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

                                  FORM 10-QSB

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

                 For the quarterly period ended March 31, 1997

                                       OR

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

            For the transition period from __________ to __________


                        Commission file number: 333-3098



                                 n-Vision, Inc.
             (Exact name of registrant as specified in its charter)


                   Delaware
(State or other jurisdiction of incorporation or          54-1741313
                 organization)                 (IRS Employer Identification No.)


                           7680 Old Springhouse Road
                         Madison Building, First Floor
                             McLean, Virginia 22102
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (703) 506-8808


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or Section 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 ( )

         The number of outstanding shares of the registrant's  Common Stock, par
value $.01 per share, was 5,362,625 on March 31, 1997.

                                       1

<PAGE>


                                  FORM 10-QSB

                                     INDEX
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S> <C>
PART I                     FINANCIAL INFORMATION

               Item 1.     Financial Statements

                           Report of Independent Accountants      .........................  3

                           Balance  Sheets as of March 31, 1997
                           and December 31, 1996                  .........................  4

                           Statements  of  Operations  For  the
                           three  months  ended  March 31, 1997
                           and March 31, 1996                     .........................  5

                           Statements of Cash Flows For the
                           three months ended March 31, 1997 and
                           March 31, 1996.                        .........................  6

                           Notes to Financial Statements          .........................  7

               Item 2.     Management's Discussion and Analysis
                           of Financial Condition and Results of
                           Operations .                           .........................  8

PART II                    OTHER INFORMATION

               Item 6      Reports and Exhibits on Form 8-K.      ......................... 11

                           SIGNATURES                             ......................... 12
</TABLE>

                                       2

<PAGE>


PART I   FINANCIAL INFORMATION


Item 1            Financial Statements



                           ACCOUNTANT'S REVIEW REPORT


Board of Directors
n-Vision, Inc.

We have reviewed the  accompanying  balance sheet of n-Vision,  Inc. as of March
31,  1997,  and the  related  statements  of  operations  and cash flows for the
three-month  periods ended March 31, 1997 and 1996.  These financial  statements
are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquires of persons  responsible  for financial and  accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the  accompanying  financial  statements for them to be in conformity
with generally accepted accounting principals.

We have  previously  audited,  in accordance  with generally  accepted  auditing
standards,  the balance sheet of n-Vision, Inc. as of December 31, 1996, and the
related consolidated  statements of operations,  stockholder's  equity, and cash
flows for the year then ended (not  presented  herein),  and in our report dated
February  18, 1997 we  expressed an  unqualified  opinion on those  consolidated
financial  statements.  In our  opinion,  the  information  set  for  the in the
accompanying  condensed  consolidated  balance  sheet as of December 31, 1996 is
fairly stated, in all material respects, in relation to the consolidated balance
sheet form which it has been derived.


                                                     /s/ Grant Thornton LLP
                                                     ________________________
                                                     GRANT THORNTON LLP


Vienna, Virginia
May  3, 1997

                                       3

<PAGE>


                                 n-VISION, INC.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                          March 31          December 31
                                                                            1997                1996
                                                                       ----------------    ---------------
                                                                         (Unaudited)         (Audited)
<S> <C>
                                     ASSETS

CURRENT ASSETS
     Cash and cash equivalents                                    $        2,060,258  $        2,422,839
      Investments                                                          1,234,375           1,250,000
     Accounts Receivable                                                           -                   -
          Trade                                                              308,816             194,910
          Officer & Employee Travel Advances                                   3,673               1,943
          Interest Receivable                                                 26,953                   -
     Inventories                                                             718,421             716,590
     Prepaid Expenses                                                         37,605              48,731
     Income Tax Refund Receivable                                             17,389              17,389
                                                                       --------------    ----------------
                                           Total Current Assets            4,407,490           4,652,402

PROPERTY AND EQUIPMENT
     (Net of Accumulated Depreciation)                                       351,178             302,745

OTHER ASSETS
     Organization Costs  (Net of Accumulated Amortization)                    37,237              40,845
                                                                       --------------    ----------------
                                                                  $        4,795,905  $        4,995,732
                                                                       ==============    ================

                      LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES
        Current Maturities --Note To ATS  & Accrued Interest      $          132,000  $          120,000
         Current Portion, Capital Lease Obligations                           22,278              21,554
         Accounts Payable                                                    139,346              52,131
   Accrued Salaries and Benefits                                              86,979              81,950
   Accrued Warranty Liability and Deferred Revenue                            53,281             144,114
                                                                       --------------    ----------------
                                      Total Current Liabilities              433,884             419,749

NON-CURRENT LIABILITIES
   Note Payable-ATS                                                          480,000             480,000
   Capital Lease Obligations                                                  21,429              27,334
                                                                       --------------    ----------------
                                                                             501,429             507,334

STOCKHOLDER'S EQUITY
   Common Stock                                                               53,126              53,126
   Common Stock Subscriptions and Notes Receivable                           (91,722)            (91,722)
    Securities revaluation                                                   (15,625)                  -
   Paid in Capital                                                        10,529,492          10,529,492
   Accumulated Deficit                                                    (6,614,678)         (6,422,247)
                                                                       --------------    ----------------
Total Stockholder's Equity                                                 3,860,593           4,068,649
                                                                       --------------    ----------------
                                                                  $        4,795,906  $        4,995,732
                                                                       ==============    ================
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       4

<PAGE>

                                 n-VISION, INC.
                            STATEMENTS OF OPERATIONS

                                               Three Months ended
                                                    March 31
                                          ------------------------------
                                              1997             1996
                                          --------------    ------------
                                                   (unaudited)

Sales                                  $       628,871  $         256,753
Cost of Sales                                  334,386             98,298
                                          -------------    ---------------
     Gross Margin                              294,485            158,455

Operating Expenses
     General and Administrative                315,591            168,016
     Product Development                        94,018            141,586
     Marketing and Sales                       119,855             25,646
                                          -------------    ---------------
Loss from operations                          (234,979)          (176,793)

Interest Income                                 56,114                  -
Interest  Expense                              (13,566)           (44,032)
                                          -------------    ---------------
Loss before income taxes                      (192,431)          (220,825)
Income Tax Benefit                                   0                  0
                                          -------------    ---------------
     NET LOSS                          $      (192,431) $        (220,825)
                                          =============    ===============

Weighted average shares
outstanding                                  5,362,625          3,750,000
                                          =============    ===============

Loss per Share                         $          (.04) $            (.06)
                                          =============    ===============


        The accompanying notes are an integral part of these statements.

                                       5


<PAGE>



                                 n-VISION, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                              Three months ended
                                                                      -----------------------------------
                                                                       Mar 31 1997          Mar 31 1996
                                                                      ---------------     ---------------
                                                                       (Unaudited)          (Unaudited)
<S> <C>
Cash Flows from operating activities
   Net Income (Loss)                                                       (192,431)            (220,825)
   Provision for contributed services                                             -               78,125
   Depreciation and amortization                                             45,076                6,697
   Accrued interest on stockholder's notes                                        -              (11,146)
    Loss on Disposal of Fixed Assets                                          5,816                    -
   Changes in assets and liabilities                                              -                    -
     (Increase) decrease in accounts receivable                            (113,906)             (47,316)
     (Increase) Decrease in inventories                                      (1,832)             (32,015)
     (Increase) increase in prepaid expenses                                 11,126                  (22)
     (Decrease) Increase in accrued interest                                (26,953)            (226,115)
     (Decrease) Increase in accounts payable                                 87,215              (76,590)
     (Decrease) Increase in accrued salaries and benefits                     5,029               (1,844)
     (Decrease) Increase in other accrued liabilities                        (1,730)              52,621
     (Increase) Decrease in Deferred Revenue & Warranty Res.                (90,833)              47,274
     (Decrease) Increase in net cash used in investing
        activities                                                           12,000                    -
                                                                     ---------------     ----------------
          Total Adjustments                                                 (68,992)             (33,448)
                                                                     ---------------     ----------------
          Net cash used in operating activities                            (261,423)            (254,313)

Cash flows form investing activities
     Purchase of property and equipment                                     (95,977)              (3,780)
     Capital Lease                                                           (5,181)                   -
                                                                     ---------------     ----------------
         Net cash used in investing activities                             (101,158)              (3,780)

Cash flows from financing activities
     (Decrease) Increase in ATS line of credit                                    -              107,731
     (Decrease) Increase in Bank Line of Credit                                   -               48,397
     Proceeds From Convertible Notes Payable                                      -              250,000
                                                                     ---------------     ----------------
                    Net Cash provided by financing activities                     -              406,128
                                                                     ---------------     ----------------
         Net Increase (Decrease) in Cash and Cash Equivalents   $          (362,581) $           148,035
                                                                     ===============     ================

                                       Beginning Cash Balance             2,422,839                6,088
                                                                     ---------------     ----------------
                                         Ending Cash Balance    $         2,060,258  $           154,123
                                                                     ===============     ================
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       6


<PAGE>


                                 n-VISION, INC.
                         NOTES TO FINANCIAL STATEMENTS
                                  (Unaudited)

Note A            Interim Financial Statements

         The  condensed  financial  statements  for the three month period ended
March 31, 1997 and March 31,  1996 are  unaudited  and  reflect all  adjustments
(consisting only of normal recurring  adjustments)  which are, in the opinion of
management,  necessary for a fair  presentation  of the  financial  position and
operating  results for the interim period.  The condensed  financial  statements
should be read in conjunction  with the audited  financial  statements and notes
thereto,  together  with  management's  discussion  and  analysis  of  financial
condition and results of operations, contained in the Company's Annual Report to
Shareholders, for the period ending December 31, 1996. The results of operations
for the three months ended March 31, 1997 are not necessarily  indicative of the
results for the entire fiscal year ending December 31, 1997.


                                       7


<PAGE>


Item  2           MANAGEMENT'S DISCUSSION AND ANALYSIS
                  OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Some  statements in this  Management's  Discussion and Analysis  contain forward
looking  information  that  involve  a number of risks  and  uncertainties,  the
possible  realization  of which  could  have  material  adverse  effects  on the
Company's  operating  results.  Factors that may cause actual  results to differ
materially  include:  development of new products and rapid change in technology
that may displace a product sold by the Company;  the highly competitive market,
the  Company's  dependence  upon a  limited  number  of  suppliers  for  product
components,  fluctuation in the Company's quarterly results of operations due to
the  timing of orders  from  customers;  and other  risk  factors  listed in the
company's  SEC filings  including,  but not  limited  to, the SB-2  Registration
Statement  dated May 28, 1996,  The 10-KSB for the year ended December 31, 1996,
and the Annual Report to Shareholders for December 31, 1996.


General

         n-Vision, Inc. ("Company"), a Delaware Corporation,  designs, develops,
manufactures,  and markets  state-of-the-art,  proprietary 3D immersive displays
for use in  advanced  visualization  applications,  products,  and systems for a
variety of  commercial,  industrial,  and military  applications.  The Company's
products and systems are marketed  worldwide,  but  principally  to customers in
North America,  Europe,  and the Pacific Rim, e.g.,  U.S. Air Force,  U.S. Navy,
NASA Langley Research  Center,  University of Illinois,  Iowa State  University,
Lockheed Martin, Inc., Silicon Graphics, Inc., UK Defense Research Establishment
(Farnborough),  Volvo,  Volkswagen,  Daimler-Benz,  BMW,  Thomson CSF, KPMG Peat
Marwick, and Raytheon among others.


Results of Operations

         Quarter Ended March 31, 1997 Compared to Quarter Ended March 31, 1996.
         For the Quarter ended March 31, 1997, the Company  reported  revenue of
$628,871  from  the  sale of 11 units of its VR  products  and  systems,  a 145%
increase  compared  to the same  period  ended  March 31, 1996 where the Company
reported  revenue  of  $256,753  from  the  sale of 4 units.  The  increase  was
primarily  attributable  to the delivery of the second order for two  production
units of the  Datavisor 80 and four units of the Datavisor  HiRes.  In addition,
the  Company  delivered  its first DV-4 unit which was a result of the  December
1996 marketing agreement with Virtuality Ltd. of England. As of May 1, 1997, the
Company  had a backlog of  delivered  and  undelivered  orders and  services  of
approximately $340,000.
         The  Company's  gross  margin  on sales  decreased  to 47% in the first
quarter 1997 from 62% in the first quarter  1996.  The first quarter 1997 margin
is not fully  comparable to the first quarter 1966 margin but is more comparable
to the full 1996 year  margins  which were 43%.  The Company  believes  that the
introduction of the  Datavisor-80,  a high margin product will tend to stabilize
margins.  This  however  may be  tempered  to the extent  that the  product  mix
contains a higher or lesser  volume of high  margin  products  versus low margin
products and whether or not the products are sold  directly to end users or sold
and discounted  through the Company's  increasing  number of  distributors.  The
Company  can make no  determination  at  present  as to the  composition  of the
product mix in the  future.  For a detailed  discussion  of  volatility  see the
Annual Report to Shareholders for 1996.
         Operating  Expenses  increased to $529,464 in the first quarter of 1997
from $335,248 in the first quarter of 1996, or 58%.  General and  Administrative
expenses  increased  from $168,018 in the first quarter of 1996 to $315,951,  or
88% in the  first  quarter  of 1997 with  increases  in  audit,  insurance,  and
executive  costs.  These costs are base  infrastructure  costs of being a public
company.  The Company believes these costs will grow far slower than other costs
as revenue  rises.  Marketing  and Sales  costs  rose from  $25,646 in the first
quarter 1996 to $119,855 in the first quarter 1997 as the Company  promoted four
new products

                                       8

<PAGE>

and  is  seeking to strategically position its products as the immersive display
market  develops.   Additional  marketing  costs  are  expected  as  the Company
continues sales development efforts.  Research and  Development  costs  declined
in the first  quarter of  1997  to $94,018  from  $141,586  in the first quarter
of 1996.  This  occurred  due to the  increased  funding by customers for custom
applications of the Company's  technology  and  products. Management expects R&D
to  stabilize   as the Company seeks development support directly from customers
for R&D.
         Net interest  earned  increased to $42,548 in the first quarter of 1997
when  compared  to an expense of $44,032 in the first  quarter of 1996.  This is
attributable to significant  funds remaining from the public offering being held
for  development  and  acquisitions.  The Company expects net interest to remain
positive for the next year.
         The  Company's  operating  results  could  be affected  by a number  of
factors.  They include the availability  and cost of components,  an  unexpected
inability to manage expenses  relative to revenue growth,  and  an  inability to
anticipate  downward price pressures.  Also,  there is the potential  problem of
competing with companies having significantly greater financial,  technical, and
market resources than the Company.
         A  significant  percentage  of  the  Company's  sales historically  has
occurred  in the  last  month  of a  quarter.   The  ability of the  Company  to
anticipate in advance  the mix of  customer  orders  and its ability to ship the
necessary quantities of product near the end of a fiscal quarter could result in
material fluctuations in quarterly operating results.
         Finally,  any shortfall in revenue or earnings from the level  expected
by securities  analysts  could have an immediate and  significant  effect on the
trading price of the Company's common stock in any given period, especially with
the demise of Stratton Oakmont,  Inc. the Company investment banker for the IPO.
Moreover, it is possible the Company may not learn of such shortfalls until late
in the fiscal quarter,  which could result in an even more immediate and adverse
effect  on the  trading  price of the  Company's  stock.  Finally,  the  Company
participates  in a competitive  industry  marked by changing  technology,  which
could result in volatility of the Company's common stock price.


Liquidity and Capital Resources

         Working capital, which consists primarily of cash and cash equivalents,
trade  receivables,  and  inventories,  totaled  $4,321,871 as of March 31, 1997
compared to a working  capital  deficiency of $1,045,300 at March 31, 1996.  The
increase  in  working  capital  was due to an  initial  public  offering  of the
Company's common stock in May of 1996 from which the Company retired $825,461 in
short term debt and accrued  interest due to Advanced  Technology  Systems(ATS).
Cash and cash equivalents  totaling  $3,293,399 consists primarily of over-night
repurchase agreements and investment grade instruments. The Company believes the
current level of cash should provide sufficient liquidity and working capital to
fund its operations through the current year.
         Longer term cash requirements, other than normal operating expenses are
anticipated  for the  development  of new  products,  enhancements  of  existing
products, financing anticipated growth, and the possible acquisitions of related
businesses  and  technologies.  The Company  believes that existing cash will be
sufficient to satisfy the anticipated cash requirements through the end of 1997.
In the event that the Company has insufficient  cash flow to meet its needs, the
Company  believes that proceeds from the exercise of 1,380,000  Class A warrants
for $5.50 per share should more than make up the short fall. The warrants may be
exercised  during a four year period  commencing May 29, 1997 unless redeemed by
the Company.  The Company,  however, can make no assurances that investors would
elect to exercise the warrants.


Income Taxes

         The Company is organized as a C Corporation and pays income taxes based
upon accrual  based taxable  income  adjusted for  differences  in the timing of
reporting certain expenses for tax and financial

                                       9

<PAGE>

statement purposes. The Company's income taxes payable,  if any,  that may arise
in  the  future  may  be  offset by credits  available for certain  research and
development  expenditures incurred.
         As of December 31,  1996,  the Company had a net  operating  loss carry
forward  available to offset future taxable income of  approximately  $1,450,000
available to offset future taxable income  generated  through 2010. In the event
of a change in  control of the  Company,  use of such  carry  forwards  could be
reduced.


Seasonality

         Based on  experience  to date,  the  Company  believes  that its future
operating results will not be subject to seasonal changes. Such effects,  should
they occur, may be apparent in the Company's  operating  results during a period
of expansion.  However, the Company can make no assurances that its business can
continue to be significantly expanded.


                                       10

<PAGE>




PART II  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

No reports on From 8-K were filed during the quarter ended March 31, 1997.


                                       11

<PAGE>


Signatures

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

Dated:   May 9, 1997


                              n-VISION, INC.
                              (Registrant)




                              /s/  Robert B. Hamilton
                              _________________________________________________
                              Robert B. Hamilton
                              Executive Vice President, Chief Financial Officer
                              (Principal Financial and Accounting Officer)


                                       12