<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

For the quarterly period ended          September 30, 1997
                              -------------------------------------------------

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the Transition period from                          to
                              -------------------------     -------------------

Commission file number   0-28484
                       --------------------------------------------------------

                              QualMark Corporation
-------------------------------------------------------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

               Colorado                                     84-1232688
----------------------------------------          -----------------------------
     (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                     Identification No.)

   1329 West 121st Avenue, Denver, CO                          80234
-------------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip Code)

(Issuer's telephone number)        (303) 254-8800
                              -------------------------------------------------

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


     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
                                                            [ X] Yes  [ ] No



                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

The number of shares of no par value common stock at October 21, 1997 is
------------------------------------------------------------------------
3,387,134.
----------

     Transitional Small Business Disclosure Format (check one): [ ] Yes [ X] No

<PAGE>


                    Part I - FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS

                              QUALMARK CORPORATION
                                  BALANCE SHEET
                      (AMOUNTS IN THOUSANDS, EXCEPT SHARES)


                                                SEPT. 30, 1997
                                                  (UNAUDITED)    DEC. 31, 1996
                                                --------------   -------------
                    ASSETS

   Cash and equivalents                                  $544            $411
   Short term investments                                 200           1,911
   Trade accounts receivable, net of
      allowance for doubtful accounts of $21
      at Sept. 30, 1997 and December 31, 1996           2,576           1,246
   Inventories                                            360             536
   Other current assets                                    79             120
                                                -------------    ------------
      Total current assets                              3,760           4,224

   Property and equipment, net                          1,323           1,073
   Patents, net of accumulated amortization
      of $266 and $254, respectively                       16              28
   Other assets                                           177             116
                                                -------------    ------------

   Total assets                                        $5,277          $5,441
                                                -------------    ------------
                                                -------------    ------------

      LIABILITIES & SHAREHOLDERS' EQUITY

   Accounts payable                                      $796            $699
   Customer deposits and deferred revenue                  55              47
   Accrued expenses                                       529             984
   Current portion of capital lease obligations            17              31
                                                -------------    ------------
      Total current liabilities                         1,397           1,761

   Noncurrent portion of capital lease
      obligations                                           7              18
   Notes Payable                                          200               0
                                                -------------    ------------
      Total long term liabilities                         207              18

   Shareholders' Equity:
   Common stock; no par value; 15,000,000
      shares authorized;   3,385,484 shares
      and 3,330,484 shares issued and
      outstanding at Sept. 30, 1997 and
      December 31, 1996, respectively                   6,265           6,131

   Accumulated deficit                                 (2,592)         (2,469)
                                                -------------    ------------
      Total shareholders' equity                        3,673           3,662
                                                -------------    ------------

   Total liabilities and shareholders' equity          $5,277          $5,441
                                                -------------    ------------
                                                -------------    ------------


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

<PAGE>

                              QUALMARK CORPORATION
                             STATEMENT OF OPERATIONS
            (UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)



<TABLE>
<CAPTION>


                                                  For the three       For the three        For the nine        For the nine
                                                   months ended        months ended        months ended        months ended
                                                  Sept. 30, 1997      Sept. 30, 1996      Sept. 30, 1997      Sept. 30, 1996
                                                  --------------      --------------      --------------      --------------

<S>                                               <C>                 <C>                 <C>                 <C>
Net revenue                                             $2,892              $1,531              $7,166              $3,822
Cost of revenue                                          1,643                 796               4,171               2,188
                                                  ------------        ------------        ------------        ------------
    Gross profit                                         1,249                 734               2,995               1,634

Selling, general and administrative expenses             1,080                 690               2,974               1,735
Research and development expenses                           55                  27                 160                 128
                                                  ------------        ------------        ------------        ------------
    Income (loss) from operations                          114                  17                (139)               (229)

Other income (expense):
    Interest                                                (3)                 29                  24                  16
    Other                                                   (2)                  0                  (8)                (39)
                                                  ------------        ------------        ------------        ------------

Net income (loss)                                         $109                 $46               ($123)              ($252)
                                                  ------------        ------------        ------------        ------------
                                                  ------------        ------------        ------------        ------------



Net income(loss) per share                               $0.03               $0.01              ($0.04)             ($0.09)

Weighted average number of common shares                 3,699               3,586               3,355               2,764
</TABLE>



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

<PAGE>

                              QUALMARK CORPORATION
                             STATEMENT OF CASH FLOWS
                        (UNAUDITED, AMOUNTS IN THOUSANDS)


                                                   For the nine   For the nine
                                                   months ended   months ended
                                                  Sept. 30, 1997 Sept. 30, 1996
                                                  -------------- --------------
Cash Flows From Operating Activities:
Net loss                                                  ($123)        ($252)
Adjustments to reconcile net loss to net
 cash from operating activities:
    Depreciation                                            298           118
    Patent amortization                                      12            16
    Discount accretion                                        0            42
Change in assets and liabilities:
    Accounts receivable                                  (1,330)         (442)
    Inventories                                             176          (294)
    Other assets                                            (19)         (107)
    Accounts payable and accrued expenses                  (358)          384
    Customer deposits and deferred revenue                    8          (130)
                                                  -------------  ------------
       Net cash used in operating activities             (1,336)         (666)

Cash Flows From Investing Activities:
Acquisition of property and equipment                      (550)         (741)
Acquisition of patents                                        0           (17)
Purchase of short term investments                         (200)            0
Proceeds on sale/redemption of short term
 investments                                              1,911             0
                                                  -------------  ------------
    Net cash provided(used) by investing
     activities                                           1,161          (758)

Cash Flow From Financing Activities:
Proceeds from borrowing                                     200             0
Repayments of borrowings - others                             0          (701)
Proceeds from issuance of common stock                      134         4,536
Principal payments on capital lease obligations             (26)          (38)
                                                  -------------  ------------
    Net cash from financing activities                      308         3,797
                                                  -------------  ------------

Net increase in cash                                        133         2,373
Cash at beginning of period                                 411           251
                                                  -------------  ------------
Cash at end of period                                      $544        $2,624
                                                  -------------  ------------
                                                  -------------  ------------

NONCASH FINANCING ACTIVITIES
    Conversion of debt to common stock                       $0          $250
    Acquisition of equipment under capital lease              0            43
SUPPLEMENTAL DISCLOSURE
    Interest paid                                            $6           $43

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

<PAGE>

                              QUALMARK CORPORATION
                          NOTES TO FINANCIAL STATEMENTS


QualMark Corporation (the Company), was founded in 1991 and is a manufacturer of
physical stress systems. These systems rapidly and efficiently expose product
design and manufacturing related failures on its customers products, thereby
providing manufacturers the necessary information to improve product quality.
The Company also operates a nation-wide network of test centers that its
customers may use as an alternative, or in addition, to purchasing its systems.


NOTE 1 - Basis of Presentation

These financial statements should be read in conjunction with the audited
financial statements for the year ended December 31, 1996 and notes thereto.

The interim financial data as of September 30, 1997 and for the nine months
ended September 30, 1997 and 1996 is unaudited; however, in the opinion of
management of the Company, the interim data includes all adjustments, consisting
only of normal recurring adjustments, necessary for a fair presentation of the
results for the interim periods presented.  Results for the nine months are not
necessarily indicative of results for the remainder of 1997.


NOTE 2 - Inventories

Inventories consist of the following (amounts in thousands):

                                     9/30/97
                                   (unaudited)      12/31/96
                                   --------------------------
     Raw materials                      $360           $334
     Work in process                       0              9
     Finished goods                        0            193
                                   ---------        -------
                                        $360           $536
                                   ---------        -------
                                   ---------        -------



NOTE 3 - Net Income (Loss) Per Share


Net income (loss) per share is computed using the weighted average number of
Common shares outstanding during each period, including common equivalent shares
outstanding.  Common equivalent shares consist of stock options and warrants
calculated using the treasury stock method, when dilutive.

<PAGE>

In February 1997, the Financial Standards Board issued Statement of Accounting
Standards No. 128, "Earnings per share" (FAS) 128.  FAS 128 changes the
computation, presentation and disclosure requirements of earnings(loss) per
share that has previously been followed by the Company.  FAS 128 is effective
for years ending after December 15, 1997 and early adoption is not permissible.
If the provisions of FAS 128 were adopted for the three months ended September
30, 1997 and 1996, and for the nine months ended September 30, 1997 and 1996,
the Company's basic income(loss) per share would not have been materially
different than those presented.


NOTE 4 - Litigation

     On March 22, 1996, Screening Systems, Inc. ("SSI"), filed a patent
infringement action in the United States District Court for the Central District
of California, Southern Division, against the Company, alleging that the Company
has infringed U.S. Patent No. 4,181,026.  SSI amended its complaint in September
to add claims for infringement of U.S. Patent Nos. 4,181,026 and 4,181,028, and
for contributory and inducing infringement.  Each of the patents-in-suit is
owned by Hughes Electronics Company("Hughes") and licensed to SSI.  Trial of
this matter was originally set for March 25, 1997.

In October 1996, the Company filed a motion to dismiss the action on the basis
that SSI did not alone have standing to pursue the action pursuant to the terms
of its license agreement with Hughes.  In November 1996, the court ruled on the
Company's motion by ordering that Hughes be joined as an interested party.
Because Hughes declined to join the action as a plaintiff, SSI joined Hughes as
a defendant in its November 22, 1996 Second Amended Complaint.

With limited exception, the parties completed discovery on January 10, 1997.  On
February 3, 1997 the Company filed motions for summary judgement of non-
infringement on each of the three patents in suit,  SSI filed a motion for
summary judgement with respect to U.S. patent No. 4,181,028 and other motions
addressing the Company's defenses.  On February 6, 1997, Judge McLaughlin
vacated all pending dates, including the March 25, 1997 trial date, and referred
the motions for summary judgement to Magistrate Judge Elgin Edwards for
determination.

Magistrate Judge Edwards set a hearing known as a "Markman hearing" to determine
the scope and meaning of the relevant claims and terms of the patents-in-suit
before ruling on any motions for summary judgement of non-infringement.  The
hearings were originally scheduled for March 25, 1997 but were postponed to
April 10, 1997 and completed on May 20, 1997.  After receiving final arguments
from the parties, the Judge will issue an interpretation of the meaning and
scope of the claims of the patents-in-suit.  Based on those interpretations, the
Company expects to refile its motions

<PAGE>

for summary judgement of non-infringement.  The Court has not set a new trial
date and the Company understands that no trial date will be set until after
ruling on any summary judgment motions.

The Company is convinced that the legal action by the plaintiff is without merit
and will continue to vigorously defend itself in these matters.


Item 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward-Looking Statements

The statements contained in this report which are not historical in nature are
forward-looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those set forth or implied
by forward-looking statements, including  but not limited to the risk of an
unfavorable outcome in the SSI litigation, variability in order flow and
operating results, the ability of the Company to find and retain qualified
personnel to staff its manufacturing and marketing operations and existing and
anticipated test centers, and the risk that the demand for the Company's systems
will not continue to grow.


Results of Operations

Revenue

     Net revenue in the three months ended September 30, 1997 increased
$1,361,793 (89.0%) as compared with the three months ended September 30, 1996,
from $1,530,520 to $2,892,313.   Net revenue in the nine month period ended
September 30, 1997 increased $3,344,155 (87.5%) as compared with the nine months
ended September 30, 1996, from $3,821,811 to $7,165,965.

     System sales revenue in the three month period ended September 30, 1997
increased $1,153,617 (116.5%) from $989,947 to $2,143,564 as compared to the
same three month period in 1996.  For the nine month period ended September 30,
1997, system revenue increased $2,636,865 (101.4%) over the same nine month
period in 1996, from $2,601,516 to $5,238,381.  Unit shipments increased from
nine to seventeen in the comparable three month periods ended September 30, 1997
and 1996 and from 21 to 41 systems in the comparable nine month periods ended
September 30, 1997 and 1996.

   Test center revenue for the three months ended September 30, 1997 increased
$208,176 (38.5%) from $540,573 to $748,749 over the three months ended September
30, 1996.  For the nine months ended September 30, 1997, test center revenue
increased $707,290 (58.0%)

<PAGE>

from $1,220,295 to $1,927,585 over the same period in 1996.  The Company
operated eight test centers containing ten systems during the three month period
ended September 30, 1997 compared to six test centers containing seven systems
during the same period in 1996.

     The Company's quarterly operating results could be subject to fluctuations
for a variety of reasons.  The Company operates with a small backlog relative to
its revenue; thus most of its sales in each quarter result from orders received
in the current or prior quarter.  In addition, because prices for the Company's
products are relatively substantial, a significant portion of net sales for each
quarter is attributable to a relatively small number of units.

     For the three and nine month periods ended September 30, 1997, no single
customer accounted for more than 10% of revenue in the respective periods.

Gross Margin

     The gross margin in the three months ended September 30, 1997 was 43.2%
compared to a 48.0% gross margin for the same period in 1996.  For the nine
months ended September 1997, the gross margin was 41.8% compared to a gross
margin of 42.7% in the same nine month period in 1996.  The decrease in gross
margin is partially attributable to an increased charge to royalty expense under
an agreement the Company has with its founder.  Under that agreement, if
revenues exceed certain levels, an increase in the percentage of total sales is
paid as a royalty to the founder.  Recognizing that revenue is likely to reach a
level where an increase in royalty expense will occur, during the third quarter
the Company took an additional charge of $71,659 on total year-to-date revenue.


Operating Expense

     General and administrative expenses increased from $445,974 to $620,779 for
the three months ended September 30, 1997 compared to the same three month
period in 1996.  For the nine months ended September 30, 1997, general &
administrative cost increased from $1,152,049 to $1,779,802 over the same nine
month period in 1996.  The increase reflects added costs for opening test
centers, test center administration and legal costs incurred from the Company's
involvement in a litigation matter.

     Sales and Marketing expenses increased $214,715 from $244,477 for the three
months ended September 30, 1996 to $459,192 for the three months ended September
30, 1997.  For the nine months ended September 30, 1997, the increase was
$611,070, from $583,170 to $1,194,240 when compared to the same nine month
period on 1996.  These increases were primarily due to increases in department
headcount and sales and marketing efforts in expanding the sales force over the
comparable periods in 1996.

<PAGE>

Liquidity and Capital Resources

     During the first nine months of 1997, the Company's operations used
$1,336,000 of cash in operating activities, invested $550,000  for equipment,
paid $25,814 in lease payments and borrowed $200,000 from its bank.  The Company
also purchased $200,000 in short term investments and redeemed short term
investments of $1,911,000.  Former employees exercised options to purchase
55,000 shares of common stock for a total change in common stock of $134,000.
Together, these activities resulted in a cash increase  of approximately
$133,000 to a quarter ending balance of $544,000.

          In September 1997 the Company renegotiated its line of credit
arrangement with its bank.  The credit line provides for draws up to $1,500,000;
bears interest at prime plus 1.5%, and is secured by substantially all of the
assets of the Company.  The Company must maintain certain financial and other
covenants in order to draw amounts available under the line of credit.  On the
effective date of the agreement, September 18, 1997, and according to its terms,
the Company borrowed $200,000 secured by certain fixed assets.  This portion of
the credit line bears interest at prime plus 1.75% and is to be repaid in equal
monthly payments over a three year term.

     The Company expects to meet long term liquidity requirements through
existing cash balances and utilization of its credit line until cash flows from
operations are sufficient to sustain the Company.  The Company's ability to
generate positive cash flows is dependent on the continued growth of its systems
and test center business and the satisfactory resolution of its litigation
matter.

<PAGE>

                           PART II  OTHER INFORMATION


Item 1    Legal Proceedings

     See Note 4 to Financial Statements.


Item 6    Exhibits and Reports on Form 8-K.

     (a)       Exhibits - See Index to Exhibits.

     (b)       Reports on Form 8-K during the nine months ended
               September 30, 1997 - none.










                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                              QualMark Corporation



Date: October 24, 1997             By: /s/ W. PRESTON WILSON
                                      ------------------------------------
                                      W. Preston Wilson
                                      President, Chief Executive Officer


Date: October 24, 1997                 /s/ VERNON W. SETTLE
                                      ------------------------------------
                                      VERNON W. SETTLE
                                      VP, Finance & Administration
                                      Principal Accounting Officer

<PAGE>

                                INDEX TO EXHIBITS


Exhibit
Number    Description
------    -----------


 4.1      Form of Certificate for shares of Common stock.(1)

 4.6      Form of Warrant issued to holders of 10% secured promissory notes.(1)

10.1      QualMark Corporation 1993 Incentive Stock Plan.(1)

10.2      QualMark Corporation 1996 Incentive Stock Plan.

10.3      Agreement dated March 31, 1993 by and between QualMark Corporation and
          W. Preston Wilson.(1)

10.4      Agreement dated August 15, 1994 by and between QualMark
          Corporation and J. Wayne Farlow.(1)

10.5      Agreement dated September 30, 1995 by and between QualMark Corporation
          and Gregg K. Hobbs.(1)

10.8      Addendum to Agreement dated December 21, 1995 by and between the
          Company and Gregg K. Hobbs (1)

10.11     Loan and Security Agreement dated April 30, 1996, by and between 
          QualMark Corporation and Silicon Valley Bank, as amended by 
          Amendent to Loan and Security Agreement dated August 18, 1997.

27.1      Financial Data Schedule

(1) Similarly denoted as an exhibit to registration statement 333-1454-D and
       incorporation herein by reference.