<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q


[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                       For The Quarter Ended July 1, 2001


[  ] 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 0-19386


                          FISCHER IMAGING CORPORATION
             (Exact name of Registrant as specified in its charter)

                  DELAWARE                               36-2756787
          (State of incorporation)          (I.R.S. Employer Identification No.)

          12300 North Grant Street
              Denver, Colorado                             80241
(Address of principal executive offices)                (Zip Code)

       Registrant's telephone number, including area code: (303) 452-6800


Indicate by check mark whether the Registrant (i) 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 (ii) has been subject to such filing
requirements for the past 90 days.                Yes  X    No
                                                     -----     -----

The number of shares of Registrant's Common Stock outstanding as of July 1, 2001
was 8,635,651.
<PAGE>

                          FISCHER IMAGING CORPORATION

                               TABLE OF CONTENTS


PART I.   FINANCIAL INFORMATION                                             Page
                                                                            ----


Item 1.   Consolidated Financial Statements

          Consolidated Balance Sheets (unaudited) --
          July 1, 2001 and December 31, 2000                                   3

          Consolidated Statements of Operations (unaudited) --
          Three and six months ended July 1, 2001 and July 2, 2000             4

          Consolidated Statements of Cash Flows (unaudited) --
          Six months ended July 1, 2001 and July 2, 2000                       5

          Notes to Consolidated Financial Statements (unaudited)               6

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                           12

Item 3.   Quantitative and Qualitative Disclosures About Market Risk          19



PART II.  OTHER INFORMATION


Item 1.   Legal Proceedings                                                   20

Item 2.   Changes in Securities and Use of Proceeds                           20

Item 3.   Defaults Upon Senior Securities                                     20

Item 4.   Submission of Matters to a Vote of Security Holders                 20

Item 5.   Other Information                                                   20

Item 6.   Exhibits and Reports on Form 8-K                                    20

<PAGE>

                          FISCHER IMAGING CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                    (Amounts in thousands except share data)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                               July 1,       December 31,
                                                                                2001            2000
                                                                               -------       -----------
                                     ASSETS
<S>                                                                            <C>           <C>
CURRENT ASSETS
   Cash and cash equivalents                                                     $ 2,520         $   843
   Trade accounts receivable, net of allowance for doubtful
     accounts of approximately $709 and $1,236 at July 1, 2001
     and December 31, 2000, respectively                                          12,491          12,600
   Inventories                                                                    18,112          18,844
   Prepaid expenses and other current assets                                         554             744
                                                                                 -------         -------
       Total current assets                                                       33,677          33,031
                                                                                 -------         -------
PROPERTY AND EQUIPMENT
   Manufacturing equipment                                                         8,147           8,124
   Office equipment and leasehold improvements                                     6,039           6,021
                                                                                 -------         -------
                                                                                  14,186          14,145
   Less- Accumulated depreciation and amortization                                12,300          12,032
                                                                                 -------         -------
       Property and equipment, net                                                 1,886           2,113
                                                                                 -------         -------
INTANGIBLE ASSETS, net                                                             1,903           1,841
DEFERRED COSTS AND OTHER ASSETS                                                    1,399           1,491
                                                                                 -------         -------
       TOTAL ASSETS                                                              $38,865         $38,476
                                                                                 =======         =======

</TABLE>

                    LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
CURRENT LIABILITIES
<S>                                                                              <C>             <C>
   Notes payable and current maturities of long-term debt                        $     18        $     39
   Trade accounts payable                                                           3,131           3,463
   Accrued salaries and wages                                                       2,186           1,781
   Customer deposits                                                                  660             715
   Accrued warranty and installation costs                                            864           1,206
   Deferred service revenue                                                           520             687
   Other current liabilities                                                        2,007           1,768
                                                                                 --------        --------
       Total current liabilities                                                    9,386           9,659

LONG-TERM DEBT                                                                        846             840
                                                                                 --------        --------
       TOTAL LIABILITIES                                                           10,232          10,499
                                                                                 --------        --------
STOCKHOLDERS' INVESTMENT
   Common Stock, $.01 par value, 25,000,000 shares authorized,
     8,635,651 and 8,587,315 shares issued and outstanding at
     July 1, 2001 and December 31, 2000, respectively                                  86              86
   Preferred Stock, 5,000,000 shares authorized:
     Series C Junior Participating Preferred Stock, $.01 par value,
       500,000 shares authorized, no shares issued and outstanding                   --              --
   Additional paid-in capital                                                      47,460          47,377
   Accumulated deficit                                                            (18,711)        (19,670)
   Accumulated other comprehensive income (foreign
     currency translation adjustments)                                               (202)            184
                                                                                 --------        --------
       TOTAL STOCKHOLDERS' INVESTMENT                                              28,633          27,977
                                                                                 --------        --------
       TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT                            $ 38,865        $ 38,476
                                                                                 ========        ========

</TABLE>



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

                                       3

<PAGE>

                          FISCHER IMAGING CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                  (Amounts in thousands except per share data)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                           Three Months Ended                    Six Months Ended
                                        ------------------------              ----------------------
                                        July 1,          July 2,              July 1,        July 2,
                                          2001             2000                 2001           2000
                                        -------          -------              -------        -------
<S>                                     <C>              <C>                  <C>            <C>
REVENUES
      Products and services             $12,824          $11,946              $24,070        $25,689



COST OF SALES
      Products and services               6,386            5,993               12,070         13,546
                                        -------          -------              -------        -------


             Gross profit                 6,438            5,953               12,000         12,143

OPERATING EXPENSES
      Research and development              937              976                1,909          2,017
      Selling, marketing and              3,125            3,316                6,019          6,699
       service
      General and administrative          1,551            1,105                2,849          2,314
                                        -------          -------              -------        -------
              Total operating             5,613            5,397               10,777         11,030
               expenses                 -------          -------              -------        -------

INCOME FROM OPERATIONS                      825              556                1,223          1,113

      Interest expense                      (50)            (177)                (104)          (345)
      Interest income                        25               10                   47             30
      Other income (expense), net           (49)              76                 (208)            17
                                        -------          -------              -------        -------

INCOME BEFORE INCOME TAXES                  751              465                  958            815
      Provision for income taxes             --               --                   --             --
                                        -------          -------              -------        -------
NET INCOME                              $   751          $   465              $   958        $   815
                                        =======          =======              =======        =======

NET INCOME PER SHARE
      Basic                             $  0.09          $  0.07              $  0.11        $  0.12
                                        =======          =======              =======        =======
      Diluted                           $  0.08          $  0.06              $  0.10        $  0.10
                                        =======          =======              =======        =======

SHARES USED TO CALCULATE
INCOME PER SHARE
      Basic                               8,635            7,075                8,633          7,075
                                        =======          =======              =======        =======
      Diluted                             9,403            7,781                9,235          7,788
                                        =======          =======              =======        =======
</TABLE>




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

                                       4
<PAGE>

                          FISCHER IMAGING CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                        Six Months Ended
                                                    -------------------------
                                                    July 1,           July 2,
                                                     2001              2000
                                                    -------           -------
<S>                                                 <C>             <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
   Net cash provided by
    operating activities                            $ 2,509           $ 2,552
                                                    -------           -------

 CASH FLOWS FROM INVESTING ACTIVITIES
   Capital expenditures                                (538)             (121)
                                                    -------           -------

     Net cash used in investing activities             (538)             (121)
                                                    -------           -------

 CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from sales of common stock, net              90                88
   Net repayments under line of credit
    agreement                                            --            (1,776)
   Repayments of long-term debt                          --              (367)

     Net Cash provided by (used in) financing
      activities                                         90            (2,055)
                                                    -------           -------

 EFFECT OF EXCHANGE RATE CHANGES ON CASH               (384)             (313)
                                                    -------           -------
 NET INCREASE IN CASH AND CASH EQUIVALENTS            1,677                63
 CASH AND CASH EQUIVALENTS, beginning
  of period                                             843             1,056
                                                    -------           -------
 CASH AND CASH EQUIVALENTS, end of
  period                                            $ 2,520           $ 1,119
                                                    =======           =======

</TABLE>

                                       5
<PAGE>

                          FISCHER IMAGING CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

(1)  GENERAL

In management's opinion, the accompanying unaudited consolidated balance sheets
and statements of operations and cash flows contain all adjustments, consisting
only of normal recurring items, necessary to present fairly the financial
position of Fischer Imaging Corporation (the "Company") on July 1, 2001, its
results of operations for the three and six months ended July 1, 2001 and
July 2, 2000 and its cash flows for the six months ended July 1, 2001 and
July 2, 2000. Results of operations and cash flows for the interim periods may
not be indicative of the results of operations and cash flows for the full
fiscal year.

These unaudited consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all the
information and note disclosures required by generally accepted accounting
principles.  The financial statements should be read in conjunction with the
audited financial statements and notes thereto contained in the Company's latest
annual report on Form 10-K for the year ended December 31, 2000.

Typically, and for the year ending December 31, 2001, the Company closes its
first three fiscal quarters as of the Sunday closest to the end of March, June
and September.


(2)  INVENTORIES

Inventories include costs of materials, direct labor and manufacturing overhead.
Inventories are priced at the lower of cost (using primarily the last-in,
first-out ("LIFO") method of valuation) or market. Writedowns for excess or
obsolete inventories are charged to expense in the period in which conditions
giving rise to the writedowns are first recognized.

Inventories consisted of the following components (in thousands):

<TABLE>
                                                          July 1,          December 31,
                                                           2001               2000
                                                         -------            -------
<S>                                                     <C>                <C>
                 FIFO cost--
                      Raw materials                      $ 9,808            $ 9,363
                      Work in process and
                       finished goods                       8,49              9,676
                 LIFO valuation adjustment                  (195)              (195)

                 Inventories, net                        $18,112            $18,844
                                                         =======            =======

</TABLE>

                                       6
<PAGE>

                          FISCHER IMAGING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                  (Unaudited)

(3)  NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                          July 1,         December 31,
                                                           2001              2000
                                                           ----              ----
<S>                                                     <C>               <C>
Borrowing under bank revolving line of credit             $  --             $  --
Capitalized lease obligations                                56                71
Other                                                       808               808
                                                          -----             -----
                                                            864               879
Less--Current maturities                                    (18)              (39)
                                                          -----             -----
Long-term debt                                            $ 846             $ 840
                                                          =====             =====
</TABLE>


See "Management's Discussion & Analysis - Liquidity and Capital Resources" for
further discussion of the Company's line of credit.

(4)  NET INCOME PER SHARE

Basic income per share is computed by dividing the net income or loss by the
weighted average number of shares of common stock outstanding.  Diluted income
or loss per share is determined by dividing the net income or loss by the sum
of: (1) the weighted average number of common shares outstanding; (2) if
dilutive, the number of shares of convertible preferred stock as if converted
upon issuance; and (3) if dilutive, the effect of outstanding stock options
determined utilizing the treasury stock method.

A reconciliation between the number of securities used to calculate basic and,
if dilutive, diluted income per share is as follows (in thousands):


<TABLE>
<CAPTION>
                                                   Three Months Ended              Six Months Ended
                                                  --------------------           --------------------
                                                   July 1,     July 2,            July 1,     July 2,
                                                     2001       2000               2001        2000
                                                   -------    -------            -------     -------
<S>                                                <C>        <C>                 <C>         <C>
Weighted average number of common shares
 outstanding

(Shares used in Basic Earnings Per Share
 Computation)....................................   8,635      7,075              8,633       7,075
                                                               -----              -----       -----
Shares of convertible preferred stock (as if
 converted)......................................      --        507                 --         507
Effect of stock options (treasury stock method)..     768        199                602         206
                                                    -----      -----              -----       -----
Shares used in Diluted Earnings Per Share
 Computation, if dilutive........................   9,403      7,781              9,235       7,788
                                                    =====      =====              =====       =====
</TABLE>

As of July 1, 2001 and July 2, 2000, there were, respectively, 1,652,275 and
1,277,450 outstanding options to purchase shares of Common Stock under the
Company's current stock option plans.

                                       7
<PAGE>

(5)  COMPREHENSIVE INCOME

Comprehensive income is defined as the change in equity of an enterprise other
than the change resulting from investments by or distributions to its owners.
For the Company, comprehensive income includes only net earnings or loss and
foreign currency translation adjustments, as follows:
<TABLE>
<CAPTION>

                                           Three Months Ended                    Six Months Ended
                                     -------------------------------       --------------------------
<S>                                    <C>               <C>                <C>             <C>
                                        July 1,            July 2,           July 1,         July 2,
                                         2001               2000              2001            2000
                                     ------------      -------------       -----------    -----------

Net income                              $ 751              $ 465             $ 958          $ 815
Foreign currency translation             (144)              (318)             (388)          (313)
 adjustments                             -----              -----             -----          -----
Comprehensive income                    $ 607              $ 147             $ 570          $ 502
                                         =====              =====             =====          =====
</TABLE>

                                       8
<PAGE>

                          FISCHER IMAGING CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                  (Unaudited)

(6)  OPERATING AND GEOGRAPHIC SEGMENT INFORMATION

The Company operates in a single industry segment: the design, manufacture, and
marketing of x-ray imaging systems. Because of differences in distribution
costs, strategies, and aftermarket potential, the Company separately manages and
reports operating results for products sold by the Company (proprietary) from
those manufactured for sale to other medical products companies under Original
Equipment Manufacturer ("OEM") contracts. The Company's manufacturing and most
distribution activities are in the United States, including export sales to
Europe, primarily, and elsewhere. The Company also has marketing operations in
Europe.  Australia operations were closed at December 31, 2000. The following is
a summary of the Company's operations by segment (in thousands):

<TABLE>
<CAPTION>
                                            United States
                               ----------------------------------------
                                   Proprietary                              International
                               ------------------                        -------------------     Internal
                                Domestic   Export    OEM       Total     Australia    Europe       Sales      Total
                                --------   ------  ------      -----     ---------  ---------    --------  ----------
Three Months Ended July 1, 2001
-------------------------------
<S>                            <C>        <C>      <C>        <C>       <C>         <C>         <C>       <C>
  Revenues:
   Product.....................  $ 7,542   $1,422  $           $ 8,964    $    --      $ 138      $ (30)     $ 9,072
   Service.....................    3,541                         3,541         --        211         --        3,752
                                 -------  -------  ------      -------    --------     -----      -----      -------
                                  11,083    1,422               12,505                   349        (30)      12,824
                                 -------  -------  ------      -------    --------     -----      -----      -------
  Costs of sales:
   Product.....................    4,096      846                4,942         --         85        (30)       4,997
   Service.....................      536                           536                    44                     580
                                 -------  -------  ------      -------    --------     -----      -----      -------
   Allocated...................    4,632      846                5,478                   129        (30)       5,577
                                 -------  -------  ------
   Unallocated.................                                    809         --         --         --          809
                                                               -------    --------     -----      -----      -------
                                                                 6,287         --        129        (30)       6,386
                                                               -------    --------     -----      -----      -------
  Gross profit.................                                  6,218                   220                   6,438
  Operating expenses...........                                  5,418         --        195         --        5,613
                                                               -------    --------     -----      -----      -------
  Income from operations.......                                    800                    25         --          825
  Interest expense.............                                    (50)        --         --         --          (50)
  Interest income..............                                     25                    --         --           25
  Other expense, net...........                                    (56)        --          7         --          (49)
                                                               -------    --------     -----      -----      -------
  Net income...................                                $   719    $    --      $  32      $  --      $   751
                                                               =======    ========     =====      =====      =======
</TABLE>

<TABLE>
<CAPTION>

Three Months Ended July 2, 2000
-------------------------------
  Revenues:
<S>                            <C>        <C>      <C>     <C>           <C>        <C>       <C>         <C>
   Product.....................  $ 7,463   $1,648  $  248      $ 9,359    $    --      $ 278      $(440)     $ 9,197
   Service.....................    2,643       --      --        2,643         55         51         --        2,749
                                 -------   ------  ------      -------    -------      -----      -----      -------
                                  10,106    1,648     248       12,002         55        329       (440)      11,946
                                 -------   ------  ------      -------    -------      -----      -----      -------
  Costs of sales:
   Product.....................    4,127      910      11        5,048         --         --       (165)       4,883
   Service.....................      304       --      --          304         30         20          2          356
                                 -------   ------  ------      -------    -------      -----      -----      -------
   Allocated...................    4,431      910      11        5,352         30         20       (163)       5,239
                                 -------   ------    ----
   Unallocated.................                                    754         --         --         --          754
                                                               -------    -------      -----      -----      -------
                                                                 6,106         30         20       (163)       5,993
                                                               -------    -------      -----      -----      -------
  Gross profit.................                                  5,896         25        309       (277)       5,953
  Operating expenses...........                                  5,305        117        252       (277)       5,397
                                                               -------    -------      -----      -----      -------
  (Loss) income from operations                                    591        (92)        57         --          556
  Interest expense.............                                   (177)        --         --         --         (177)
  Interest income..............                                      5          5         --         --           10
  Other expense, net...........                                     88        (28)        16         --           76
                                                               -------    -------      -----      -----      -------
  Net (loss) income............                                $   507    $  (115)     $  73      $  --      $   465
                                                               =======    =======      =====      =====      =======
</TABLE>

                                       9
<PAGE>

                          FISCHER IMAGING CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                  (Unaudited)

<TABLE>
<CAPTION>
                                            United States
                               ----------------------------------------
                                  Proprietary                                International
                               ------------------                        ---------------------   Internal
                               Domestic   Export    OEM       Total      Australia    Europe      Sales        Total
                               ---------  -------  ------  ------------  ----------  ---------  ----------  -----------
Six Months Ended July 1, 2001
-----------------------------
<S>                            <C>        <C>      <C>     <C>           <C>         <C>        <C>         <C>
  Revenues:
   Product                       $14,570   $2,323  $           $16,893   $       --    $  285       $ (33)     $17,145
   Service                         6,401       --                6,401           --       524          --        6,925
                                 -------  -------  ------      -------   ----------    ------       -----      -------
                                  20,971    2,323               23,294           --       809         (33)      24,070
                                 -------  -------  ------      -------   ----------    ------       -----      -------
  Costs of sales:
   Product  .                      8,117    1,348                9,465           --       194         (33)       9,626
   Service  .                        871       --                  871           --       125          --          996
                                 -------  -------              -------   ----------    ------       -----      -------
   Allocated                       8,988    1,348               10,336           --       319         (33)      10,622
                                 -------  -------              -------
   Unallocated                                                   1,448           --        --          --        1,448
                                                               -------   ----------    ------       -----      -------
                                                                11,784           --       319         (33)      12,070
                                                               -------   ----------    ------       -----      -------
  Gross profit                                                  11,510           --       490          --       12,000
  Operating expenses                                            10,339           --       438          --       10,777
                                                               -------   ----------    ------       -----      -------
  Income from operations                                         1,171           --        52          --        1,223
  Interest expense                                                (104)          --        --          --         (104)
  Interest income                                                   47           --        --          --           47
  Other expense, net                                              (203)          --        (5)         --         (208)
                                                               -------   ----------    ------       -----      -------
  Net income                                                   $   911   $       --    $   47       $  --      $   958
                                                               =======   ==========    ======       =====      =======
  Other information:
         Identifiable                                          $37,727   $       --    $1,138                  $38,865
          assets
         Capital                                                   538           --        --                  $   538
          expenditures
         Depreciation                                              407           --        --                  $   407
         Amortization                                              288           --        --                  $   288
</TABLE>

<TABLE>
<CAPTION>

Six Months Ended July 2, 2000
-----------------------------
Revenues:
<S>                            <C>        <C>      <C>      <C>           <C>        <C>       <C>         <C>
    Product                      $14,247   $4,636   $1,300      $20,183   $     --    $  533       $(712)     $20,004
    Service                        5,468       --       --        5,468        114       103          --        5,685
                                 -------  -------  -------      -------     ------    ------       -----      -------
                                  19,715    4,636    1,300       25,651        114       636        (712)      25,689
                                 -------  -------  -------      -------     ------    ------       -----      -------
  Costs of sales:
    Product                        7,652    2,503      635       10,790         --        --        (175)      10,615
    Service                          706       --       --          706         42        29          (5)         772
                                 -------  -------  -------      -------     ------    ------       -----      -------
    Allocated                      8,358    2,503      635       11,496         42        29        (180)      11,387
                                 -------  -------  -------      -------
    Unallocated                                                   2,159         --        --          --        2,159
                                                                -------     ------    ------       -----      -------
                                                                 13,655         42        29        (180)      13,546
                                                                -------     ------    ------       -----      -------
  Gross profit                                                   11,996         72       607        (532)      12,143
  Operating expenses                                             10,865        200       497        (532)      11,030
                                                                -------     ------    ------       -----      -------
  Income (loss) from                                              1,131       (128)      110          --        1,113
   operations
  Interest expense                                                 (343)        --        (2)         --         (345)
  Interest income                                                    21          9        --          --           30
  Other expense, net                                                226       (221)       12          --           17
                                                                -------     ------    ------                  -------
  Net income (loss)                                             $ 1,035     $ (340)   $  120       $  --      $   815
                                                                =======     ======    ======       -----      =======
  Other information:
    Identifiable assets                                         $35,978     $1,100    $1,004                  $38,082
    Capital expenditures                                            121         --        --                  $   121
    Depreciation                                                    832         --        --                  $   832
      Amortization                                                  279         --        --                  $   279
</TABLE>

Internal sales from the United States to Australia and Europe are recorded on
the basis of transfer pricing established by the Company. International sales to
OEM customers are managed and, therefore, reported as part of OEM business
results.

                                       10
<PAGE>

(7)  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 133 and No. 137. In June 1998,
the Financial Accounting Standards Board, or FASB, issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 establishes accounting and reporting standards for
derivative financial instruments and hedging activities related to those
instruments as well as other hedging activities. It requires an entity to
recognize all derivatives as either assets or liabilities in the statement of
financial position and measures those instruments at fair value. In June 1999,
the FASB issued Statement of Financial Accounting Standards No. 137, "Accounting
for Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133 - An amendment of FASB Statement No. 133." SFAS
No. 137 delays the effective date of SFAS No. 133 to financial quarters and
financial years beginning after June 15, 2000. The Company does not typically
enter into arrangements that would fall under the scope of Statement No. 133 and
thus, the adoption of Statement No. 133 did not significantly affect our
financial condition or results of operations.

Disclosure Regarding FASB 141 & 142

In July 2001 the FASB issued SFAS No. 141, "Business Combinations," and SFAS No.
142, "Goodwill and Other Intangible Assets," which replace Accounting Principle
Board Opinion Nos. 16, "Business Combinations," and 17, "Intangible Assets,"
respectively. SFAS No. 141 requires that the purchase method of accounting be
used for all business combinations initiated after June 30, 2001, and that the
use of the pooling-of-interests method be prohibited. SFAS No. 142 changes the
accounting for goodwill from an amortization method to an impairment-only-
method. Amortization of goodwill, including goodwill recorded in past business
combinations, will cease upon adoption of SFAS No. 142, which the Company will
be required to adopt on January 1, 2002. After December 31, 2001, goodwill can
only be written down upon impairment discovered during annual tests for fair
value, or discovered during tests taken when certain triggering events occur.
Prior to the adoption of SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of." The Company expects
the adoption of SFAS No. 141 and No. 142 will not have a material effect on the
Company's financial condition and results of operations.

                                      11
<PAGE>

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

The following discussion of financial condition and results of operations should
be read in conjunction with the company's Consolidated Financial Statements and
Notes thereto appearing in the company's Annual Report on Form 10-K for the year
ended December 31, 2000 (the "Form 10-K"). This Form 10-Q, including the
information incorporated by reference herein, contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. For
this purpose, statements contained herein that are not statements of historical
fact may be considered forward-looking statements. Without limiting the
foregoing, the words "believes", "expects", "anticipates", "plans", "estimates",
and similar words and expressions are intended to identify such statements.
These forward-looking statements include statements about:

 .  resolutions of deficiencies noted by the FDA;

 .  the adequacy of financial resources;

 .  future revenues, expenses, and other operating results;

 .  sales under the company's strategic alliances, marketing arrangements, and
   other agreements pertaining to Mammotest, digital radiography, and other
   products;

 .  the status of SenoScan and other new products in development;

 .  the size and growth of the company's markets;

 .  the success of efforts to reduce manufacturing and other costs;

 .  manufacturing capacity and capabilities;

 .  submissions to the FDA and receipt of FDA approvals and clearances;

 .  the availability of raw materials and components; and

 .  other matters.

These forward-looking statements involve risks and uncertainties. The actual
results that the company achieves may differ materially from those discussed in
such forward-looking statements due to the risks and uncertainties set forth:

(1)  in the Business section of the Form 10-K under the headings: "Risks
     Associated with OEM Agreements," "Sales and Marketing," "International
     Operations," "Strategic Alliances," "Risks of Technological Change and New
     Products," "Risks of New Product Development and Market Acceptance,"
     "Competition," "Government Regulation," "Government Reimbursement,"
     "Manufacturing and Operating Risks," "Product Liability, Market Withdrawal,
     and Product Recalls," "Patents and Intellectual Property," "Risk of
     Dependence on Key Personnel,"

                                      12
<PAGE>

(2)  in the Market for Registrant's Common Equity and Related Stockholder
     Matters under the headings "Risk of Price Volatility of Common Stock,"
     'Risks of Fluctuations in Quarterly Results of Operations," "Risks of
     Fluctuations in Quarterly Results of Operations," Risks Associated with
     Shares Eligible for Future Sale," "Risks Associated with Control by
     Management and Certain Stockholders," and "Certain Anti-Takeover Effects,"

(3)  in the Management's Discussion and Analysis of Financial Condition and
     Results of Operations ("MD&A") section of the Form 10-K under the
     "Overview," "Quantitative and Qualitative Disclosures About Market Risk,"
     "FDA Regulations," and "Recent Developments" headings,

(4)  elsewhere in the Business, MD&A, and other sections of the Form 10-K,

(5)  and in this Form 10-Q under the "Overview," section of MD&A and elsewhere.

                                      13
<PAGE>

Results of Operations

The following table sets forth the percentage of revenues represented by certain
data included in the Company's statements of operations for the periods
indicated:

<TABLE>
<CAPTION>
                                       Three Months Ended   Six Months Ended
                                       ------------------   -----------------
                                       July 1,    July 2,   July 1,   July 2,
                                         2001      2000      2001       2000
                                       -------    -------   -------   --------
      <S>                              <C>        <C>       <C>       <C>
      Revenues                           100.0%    100.0%    100.0%    100.0%
      Gross margin                        50.2      49.8      49.9      47.3
      Research and development             7.3       8.2       7.9       7.9
      Selling, marketing and service      24.4      27.8      25.0      26.1
      General and administrative          12.1       9.3      11.8       9.0
      Income (Loss) from Operations        6.4       4.7       5.1       4.3
      Benefit for income taxes              --        --        --        --
      Net income (loss)                    5.9       3.9       4.0       3.2
</TABLE>

Revenues.  Second quarter 2001 revenues were $12,824,000, a 7.3% increase from
second quarter 2000 revenues of $11,946,000. The increase reflects the increase
in domestic product and service sales. Domestic sales increased $1,018,000 from
second quarter 2000.

For the six months ended July 1, 2001, revenues were $24,070,000, or about 6.3%
lower than revenues of $25,689,000 for the six months ended July 2, 2000. This
decrease reflects the increase explained above, offset by decreases in
International and OEM sales.

Gross Profit.   For the second quarter of 2001, gross profit expressed as a
percentage of revenues was 50.2%, as compared to 49.8% for the second quarter of
2000. For the six months ended July 1, 2001, gross profit as a percentage of
revenues was 49.9%, as compared to a gross profit of 47.3% for the six months
ended July 2, 2000. The increase in gross profit was primarily due to
efficiencies derived from our corporate right-sizing and reorganization, the
implementation of a flattened manufacturing process, a continued shift towards
higher margin direct sales versus dealer and OEM sales and an increase in
production of higher margin mammography and digital radiology products.

                                      14
<PAGE>

Research and Development Expenses.  Research and development expenses for the
second quarters of 2001 and 2000 were $937,000 and $976,000, respectively, or
7.3% and 8.2% of revenues, respectively. For the six months ended July 1, 2001
and July 2, 2000, research and development expenses were $1,909,000 and
$2,017,000, respectively, or 7.9% and 7.9%, respectively, of revenues. The
decrease in the three and six month periods ended July 1, 2001 reflect
reductions in staffing and the near completion of the SenoScan project. Although
the Company continues to aggressively pursue new product development, it has
significantly reduced its customization of existing products and has delivered a
more standard product to its customers. This has driven the reduction in
engineering staffing and costs.

Selling, Marketing and Service Expenses.  Selling, marketing and service
expenses for the second quarters of 2001 and 2000 were $3,125,000 and
$3,316,000, respectively, or 24.4% and 27.8%, respectively, of revenues. For the
six months ended July 1, 2001 and July 2, 2000, selling, marketing and service
expenses were $6,019,000 and $6,699,000, respectively, or 25.0% and 26.1%,
respectively, of revenues. As compared to the same three and six month period in
2000, selling, marketing and service expenses decreased as a result of lower
headcount, reduced commissions and reduced travel expenses.

                                      15
<PAGE>

General and Administrative Expenses.  General and administrative expenses for
the second quarters of 2001 and 2000 were $1,551,000 and $1,105,000,
respectively, or 12.1% and 9.3%, respectively, of revenue. For the six months
ended July 1, 2001 and July 2, 2000, general and administrative expenses were
$2,849,000, and $2,314,000, respectively, or 11.8% and 9.0% of revenues,
respectively. For both the three and six month periods, the increase was
primarily due to an increase in general legal reserves and some special
projects that began in the second quarter of 2001.

Interest Expense / Interest Income.  Interest expense for the three months ended
July 1, 2001 and July 2, 2000 was $50,000 and $177,000, respectively and, for
the six month periods then ended was $104,000 and $345,000, respectively.
Interest income for the second quarters of 2001 and 2000 was $25,000 and
$10,000, respectively and, for the six months ended July 1, 2001 and July 2,
2000 was $47,000 and $30,000, respectively. The decrease in interest expense, as
well as the increase in interest income in the three and six months ended July
1, 2001 as compared to the three and six months ended July 2, 2000 is due
primarily to lower levels of borrowings under the Company's working capital line
of credit and higher levels of investing.

Net Income/Loss.  The Company's net income for the second quarter of 2001 was
$751,000 as compared to net income for the second quarter of 2000 of $465,000.
For the six months ended July 1, 2001, the Company's net income was $958,000 as
compared to net income of $815,000 for the six months ended July 2, 2000. The
changes in net income are due to the factors mentioned above.

                                      16
<PAGE>

Income Taxes

The Company's estimated effective tax rate for the year ended December 31, 2001
is currently 0%. Accordingly, no income tax benefit or provision has been
recorded for the three or six month periods ended July 1, 2001. This rate was
determined based upon the anticipated 2001 results of operations includable in
the domestic consolidated tax return and upon projected net temporary
differences between operating results reflected in the financial statements and
those required to be reflected in the 2001 domestic consolidated tax return. As
of December 31, 2000, the Company had valuation allowances of approximately
$15.8 million, reducing net deferred tax assets to $0. The realizability of net
deferred tax assets is dependent on the Company's ability to generate future
taxable income, and the Company's estimate of realizable deferred tax assets may
change in the near future.

No income tax provisions have been recognized for foreign tax jurisdictions and
no income tax benefits have been recognized for subsidiary losses outside the
domestic consolidated return because they are not expected to reverse in the
foreseeable future.

                                      17
<PAGE>

Liquidity and Capital Resources

Net cash provided by operating activities for the six months ended July 1, 2001
was $2.5 million which was consistent with $2.6 million provided by operations
in the comparable six-month period of 2000.

Net cash used in investing activities was $538,000 for the six months ended
July 1, 2001, up $417,000 from the comparable six-month period in 2000. The
Company anticipates that the level of spending for capital expenditures in the
second quarter of 2001 will continue, although there currently are no material
commitments for capital expenditures.

Net cash provided by financing activities for the six months ended July 1,2001
was $69,000, which resulted from the exercise of stock options. For the
comparable period in 2000, cash of $2,055,000 was used principally for the
reduction in borrowings under the Company's bank revolving line of credit. The
reduction in borrowings was made possible by the decrease in accounts receivable
and improved profitability.

As of July 1, 2001, the Company had $2.5 million in cash and cash equivalents,
working capital of $24.3 million, and a $8.0 million bank revolving line of
credit facility, which is subject to restrictions as to availability based on
eligible receivables and inventory, as defined. As of July 1, 2001, $8.0 million
was available under this line. The agreement is secured by the Company's
tangible assets and is for a term of three years. The borrowings under the
agreement are subject to interest at the bank's prime rate of interest, 6.75%,
at July 1, 2001.

The company believes its current cash and cash equivalent balances, its
available borrowings under the line of credit, and cash generated from
operations will be sufficient to satisfy its liquidity needs for the remainder
of 2001. The company may need to obtain additional debt or equity financing to
fund its long-term growth needs.

                                      18
<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk:
--------------------------------------------------------------------

There have been no significant changes in market risk from December 31, 2000.

                                      19
<PAGE>

                          PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings:
---------------------------

  Not applicable.

Item 2.  Changes in Securities and Use of Proceeds:
---------------------------------------------------

  Not applicable.

Item 3.  Defaults Upon Senior Securities:
-----------------------------------------

  Not applicable.

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


The annual shareholder meeting was held June 20, 2001 at 3:00 p.m. There were
two proposals presented to the shareholders for consideration. The first
proposal was the election of directors. Kathryn A. Paul and Louis E. Rivelli
were re-elected for a three year term ending in 2004. The second proposal was
the ratification of Arthur Andersen, LLP as independent auditors of the
company for the fiscal year ending December 31, 2001. Arthur Andersen LLP was
approved as the company's independent auditors. No other business came before
the shareholders for vote.

The vote results were as follows:

                                  For       Withheld
Proposal #1 Kathryn A. Paul    3,721,939     58,844
            Louis E. Rivelli   3,718,940     61,843

Proposal #2 Ratification of the appointment of Arthur Andersen LLP as
independent auditors for the fiscal year ending December 31, 2001.

                       For        Against        Abstain
                    3,722,930     57,853           -0-

Directors whose terms expire in 2002 are David G. Bragg, M.D. and Gerold D.
Knudson. Morgan W. Nields and Fred Burbank, M.D. terms expire in 2003.

Item 5.  Other Information:
---------------------------

  Not applicable.

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

       (a)   Documents filed as part of this report:

        1.   Financial Statements.

             See pages 3 through 5 of this Form 10-Q.

        2.   Financial Statement Schedules.

             None

        3.   Exhibits.

                                       20
<PAGE>

        The following are filed as part of this report:

<TABLE>
<CAPTION>
Exhibit
          -----------------------------------------------------------------------------------------------------
 Number                                          Description of Exhibit
--------  -----------------------------------------------------------------------------------------------------
<S>       <C>
3.1       Certificate of Incorporation of the Company(1)

3.2       Bylaws of the Company(1)

4.1       Amended and Restated Rights Agreement, dated as of November 3, 1994, between the Company and
          American Securities Transfer, Inc. which includes the Certificate of Designation for the Series C
          Junior Participating Preferred Stock as Exhibit A and the form of Right Certificate as Exhibit B(4)

4.2       Certificate of Designation for the Series D Convertible Preferred Stock(4)

10.1      Agreement, dated October 5, 1990, between the Company and Dornier Medizintechnik GmbH(1)

10.2      Purchase Agreement, dated August 29, 1994, between the Company and General Electric Company on
          behalf of GE Medical Systems(4)

10.3      Nonemployee Director Stock Option Plan, as amended(5)

10.4      Stock Option Plan(1)

10.5      Retention Bonus Plan(3)

10.6      Lease Agreement, dated July 31, 1992, between the Company and
          JN Properties(2)

10.7      Stock Purchase Agreement, dated as of June 20, 1995, between the
          Company and General Electric Company, acting through its GE Medical
          Systems Division ("GEMS")(4)

10.8      Registration Rights Agreement, dated as of June 20, 1995, between
          the Company and GEMS(4)

10.9      Manufacturing and License Agreement, dated as of June 20, 1995,
          between the Company and GEMS(4)

10.10     Amendment, dated as of June 20, 1995, to Purchase Agreement, dated
          as of August 29, 1994, between the Company and GEMS(4)

10.11     Agreement dated October 10, 1997, between the Company and Ethicon
          Endo-Surgery, Inc. with Addendum dated January 28, 1998.(5)

27        Financial Data Schedule(6)
</TABLE>
----------------
(1)       Incorporated by reference to the Company's Registration Statement on
          Form S-1, File No. 33-41537, as filed with the Securities and Exchange
          Commission (the "Commission") on July 3, 1991.

(2)       Incorporated by reference to the Company's Form 10-K for the year
          ended December 31, 1992, as filed with the Commission.

(3)       Incorporated by reference to the Company's Form 10-K for the year
          ended December 31, 1994, as filed with the Commission on April 14,
          1995.

(4)       Incorporated by reference to the Company's Form 8-K, as filed with the
          Commission on July 3, 1995.

(5)       Incorporated by reference to the Company's Form 10-K for the year
          ended December 31, 1997, as filed with the Commission on March 31,
          1998.

(6)  Filed herewith.

        (b) Reports on Form 8-K

        None

        (c) Exhibits

                                       21
<PAGE>

        See Item 6(a)(3) of this Form 10-Q.

        (d) Financial Statement Schedules

        None



                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the quarter
ended July 1, 2001 to be signed on its behalf by the undersigned thereunto duly
authorized.

                            FISCHER IMAGING CORPORATION



                            /s/ RODNEY B. JOHNSON
                            ----------------------
                            Rodney B. Johnson
                            Chief Financial Officer, Secretary



August 15, 2001




                                       22