SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

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

                    For The Quarter Ended September 29, 1997


[X]     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 
                                      ----       ----

                                            Shares Outstanding as of
       Title of Class                           September 29, 1997
------------------------------              ------------------------
Common Stock,  $0.01 par value                       6,948,648



<PAGE>


                           FISCHER IMAGING CORPORATION


                                TABLE OF CONTENTS



PART I.  FINANCIAL INFORMATION                                            PAGE

         Item 1.  Consolidated Financial Statements

                  Consolidated Balance Sheets -
                  September 29, 1997 and December 31, 1996                   3

                  Consolidated Statements of Operations -
                  Three and nine months ended  September 29, 1997
                  and September 30, 1996                                     4

                  Consolidated Statements of Cash Flows -
                  Nine months ended  September 29, 1997
                  and  September 30, 1996                                    5

                  Notes to Consolidated Financial Statements                 6

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


PART II. OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K                           16



<PAGE>


                           FISCHER IMAGING CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                    (Amounts in thousands except share data)

<TABLE>
<CAPTION>
                                                                    September 29,     December 31,
                                                                        1997              1996
                                                                   ---------------- ---------------
                               ASSETS                                (Unaudited)

<S>                                                                  <C>               <C>     
CURRENT ASSETS:
  Cash and cash equivalents                                          $   6,536         $  3,289
  Trade accounts receivable, net of allowance for doubtful
     accounts of approximately $728 and $641 at September 29,
     1997 and December 31, 1996, respectively                           13,621           18,600
  Inventories                                                           17,569           23,692
  Deferred income taxes                                                  2,267            2,267
  Prepaid expenses and other current assets                              1,526            1,289
                                                                      --------          -------
              Total current assets                                      41,519           49,137
                                                                      --------          -------

PROPERTY AND EQUIPMENT (at cost):
  Manufacturing equipment                                                9,443            8,198
  Office equipment and leasehold improvements                            5,510            4,666
                                                                      --------          -------
                                                                        14,953           12,864
  Less- Accumulated depreciation and amortization                        8,909            8,294
                                                                      --------          -------
              Property and equipment, net                                6,044            4,570
                                                                      --------          -------

INTANGIBLE ASSETS, net                                                   3,787            4,327
DEFERRED INCOME TAXES                                                      346              346
DEFERRED COSTS AND OTHER ASSETS                                          1,672            2,052
                                                                      --------          -------
              TOTAL ASSETS                                           $  53,368         $ 60,432
                                                                      ========          =======


                    LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
  Trade accounts payable                                             $   4,392         $  5,155
  Notes payable and current maturities of long-term debt                   256              283
  Accrued salaries and wages                                             2,110            2,160
  Accrued restructuring costs                                            1,600               --
  Deferred service revenue                                                 647              805
  Other current liabilities                                              3,203            3,587
                                                                      --------          -------
              Total current liabilities                                 12,208           11,990

LONG-TERM DEBT                                                             342              149

ACCRUED RESTRUCTURING AND OTHER NONCURRENT LIABILITIES                   1,586              488
                                                                      --------          -------
               TOTAL LIABILITIES                                        14,136           12,627
                                                                      --------          -------

STOCKHOLDERS' INVESTMENT:
  Common Stock, $.01 par value,  25,000,000 shares  authorized,
    6,948,648 and 6,920,335 shares issued and outstanding at
    September 29, 1997 and December 31, 1996, respectively                  69               69
  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                                                             -                -
   Series D Convertible Preferred Stock, $.01 par value,
     1,333,333 shares authorized, issued and outstanding at
     September 29, 1997 and December 31, 1996; liquidation
     preference of $10,000,000                                              13               13
  Additional paid-in capital                                            49,235           49,093
  Accumulated deficit                                                  (10,563)          (1,388)
  Cumulative translation adjustment                                        478               18
                                                                      --------          -------
              TOTAL STOCKHOLDERS' INVESTMENT                            39,232           47,805
                                                                      --------          -------
              TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT         $  53,368         $ 60,432

                                                                      ========          =======
</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                       Nine Months Ended
                                      -------------------------------------    -------------------------------------
                                       September 29,       September 30,        September 29,        September30,
                                            1997                1996                 1997                1996
                                       -------------       -------------        -------------        ------------

<S>                                       <C>                 <C>                 <C>                  <C>     
NET REVENUES                              $ 14,636            $ 20,886            $ 42,089             $ 62,865

COST OF SALES                                9,439              12,953              27,799               37,562
                                          --------             -------             -------              -------
     Gross profit                            5,197               7,933              14,290               25,303

OPERATING EXPENSES:
  Research and development                   1,327               1,816               4,393                5,025
  Selling, marketing and service             3,487               4,489              12,203               13,347
  General and administrative                 1,248               1,265               3,490                3,538
  Restructuring provision                    2,900                  --               2,900                   --
                                          --------             -------             -------              -------
      Total operating expenses               8,962               7,570              22,986               21,910
                                          --------             -------             -------              -------

(LOSS) EARNINGS FROM OPERATIONS
                                            (3,765)                363              (8,696)               3,393

      Interest expense                         (19)                (99)                (68)                (519)
      Interest income                           69                  75                 197                   90
      Other (expense) income, net             (169)                (13)               (608)                  41
                                          --------             -------             -------              -------
(LOSS) EARNINGS BEFORE
INCOME TAXES                                (3,884)                326              (9,175)               3,005
      Provision for income taxes                                    85                  --                  745
                                          --------             -------             -------              -------
NET (LOSS) EARNINGS                      $  (3,884)           $    241           $  (9,175)            $  2,260
                                          ========             =======            ========              =======

NET (LOSS) EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE                  $   (0.47)           $   0.03           $   (1.11)            $   0.30
                                          ========             =======            ========              =======

WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING                           8,282               8,331               8,282                7,659
                                          ========             =======            ========              =======
</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>
                                                                         Nine Months Ended
                                                                    ----------------------------
                                                                    September 29,  September 30,
                                                                         1997           1996
                                                                    -------------  -------------

<S>                                                                  <C>             <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss) earnings                                                $   (9,175)     $   2,260
                                                                      ---------       --------
  Adjustments to reconcile net (loss) earnings
    to net cash provided by (used in) operating
    activities-
      Restructuring provision                                             2,900             --
      Depreciation                                                        1,398          1,191
      Amortization of intangible assets                                     540            553
      Provision for doubtful accounts                                       112            263
      Sales and retirements of assets                                       152             76
      Other changes in current assets and liabilities-
        Decrease (Increase) in trade accounts receivable                  4,867         (2,731)
        Decrease (Increase) in inventories                                6,123         (3,259)
        Decrease in deferred income taxes                                    --            159
        Increase in prepaid expenses and other current assets              (237)          (509)
        Decrease (Increase) in deferred costs and other assets              380           (115)
        Decrease in trade accounts payable                                 (763)        (2,802)
        (Increase) Decrease in accrued salaries and wages                   (50)           123
        Decrease in deferred service revenue                               (158)          (388)
        Decrease in accrued restructuring charges                          (200)            --
        (Decrease) Increase in other current liabilities                   (384)           849
      Other                                                                  (2)            79
                                                                       --------       --------
            Total adjustments                                            14,678         (6,511)
                                                                       --------       --------
            Net cash provided by (used in) operating activities           5,503         (4,251)
                                                                       --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                                                   (2,497)        (1,062)
  Other                                                                      --            (48)
                                                                       --------       --------
             Net cash used in investing activities                       (2,497)        (1,110)
                                                                       --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sales of common stock                                       142         13,586
  Net repayments under line of credit agreement                              --         (2,643)
  Repayments of long-term debt                                             (361)        (1,553)
                                                                       --------       --------
             Net cash (used in ) provided by financing activities          (219)         9,390
                                                                       --------       --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                     460             75
                                                                       --------       --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      3,247          4,104

CASH AND CASH EQUIVALENTS, beginning of period                            3,289            968
                                                                       --------       --------
CASH AND CASH EQUIVALENTS, end of period                              $   6,536      $   5,072
                                                                       ========       ========
</TABLE>

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


                                        5

<PAGE>


                           FISCHER IMAGING CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
1. GENERAL

In the opinion of management,  the accompanying  unaudited  consolidated balance
sheets and  statements  of  operations  and cash flows  contain all  adjustments
consisting,  with the exception of the restructuring  provision,  only of normal
recurring items,  necessary to present fairly the financial  position of Fischer
Imaging  Corporation  (the  "Company")  at September  29,  1997,  its results of
operations for the three and nine months ended  September 29, 1997 and September
30,  1996 and cash  flows  for the nine  months  ended  September  29,  1997 and
September 30, 1996.

The  unaudited  consolidated  financial  statements  presented  herein 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, 1996.

The Company  typically  closes its first three fiscal  quarters as of the Sunday
closest  to the end of  March,  June  and  September.  In 1997,  to more  evenly
distribute  the days  between  quarters,  the first three fiscal  quarters  were
closed as of the Monday  closest to the end of the respective  months,  or March
31, June 30, and September 29, respectively.

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):

                                            September 29,         December 31,
                                               1997                  1996
                                          ------------------  -----------------
FIFO cost-
     Raw materials                             $10,977             $16,244
     Work in process and finished goods         12,142              13,467
LIFO valuation adjustment                         (714)               (893)
                                                ------              ------
     Total before valuation reserves            22,405              28,818
Less valuation reserves                         (4,836)             (5,126)
                                                ------              ------
Inventories, net                               $17,569             $23,692
                                                ======              ======

3.  OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following (in thousands):

                                              September 29,      December 31,
                                                  1997               1996
                                             ----------------  ----------------

Customer  deposits                               $1,329             $1,058
Accrued warranty and  installation costs          1,164              1,408
Other                                               710              1,121
                                                  -----              -----
Total other current liabilities                  $3,203             $3,587
                                                  =====              =====

                                        6

<PAGE>


4. NOTES PAYABLE AND LONG-TERM DEBT

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


                                        September 29,         December 31,
                                            1997                  1996
                                       ---------------       --------------

  Capitalized lease obligations            $ 555                  $ 382
  Other                                       43                     50
                                            ----                   ----
                                             598                    432
  Less--Current maturities                  (256)                  (283)
                                            ----                   ----
  Long-term debt                           $ 342                  $ 149
                                            ====                   ====

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

5. ISSUANCE OF STOCK

     On June 27, 1996, the Company completed the sale of 1,200,000 shares of its
common stock at $12.00 per share.  Proceeds,  net of  underwriting  discount and
other  expenses,  of  $13,121,000  were  received  in early  July  1996 and were
primarily  utilized to repay  existing  indebtedness  under the  Company's  bank
revolving line of credit of approximately  $6.4 million.  The remaining proceeds
were invested in short-term, investment grade securities.

6.  NET (LOSS) EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE

Net (loss)  earnings per share is computed based on the weighted  average number
of common and  convertible  preferred  shares and,  if  dilutive,  other  common
equivalent shares outstanding  during each of the periods.  The Company uses the
treasury stock method for determining the effect of outstanding stock options on
earnings per share.

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 128  "Earnings  per Share",  which is to be
effective December 15, 1997. This statement  establishes standards for computing
and presenting earnings per share. Had this statement been adopted as of January
1, 1997, (loss) earnings per share would have been as follows:

<TABLE>
<CAPTION>
                                               Three Months Ended                        Nine Months Ended
                                      --------------------------------------    -------------------------------------
                                        September 29,       September 30,        September 29,       September 30,
                                            1997                 1996                 1997                1996
                                      ------------------   -----------------    -----------------   -----------------

<S>                                       <C>                    <C>               <C>                    <C> 
Basic (loss) earnings per share           $ (.56)                $.03              $(1.32)                $.36
Diluted (loss) earnings per share           (.47)                 .03               (1.11)                 .30
</TABLE>


7.  FISCHER MIDWEST MINORITY INTEREST

During the first quarter of 1996, the Company acquired the 45% minority interest
of Fischer Imaging Midwest, Inc., its domestic marketing subsidiary, in exchange
for shares of the Company's stock. The Company accounted for this transaction as
a  purchase,   acquiring  the  minority  interest  with  a  net  book  value  of
approximately $331,000 and recording goodwill of approximately  $270,000,  which
is being amortized on a straight-line basis over 15 years.


                                        7

<PAGE>


8.  RESTRUCTURING PROVISION

During the third  quarter of 1997,  the  Company  decided to close its  Addison,
Illinois manufacturing facility.  Therefore,  the Company, in the third quarter,
recorded a $2.9 million  restructuring  provision for estimated facility closing
costs, the shortfall  between required lease and anticipated  sublease  payments
during  the  facility's  remaining  lease  term,  severance  and  certain  other
non-recurring  costs associated with this decision.  The Company  estimates that
the closure of the facility will be completed by early 1998. However,  the lease
on the Addison  facility runs through May 2002.  During the third  quarter,  the
Company spent approximately $200,000 for severance and facility closing costs.


                                        8

<PAGE>


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

The  following  discussion  of results of  operations  and  financial  condition
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, any statements contained herein that
are not  statements  of  historical  fact may be  deemed  to be  forward-looking
statements.  Without limiting the foregoing,  the words  "believes",  "expects",
"anticipates",  "plans",  "estimates",  and similar  words and  expressions  are
intended  to  identify   forward-looking   statements.   These   forward-looking
statements  include  statements  about  the size  and  growth  of the  Company's
markets, the Company's future operating results including revenues and expenses,
the  success  of its  cost-cutting  measures,  the  effects of  outsourcing  and
transferring  certain production from the Company's Addison,  Illinois facility,
sales under its OEM  agreements and otherwise,  marketing  arrangements  for its
Mammotest products and other products,  development of new products, submissions
to the  FDA  and  receipt  of  FDA  approvals  and  clearances,  resolutions  of
deficiencies  noted by the FDA, the  availability  of sources of  liquidity  and
capital financing,  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  described in this Form 10-Q, in the Business section of
the Company's  Form 10-K for the year ended  December 31, 1996 (the "Form 10-K")
under the "Risks Associated with OEM Agreements", "Risks of Technological Change
and New Products",  "Risks of New Product  Development  and Market  Acceptance",
"Manufacturing  and  Operating  Risks",  "Government  Regulation",  and "Product
Liability, Market Withdrawal, and Product Recalls" headings, in the Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
("MD&A")  section of the Form 10-K and elsewhere in the Form 10-K, as well as in
the "Risk Factors" section of the Company's  Registration  Statement on Form S-2
that was declared effective on June 27, 1996.

OVERVIEW

The Company  designs,  manufactures  and markets  specialty and general  purpose
medical  imaging  systems  for the  diagnosis  and  treatment  of  disease.  The
Company's newest product lines are directed towards medical specialties in which
image-guided,   minimally-invasive   therapies  are   replacing   open  surgical
procedures.  These products are used primarily in the diagnosis and treatment of
breast cancer,  heart disease and vascular disease. The Company also designs and
manufactures  specialty  x-ray imaging  components  and  subsystems  for several
leading medical products companies as an original equipment manufacturer ("OEM")
and  sells  general  radiology  systems  for  use  in  hospitals,   clinics  and
physicians' offices.

Revenues for the third quarter  ended  September  29, 1997 were  $14,636,000,  a
$515,000 or 3%,  decrease as compared to the second quarter of 1997. The revenue
decrease was the result of a  continuing  decrease in OEM  shipments,  partially
offset by an significant increase in sales of  electrophysiology  products and a
modest  improvement in sales of mammography  systems.  The resulting decrease in
gross margin was more than offset by a $613,000 reduction in operating expenses,
causing the third quarter 1997 net loss before the restructuring provision to be
reduced from  $1,412,000,  or $.17 per share,  in the second quarter of 1997, to
$984,000, or $.12 per share.


                                        9

<PAGE>


The Company  experienced  substantial losses for the nine months ended September
29, 1997 and  break-even  operating  results in 1996,  with losses in the second
half  of  the  year.   The  Company  cannot  predict  when  it  will  return  to
profitability,  although  it has taken  significant  steps to  reduce  costs and
improve sales during 1997.  Improvement  in the Company's  results of operations
will  depend on many  factors  including,  among  other  things,  demand for the
Company's  products and the ability of the Company to maintain or increase gross
margins,  control  manufacturing  and other  costs,  enter into and  effectively
implement distribution agreements for its Mammotest products and other products,
implement  its  marketing  and  sales   strategies  in  the  United  States  and
internationally,  maintain orders under OEM agreements,  renew OEM agreements on
favorable   terms  and  develop  and   introduce   new  products   that  compete
successfully.

The Company  experienced  significantly  lower sales under its OEM  arrangements
during  the fourth  quarter  of 1996 and the first  nine  months of 1997 than in
comparable prior periods, primarily due to decreased shipments of Tilt-C systems
to GE Medical Systems.

The Company also experienced  decreases in the sales of its Mammotest systems in
the first nine months of 1997.  Sales of Mammotest  systems  during the last six
months of 1996 were flat when  compared to the  comparable  six month  period of
1995.  The Company is facing,  and expects to continue to face,  aggressive  and
successful  competition  within the  surgical  stereotactic  core needle  breast
biopsy market from U. S.  Surgical  Corporation.  In October  1997,  the Company
entered into  distribution  partnerships with Johnson and Johnson's Ethicon Endo
Surgery Division and with Imagyn Medical Technologies that it believes will help
it more adequately address this market.

The Company  believes that improving  factory  utilization and further  reducing
operating  expenses  will be key elements in its efforts to return to acceptable
levels of profitability.  The Company has announced that it intends to close its
Addison,  Illinois  manufacturing  facility and  outsource  or transfer  Addison
production, as a means of reducing its overall manufacturing costs. Accordingly,
the  Company  recorded  a $2.9  million  restructuring  provision  in the  third
quarter,  to provide for estimated facility closing costs, the shortfall between
required lease and anticipated sublease payments during the facility's remaining
lease term, severance and certain other non-recurring costs associated with this
decision. The Company anticipates additional one-time costs associated with this
closing. Due to the potential costs associated with outsourcing and transferring
production, as well as other factors, there can be no assurance as to the timing
or ultimate success of such efforts.

The Company has experienced and is likely to continue to experience  significant
quarterly and annual  fluctuations  in net revenues,  operating  results and net
income,  depending on such  factors as the timing of large  system  shipments to
customers,  the timing of orders under OEM contracts  and related  manufacturing
and shipment scheduling, new product introductions and new marketing programs by
the Company and its competitors,  delays in contract development  projects,  the
effect of economic  conditions on the Company's markets,  the effects of managed
healthcare on capital expenditures and reimbursement, increases in marketing and
research  costs in  relation to sales,  regulatory  clearance  of new  products,
seasonal purchasing patterns of hospitals and the timing of purchasing decisions
by customers. Additionally, because the timing of the occurrence of such factors
is  difficult  to  anticipate  and many of the  Company's  costs are fixed,  the
Company  may not be able to  sufficiently  reduce its costs in periods  when its
revenues are less than  anticipated  and may suffer  unexpected  losses or lower
income in these periods.

The Company is attempting to expand  international  sales and marketing efforts,
which can be expected to result in losses from  international  operations  until
international  revenues reach  sufficient  levels.  Additionally,  the Company's
exposure to the risks of  international  business,  including  foreign  currency
risks, may increase as its international business grows. The Company attempts to
minimize these risks through measures  including,  but not limited to, requiring
payments in U.S.  dollars and the use of  dollar-denominated  letters of credit.
There can be no assurance,  however,  that the Company will be successful in its
international sales efforts or in minimizing any associated risks.

                                       10

<PAGE>


The  Company  is  subject  to  periodic   inspections   by  the  Food  and  Drug
Administration   ("FDA")  whose  primary  purpose  is  to  audit  the  Company's
compliance with Current Good Manufacturing  Practices ("CGMPs"), as set forth in
the Quality System Regulation. This regulation establishes standards for design,
testing, quality control and documentation procedures. Following a December 1996
inspection, the FDA issued Inspectional Observations Form 483 ("Form 483") and a
Warning Letter  regarding  manufacturing  practices at its Denver  facility.  As
requested,  the Company has responded to the Warning  Letter  regarding  planned
corrective  actions.  The Company must also obtain third-party  certification of
the Company's  manufacturing and quality systems. This certification is expected
to be submitted to the FDA during November  1997. Until outstanding GMP concerns
are  resolved,  the  Company  will be  unable to  receive  an award of a federal
government   contract  or  new  marketing  or  export   clearance  for  products
manufactured at its Denver facility. Failure to correct the noted deviations, to
obtain third-party  certification,  and/or other ongoing FDA concerns could also
result in FDA  enforcement  actions  which could  include,  among other  things,
seizure,  injunction,  and/or  criminal  or civil  proceedings  being  initiated
without  further  notice.   The  Company  has  also  received  a  Non-Compliance
Declaration  from  the  Center  for  Device  Evaluation  and  Research  ("CDRH")
regarding  violations of the Electronic  Product Radiation  Control  Performance
Standard. The Company has responded to the Non-Compliance Declaration describing
planned  corrective  actions as to some matters and  requesting  exemption as to
others.  The Company  believes that it will be able to correct the  deficiencies
noted in the Form  483,  the FDA  Warning  Letter,  and the CDRH  Non-Compliance
Declaration,  although no  assurance  can be given that the  corrections  can be
accomplished in a timely manner, if at all.

Although the Company strives to operate within the  requirements  imposed by the
FDA, there can be no assurances that these deficiencies can be corrected or that
the Company will be able to satisfy FDA compliance concerns in the future. These
ongoing  compliance  reviews and/or related delays in future product  clearances
could have a material adverse effect on the Company.

RESULTS OF OPERATIONS

The Company's net revenues and net loss, excluding the restructuring  provision,
were $14,636,000 and $984,000,  respectively,  for the third quarter of 1997, as
compared to revenues of  $20,886,000  and net earnings of $241,000 for the third
quarter of 1996.  The most  significant  factor in the  decline in  revenues  as
compared  to the  third  quarter  of 1996  was a more  than 50%  decline  in OEM
shipments,  principally sales of Tilt-C systems to GE Medical Systems.  Sales of
general and special purpose x-ray systems also declined as compared to the third
quarter  of 1996.  These  declines  were  partially  offset  by an  increase  in
mammography systems. The resulting decline in gross margins was partially offset
by operating expense reductions totaling $1,508,000.

Including the $2.9 million restructuring  provision,  the third quarter net loss
was $3,884,000. The restructuring provision relates to the Company's decision to
close  its  Addison,  Illinois  manufacturing  facility.  See Note 8 to Notes to
Consolidated Financial Statements.

See "Overview"  for a further  discussion of the recent decline in the Company's
sales and the Company's efforts to reduce its manufacturing costs.

                                       11

<PAGE>


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



<TABLE>
<CAPTION>
                                             Three Months Ended                             Nine Months Ended
                                     September 29,       September 30,            September 29,        September 30,
                                  --------------------------------------       ---------------------------------------
                                        1997                 1996                    1997                 1996
                                  ------------------   -----------------       ------------------   ------------------

<S>                                     <C>                <C>                     <C>                  <C>
Net revenues                            100.0%             100.0%                  100.0%               100.0%

Gross profit                             35.5               38.0                    34.0                 40.2

Research and development                  9.1                8.7                    10.4                  8.0

Selling, marketing and service           23.8               21.5                    29.0                 21.2

General and administrative                8.5                6.1                     8.3                  5.6

Restructuring provision                  19.8                ---                     6.9                  ---

(Loss) Earnings from Operations         (25.7)               1.7                   (20.7)                 5.4

Provision for income taxes                ---                 .4                     ---                  1.2

Net (loss) earnings                     (26.5)               1.2                   (21.8)                 3.6
</TABLE>


Net Revenues.  Third quarter net revenues  were  $14,636,000,  a decrease of 30%
from third quarter 1996 net revenues of  $20,886,000.  Net revenues for the nine
months  ended  September  29, 1997 were  $42,089,000,  a 33%  decrease  from net
revenues  of  $62,865,000  for the  comparable  nine month  period of 1996.  The
Company's decrease in revenues for the three and nine months ended September 29,
1997 compared to the same periods in 1996 principally reflects a strong decrease
in OEM shipments  (primarily the Tilt-C system sold to GE Medical Systems).  The
revenue decrease for the three month periods also reflects reductions in general
and specialty  x-ray  equipment,  partly offset by improved sales of mammography
products. For the nine month periods, the decline in revenues was also caused by
reductions  in  mammography  product  sales.  For both the three and nine  month
periods,  the  declines  were  reflected  across  dealer and direct  channels of
distribution, both domestically and internationally. International revenues were
unfavorably  impacted  for the three and nine months  ended  September  29, 1997
compared  to the same  periods  of 1996,  due in large part to the impact of the
strong dollar on export sales to Europe and Australia.

Gross  Profit.  For the third  quarter  of 1997,  gross  profit  expressed  as a
percentage  of net  revenues  was 35.5%,  as compared to the 38.0% for the third
quarter of 1996.  For the nine months ended  September  29,  1997,  gross profit
expressed  as a percentage  of revenues was 34.0%,  as compared to 40.2% for the
same nine month period of 1996.  The decline in gross profit as a percentage  of
revenues was due to an increase in  unfavorable  manufacturing  variances,  as a
result of a substantial decline in production caused by the reduction in OEM and
other  shipments and by the  Company's  successful  efforts to reduce  inventory
levels. The effects of increased unfavorable manufacturing variances were partly
offset by a shift in product mix from OEM shipments to proprietary  products and
service revenues, which generally have higher margins.


                                       12


<PAGE>


Research and Development  Expenses.  Research and  development  expenses for the
third quarter of 1997 and 1996 were $1,327,000 and $1,816,000, respectively. The
lower level of research  and  development  expenses  over last year is primarily
attributable to efforts to narrow the focus of engineering efforts and eliminate
marginal  engineering  efforts,  as well as  reductions  due to the  transfer of
engineering  activities  from the Company's  Addison,  Illinois  location.  As a
percentage of net revenues, third quarter 1997 and 1996 research and development
expenses were 9.1% and 8.7%,  respectively.  The increase as a percentage of net
revenues is due to lower net revenues in the third quarter of 1997.

For the nine months ended  September 29, 1997 and  September 30, 1996,  research
and  development  expenses  were  $4,393,000,  or  10.4%  of net  revenues,  and
$5,025,000,  or 8.0% of net  revenues,  respectively.  The  reduction in expense
level is the  result of  efforts  to  eliminate  marginal  engineering  efforts;
whereas,  the  reduction in research  and  development  as a  percentage  of net
revenues is due to lower net revenues for the nine months  ended  September  29,
1997 as compared to the nine months  ended  September  30, 1996.  The  Company's
primary area of focus  remains the  continuing  development  of digital  imaging
products for mammography.


Selling, Marketing and Service Expenses. Selling, marketing and service expenses
for  the  third  quarter  of 1997  and  1996  were  $3,487,000  and  $4,489,000,
respectively,  or 23.8% and 21.5%,  respectively,  of net revenues. For the nine
months  ended  September  29,  1997 and 1996,  selling,  marketing  and  service
expenses were  $12,203,000 and  $13,347,000,  respectively,  or 29.0% and 21.2%,
respectively,  of net revenues.  The decrease in selling,  marketing and service
expense for the three and nine months  ended  September  29, 1997 as compared to
the same  periods of 1996 is  primarily  the result of lower net revenues and is
also due to the  reduced  scope  of  marketing  activities.  The  increase  as a
percentage  of net revenues for both the three and nine month periods of 1997 as
compared to the same periods of 1996 is  primarily  due to the shift in mix from
OEM sales to sales of  proprietary  products,  for which the  Company  generally
incurs commissions, warranty and installation expenses.

General and Administrative Expenses. General and administrative expenses for the
third  quarter of 1997 and 1996 were  essentially  unchanged at  $1,248,000  and
$1,265,000,   respectively.  As  a  percentage  of  net  revenues,  general  and
administrative  expenses  increased  from 6.1% to 8.5% from the third quarter of
1996 to the third quarter of 1997. For the nine months ended September 29, 1997,
general and administrative expenses were $3,490,000, or 8.3% of net revenues, as
compared to  $3,538,000,  or 5.6% of net revenues for the  comparable  period of
1996. The increase in general and administrative expenses as a percentage of net
revenues  is  primarily  due to the  change  in net  revenues,  which  decreased
significantly in 1997 as compared to 1996.

Interest  Expense / Interest  Income.  Interest expense for the third quarter of
1997 and 1996 was $19,000 and  $99,000,  respectively.  Interest  income for the
third  quarter of 1997 and 1996 was $69,000 and $75,000,  respectively.  For the
nine months ended September 29, 1997,  interest expense was $68,000, as compared
to $519,000 for the nine months ended  September 30, 1996.  Interest  income for
the nine months  ended  September  29, 1997 and 1996 was  $197,000  and $90,000,
respectively.


                                       13

<PAGE>


The  reduction  in interest  expense  for both the three and nine month  periods
ended  September 29, 1997 as compared to the same periods of 1996 is principally
related to reduced  borrowings under the Company's  revolving line of credit and
other borrowing arrangements.  The Company's borrowings under its line of credit
have been reduced as a result of lower  working  capital  requirements  and as a
result of the use of  proceeds  from  sales of Company  stock to repay  existing
indebtedness  under the line of credit.  The increase in interest income for the
nine month  period  ended  September  29, 1997 as compared to the same period of
1996 is primarily due to average cash and cash equivalent  balances,  which have
increased as a result of the investment in short-term securities of the proceeds
from  the  sale of  common  stock  that  were not  utilized  to  repay  existing
indebtedness  in  1996.   (See  Note  5  to  Notes  to  Consolidated   Financial
Statements.)


Net  (Loss)  Earnings.  The  Company's  net loss for the third  quarter of 1997,
excluding  the  restructuring  provision  (see  Note 8 to Notes to  Consolidated
Financial Statements),  was $984,000 as compared to net earnings of $241,000 for
the third quarter of 1996. For the nine months ended September 29, 1997, the net
loss, excluding the restructuring provision, was $6,275,000,  as compared to net
earnings of $2,260,000  for the  comparable  nine month period of 1996.  For the
three and nine month periods  ended  September  29, 1997,  operating  results as
compared to the same periods in 1996 were unfavorably impacted by the reductions
in gross margin  resulting from lower sales,  higher  unfavorable  manufacturing
variances,  marketing  and service  expenses  associated  with sales through the
direct sales channel,  and the unfavorable effects of foreign translation losses
caused by the strengthening U. S. dollar.

Net loss from operations,  including the restructuring provision, was $3,884,000
and $9,175,000,  respectively, for the three and nine months ended September 29,
1997.

INCOME TAXES

The Company's  estimated effective tax rate for the year ended December 31, 1997
is currently  0%.  Accordingly,  no income tax benefit has been provided for the
three and nine month periods ended  September 29, 1997. This rate was determined
based upon the anticipated 1997 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 domestic  consolidated  tax return for 1997. As of December 31,
1996, the Company had approximately $2,613,000 of net deferred tax assets, which
represents  credits that are more likely than not to be realized against taxable
income  of  future  years.  The  amount of net  deferred  tax  asset  considered
realizable,  however,  could be reduced in the near term if  estimates of future
taxable income do not materialize.

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.


                                       14

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES


Net cash provided by operating  activities  for the nine months ended  September
29, 1997 was $5.5 million  compared to $4.3 million  used in  operations  in the
comparable  period of 1996.  The  generation  of cash flow from  operations  was
primarily due to a decrease in working capital. This decrease in working capital
was the result of $4.9 million in net  collections of trade accounts  receivable
and a reduced  investment in inventories of $6.1 million,  partially offset by a
$0.8  million  reduction  in trade  accounts  payable.  The  decrease in working
capital   investment  was  partially  offset  by  a  net  loss  before  non-cash
restructuring, depreciation, and amortization provisions of $4.3 million.

Net cash used in investing activities was $2.5 million for the nine months ended
September  29, 1997,  compared to $1.1 million for the same period in 1996.  The
increase was principally  related to capital  equipment  investments  related to
digital mammography.

Net cash used in financing  activities  for the nine months ended  September 29,
1997 was $0.2 million, compared to $9.4 million provided by financing activities
for the same period in 1996.  The amount used in  financing  activities  for the
nine  months  ended  September  29,  1997 was  primarily  due to  repayments  of
long-term debt. The amount provided by financing during the comparable period of
1996 was primarily due to proceeds from the issuance of Common Stock (See Note 5
to Notes to Consolidated  Financial  Statements,  offset by repayments under the
Company's line of credit and other debt agreements.)

As of June 30, 1997,  the Company had $6.5 million in cash and cash  equivalents
and working capital of $29.3 million.  As of September 29, 1997, the Company had
no outstanding borrowings under any line of credit arrangements.  The Company is
currently negotiating a working capital line of credit. The borrowings under the
line of credit are expected to be secured by accounts receivable,  inventory and
fixed  assets and to be subject to  borrowing  base  restrictions.  The  Company
expects its  long-term  liquidity  needs to be satisfied  principally  from cash
flows  generated  from  operations.  The Company  believes  that its  short-term
liquidity  needs can be satisfied  through cash  provided  from  operations  and
current cash and cash equivalent balances if a working capital line of credit is
not finalized or finalization is delayed.


                                       15


<PAGE>


                           PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:

(A)  EXHIBITS

               Exhibits filed with this report:
`
               Exhibit No.                                  Description

                     27                              Financial Data Schedule
(B)  REPORTS ON FORM 8-K

               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 September 29, 1997 to be signed on its behalf by the undersigned thereunto
duly authorized.



                                                 FISCHER IMAGING CORPORATION


                                                 /s/ WILLIAM C. FEE
                                                 -------------------------------
                                                 William C. Fee
                                                 Vice President  /
                                                 Chief Accounting Officer
                                                 (Principal  Accounting Officer)


November 13, 1997



                                       16


<PAGE>


                                  EXHIBIT INDEX


EXHIBIT NO.                                      DESCRIPTION
   27                                            Financial Data Schedule