in
thousands):

<TABLE>
<CAPTION>
                           SEPT. 30,           DEC. 31,
                             1998                1997
                           --------            --------
<S>                        <C>                 <C>
Billed                     $ 16,836            $ 11,009
Unbilled                      6,144               5,838
                           --------            --------
                           $ 22,980             $16,847
                           --------            --------
                           --------            --------
</TABLE>

4. INVENTORIES

     The components of inventory consist of the following (in thousands):

<TABLE>
<CAPTION>
                           SEPT. 30,           DEC. 31,
                             1998                1997
                           --------            --------
<S>                        <C>                 <C>
Raw Materials               $ 5,801             $ 6,817
Work-in-process               5,719               3,290
Finished goods                  133                 674
                           --------            --------
                           $ 11,653            $ 10,781
                           --------            --------
                           --------            --------
</TABLE>

5. PROPERTY AND EQUIPMENT

     The components of property and equipment consist of the following (in 
thousands):

<TABLE>
<CAPTION>
                                         SEPT. 30,           DEC. 31,
                                           1998                1997
                                         --------            --------
<S>                                      <C>                 <C>
Machinery and equipment                   $ 4,618             $ 3,626
Self constructed assets                     3,360               2,249
Furniture and fixtures                      1,071                 976
Leasehold improvements                      2,933               2,872
                                         --------            --------
                                           11,982               9,723
Less: accumulated depreciation             (3,846)             (2,543)
                                         --------            --------
                                          $ 8,136             $ 7,180
                                         --------            --------
                                         --------            --------
</TABLE>


6.   STOCKHOLDERS' EQUITY

   In late October 1998, the Company offered employees and consultants the 
opportunity to participate in an option repricing program.  Under the 
program, each employee and consultant could elect on or before November 9 
that his or her existing option issued under the Company's Equity Incentive 
Plan be converted into a repriced option.  The per share exercise price of 
each repriced option would be equal to the greater of the fair market value 
of the Company's common stock on the conversion date (November 9, 1998) or 
$6.93.  In return for the lower exercise price, the repriced options issued 
would be subject to a blackout period whereby no options could be exercised 
between November 9, 1998 and May 8, 1999. The number of shares vested under 
the converted option would vest immediately under the repriced option. All 
remaining shares subject to the repriced option would

                                       7
<PAGE>

                         INVISION TECHNOLOGIES, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)
                                          
vest over a period that is equivalent to the vesting period remaining under 
the converted option.  On November 9, the fair market value of the Company's 
common stock was $6.50 and options for a total of 313,986 shares were 
repriced at $6.93 per share. The weighted average per share exercise price of 
the outstanding shares subject to the options prior to conversion was $10.55 
and the range of exercise prices was $7.69-$14.56. 

     In May 1997, the Company sold 1,875,000 shares of common stock in an 
underwritten public offering at $12.00 per share generating net proceeds to 
the Company of approximately $21.2 million including proceeds from the 
underwriters over-allotment option exercised in June 1997.

     In October 1998, the Company repurchased an additional 33,900 shares of 
its common stock at prevailing market prices.

7.   ACQUISITION OF QUANTUM MAGNETICS, INC.

     On September 30, 1997, the Company acquired Quantum Magnetics, Inc. 
("Quantum"), a developer of explosive systems based upon quadrupole resonance 
technology.  The transaction has been accounted for as a pooling of interests 
effective September 30, 1997; therefore, all prior periods have been restated.

     Prior to the acquisition, Quantum used a September 30 fiscal year end.  
The financial statements of the Company have been restated to combine the 
results of Quantum as if it had used a December 31 year end.  Non-recurring 
expenses associated with the acquisition, comprised primarily of outside 
accounting and legal fees, amounted to $685,000 and have been included in 
acquisition costs in the statement of income.

     In July 1997, the Company sold a portion of a prior investment in 
Quantum for net cash proceeds of $312,000 resulting in a loss of $402,000 
which has been included in interest and other income, net in the statement of 
income.  The sale reduced the Company's ownership interest in Quantum in 
order to comply with pooling-of-interests accounting rules.  






                                       8
<PAGE>
                                          
                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS

     THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WHICH 
INVOLVE RISKS AND UNCERTAINTIES. WHEN USED IN THIS DISCUSSION, THE WORDS 
"ANTICIPATE," "BELIEVE," "ESTIMATE," AND "EXPECT" AND SIMILAR EXPRESSIONS AS 
THEY RELATE TO THE COMPANY OR ITS MANAGEMENT ARE INTENDED TO IDENTIFY SUCH 
FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL RESULTS, PERFORMANCE OR 
ACHIEVEMENTS COULD DIFFER MATERIALLY FROM THE RESULTS EXPRESSED IN, OR 
IMPLIED BY, THESE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR 
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE RISKS RELATED TO MARKET ACCEPTANCE OF 
THE COMPANY'S CURRENT PRODUCTS AND NEW PRODUCTS IN DEVELOPMENT, FLUCTUATIONS 
IN THE COMPANY'S QUARTERLY AND ANNUAL OPERATING RESULTS, THE LOSS OF ORDERS 
OF THE COMPANY'S PRODUCTS OR THE FAILURE TO OBTAIN ADDITIONAL ORDERS, LOSS OF 
ANY OF THE COMPANY'S SOLE SOURCE SUPPLIERS, INTENSE COMPETITION, RELIANCE ON 
LARGE ORDERS, CONCENTRATION OF THE COMPANY'S CUSTOMERS, RISKS RELATED TO THE 
LENGTHY SALES CYCLES FOR THE COMPANY'S PRODUCTS, RISKS INHERENT TO DOING 
BUSINESS WITH PUBLIC AGENCIES WHICH ARE SUBJECT TO LEGISLATIVE BUDGETING AND 
OTHER LIMITATIONS, AS WELL AS, SUCH OTHER RISKS AS ARE DESCRIBED UNDER 
"BUSINESS RISKS" AND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR 
ENDED DECEMBER 31, 1997 AND SUBSEQUENT QUARTERLY REPORTS ON FORM 10-Q.

OVERVIEW

     InVision Technologies, Inc. ("InVision," or together with its 
subsidiaries, the "Company") designs, manufactures and markets explosive 
detection systems based on advanced "CT" or CAT Scan technology. InVision was 
formed in September 1990 to design and develop the CTX 5000 and remained in 
the development stage through December 1994. In March 1994, InVision received 
its first commercial order for a CTX 5000 system from the Brussels 
International Airport in Belgium and since such time has received orders for 
a total of 140 CTX Series systems of which a total of 132 had been shipped as 
of September 30, 1998.  Today the Company markets its more advanced CTX 5000 
and CTX 5500 explosive detection systems (the "CTX 5000 Series") and has 
other products under development.
     
     On September 30, 1997, InVision acquired Quantum Magnetics, Inc., 
("Quantum") a privately held developer of explosive detection equipment based 
on quadrupole resonance technology.  The transaction has been accounted for 
as a pooling of interests in the quarter ended September 30, 1997; therefore, 
all prior periods have been restated to include Quantum's results.  Quantum 
is currently a development stage company with products in the prototype stage 
and an order from the FAA to supply two QSCAN-500 advanced technology 
systems.  Quantum is also a leading supplier of research and development 
services, in the area of magnetic sensing and detection technologies, to a 
number of government agencies.
     
     For the three month and nine month periods ended September 30, 1998, the 
Company had revenues of $16.5 million and $47.8 million, respectively, and as 
of September 30, 1998 had backlog equipment orders, service agreements and 
R&D contracts of approximately  $21.8 million.

     The Company considers research and development to be a vital part of its 
operating discipline and continues to dedicate substantial resources for 
research to enhance the performance, functionality and reliability of its 
explosive detection systems based on CT technology. At September 30, 1998, 
the Company had 106 full-time employees engaged in research and development 
activities while also using the services of 23 specialized contract employees 
and consultants in this area.  Total research and development expenditures by 
the Company are partially offset by amounts reimbursed by the Federal 
Aviation Administration ("FAA") and other government and private agencies 
under development contracts and grants. The Company believes that investment 
in research and development in absolute dollars will increase substantially 
to meet its future needs regardless of the level of funding received from the 
FAA. During the nine months ended September 30, 1998 and 1997, the Company 
spent $12.5 million and $9.6 million, respectively, on research and 
development activities. Of these amounts, $7.3 million and $4.4 million, 
respectively, were funded by the FAA and other government and private 
agencies under development contracts and grants. To the extent that contract 
and grant receipts decline in the future, research and development 
expenditures borne by the Company would increase, and the Company expects 
that its results of operations would be adversely impacted.

                                       9
<PAGE>

                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (CONTINUED)
     
     In any given fiscal year, the Company's revenues have principally 
consisted, and the Company believes will continue to consist, of orders of 
multiple units from a limited number of customers. During the first nine 
months of 1998, approximately $31.7 million, or 66%, of the Company's 
revenues, were generated from sales to the Company's largest customer, the 
U.S. government. During the fiscal year ended December 31, 1997, revenues 
from the Company's largest customer, the U.S. government, were approximately 
$32.1 million, or 54%, of the Company's revenues.

     The Company markets its products both directly through internal sales 
personnel and indirectly through authorized agents, distributors and systems 
integrators. In the United States, the Company markets its CTX 5000 Series 
primarily through direct sales personnel. Internationally, the Company 
utilizes both a direct sales force and authorized agents to sell its 
products. During the nine months ended September 30, 1998 and the year ended 
December 31, 1997, international sales represented 34% and 46%, respectively, 
of the Company's revenues. 
                                          
     The sales cycle of the CTX 5000 Series is often lengthy due to the 
protracted approval process that typically accompanies large capital 
expenditures and the time required to manufacture the CTX 5000 Series and 
install and assimilate the CTX 5000 Series. Typically, six to twelve months 
may elapse between a new customer's initial evaluation of the Company's 
system and the execution of a contract. Another three months to a year may 
elapse prior to shipment of the CTX 5000 Series as the customer site is 
prepared and the CTX 5000 Series is manufactured. During this period the 
Company expends substantial funds and management resources but recognizes no 
associated revenue.

     The Company recognizes revenue upon shipment unless extended acceptance 
criteria exist, in which case revenue is recognized upon completion of such 
acceptance criteria. The Company typically requires significant customer 
deposits and progress payments in advance of shipment on customer purchase 
orders. Provision for estimated installation, training and warranty costs is 
recorded at the time revenue is recognized. Systems typically carry a 
one-year warranty. 










                                       10
<PAGE>
                                          
                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (CONTINUED)

RESULTS OF OPERATIONS

     The following table sets forth, certain income and expenditure items 
from the Company's condensed consolidated statements of operations expressed 
as a percentage of revenues for the periods indicated.

<TABLE>
<CAPTION>
                                                        Three Months Ended            Nine Months Ended
                                                          September 30,                 September 30,
                                                      ---------------------         ---------------------
                                                       1998           1997           1998           1997
                                                      ------         ------         ------         ------
<S>                                                   <C>            <C>            <C>            <C>
Revenues                                              100.00%        100.00%        100.00%        100.00%
Cost of revenues:                                      54.09          50.01          54.83          50.03
                                                      ------         ------         ------         ------
   Gross Profit                                        45.91          49.99          45.17          49.97
                                                      ------         ------         ------         ------

Operating expenses:
   Research and development                            11.73          11.40          10.97          13.57
   Sales and marketing                                  9.74           9.05          10.13          11.09
   General and administrative                          10.00           9.43          10.63          11.73
   Acquisition costs                                       -           4.43              -           1.79
                                                      ------         ------         ------         ------
     Total operating expenses                          31.47          34.31          31.73          38.18
                                                      ------         ------         ------         ------

Income from operations                                 14.43          15.68          13.44          11.79
Interest expense                                       (0.96)         (0.38)         (0.50)         (0.90)
Interest and other income, net                          1.16          (0.85)          1.31           0.18
                                                      ------         ------         ------         ------

Income before provision for income taxes               14.64          14.45          14.25          11.07

Provision for income taxes                              1.76           1.59           1.71           1.88
                                                      ------         ------         ------         ------

   Net income (loss)                                   12.88%         12.86%         12.54%          9.19%
                                                      ------         ------         ------         ------
                                                      ------         ------         ------         ------
</TABLE>


CURRENT QUARTER COMPARED TO PRIOR YEAR QUARTER

     REVENUES.   The Company's revenues are comprised of system revenues, 
which include sales of the CTX 5000 Series, accessories, installation and 
configuration, and maintenance related to product support. 

     Revenues were $16.5 million for the third quarter of 1998, an increase 
of 6.5% from the $15.5 million in the third quarter of 1997. This increase 
was primarily due to the initial shipments on the order from the FAA to 
upgrade all 59 CTX 5000 systems previously purchased by the FAA to the 
Company's second-generation CTX 5500 system. In the third quarter of 1998, 
the Company shipped 15 units (10 units to the FAA and 5 units to 
international customers) and the first 12 of the 59 CTX 5500 upgrades, 
compared to 16 units (13 units to the FAA and 3 units to international 
customers), in the third quarter of 1997. The Company typically ships against 
a backlog of orders for its products.  The backlog (excluding R&D contracts) 
as of September 30, 1998 was $15.7 million, compared to $46.8 million as of 
September 30, 1997.

     Quantum research and development contracts were reported as revenues 
prior to the acquisition by Invision.  All Quantum research and development 
revenues have been classified as a reduction to research and development 
expense to conform with the Company's  policy.

                                       11
<PAGE>

                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (CONTINUED)

      GROSS PROFIT.  Cost of revenues primarily consists of purchased 
materials procured for use in the assembly of the Company's products, as well 
as manufacturing labor, overhead and warranty costs. In any given period the 
Company's gross profit may be affected by several factors, including product 
configuration, location of the installation, and complexity of integration 
into various airport environments.  Gross profit was $7.6 million in the 
third quarter of 1998, a decrease of 2.2% from the $7.7 million in the third 
quarter of 1997.  Gross margins were 45.9% and 50.0%, respectively. The 
decrease in gross margins from the same quarter in 1997 was primarily due to 
higher manufacturing overhead costs as a result of the Company's relocation 
to a new facility in late 1997.

     RESEARCH AND DEVELOPMENT.  Research and development expenditures consist 
primarily of compensation paid to personnel engaged in research and 
development activities, amounts paid for outside services, and costs of 
materials utilized in the development of hardware products, including 
prototype units. All software and hardware research and development costs are 
expensed as incurred. Research and development expenditures by the Company 
are partially offset by amounts reimbursed by the FAA and other government 
and private agencies under development contracts and grants.  These services 
are provided on both a cost and cost plus basis. The Company believes that 
research and development expenditures in absolute dollars will increase 
substantially in the future regardless of the level of funding received from 
the FAA. 

     Net research and development expenses would have been $2.2 million in 
the third quarter of 1998 without the capitalization of software development 
costs in accordance with Statement of Financial Accounting Standards No. 86 
("FAS 86"), "Accounting for the Costs of Computer Software to be Sold, 
Leased, or Otherwise Marketed." Under FAS 86, software production costs for 
computer software that is to be used as an integral part of the product or 
process are to be capitalized once technological feasibility has been 
established for the software and all research and development activities for 
the other components of the product or process have been completed.  No 
software development costs were capitalized in the third quarter of 1997 
because research and development on the new product line had not been 
completed. Before considering the impact of software capitalization, gross 
research and development expenditures were $4.7 million in the third quarter 
of 1998, an increase of 23.5% from the $3.8 million in the third quarter of 
1997. Of these amounts, $2.5 million and $2.1 million, respectively, were 
funded by research and development contracts and grants from the FAA and 
other governmental and private entities.  As a percentage of revenues, net 
research and development expenditures were 11.7% in the third quarter of 
1998, compared to 11.4% in the third quarter of 1997. The increase in 
research and development expenditures is primarily the result of personnel 
additions and increased spending on engineering materials and services. 

     SALES AND MARKETING.  Sales and marketing expenditures consist primarily 
of compensation paid to direct and indirect sales and marketing personnel, 
payments to consultants, travel related to the sales process, and other 
selling and distribution costs. 

     Sales and marketing expenditures were $1.6 million in the third quarter 
of 1998, an increase of 14.7% from the $1.4 million in the third quarter of 
1997. As a percentage of revenues, sales and marketing expenditures were 9.7% 
in the third quarter of 1998, compared to 9.1% in the third quarter of 1997.  
The increase in sales and marketing expenditures in the 1998 quarters is 
primarily the result of personnel additions.  

                                       12
<PAGE>

                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (CONTINUED)

     GENERAL AND ADMINISTRATIVE.  General and administrative expenses consist 
primarily of compensation paid to administrative personnel, including 
directors, payments to consultants, professional service fees, and travel and 
other general expenses. 

     General and administrative expenses were $1.6 million in the third 
quarter of 1998, an increase of 13.0% from the $1.5 million in the third 
quarter of 1997. As a percentage of revenues, general and administrative 
expenses were 10.0% in the third quarter of 1998, compared to 9.4% in the 
third quarter of 1997. The increase in general and administrative expenses is 
primarily the result of personnel additions and increased professional and 
consulting costs associated with the Company's growth, increased insurance 
costs, and increased costs of operations associated with being a publicly 
traded company.

     INTEREST EXPENSE.  Interest expense in the third quarters of 1998 and 
1997 resulted primarily from short-term debt outstanding during each period.
 
     INTEREST AND OTHER INCOME, NET.  Interest and other income, net, 
increased to $191,000 in the third quarter of 1998 from $(132,000) in the 
third quarter of 1997.  The 1998 amount consists primarily of interest income 
for the quarter on cash and short-term investment balances in the quarter.  
The 1997 amount consists primarily of  interest income for the quarter on 
cash and short-term balances in the quarter offset by a loss of $402,000 on 
the sale of Quantum stock prior to the Quantum acquisition.  

     PROVISION FOR INCOME TAXES. The provision for income taxes was $289,000 
in the third quarter of 1998, representing an effective tax rate of 12.0% for 
the period.  The provision for income taxes of $246,000 in the third quarter 
of 1997 reflects the provision adjustment based on an effective tax rate of 
17.0% for the year.

CURRENT NINE MONTH PERIOD COMPARED TO PRIOR NINE MONTH PERIOD

     REVENUES.  Revenues were $47.8 million for the nine month period ended 
September 30, 1998, an increase of 24.9% from the $38.2 million in the same 
period of 1997. This increase was primarily the result of the growth in unit 
shipments generated from the 54 unit order by the FAA in December 1996 and 
continuing shipments into international markets. In the nine month period of 
1998, the Company shipped 48 units (32 units to the FAA and 16 units to 
international customers), compared to 38 units (22 units to the FAA and 16 
units to international customers) in the nine month period of 1997. The 
Company typically ships against a backlog of orders for its products.  The 
backlog (excluding R&D contracts) as of September 30, 1998 was $15.7 million, 
compared to $46.8 million as of September 30, 1997.

      Quantum research and development contracts were reported as revenues 
prior to the acquisition by Invision. All Quantum research and development 
revenues have been classified as a reduction to research and development 
expense to conform with the Company's policy.

      GROSS PROFIT.   Gross profit was $21.6 million in the nine month period 
ended September 30, 1998, an increase of 12.9% from the $19.1 million in the 
same period of 1997. Gross margins were 45.2% and 50.0%, respectively.  The 
decrease in gross margins was primarily due to higher manufacturing overhead 
costs as a result of the Company's relocation to a new facility in late 1997, 
and configurations of units shipped and volume discounts in the second 
quarter of 1998 that resulted in lower average selling prices of systems 
shipped during the quarter.

     RESEARCH AND DEVELOPMENT.  Research and development expenditures by the 
Company are partially offset by amounts reimbursed by the FAA and other 
government and private agencies under development contracts and grants.  
These services are provided on both a cost and cost plus basis. The Company 
believes that research and development expenditures in absolute dollars will 
increase substantially in the future regardless of the level of funding 
received from the FAA.

                                       13
<PAGE>

                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (CONTINUED)

     Net research and development expenses would have been $6.0 million in 
the nine month period ended September 30, 1998 without the capitalization of 
software development costs in accordance with FAS 86.  No software 
development costs were capitalized in the nine month period of 1997 because 
research and development on the new product line had not been completed.  
Before considering the impact of software capitalization, gross research and 
development expenditures were $13.3 million in the nine month period of 1998, 
an increase of 38.6% from the $9.6 million in the same period of 1997. Of 
these amounts, $7.3 million and $4.5 million, respectively, were funded by 
research and development contracts and grants from the FAA and other 
governmental and private entities. As a percentage of revenues, net research 
and development expenditures decreased to 11.0% in the nine month period of 
1998 from 13.6% in the same period of 1997. The increase in gross research 
and development expenditures is primarily the result of personnel additions 
and increased spending on engineering materials and services. 

     SALES AND MARKETING. Sales and marketing expenses were $4.8 million in 
the nine month period ended September 30, 1998, an increase of 14.1% from the 
$4.2 million in the same period of 1997. As a percentage of revenues, sales 
and marketing expenses decreased to 10.1% in the nine month period of 1998 
from 11.1% in the same period of 1997. The increased level of spending in the 
nine month period of 1998 reflects higher commissions and other direct 
selling expenses resulting from the increase in revenues, as well as 
increases in staffing.
        
     GENERAL AND ADMINISTRATIVE. General and administrative expenses were 
$5.1 million in the nine month period ended September 30, 1998, an increase 
of 13.2% from the $4.5 million in the same period of 1997. As a percentage of 
revenues, general and administrative expenses decreased to 10.6% in the nine 
month period of 1998 from 11.7% in the same period of 1997. The increased 
level of spending in the nine month period of 1998 is primarily the result of 
personnel additions and increased professional and consulting costs 
associated with the Company's growth, increased insurance costs, and 
increased costs of operations associated with being a publicly traded company.

     INTEREST EXPENSE.  Interest expense decreased to $240,000 in the nine 
month period ended September 30, 1998 from $346,000 in the same period of 
1997. Interest expense in the nine month period of 1997 included a non-cash 
charge resulting from the amortization of a loan warrant discount.

     INTEREST AND OTHER INCOME, NET.  Interest and other income, net, 
increased to $626,000 in the nine month period ended September 30, 1998 from 
$70,000 in the same period of 1997. The 1998 amount consists primarily of 
interest income for the period and results from the significantly higher cash 
and short-term investment balances in the nine month period of 1998 compared 
to the same period of 1997. The 1997 amount consists primarily of interest 
income offset by a loss of $402,000 on the sale of Quantum stock prior to the 
Quantum acquisition.  

     PROVISION FOR INCOME TAXES.  The provision for income taxes in the nine 
month periods ended September 30, 1998 and 1997 reflect an effective tax rate 
of 12.0% and 17.0%, respectively.  The Company's effective tax rate of 12.0% 
in the nine month period of 1998 is lower than the statutory tax rates 
primarily due to the utilization of net operating loss and other credit 
carryforwards. At December 31, 1997 the Company had federal net operating 
loss carryforwards of approximately $13.7 million available to reduce future 
federal taxable income and $2.0 million available to reduce State taxable 
income.  The Company's net operating loss carry-forwards expire from 2005 to 
2011. 
     
LIQUIDITY AND CAPITAL RESOURCES 

     Since inception, the Company has financed its operations primarily 
through private sales of $16.5 million of Preferred and Common Stock (of 
which $5.6 million represents indebtedness converted to equity), the sale of 
$9.5 million of Common Stock in the Company's initial public offering in 
April 1996, the sale of $21.2 million in the Company's follow-on offering in 
May 1997 and short-term borrowings under a working capital line of credit. At 
September 30, 1998, the Company had $12.6 million in cash, cash equivalents 
and short-term investments, compared to $19.2 million at December 31, 1997.

                                       14
<PAGE>
                                          
                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (CONTINUED)

     Net cash used in operating activities was $3.7 million in the nine month 
period ended September 30, 1998, compared to $2.2 million in the same period 
of 1997.  Cash used in operating activities in the nine month period of 1998 
primarily resulted from net income of $6.0 million, the non-cash effect from 
depreciation and amortization of $1.3 million and an increase in accrued 
liabilities, offset by an increase in accounts receivable due to the timing 
of revenues (i.e., late in the third quarter of 1998), a decrease in deferred 
revenues, an increase in other current assets, a decrease in accounts payable 
and an increase in inventory.

     Net cash provided by investing activities was $0.9 million in the nine 
month period ended September 30, 1998, compared to $9.7 million used in 
investing activities in the same period of 1997.  Net cash provided by 
investing activities primarily resulted from the sale of short-term 
investments and release of restricted cash, partially offset by the purchase 
of capital equipment and additions to other assets due to software 
development costs capitalized in the period.  The Company has no significant 
capital spending or purchase commitments other than normal purchase 
commitments and commitments under leases.  The Company had $2.0 million in 
short-term investments at September 30, 1998.
 
     Net cash used in financing activities was $0.8 million in the nine month 
period ended September 30, 1998, compared to the $24.2 million provided by 
financing activities in the same period of 1997.  Net cash used in financing 
activities in the nine month period of 1998 primarily resulted from the 
repurchase of common stock at prevailing market prices and the net repayment 
of debt financing (principally, short-term borrowings under the line of 
credit), partially offset by proceeds from sales under the employee stock 
purchase plan and exercises of incentive stock options. In October 1998, the 
Company repurchased an additional 33,900 shares of its common stock for 
$177,000 at the prevailing market prices at the time of purchase.  Future 
repurchases of the Company's common stock would be based on market conditions 
and evaluated on a case by case basis.

     In April 1998, the Company renewed its two one-year revolving line of 
credit agreements with Silicon Valley Bank.  The first agreement provides for 
maximum borrowings in an amount up to the lower of 80% of domestic eligible 
accounts receivable or $4.5 million.  Borrowings under this agreement bear 
interest at the bank's prime rate (8.50% at September 30, 1998). The second 
agreement is partially guaranteed by the Export-Import Bank of the United 
States and provides for maximum borrowings in an amount up to the lower of 
the sum of 90% of eligible export accounts receivable plus 70% of eligible 
raw materials and work-in-process inventory designated for export customers 
or $4.5 million. Borrowings under this agreement bear interest at the bank's 
prime rate (8.50% at September 30, 1998). Borrowings under both agreements 
are secured by all of the Company's assets other than its intellectual 
property. The agreements expire in April 1999 and require that the Company 
maintain certain financial ratios and levels of tangible net worth and 
profitability and also prohibit the Company from paying cash dividends. 
Proceeds of loans under both lines of credit may be used for general 
corporate purposes.  As of September 30, 1998, the Company had borrowings of  
$3.0 million and a guarantee of performance under a sales contract to a 
certain customer through issuance of a letter of credit totaling $0.5 million.
     
     In April 1998, the Company renewed its committed equipment line of 
credit with Silicon Valley Bank that transforms into a term loan (computer 
equipment -36 months; furniture and fixtures - 60 months) after drawdown.  
The agreement expires in April 1999 and provides for borrowings up to $1.75 
million. Borrowings under this agreement bear interest at the bank's prime 
rate (8.50% at September 30, 1998) and are secured by the assets purchased or 
financed.  As of September 30, 1998, the Company had borrowings of $1.25 
million under the agreement. 

     The Company believes that existing cash and cash equivalents of $10.5 
million as of September 30, 1998, short-term investments of $2.0 million, and 
available borrowings under the Company's line of credit agreements will be 
sufficient to finance its working capital and capital expenditure 
requirements for at least the next 12 months.

                                       15
<PAGE>

                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (CONTINUED)
                                          
BUSINESS RISKS

     The Company's quarterly revenues have fluctuated significantly in the 
past and are expected to fluctuate significantly in the future. These 
fluctuations are the result of a variety of factors, including the Company's 
delivery cycle, variations in product configuration, timing of orders, and 
suitability of client sites. The Company's cost of revenues fluctuates from 
quarter to quarter consistent with fluctuations in such revenues. In 
addition, the Company's gross margins may be affected by, among other 
factors, the configuration of systems sold, the mix between system and add-on 
sales, and the breakdown between domestic and international sales. 

     The quarter ended March 31, 1997 was the Company's first profitable 
quarter since inception. Although the Company has reported a profit in each 
subsequent quarter, there can be no assurance that the Company will continue 
to be profitable on a quarterly basis or annual basis. The Company's past 
operating results have been, and its future operating results will be, 
subject to fluctuations resulting from a number of factors, including the 
timing and announcement of orders, delays in shipments caused by customer 
readiness or integration issues, the timing of new or enhanced product 
offerings by the Company or its competitors and the certification of certain 
of these products, the mix between sales to domestic and international 
customers, market acceptance of any new or enhanced version of the Company's 
products, availability of key components, the Company's ability to rapidly 
increase production, and fluctuations in demand driven by general conditions 
impacting the aviation security industry beyond the control of the Company. 
The Company's revenues in any period are generally derived from a limited 
number of customers, a high percentage of which are public agencies which are 
subject to legislative budgeting and other limitations, including with 
respect to its largest customer, the U.S. government, the risk that a 
substantial portion of the $100 million of funds appropriated by Congress to 
purchase explosive detection systems equipment in fiscal 1999 will not be 
used to purchase the Company's products. The Company may also choose to 
reduce prices or increase spending in response to competition or to pursue 
new market opportunities, all of which may adversely affect the Company's 
business, financial condition and results of operations.

     The Company regularly evaluates acquisition opportunities and is likely 
to make acquisitions  in the future.  Future acquisitions by the Company 
could result in potentially dilutive issuances of equity securities, the 
incurrence of debt and contingent liabilities and amortization expenses 
related to goodwill and other intangible assets, which could materially 
adversely affect the Company's results of operations.  The Company's 
management has had limited experience in assimilating acquired organizations. 
 No assurance can be given as to the ability of the Company to integrate 
successfully any operations, personnel or products that have been acquired or 
that might be acquired in the future, and the failure of the Company to do so 
could have a material adverse effect on the Company's results of operations.

     Substantially all of InVision's customers and a high percentage of 
Quantum's research and development customers to date have been public 
agencies or quasi-public agencies.  In contracting with public agencies, the 
Company is subject to public agency contract requirements which vary from 
jurisdiction to jurisdiction and are subject to budgetary processes and 
expenditure constraints. Budgetary allocations for explosive detection 
systems are dependent, in part, upon governmental policies which fluctuate 
from time to time in response to political and other factors, including the 
public's perception of the threat of commercial airline bombings.  Many 
domestic and foreign government agencies have experienced budget deficits 
that have led to decreased capital expenditures in certain areas.  The 
Company's results of operations may be subject to substantial 
period-to-period fluctuations as a result of these and other factors 
affecting capital spending.  A reduction of funding for explosive detection 
technology deployment could materially and adversely affect the Company's 
business, financial condition or results of operations. Future sales to 
public agencies will depend, in part, on the Company's ability to meet public 
agency contract requirements, certain of which may be onerous or even 
impossible for the Company to satisfy. In addition, public agency contracts 
are frequently awarded only after formal competitive bidding processes, which 
have been 

                                       16
<PAGE>

                         INVISION TECHNOLOGIES, INC.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS
                                 (CONTINUED)
                                          
and may continue to be protracted, and typically contain provisions that 
permit cancellation in the event that funds are unavailable to the public 
agency. There can be no assurance that the Company will be awarded any of the 
contracts for which its products are bid or, if awarded, that substantial 
delays or cancellations of purchases will not result from protests initiated 
by losing bidders.
     
     YEAR 2000 COMPLIANCE.  The CTX 5000 Series contains installed computer
systems and software products which are coded to accept only two digit entries
in the date code field.  Beginning in the year 2000, these date code fields will
need to accept four digit entries to distinguish 21st century dates from 20th
century dates.   The Company also currently uses third party and some internally
developed software and related hardware in its manufacturing, information,
facilities and business systems that will be affected by the date change in the
year 2000.  When the millennium date change occurs, these date sensitive systems
and products will recognize the year 2000 as the year 1900, or not at all.  This
inability to recognize or properly treat the year 2000 may result in system
failure or cause systems to process critical operational or financial
information incorrectly.

     The Company has instituted a comprehensive Year 2000 project designed to
identify and assess the risks associated with its products, operations and
infrastructure, information systems, suppliers and customers that are not Year
2000 compliant, and to develop, implement, and test remediation and contingency
plans to mitigate these risks.  The project comprises four phases:  (1)
identification of risks; (2) assessment of risks; (3) development of remediation
and contingency plans; and (4) implementation and testing.

     With respect to the Company's products in the CTX 5000 Series, the 
Company has completed its identification and assessment of risks with respect 
to product software and identified issues with the main computer operating 
system.  Updates are available from the supplier to resolve these problems 
and initial tests of these updates have been successful.  Upgrades for both 
the CTX 5000 and CTX 5500 are currently being prepared and tested. No 
problems have been identified with respect to secondary operating systems.  A 
hardware component review for imbedded chips, clocks and supplier testing for 
Year 2000 compliance is in progress.  Hardware components that are not Year 
2000 compliant, if any, will be identified and upgraded.  Initial review 
suggests only minor hardware effects. The Company anticipates that the final 
phase of the project, implementation and testing, will be completed for the 
CTX 5500, both original systems and upgrade kits, by the end of the fourth 
quarter of 1998, and for upgrade kits for the Company's first generation 
product, the CTX  5000, by the end of the second quarter of 1999.  We 
recently demonstrated Year 2000 compliance of the CTX 5500 upgrade to the FAA 
and met their requirements. Year 2000 upgrades are currently being beta tested 
in several U.S. sites. Upon successful completion of the beta tests, straight 
forward field upgrades will be performed on all of the Company's 5500 
installed base over the next few months. InVision also has identified an 
upgrade path for earlier CTX 5000 products, however, minor variations in 
system configuration will require additional time to identify and implement 
the upgrades.  The cost to the Company of  bringing its CTX 5500 product into 
year 2000 compliance has been determined from beta tests to be minimal.  The 
cost of 

                                       17
<PAGE>


updating CTX 5000 systems is not yet fully determined but is expected not to 
be material. Furthermore, any cost to InVision is expected to be reduced by 
the significant number of CTX 5000 customers who have or are expected to make 
the decision to purchase CTX 5500 upgrade kits to realize the operational 
benefits of the next generation system in addition to the Year 2000 
compliance features.

     With respect to the Company's internal computerized systems in its
manufacturing, information, facilities and financial and administrative areas,
the Company is at the beginning stage of a formal inventory and identification
of risks.  Outside consultants have been engaged to assist the Director of
Quality Assurance and the Executive Staff under the direction of the Chief
Financial Officer to complete this process, including the implementation of any
necessary solutions and the design of any necessary contingency plans.  Although
the formal process is at an early stage, preliminary, informal assessments of
compliance by principal third party software and hardware vendors earlier this
year did not detect any significant compliance problems and the Company is
hopeful that all phases of this portion of the compliance project can be
completed by the end of the first quarter of 1999.   However, the early stage of
this phase means that the Company can not yet predict whether significant
problems will be identified and cannot yet determine the  extent of contingency
planning that may be required.  The Company is also not in a position to state
the total cost of remediation of all Year 2000 issues although costs identified
to date have not been material and the Company does not expect total costs to be
material.  

     The Company has not yet completed its assessments, developed remediation
for all problems, developed any contingency plans, or completely implemented or
tested any of its remediation plans.  As the Year 2000 project continues, the
Company may discover additional Year 2000 problems, may not be able to develop,
implement, or test remediation and contingency plans, or may find that  the
costs of these activities exceed current expectations and become material.  In
many cases, the Company is relying on assurances from suppliers that new and
upgraded information systems and other products will be Year 2000 compliant. 
The Company plans to test such third-party products, but cannot be sure that its
test will be adequate or that, if problems are identified, they will be
addressed in a timely and satisfactory way.  Because the Company uses a variety
of information systems and had additional systems embedded in its operations and
infrastructure, the Company cannot be sure that all of its systems will work
together in a Year 2000 compliant fashion.  Furthermore, the Company cannot be
sure that it will not suffer business interruptions, either because of its own
Year 2000 problems or those of its customers or suppliers may make it difficult
or impossible for them to fulfill their commitments to the Company.  If the
Company fails to satisfactorily resolve Year 2000 issues related to its products
in a timely manner, it could be exposed to liability to third parties,
including, in particular, those customers owning approximately one-half of the
installed systems, whose systems are covered by an express Year 2000 warranty. 
The Company is continuing to evaluate Year 2000-related risks and will take such
further corrective actions, including the development of contingency plans, as
may be required.             


                                       18

<PAGE>
     

                         PART II.  OTHER INFORMATION


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits
     
          27   Financial Data Schedule

     (b)  The Registrant filed no Reports on Form 8-K during the quarter ended
          September 30, 1998.







                                       19
<PAGE>

                                     SIGNATURES
                                          
                                          
                                          
     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.




                                        INVISION TECHNOLOGIES, INC.
     
     
     
     
     
     
     
Date: November 16, 1998                 /s/ Sergio Magistri
                                        -------------------
                                        Dr. Sergio Magistri
                                        President and Chief Executive Officer 
                                        (PRINCIPAL EXECUTIVE OFFICER)
     




Date: November 16, 1998                 /s/ Curtis P. DiSibio
                                        ---------------------
                                        Curtis P. DiSibio
                                        Senior Vice President and Chief
                                        Financial Officer 
                                        (PRINCIPAL FINANCIAL AND ACCOUNTING
                                        OFFICER)

     








                                       20