<PAGE>   1
                UNITED STATES 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 QUARTERLY PERIOD ENDED...............DECEMBER 31, 1997


                                       OR


             ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934.


                         Commission file number 0-27206


                             SPACEHAB, Incorporated
                             1595 Spring Hill Road
                                   Suite 360
                            Vienna, Virginia  22182
                                 (703) 821-3000



     Incorporated in the State of Washington             I.R.S. Employer
                                                         Identification
                                                         No. 91-1273737


The number of shares of Common Stock outstanding as of the close of business on
February 5, 1998:


           Class                       Number of Shares Outstanding
           -----                       ----------------------------
           Common Stock                         11,154,568



Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports,  and (2) has been subject to such
filing requirements for the past 90 days.


                                        Yes   X         No
                                            -----         -----
<PAGE>   2
                     SPACEHAB, INCORPORATED AND SUBSIDIARY
                DECEMBER 31, 1997 QUARTERLY REPORT ON FORM 10-Q
                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
PART 1      FINANCIAL INFORMATION                                                             PAGE
                                                                                              ----
<S>         <C>                                                                                 <C>
  Item 1.   Unaudited Consolidated Financial Statements

            Condensed Consolidated Balance Sheets as of June 30, 1997 and
            December 31, 1997                                                                    3

            Condensed Consolidated Statements of Operations for the Three and
            Six months ended December 31, 1996 and 1997                                          4

            Condensed Consolidated Statements of Cash Flows for the
            Six months ended December 31, 1996 and 1997                                          5

            Notes to Condensed Consolidated Financial Statements                                 6


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


Part II -   Other Information

  Item 4.   Submission of Matters to a Vote of Security Holders                                 13

  Item 6.   Exhibits and Reports on Form 8-K                                                    14
</TABLE>

                                       2
<PAGE>   3
PART 1:  FINANCIAL INFORMATION
ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                     SPACEHAB, INCORPORATED AND SUBSIDIARY
                     CONDENSED CONSOLIDATED BALANCE SHEETS




<TABLE>
<CAPTION>
                                                                            JUNE 30,                       DECEMBER 31,
                                                                              1997                             1997
                                                                            (AUDITED)                      (UNAUDITED)
                                                                      ------------------------        ---------------------------
<S>                                                                    <C>                             <C>
                              ASSETS
Cash and cash equivalents                                               $          12,886,731              $          79,856,749
Receivables                                                                         5,176,255                          8,091,539
Prepaid and other current assets                                                      199,247                          1,153,759
                                                                        ---------------------              ---------------------
     Total current assets                                                          18,262,233                         89,102,047
Property, plant and equipment, net of
 accumulated depreciation and amortization
 of $38,115,620 and $40,683,502                                                    90,961,873                         96,244,607
Goodwill, net of accumulated amortization of $55,947 and $143,780                   3,394,773                          3,306,940
Deferred mission costs                                                              1,438,910                          2,587,452
Other assets, net                                                                     392,587                          5,655,712
                                                                        ---------------------              ---------------------
     Total assets                                                       $         114,450,376              $         196,896,758
                                                                        =====================              ======================

               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Note payable, current portion                                         $                   -              $           3,160,000
  Loan payable under credit agreement, current portion                                500,000                            500,000
  Accounts payable and accrued expenses                                             2,408,111                          3,295,089
  Accrued consulting and subcontracting services                                    9,052,308                          4,441,844
  Advanced billings                                                                   846,855                                  -
                                                                        ---------------------              ---------------------
    Total current liabilities                                                      12,807,274                         11,396,933
Notes payable to shareholder                                                       11,225,246                         11,921,643
Loan payable under credit agreement, net of current portion                         1,500,000                          1,000,000
Note payable, net of current portion                                                        -                         10,253,074
Convertible notes payable                                                                   -                         63,250,000
Deferred flight revenue                                                             2,295,898                         12,313,949
                                                                        ---------------------              ---------------------
       Total liabilities                                                           27,828,418                        110,135,599
Commitments and contingencies
Stockholders' equity:
  Common stock, no par value, authorized             
    30,000,000 shares, issued and outstanding        
    11,149,737 and 11,154,568 shares, respectively                                 81,057,164                         81,123,730
  Additional paid-in capital                                                           16,299                             16,299
  Accumulated earnings                                                              5,548,495                          5,621,130
                                                                        ---------------------              ---------------------
       Total stockholders' equity                                                  86,621,958                         86,761,159
                                                                        ---------------------              ---------------------
       Total liabilities and stockholders' equity                       $         114,450,376              $         196,896,758
                                                                        =====================              ======================
</TABLE>

See accompanying notes to unaudited condensed consolidated financial
statements.





                                       3

<PAGE>   4
                     SPACEHAB, INCORPORATED AND SUBSIDIARY
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                              THREE MONTHS                             SIX MONTHS
                                                            ENDED DECEMBER 31,                      ENDED DECEMBER 31,
                                                     ------------------------------------     --------------------------------
                                                              1996             1997                1996             1997
                                                     --------------       ---------------     ---------------   --------------
<S>                                                   <C>                  <C>                 <C>               <C>          
Revenue                                               $ 22,992,176         $  17,755,687       $  23,105,418     $ 20,292,944
Costs of revenue:
   Integration and operations                            6,425,204             5,307,476           8,972,459        8,347,336
   Depreciation                                          2,376,138               978,461           4,752,277        1,956,921
   Insurance and other                                     106,250             1,633,723             106,250        2,854,596
                                                     --------------       ---------------     ---------------   --------------
      Total costs of revenue                             8,907,592             7,919,660          13,830,986       13,158,853
                                                     --------------       ---------------     ---------------   --------------
Gross profit                                            14,084,584             9,836,027           9,274,432        7,134,091
Operating expenses:
   Marketing, general and administrative                 1,622,120             3,243,010           2,982,527        5,880,734
   Research and development                                314,564               759,768             314,564        1,051,577
                                                     --------------       ---------------     ---------------   --------------
      Total operating expenses                           1,936,684             4,002,778           3,297,091        6,932,311
                                                     --------------       ---------------     ---------------   --------------
      Income from operations                            12,147,900             5,833,249           5,977,341          201,780
Interest expense, net of capitalized amounts             (318,035)          (1,175,542)            (678,317)      (1,378,335)
Interest and other income                                  459,665             1,699,447             814,574        1,409,880
Other expense                                                    -                     -             897,649                -
                                                     --------------       ---------------     ---------------   --------------
      Income before income taxes                        12,289,530             6,357,154           5,215,949          233,325
Income tax expense                                       1,230,000                78,461           1,230,000          160,688
                                                     --------------       ---------------     ---------------   --------------
      Income before extraordinary item                  11,059,530             6,278,693           3,985,949           72,637
                                                     ==============       ===============     ===============   ==============
Extraordinary item - gain on early retirement
 of debt, net of taxes                                           -                     -           3,274,029                -
                                                     --------------       ---------------     ---------------   --------------
      Net income                                      $ 11,059,530         $   6,278,693       $   7,259,978     $     72,637
Basic earnings per share:
  Income before extraordinary item                    $       1.00         $        0.56       $        0.36     $       0.01
  Extraordinary item                                             -                     -                0.30                -
                                                     --------------       ---------------     ---------------   --------------
Net income per share                                  $       1.00         $        0.56       $        0.66     $       0.01
                                                     ==============       ===============     ===============   ==============
Shares used in computing net income
   per share                                            11,111,997            11,149,789          11,091,443       11,148,830
                                                     ==============       ===============     ===============   ==============
Diluted earnings per share:
  Income before extraordinary item                    $       0.99         $        0.47       $        0.36     $       0.01
  Extraordinary item                                             -                     -                0.29                -
                                                     --------------       ---------------     ---------------   --------------
Net income per share                                  $       0.99         $        0.47       $        0.65     $       0.01
                                                     ==============       ===============     ===============   ==============
Shares used in computing net income
   per share - assuming dilution                        11,146,236            15,034,271          11,147,737       11,401,426
                                                     ==============       ===============     ===============   ==============
</TABLE>





     See accompanying notes to unaudited condensed consolidated financial
                                  statements.





                                       4

<PAGE>   5
                     SPACEHAB, INCORPORATED AND SUBSIDIARY
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED DECEMBER  31,
                                                                                 1996                   1997
                                                                          -------------------    --------------------
<S>                                                                        <C>                         <C>
Cash flows provided by (used for) operating activities:
  Net income                                                                $      7,259,978        $         72,637
  Adjustments to reconcile net income to net
   cash provided by operating activities:
   Depreciation and amortization                                                   4,894,891               2,655,715
   Gain on early retirement of debt,
        net of taxes, before legal expenses                                      (3,383,892)                       -
   Amortization of financing fees                                                          -                 134,085
   Changes in assets and liabilities:
     Increase in accounts receivable                                             (1,600,992)             (2,915,284)
     Increase in prepaid and other
       current assets                                                              (896,872)               (954,512)
     Increase in deferred mission costs                                             (99,873)             (1,148,542)
     Increase in other assets                                                      (121,967)             (1,574,973)
     Increase (decrease) in deferred flight revenue                              (4,598,576)              10,018,051
     Increase (decrease) in accounts payable
       and accrued expenses                                                      (2,232,186)                 886,978
     Increase in advanced billings                                                         -               (846,855)
     Decrease in accrued consulting
       and subcontracting services                                                 (269,689)               (692,606)
                                                                          -------------------    --------------------
         Net cash provided by (used for) operating activities                    (1,049,178)               5,634,694
                                                                          -------------------    --------------------
Cash flows used for investing activities:
  Payments for modules under construction                                            (2,232)             (8,339,226)
  Payments for building under construction                                                -              (2,046,419)
  Purchase of property and equipment                                             (2,000,414)               (686,432)
                                                                          -------------------    --------------------
         Net cash used for investing activities                                  (2,002,646)            (11,072,077)
                                                                          -------------------    --------------------
Cash flows provided by (used for) financing activities:
  Payment of note payable to Insurers                                            (3,185,060)               (500,000)
  Payment of  debt placement fees                                                          -             (3,822,239)
  Proceeds from issuance of convertible notes payable                                      -              63,250,000
  Payment of legal fees on early retirement of debt                                (109,986)                       -
  Proceeds from note payable                                                               -              13,413,074
  Proceeds from issuance of common stock                                              24,000                  66,566
                                                                          -------------------    --------------------
         Net cash provided by (used for) financing activities                    (3,271,046)              72,407,401
                                                                          -------------------    --------------------
         Net increase (decrease) in cash
           and cash equivalents                                                  (6,322,870)              66,970,018
Cash and cash equivalents at beginning of period                                  50,795,548              12,886,731
                                                                          -------------------    --------------------
Cash and cash equivalents at end of period                                  $     44,472,678        $     79,856,749
                                                                          ===================    ====================
</TABLE>





     See accompanying notes to unaudited condensed consolidated financial
                                  statements.





                                       5

<PAGE>   6
                     SPACEHAB, INCORPORATED AND SUBSIDIARY

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION:

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments, consisting of only normal
recurring accruals, necessary for a fair presentation of the consolidated
financial position of SPACEHAB, Incorporated and subsidiary ("SPACEHAB" or the
"Company") as of December 31, 1997, and the results of their operations for the
three and six month periods ended December 31, 1996 and 1997 and their cash
flows for the six months ended December 31, 1996 and 1997.  However, the
consolidated financial statements are unaudited, and do not include all related
footnote disclosures. The results of operations for the three and six months
ended December 31, 1997 are not necessarily indicative of the results that may
be expected for the full year. The Company's results of operations fluctuate
significantly from quarter to quarter.  The interim unaudited condensed
consolidated financial statements should be read in conjunction with the
Company's audited consolidated financial statements appearing in the Company's
Form 10-K for the year ended June 30, 1997.

2.  EARNINGS PER SHARE:

In December 1997, the Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 128, Earnings Per Share, which establishes new
guidelines for the calculations of earnings per share. Earnings per share for
all prior periods have been restated to reflect the provisions of this
Statement.

The following are reconciliations of the numerators and denominators of the
basic and diluted earnings per share computations for "income before
extraordinary item" and "extraordinary item" for the three and six month
periods ended December 31, 1997 and 1996, respectively:


<TABLE>
<CAPTION>
                                Three months ended December 31, 1997   Three months ended December 31, 1996
                                 Income         Shares      Per Share     Income       Shares     Per Share
                               (Numerator)   (Denominator)    Amount   (Numerator)  (Denominator)   Amount
                              --------------------------------------- --------------------------------------
<S>                             <C>            <C>            <C>     <C>            <C>              <C>
Basic EPS:
Income available to common
stockholders                    $6,278,693     11,149,789     $0.56   $11,059,530    11,111,997       $1.00

Effect of dilutive
securities:
Convertible notes payable         $797,063      3,626,446     $   -             -             -           -
Options and warrants                     -        258,036         -             -        34,239           -
                              -------------- -------------- --------- ------------- -------------- ---------

Diluted EPS:
Income available to common
stockholders                    $7,075,756     15,034,271     $0.47   $11,059,530    11,146,236       $0.99
</TABLE>





                                       6

<PAGE>   7
<TABLE>
<CAPTION>
                             Six months ended December 31, 1997     Six months ended December 31, 1996
                              Income         Shares      Per Share     Income       Shares     Per Share
                            (Numerator)   (Denominator)    Amount   (Numerator)  (Denominator)   Amount
                          ----------------------------------------- ------------------------------------
<S>                           <C>         <C>               <C>      <C>           <C>             <C>
Basic EPS:
Income before
extraordinary item            $72,637     11,148,830        $0.01    $3,985,949    11,091,443      $0.36
Extraordinary item                  -              -            -    $3,274,029    11,091,443      $0.30

Effect of dilutive
securities:
Convertible notes                   -              -        $   -             -        54,620          -
payable
Options and warrants                -        252,596            -             -         1,674          -
                          -------------   ------------   ---------- ------------- -------------  -------

Diluted EPS:
Income available to
common stockholders:
Income before
extraordinary item            $72,637     11,401,426        $0.01    $3,985,949    11,147,737      $0.36
Extraordinary item                  -              -            -    $3,274,029    11,147,737      $0.29
</TABLE>

Convertible notes payable outstanding as of December 31, 1997, convertible into
4,642,202 shares of common stock  at $13.625 per share and due October 2007,
were not included in the computation of diluted EPS for the six month period
ended December 31, 1997 as the inclusion of the converted notes would be
anti-dilutive.

Options and warrants to purchase 2,377,856 shares of common stock, at prices
ranging from $7.50 to $24.00 per share, were outstanding for the six months
ended December 31, 1996, but were not included in the computation of diluted
EPS because the options' and warrants' exercise prices were greater than the
average market price of the common shares during the six months ended December
31, 1996.  Similarly, additional options to purchase 50,000 shares of common
stock at a price of $7.00 per share were also not included in the diluted EPS
calculation for the three month period ended December 31, 1996. The options
expire between July 13, 1997 and April 15, 2005 and warrants expire between
December 31, 1996 and June 21, 1998.

Options and warrants to purchase 1,161,560 shares of common stock, at prices
ranging from $11.00 to $14.88 per share, were outstanding for the three and six
month periods ended December 31, 1997, but were not included in the computation
of diluted EPS because the options' and warrants' exercise prices were greater
than the average market price of the common shares during the three and six
month periods ended December 31, 1997.  The options expire between January 31,
1998 and October 21, 2004 and warrants expire between December 31, 1997 and
June 21, 1998.


3.  DEPRECIATION OF FLIGHT MODULES:

Effective July 1, 1997, the Company extended the estimated useful lives of its
space modules through 2012.  This change in accounting estimate is treated
prospectively and is based on current available information from NASA, which
has estimated the life of the Space Shuttle program through at least 2012.





                                       7

<PAGE>   8
4.  REVENUE RECOGNITION:

Revenue is recognized upon completion of each module flight under the Mir
contract.  Total contract revenue is allocated to each flight based on the
amount of services the Company provides on the flight relative to total
services provided for all flights under contract. Obligations associated with a
specific mission, e.g., integration services, are also recognized upon
completion of the mission.  For new contract awards for which the capability to
successfully complete the contract can be reasonably assured and costs at
completion can be reliably estimated at contract inception, revenue recognition
under the percentage-of-completion method is being reported based on costs
incurred on a per mission basis over the period of the contract. The percentage
of completion method will result in the recognition of revenue over the period
of contract performance, thereby decreasing quarter by quarter fluctuations of
reported revenue.  Revenue provided by the Astrotech payload processing
facilities is recognized ratably over the occupancy period of the satellites at
the Astrotech facilities.


5.  STATEMENTS OF CASH FLOWS - SUPPLEMENTAL INFORMATION:

(a) Cash paid for interest costs was $0.92 million and $0.68 million for the
six months ended December 31, 1997 and 1996, respectively.  The Company
capitalized interest of approximately $0.83 million and $0.02 million during
the six months ended December 31, 1997 and 1996, respectively.  (b) The Company
paid $1.27 million and $1.40 million for income taxes during the six months
ended December 31, 1997 and 1996, respectively.


6.  NEW CREDIT FACILITIES:

On June 16, 1997, the Company entered into a $10.0 million line of credit
agreement with a financial institution.  Outstanding balances on the line of
credit accrue interest at either the lender's prime rate or a LIBOR-based rate,
and are collateralized by certain assets of the Company.  The term of the
agreement is through October 1999.  As of December 31, 1997, the Company had
not drawn against the line of credit.

On July 14, 1997, the Company's wholly-owned subsidiary, Astrotech, entered
into a five year credit facility with a financial institution for loans of up
to $15.0 million.  This loan is collateralized by the assets of Astrotech and
certain other assets of the Company, and is guaranteed by the Company.
Interest accrues at LIBOR plus three percent.  Through December 31, 1997, the
Company had drawn $14.12 million against this loan. As of December 31, 1997,
the outstanding balance on this loan was $13.41 million.

In October 1997, the Company completed a private placement offering for $63.25
million of aggregate principal of 8% Convertible Subordinated Notes due 2007.
Interest is payable semi-annually. The notes are convertible into the common
stock of the Company at a rate of $13.625 per share.  This offering provided
the Company with net proceeds of approximately $59.91 million to be used for
capital expenditures associated with the development and construction of space
related assets and for general corporate purposes.





                                       8

<PAGE>   9
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

GENERAL

     This document may contain "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including (without limitation) the "General" and
"Liquidity and Capital Resources" sections of this Item 2.  Such statements are
subject to certain risks and uncertainties, including those discussed herein,
which could cause actual results to differ materially from those projected in
such statements.

     SPACEHAB was incorporated in 1984 to commercially develop space habitat
modules to operate in the cargo bay of the Space Shuttles.

     The Company currently operates under two contracts with NASA, the Mir
Contract, with a total contract value of $90.2 million and the Research and
Logistics Module Services Contract, (the "REALMS Contract"), a $61.8 million
contract for two research missions on board the Space Shuttle and a logistics
mission to resupply the International Space Station. To date, the Company has
recognized $65.8 million of the Mir contract value, representing the completion
of the first five missions.  The remaining $24.4 million represents the final
two Mir option missions scheduled to be flown during fiscal 1998.  The
aggregate value of the newly awarded REALMS contract is $42.8 million for three
firm missions for NASA.  The additional $19.0 million will be derived from
three of NASA's major International Space Station partners; the European Space
Agency (ESA), the National Space Development Agency of Japan (NASDA) and the
Canadian Space Agency (CSA).  The Company has the potential to increase the
total current contract value of $61.8 million by approximately $22.0 million
through module usage sales to commercial customers for microgravity space
research.  Additionally, the REALMS contract has an option for a fourth mission
valued at a minimum of $15.8 million.  The first two of these missions are
scheduled for flights in the second quarter of fiscal 1999; the third is
currently projected for launch in May 2000.

     SPACEHAB generates revenue by providing lockers and/or volume within the
SPACEHAB Modules, and by integration and operations support services provided
to scientists and researchers responsible for the experiments and/or by NASA or
International Agencies to carry logistics supplies for Module missions aboard
the Shuttle system.  Under the Mir Contract, the Company recognizes revenue
only at the completion of each Space Shuttle mission utilizing Company assets.
Accordingly, the Company's quarterly revenue and profits have fluctuated
dramatically based on NASA's launch schedule and will continue to do so under
the Mir Contract and any other contract for which revenue is recognized only
upon completion of a mission.  For the REALMS contract and for future contact
awards for which the capability to successfully complete the contract can be
demonstrated at contract inception, revenue recognition under the
percentage-of-completion method is being reported based on costs incurred on a
per mission basis over the period of the contract. The percentage-of-completion
method results in the recognition of revenue over the period of contract
performance, thereby decreasing the quarter-by-quarter fluctuations of reported
revenue.

     Astrotech revenue is derived from various multiyear fixed price contracts
with satellite and launch vehicle manufacturers. The services and facilities
Astrotech provides to its customers support the final assembly, checkout and
countdown functions associated with preparing a satellite for launch.  This
preparation includes: the final assembly and checkout of the satellite,
installation of the solid rocket motors, loading of the liquid propellant,
encapsulation of the satellite in the launch vehicle, transportation to the
launch pad and command and control of the satellite during pre-launch
countdown. Revenue provided by the Astrotech payload processing facilities is
recognized ratably over the occupancy period of the satellites in the Astrotech
facilities.  Astrotech will recognize additional revenue from an exclusive
multiyear agreement to process all Sea Launch program payoads at the Boeing
facility in Long Beach, California.

     The expenses associated with the operations of SPACEHAB are recorded based
on the type of expense. Costs of revenue include integration and operations
expenses associated with the performance of two types of efforts:  (i)
sustaining engineering in support of all missions under a contract and (ii)
mission specific experiment support.





                                       9

<PAGE>   10
Expenses associated with sustaining engineering are expensed as incurred.
Mission specific expenses relating to the Mir Contract are recorded as assets
and not expensed until the specific Space Shuttle mission is flown and the
related revenue is recognized.  Other costs of revenue include depreciation
expense and costs associated with the Astrotech payload processing facilities.
Flight related insurance covering transportation of the SPACEHAB Modules from
SPACEHAB's payload processing facility to the Space Shuttle, in-flight
insurance and third-party liability insurance are also included in costs of
revenue and are expensed as incurred.  Marketing, general and administrative
and interest and other expenses are recognized when incurred.


RESULTS OF OPERATIONS

     For the three months ended December 31, 1997 as compared to the three
months ended December 31, 1996.

     Revenue. The Company recorded revenue of approximately $17.76 and $22.99
million for the three months ended December 31, 1997 and 1996, respectively. In
accordance with the Company's revenue recognition policy for the Mir and the
Commercial Middeck Augmentation Module contract (the "CMAM" contract)
Contracts, revenue is recorded at the completion of a mission when the SPACEHAB
modules are returned to the Company.  Revenue was recognized for the fifth Mir
Contract mission ($13.60 million) during the quarter ended December 31, 1997 in
addition to revenue generated from the REALMS Contract ($1.72 million) and from
Astrotech ($2.43 million). In contrast, revenue for the quarter ended December
31, 1996 was derived from the CMAM Contract($7.96 million), the Mir Contract
($14.22 million) and the NASDA/ESA Contract ($0.81 million).

     Costs of Revenue.  Costs of revenue for the quarter ended December 31,
1997 decreased 11.09% to $7.92 million, as compared to $8.91 million for
quarter ended December 31, 1996. The primary components of costs of revenue for
the quarter ended December 31, 1997 include integration and operation costs
under the Mir Contract ($4.60 million), the REALMS Contract ($0.89 million),
and the NASDA/ESA Contract ($0.12 million); Astrotech operations ($1.24
million); and, depreciation ($0.98 million). The primary components of costs of
revenue for the quarter ended December 31, 1996 included integration and
operations costs under the Mir Contract ($5.27 million), the NASDA/ESA Contract
($0.76 million) and the CMAM Contract ($0.40 million); and, depreciation ($2.38
million). This decrease in depreciation expense during 1997 is primarily
attributable to the impact of extending the estimated useful lives of the
Company's modules. This change in accounting estimate is treated prospectively
and is based on current available information from NASA, which extends the
estimated useful life of the space shuttle program to at least 2012.

     Operating Expenses.  Operating expenses increased approximately 106.68% to
approximately $4.00 million for the three months ended December 31, 1997 as
compared to approximately $1.94 million for the three months ended December 31,
1996.  This increase is due primarily to the Company's efforts to increase
staff, adding strength in engineering, design and research and development
capabilities and reflects the additional costs of approximately $0.39 million
incurred for operating the Astrotech subsidiary.

     Interest Expense.  Interest expense was approximately $1.18 million for
the three months ended December 31, 1997 as compared to approximately $0.32
million for the three months ended December 31, 1996. There was approximately
$0.45 million and $0.02 million capitalized amounts for the quarter ended
December 31, 1997 and 1996, respectively. Capitalized interest for the quarters
ended December 31, 1997 and 1996 was based on the construction of the Company's
science module with double module hardware, which will be placed in service
beginning in late 1999.  Additional amounts were capitalized during the quarter
ended December 31, 1997 relating to the construction of an expanded facility
for Astrotech.

     Interest and Other Income.  Interest and other income was approximately
$1.70 million and $0.46 million for the three months ended December 31, 1997
and 1996, respectively.  This increase is due to short term interest earned by
the Company for the investment of proceeds received from the Company's debt
financings completed during July and October 1997.





                                       10

<PAGE>   11
     Net Income.  Net income was approximately $6.28 million, or $0.56 per
share (basic EPS) ,for the quarter ended December 31, 1997, on 11,149,789
shares, as compared to $11.06 million, or $1.00 per share (basic EPS), for the
quarter ended December 31, 1996, on 11,111,997 shares.

     For the six months ended December 31, 1997 as compared to the six months
ended December 31, 1996.

     Revenue. The Company recorded revenue of approximately $20.29 million and
$23.11 million for the six months ended December 31, 1997 and 1996,
respectively.  Revenue recognized during the six months ended December 31, 1997
was from the Mir Contract ($13.60 million), REALMS Contract ($1.72 million) and
Astrotech ($4.97 million). Conversely, for the six months ended December 31,
1996 the Company's revenue was attributable to the Mir Contract ($14.22
million), CMAM Contract ($7.96 million) and NASDA/ESA Contract ($0.93 million).

     Costs of Revenue.  Costs of revenue for the six months ended December 31,
1997 decreased 4.86% to $13.16 million, as compared to $13.83 million for six
months ended December 31, 1996. The primary components of costs of revenue for
the six months ended December 31, 1997 include integration and operation costs
under the Mir Contract ($7.51 million), REALMS Contract ($0.93 million), and
the NASDA/ESA Contract ($0.20 million); Astrotech operations ($2.46 million);
and, depreciation ($1.96 million). In contrast, the primary components of costs
of revenue for the six months ended December 31, 1996 included integration and
operations costs under the Mir Contract ($7.17 million), the NASDA/ESA Contract
($0.85 million) and the CMAM Contract ($1.06 million); and, depreciation ($4.75
million). This decrease in depreciation expense is attributable to the impact
of extending the estimated useful lives of the Company's modules. This change
in accounting estimate is treated prospectively and is based on current
available information from NASA, which extends the estimated useful life of the
Space Shuttle program to at least 2012.

     Operating Expenses.  Operating expenses increased by approximately 110.26%
to approximately $6.93 million for the six months ended December 31, 1997 as
compared to approximately $3.30 million for the six months ended December 31,
1996. This increase is due primarily to the Company's efforts to increase
staff, adding strength in engineering, design and research and development
capabilities and reflects the additional costs of approximately $0.67 million
for operating the Astrotech subsidiary.

     Interest Expense.  Interest expense was approximately $1.38 million for
the six months ended December 31, 1997 as compared to approximately $0.68
million for the six months ended December 31, 1996. There was approximately
$0.83 million and $0.02 capitalized interest amounts for the six months ended
December 31, 1997 and 1996, respectively.  Interest was capitalized based on
the construction of the Company's science module with double module hardware
during the six months ended December 31, 1997 and 1996, however, additional
amounts were capitalized in 1997 for costs incurred on the construction of an
expanded facility for Astrotech.

     Interest and Other Income.  Interest and other income was approximately
$1.41 million and  $0.81 million for the six months ended December 31, 1997 and
1996, respectively. This increase is due to short-term interest earned by the
Company for the investment of proceeds received from the Company's credit
facilities.

     Net Income/Loss.  Net income was approximately $0.07 million, or $0.01 per
share (basic and diluted EPS), on 11,148,830 shares (basic EPS) as compared to
$7.26 million, or $0.66 per share (basic EPS), for the six months ended
December 31, 1996, on 11,091,443 shares.

LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY AND CAPITAL RESOURCES

     The Company has historically financed its capital expenditures, research
and development and working capital requirements with progress payments under
its contracts, including the CMAM Contract, the Mir Contract, the NASDA/ESA
Contracts and Astrotech's operations, as well as with proceeds received from
private equity offerings and borrowings under credit facilities.  During
December 1995, SPACEHAB completed an initial public offering of





                                       11

<PAGE>   12
common stock (the "Offering"), which provided the Company with net proceeds of
approximately $43.48 million. In June 1997, the Company signed an agreement
with a financial institution securing a $10.0 million revolving line of credit
(the "Revolving Line of Credit") that the Company may use for working capital
purposes.  As of December 31, 1997, no amounts were drawn on this line of
credit.  In July 1997, Astrotech obtained a five-year term loan (the "Term Loan
Agreement"), which is guaranteed by SPACEHAB, and provides for draws of up to
$15.0 million for general corporate purposes. Through December 31, 1997, the
Company had drawn $14.12 million on this loan and had an outstanding balance on
that date of $13.41 million. Further, on October 21, 1997 the Company completed
a private placement offering of convertible subordinated notes (the "Notes
Offering"), which provided the Company with net proceeds of approximately
$59.91 million to be used for capital expenditures associated with the
development and construction of space related assets and for general corporate
purposes.

     Cash Flows from Operating Activities.  Cash flows provided by (used for)
operating activities for the six months ended December 31, 1997 and 1996, were
$5.63 million and ($1.05) million respectively.  The increase in cash flows
provided by operating activities is due to a variety of offsetting factors. The
most significant factor of this increase is deferred flight revenue, which
reflects billing during the six months ended December 31, 1997 for the option
missions under the Mir contract and the REALMS contract.

     Cash Flows from Investing Activities.  For the six months ended December
31, 1997 and 1996, cash flows used for investing activities consisted of
capital expenditures of approximately $11.07 million and $2.00 million,
respectively. Of this amount, $4.42 million of the expenditures in the current
year are attributable to the construction of the Company's science module with
double module hardware, which module is to be completed in early 1999.  The
Company anticipates that it will spend between $35.0 million and $38.0 million
in total on the asset. As of December 31, 1997, the Company has spent
approximately $18.19 million on this asset.  In addition, the Company has spent
approximately $2.05 million for the construction of an expanded facility for
Astrotech.

     Cash Flows from Financing Activities.  Cash flows provided by (used for)
financing activities were approximately $72.41 million and ($3.27) million for
the six months ended December 31, 1997 and 1996, respectively. During the six
months ended December 31, 1997, the Company received net proceeds of
approximately $13.41 million under the Term Loan Agreement.  In August 1997,
the Company also made the first payment of $0.50 million under the Credit
Agreement. In October 1997, the Company received net proceeds of approximately
$59.91 million by completing an offering of $55.00 million of its 8%
Convertible Subordinated Notes due 2007 as well as exercise of the
underwriters' over-allotment for an additional $8.25 million.

     The Company believes that cash flows from the Notes Offering, the Term
Loan Agreement, the Revolving Line of Credit and other current financing
activities will be sufficient to meet any cash flow requirements from
operations and other funding requirements for capital asset construction and
development for at least the next twelve months.

PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

     NONE


ITEM 2.  CHANGES IN SECURITIES

     NONE


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     NONE





                                       12

<PAGE>   13
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  ( a )  The Annual meeting was held on October  21, 1997.

  ( b )   The existing Board of Directors stood for and were duly reelected
          at this Annual Meeting.
          The names of the directors are as follows:
          Hironori Aihara
          Robert A. Citron
          Dr. Edward E. David, Jr.
          Dr. Shelley Harrison
          Dr. Shi H. Huang
          Chester M. Lee
          Gordon S. Macklin
          Dr. Brad M. Meslin
          Dr. Udo Pollvogt
          Alvin L. Reeser
          James R. Tompson
          Prof. Ernesto Vallerani
  ( c )   The following matters were brought to a vote of the shareholders
          at the meeting:

1.   To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for fiscal year 1998.

For  7,180,750       Against  1,105          Abstain  3,699

2.   To approve the amendments to the Company's 1994 Stock Incentive Plan to
increase the total number of shares reserved and available for distribution
under the Plan to 2,750,000.

For  2,896,691       Against  1,799,888      Abstain 13,040

3.   To adopt the Company's 1997 Employee Stock Purchase Plan.

For  3,156,386       Against  1,540,226      Abstain 13,007

4.   To approve the amendments to the Company's 1995 Directors Stock Option
Plan to increase the total number of shares reserved and available for
distribution under the Plan to 500,000.

For  3,916,733       Against  1,311,137      Abstain 15,048

All four items presented to the shareholders were approved and implemented.


ITEM 5.  OTHER INFORMATION

   NONE


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

   (a) Exhibits.  The separate Index to Exhibits accompanying this filing is
incorporated herein by reference.

   (b) Reports on Form 8-K.

       1.  Report on Form 8-K filed on October 29, 1997 disclosing the
           Registrant's completion of an offering of $55 million of its 8%
           Convertible Subordinated Notes due 2007 and the closing on an
           over-allotment option for an additional $8.250 million of its 8%
           Convertible Subordinated Notes due 2007.





                                       13

<PAGE>   14
       2.  Report on Form 8-K filed on January 21, 1998 disclosing the
           Registrant's retirement of Chester M. Lee as president and
           appointment of David A. Rossi, current senior Vice President of
           Business Development, to president, effective on January 14, 1998.


<TABLE>
<CAPTION>
         EXHIBIT NO.              DESCRIPTION OF EXHIBITS
         -----------              -----------------------
         <S>              <C>
         10.1*            ESA Contract, dated October 10, 1997, between the Registrant and
                          INTOSPACE GmbH (the "ESA Contract").

         10.2             NAS 97-199, dated December 21, 1997, between the Registrant and NASA (the "REALMS Contract").
                  
         10.3             Letter Contract Number SHB 1014, dated August 13, 1997, between the Registrant and McDonnell Douglas
                          Aerospace-Huntsville, (as amended).
                  
         10.4             Employment Agreement and Non-Interference Agreement dated January 15,  1998,  between  the Company and
                          Chester M. Lee.
                  
         10.5             Employment Agreement and Non-Interference Agreement dated January 15, 1998, between the Company and David
                          A. Rossi.
                  
         10.6             Amendment number 1 to Employment Agreement and Non-Interference Agreement dated April 1, 1997, between
                          the Company and Shelley A. Harrison.
                  
         10.7             Amendment number 1 to Loan and Security Agreement dated December 31, 1997, between the Company and First
                          Union National Bank.
                  
         11.              Statement regarding Computation of Earnings Per Common Share.
                  
         21.**            Subsidiary of the Registrant
                  
         27               Financial Data Schedule
</TABLE>

         *    Incorporated by reference to the Registrant's Form 10-Q for the
              quarter ended September 30, 1997 filed with the Securities and
              Exchange Commission on November 6, 1997.

         **   Incorporated by reference to the Registrant's Annual Report on
              Form 10-K for the year ended June 30, 1997 filed with the
              Securities and Exchange Commission on September 12, 1997.





                                       14

<PAGE>   15
                                   SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                         SPACEHAB, INCORPORATED




         Date: February 06, 1998         /S/ MARGARET E. GRAYSON
         -----------------------        ---------------------------------------
                                         Margaret E. Grayson
                                         Vice President of Finance (CFO)
                                         Treasurer, and Assistant Secretary
                                         (Principal Financial and Accounting
                                         Officer)





                                       15