SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                               -------------------

                                   FORM 10-K/A
                         (Amendment No. 1 to Form 10-K)
(Mark One)

[X]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
    
              For the fiscal year ended December 31, 1997
                                       or
[  ]    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 0-25036

                                 VIDEONICS, INC.
             (Exact name of Registrant as specified in its charter)

         California                                       77-0118151
(State or jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                        Identification No.)

1370 Dell Ave., Campbell, California                       95008
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code: (408) 866-8300

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:  Common Stock,
without par value                              Nasdaq National Market System

       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 [ ]

       Indicate by check mark if  disclosure of  delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of the  Registrant's  knowledge,  in  definitive  proxy or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

       At March 31,  1998,  the  aggregate  market value of Common Stock held by
non-affiliates of the Registrant was approximately $7,837,003

       As of March 31, 1998,  there were  5,812,899  shares of the  Registrant's
Common Stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      NONE

       Items 10, 11, 12 and 13 of Part III of the Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, of Videonics Inc. (the "Company" or the
"Registrant")  previously  filed with the  Securities  and  Exchange  Commission
("SEC") are hereby amended and restated to read in their entirety as follows:


<PAGE>





                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The executive officers and directors of the Company are as follows:

                                                         Director /
Name                    Age          Position            Officer Since

Michael L. D'Addio      53        Chairman, CEO                 1986
                                  & Director

Yeshwant Kamath         49        President &                   1997
                                  Director

Jeffrey A. Burt         44        V.P. Operations               1992

James Francis           33        E.V.P of Sales                1992
                                  and Marketing

Mark C. Hahn            48        V.P., Chief                   1986
                                  Technical Officer,
                                  Secretary & Director

James A. McNeill        52           V.P. of Finance,           1993
                                     CFO & Assistant
                                     Secretary

Stephen L. Peters       43           V.P. of Research           1996
                                     & Development

Carl E. Berg            60           Director                   1987

N. William Jasper, Jr.  49           Director                   1993


     Michael  L.  D'Addio,  a  co-founder  of the  Company,  has served as Chief
Executive  Officer and  Chairman of the Board of Directors  since the  Company's
inception  in July  1986.  In  addition  Mr.  D'Addio  served  as the  Company's
President  from July 1986 until November  1997.  From May 1979 through  November
1985 Mr. D'Addio served as President,  Chief  Executive  Officer and Chairman of
the Board of Directors of Corvus Systems,  a manufacturer of small computers and
networking  systems.  Mr.  D'Addio  holds an A.B.  degree  in  Mathematics  from
Northeastern University.

     Dr. Yeshwant Kamath,  has served as President of the Company since November
1997.  From 1993 to 1996,  Dr. Kamath was the CEO and co-founder of KUB Systems,
the assets of which were  acquired by Videonics in 1996.  From 1982 to 1992,  he
was the CEO and  co-founder  of Abekas  Video  Systems,  which was  acquired  by
Carlton  Communications,  Plc. Dr. Kamath  received his MS in  Electronics  from
Syracuse  University in 1972 and his Ph.D. in Electronics from the University of
California  at Berkeley in 1975.  Dr.  Kamath  currently  serves on the Board of
Directors of two public  companies,  Elantec  Semiconductor,  Inc. and Euphonix,
Inc. and is on the Board of Directors of KTEH, the San Jose based PBS television
station.

     Jeffrey A. Burt has served as Vice  President of  Operations of the Company
since April 1992. From August 1991 to March 1992, Mr. Burt served the Company as
its Materials  Manager.  Prior to that time,  from October 1990 until July 1991,
Mr.  Burt  acted  as a  consultant  to the  Company  in the  area  of  materials
management.  From May 1989 to October  1990,  Mr. Burt served as the Director of
Manufacturing  of On Command  Video.  Mr. Burt holds a B.A.  degree in Economics
from the University of Wisconsin at Whitewater.

     James  Francis  served as Executive  Vice  President of Sales and Marketing
from September 1995 until November 1997, at which time he resigned as an officer
of the Company.  From March 1992 to August 1995,  Mr. Francis served the Company
as its Vice President of International  Sales.  From May 1990 to March 1992, Mr.
Francis  served the  Company  as its  Manager  of Far East  Marketing.  Prior to
joining the Company in 1990 Mr. Francis worked as a computer programmer with IBM
Corporation.  Mr.  Francis  holds a B.S.  degree in Electrical  Engineering  and
Japanese from Brigham Young University.

     Mark C. Hahn, a  co-founder  of the  Company,  has served as the  Company's
Chief  Technical  Officer  since  February  1996,  and  Corporate  Secretary and
Director  since the  Company's  inception.  Previously,  Mr.  Hahn served as the
Company's Vice President of Research and Development  from its inception.  Prior
to  co-founding  the Company,  Mr. Hahn served as Vice President of Research and
Chief  Technologist  of Corvus  Systems from May 1979 to February 1986. Mr. Hahn
holds a B.S. degree in Electrical  Engineering  from Princeton  University and a
M.S. degree in Electrical Engineering from Stanford University.

     James A.  McNeill has served the Company as its Vice  President  of Finance
and Chief  Financial  Officer since  November  1993.  Mr.  McNeill has served as
Assistant Secretary since October 1994. From 1991 until joining the Company, Mr.
McNeill  served  as  Vice  President,  Finance  of  JHK &  Associates,  Inc.,  a
professional  services firm.  From 1978 to 1991, he served  successively as Vice
President  of Finance and  President  of U.S.  Controls  Holding,  Inc.  and its
subsidiaries,  Reactor Controls, Inc. and Project Integration,  Inc. Mr. McNeill
holds a B.S. degree in Accounting from  Pennsylvania  State  University and is a
C.P.A. under the laws of California.

     Stephen L. Peters has served the Company as its Vice  President of Research
and  Development  since  February  1996.  From 1994 to February 1996, Mr. Peters
acted as a  consultant  in the  areas of  international  business  planning  and
product  development.  From 1976 to 1980 and from  1983 to 1994,  he served as a
Division  Manager,  R&D  Manager,  R&D Section  Manager,  Project  Manager,  and
development engineer at Hewlett-Packard.  From 1980 to 1983 he served as Project
manager and senior engineer at Advanced  Technology  Labs. Mr. Peters holds B.S.
degrees from Oregon State University in Engineering Physics and Pre-medicine.

     Carl E. Berg, a  co-founder  of the  Company,  has served on the  Company's
Board of Directors since June 1987. Mr. Berg is currently,  and has for the last
eight years been, a private venture capital  investor and industrial real estate
developer.  Mr. Berg is also a member of the Board of  Directors  of  Integrated
Device  Technology,  Inc.,  Valence  Technology,  Inc.  and  Systems  Integrated
Research.

     N.  William  Jasper,  Jr.  joined the Board of  Directors of the Company in
August 1993.  Since 1983, Mr. Jasper has been the President and Chief  Operating
Officer of Dolby Laboratories, Inc.

BOARD COMMITTEES AND MEETINGS

      During the year ending December 31, 1997,  there were four meetings of the
Company's  Board of Directors at which all members were present,  except for Mr.
Hahn, who was not present at one meeting.

      The Audit  Committee was  established on December 15, 1994. The members of
the Audit Committee are Messrs. Berg and Jasper,  neither of whom is an employee
of the Company.  The functions of the Audit Committee are to define the scope of
the audit,  review the auditor's reports and comments,  and monitor the internal
auditing  procedures  of the Company.  The Audit  Committee  did not meet during
1997.

      The  Compensation  Committee  was  established  on October 27,  1994.  The
members of the Compensation  Committee are Messrs.  Berg and Jasper,  neither of
whom  is  employed   by  the   Company.   The   Compensation   Committee   makes
recommendations  with respect to compensation of senior officers and granting of
stock options and stock awards.
The Compensation Committee met one time during 1997.

      The Company does not presently have a Nominating Committee.



ITEM 11.          EXECUTIVE COMPENSATION


      The following table sets forth the total compensation  earned by the Chief
Executive  Officer and other of the  executive  officers  of the  Company  whose
salary  and  bonus for 1997  exceeded  $100,000  for  services  rendered  in all
capacities for the years ended December 31, 1997, 1996 and 1995.

<TABLE>
                                             Summary Compensation Table

                                                                  Annual                  Long-Term
                                                               Compensation             Compensation          All Other
                                                         Salary             Bonus          Option/           Compensation
Principal Position                        Year             ($)               ($)          SARs (#)            ($) (3)
------------------                        ----             ---               ---          --------            -------
<S>                                       <C>          <C>                 <C>              <C>              <C>       
Michael L. D'Addio                        1997         $130,667                  0               0                  0
   Chief Executive Officer                1996          $92,000             $2,704               0                  0
                                          1995          $92,000            $19,068               0                  0


Yeshwant Kamath                           1997         $100,500(1)          $5,000(1)       40,008(2)               0
   President


Jeffrey A. Burt                           1997         $110,000                  0          30,000(4)         $30,200
   Vice President of                      1996          $92,000             $3,362          30,000            $70,517
   Operations                             1995          $92,000            $19,068               0            $64,133


James Francis                             1997          $50,000(7)         $84,454(5)       56,512(6)         $10,442
   Executive Vice President of            1996          $52,000           $124,160(5)       51,504                  0
   Sales and Marketing                    1995          $52,000           $149,958(5)        5,000           $229,875


James A. McNeill                          1997         $121,667            $11,667          30,000(8)               0
   Vice President of                      1996          $92,000             $2,704          30,000                  0
   Finance, CFO &                         1995          $92,000            $19,068               0                  0
   Assistant Secretary


Stephen L. Peters                         1997          $98,000            $42,000          60,010(9)         $10,000(10)
   Vice President of                      1996          $85,750(11)        $36,750(11)      50,004                  0
   Research and Development
</TABLE>

(1)    Dr. Kamath was appointed  President of the Company in November 1997.  
       According to his employment  agreement, Dr. Kamath was guaranteed a 
       $5,000 bonus for the year 1997.

(2)    Includes repriced options to purchase 40,008 shares of Common Stock.

(3)    Amounts  represent gain recognized on exercise of nonstatutory  stock 
       options issued under the Company's 1987 Stock Option Plan.

(4)    Includes repriced options to purchase 30,000 shares of Common Stock.

(5)    With respect to Mr. Francis, bonus amounts are commissions calculated as 
       a percentage of sales revenues.

(6)    Includes repriced options to purchase 56,512 shares of Common Stock.

(7)    Mr. Francis resigned from the Company in December 1997.

(8)    Includes repriced options to purchase 30,000 shares of Common Stock.

(9)    Includes repriced options to purchase 50,008 shares of Common Stock.

(10)   Represents relocation bonus.

(11)   Mr. Peters joined the Company in February 1996. Mr. Peters was guaranteed
       a bonus  of  $3,500  per  month  during  his  first  year of  employment.
       Accordingly,  the 1996 Summary  Compensation  Table information set forth
       above for 1996 includes only that compensation  earned by Mr. Peters from
       February 19, 1996 through December 31, 1996.

<PAGE>

      The following tables set forth as to the Chief Executive  Officer and each
of the executive officers named under the summary  compensation  table,  certain
information  with  respect to options to purchase  shares of Common Stock of the
Company as of and for the year ended December 31, 1997.  No options were granted
to Michael L. D'Addio, the Chief Executive Officer, for such year.

<TABLE>
                                             Option/SAR Grants in 1997


                       Number of      % of Total                                      Potential Realizable
                      Securities       Options/                                      Value at Assumed Annual
                      Underlying         SARs         Exercise                        Rates of Stock Price
                        Option/       Granted to       or Base                          Appreciation for
                         SARs          Employees        Price                            Option Term (5)
<S>                      <C>               <C>         <C>          <C>            <C>      <C>          <C>   
Name                    (#) (1)        1997 (2)        Share)        Date         0% ($)     5% ($)       10% ($)
---------------------  --------        --------        ------        -----        ------     ------       -------
Jeffrey A. Burt          30,000(3)         3.2%        $5.00        8/19/07         0        $94,334     $239,061
James Francis            56,512(3)         6.1%        $5.00        8/19/07         0       $177,700     $450,328
Yeshwant Kamath          40,008(3)         4.3%        $5.00        8/19/07         0       $125,804     $318,812
James A. McNeill         30,000(3)         3.2%        $5.00        8/19/07         0        $94,334     $239,061
Stephen L. Peters        10,002(4)         1.1%        $3.81        4/15/07         0        $23,985      $60,782
                         50,008(3)         5.4%        $5.00        8/19/07         0       $157,249     $398,499
</TABLE>

(1)    Options  granted  in this table have  exercise  prices  equal to the fair
       market  value on the date of grant.  All such  options  typically  become
       exercisable  at a rate  of  1/8  after  the  first  full  six  months  of
       employment,  and 1/8 every six  months  thereafter  for a total four year
       vesting  period  following  the date of grant.  Options  granted prior to
       August 19, 1997,  typically became exercisable at a rate of 1/6 after the
       first full six months of employment,  and 1/6 every six months thereafter
       for a total three year vesting period following the date of grant.

(2)    The  Company  granted  options to  purchase a total of 929,534  shares of
       Common Stock to employees in 1997.

(3)    Options  were issued in  connection  with the  Company's  August 19, 1997
       repricing. Repriced options had vesting periods extended from three years
       to four years.

(4)    Mr. Peters grant of 10,002 shares in April 1997 were issued under a three
       year vesting schedule.

(5)    Potential  realizable  value assumes that the stock price  increases from
       the date of grant  until  the end of the  option  term (10  years) at the
       annual rate specified (0%, 5%, 10%). Annual compounding  results in total
       appreciation  of 63% (at 5% per year) and 159% (at 10% per year).  The 5%
       and 10% assumed rates of appreciation  (over the deemed fair market value
       at the  grant  date) are  mandated  by the  rules of the  Securities  and
       Exchange  Commission  and do not  represent  the  Company's  estimate  or
       projection of the future of the Company's Common Stock.



<PAGE>

<TABLE>
                                      Aggregated Option/SAR Exercises in 1997
                                           and Year-End Option/SAR Values

                         Shares                       Number of Securities                 Value of Unexercised
                      Acquired on     Value          Underlying Unexercised              In-the-Money Options/SARs
                        Exercise    Realized        Options/SARs at Year-End                  at Year-End(1)
Name                       #          $           Exercisable      Unexercisable        Exercisable      Unexercisable
--------------------   --------- -----------      -----------      -------------        -----------      -------------
<S>                       <C>        <C>               <C>            <C>                 <C>                 <C>          
Michael L. D'Addio   -        -         -               -             -                     -
Yeshwant Kamath   -        -          15,003           25,005         -                     -
Jeffrey A. Burt           6,000      $30,200           38,250         18,750              $98,775             -
James Francis             2,000      $10,442           56,881          -                 $102,433             -
Mark C. Hahn               -          -                 -              -                   -                  -
James A. McNeill   -        -         11,250           18,750         -                     -
Stephen L. Peters   -        -        20,420           39,590           $520               $2,601
</TABLE>

(1)    Calculated  on the basis of the closing  price of $4.13 on  December  31,
       1997, minus the exercise price.


<TABLE>

                                           Ten-Year Option/SAR Repricing

                                                        Market                                       Length of
                                      Number of        Price of         Exercise                     Original
                                     Securities        Stock at         Price at                    Option Term
                                     Underlying         Time of          Time of                   Remaining at
                                     Option/SARs       Repricing        Repricing       New           Date of
                                     Repriced or          or               or        Exercise      Repricing or
Name                        Date       Amended         Amendment        Amendment      Price         Amendment
----------------------      ----       -------         ---------        ---------      -----         ---------
<S>                        <C>           <C>             <C>            <C>            <C>       <C>          
Jeffrey A. Burt            8/19/97       30,000          $5.00           $7.50         $5.00     8 years 177 days
James Francis              8/19/97        5,000          $5.00          $11.75         $5.00     7 years 139 days
                           8/19/97       51,512          $5.00           $7.50         $5.00     8 years 177 days
Yeshwant Kamath            8/19/97       40,008          $5.00           $9.00         $5.00     8 years 285 days
James A. McNeill           8/19/97       30,000          $5.00           $7.50         $5.00     8 years 177 days
Stephen L. Peters          8/19/97       50,008          $5.00           $7.50         $5.00     8 years 177 days
</TABLE>


<PAGE>



ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


BENEFICIAL OWNERS


      The following table sets forth, as of March 6, 1998,  certain  information
with respect to each person known by the Company to be a  beneficial  owner,  as
defined in Rule 13d-3 ("Rule 13d-3")  promulgated by the Securities and Exchange
Commission  under the  Securities  Exchange  Act of 1934,  as amended (the "1934
Act"), of more than 5% of the outstanding Common Stock of the Company.

                                                                 
                                                                 Percentage of
Name and Address               Number of Shares                  Outstanding
of Beneficial Owner            Beneficially Owned                Common Stock

Carl E. Berg
10050 Bandley Drive
Cupertino, CA 95014                  1,142,305                             19%

Michael L. D'Addio
1370 Dell Avenue
Campbell, CA 95008(1)                  902,962                             15%

Mark C. Hahn
1370 Dell Avenue
Campbell, CA 95008(2)                  563,831                              9%

Joseph M. Cohen; Cowen &
Company; Cowen, Incorporated
Financial Square
New York, NY 10005-3597                541,500                              9%

State of Wisconsin
  Investment Board
P.O. Box 7842
Madison, WI  53707                     535,000                              9%

Wisdom Tree
  Capital Management
1633 Broadway
38th Floor
New York, NY  10019                    533,105                              9%


(1)    Includes 6,000 shares subject to stock options exercisable as of March 6,
       1998 or within 60 days thereafter held by Mr. D'Addio's spouse, a Company
       employee.

(2)    Includes 6,000 shares subject to stock options exercisable as of March 6,
       1998 or within 60 days  thereafter  held by Mr. Hahn's spouse,  a Company
       employee.



<PAGE>


MANAGEMENT

      The following  table sets forth certain  information,  as of March 6, 1998
concerning each director and each executive officer,  including their beneficial
ownership  as defined in Rule 13d-3,  of shares of Common  Stock and  beneficial
ownership of Common Stock by all officers and directors as a group.


<TABLE>

                                           Director/                                 Shares          Percent
                                           Officer                                   Beneficially    Beneficially
Name                             Age       Since          Positions                  Owned           Owned
<S>                              <C>       <C>            <C>                         <C>                  <C>  
Carl E. Berg                     60        1987           Director                    1,142,305            19%

Michael L. D'Addio(1)            53        1986           Chairman, CEO,                902,962            15
                                                           & Director

Mark C. Hahn(2)                  48        1986           V.P., Chief                   563,831             9
                                                          Technical Officer,
                                                          Secretary & Director

N. William Jasper, Jr.(3)        49        1993           Director                       32,813             *

Yeshwant Kamath(4)               49        1997           President & Director           15,003             *

Jeffrey A. Burt(5)               44        1992           V.P. of Operations             42,000             *

James Francis(6)                 33        1992           E.V.P. of Sales and            56,881             *
                                                          Marketing

James A. McNeill(7)              52        1993           V.P. of Finance,               95,000             2
                                                          CFO & Assistant
                                                          Secretary

Stephen L. Peters(8)             43        1996           V.P. of Research and           29,338             *
                                                          Development

All executive officers and directors as a Group (9 persons)(9)                        2,880,133            48%

</TABLE>

* Represents less than 1%

(1)    Includes 6,000 shares subject to stock options exercisable as of March 6,
       1998 or within 60 days thereafter held by Mr. D'Addio's spouse, a Company
       employee.

(2)    Includes 6,000 shares subject to stock options exercisable as of March 6,
       1998 or within 60 days  thereafter  held by Mr. Hahn's spouse,  a Company
       employee.

(3)    Includes  32,813 shares subject to stock options  exercisable as of March
       6, 1998 or within 60 days thereafter.

(4)    Includes  15,003 shares subject to stock options  exercisable as of March
       6, 1998 or within 60 days thereafter.

(5)    Includes  42,000 shares subject to stock options  exercisable as of March
       6, 1998 or within 60 days thereafter.

(6)    Includes  56,881 shares subject to stock options  exercisable as of March
       6, 1998 or within 60 days thereafter.

(7)    Includes  15,000 shares subject to stock options  exercisable as of March
       6, 1998 or within 60 days thereafter.

(8)    Includes  28,338 shares subject to stock options  exercisable as of March
       6, 1998 or within 60 days thereafter.

(9)    Includes an aggregate of 202,035 shares subject to stock options included
       pursuant to notes (1) - (8).


EMPLOYMENT AGREEMENTS

      In February  1996, the Company  entered into an employment  agreement with
Mr. Peters, pursuant to which he presently receives a base salary of $98,000 per
year, plus a guaranteed  bonus of $42,000 the first year,  $38,000 in the second
year,  and $34,000 in the third year.  In  addition,  Mr.  Peters is eligible to
receive an incentive  bonus, in his second and third years of employment,  based
on  performance.  Pursuant to this  agreement,  Mr. Peters received an option to
purchase 50,004 shares of the Company's Common Stock under the Stock Option Plan
at an  exercise  price of $7.50 per share  which  vests  over three  years.  The
agreement  provides  that if Mr.  Peters is  terminated  within one year after a
merger or buyout, his shares will be fully vested and he will receive one year's
severance pay.

      In November  1997, the Company  entered into an employment  agreement with
Dr.  Kamath,  pursuant to which he presently  receives a base salary of $150,000
per year, with a guaranteed bonus of $5,000 for 1997. In addition, Dr. Kamath is
eligible to receive an incentive bonus, in 1998, based on performance.  Pursuant
to this agreement,  Dr. Kamath is to receive options to purchase  320,000 shares
of the Company's Common Stock.  These options are to be granted by the Company's
Board of Directors no later than March 31, 1998, at fair market value,  and will
vest over four years.  The  agreement  provides that if Dr. Kamath is terminated
within one year after a merger or buyout, his shares will be fully vested and he
will receive one years severance pay.

REMUNERATION OF NON-EMPLOYEE DIRECTORS

      The Company does not compensate  non-employee directors who are also major
shareholders,   such  as  Mr.  Berg,  for  their  services.  Other  non-employee
directors, such as Mr. Jasper, receive $500 for each board meeting attended.


REPORT OF THE COMPENSATION COMMITTEE WITH RESPECT TO EXECUTIVE COMPENSATION

      The Compensation Committee of the Board of Directors (the "Committee") was
established  on October 27, 1994.  The  functions of the  Committee  are to make
recommendations to the Board concerning salaries and incentive  compensation for
the Company's executive officers.

      The  Company's  executive  compensation  program has been  designed to (i)
attract  and  retain  executives  capable  of  leading  the  Company to meet its
business objectives and to motivate them to enhance long-term  shareholder value
through compensation that is comparable to the levels offered by other companies
in similar industries; (ii) motivate key executive officers to achieve strategic
business initiatives and reward them for their achievement;  and (iii) align the
interests  of  executives   with  the  long-term   interests  of  the  Company's
shareholders  through  award  opportunities  resulting  in the  ownership of the
Company's Common Stock. Annual compensation for the Company's executive officers
may consist of three  elements:  cash salary,  cash incentive  bonus,  and stock
option  grants.  Stock  option  grants  provide an incentive  which  focuses the
executive's  attention on managing the Company from the  perspective of an owner
with an equity stake in the business. These stock options will generally provide
value to the  recipient  only when the price of the  Company's  stock  increases
above the option grant price.

     The Committee recognizes that the salary paid to Mr. D'Addio, the Company's
Chief  Executive  Officer,  is  substantially  below  that  paid  to  others  in
comparable  positions of similar companies.  Therefore,  the Committee increased
the annual salary of Mr. D'Addio to $150,000 in  1997 from $92,000.  Mr. D'Addio
had previously  declined  salary  increases  recommended by the Committee  since
1994.  The  Committee  believes  that  Mr.  D'Addio's  current  salary  is still
significantly below the salary of CEO's in comparable public companies. However,
Mr. D'Addio has to date declined any additional increase.

      During 1998,  it is  anticipated  that the Committee  will conduct  annual
performance  reviews  comparing  actual Company  progress  against annual plans.
Elements of such plans,  including  progress on product  development,  sales and
marketing, expense control and organizational development, may be considered.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION 
DECISIONS

      The Compensation Committee consists of Messrs. Berg and Jasper, neither of
whom is employed by the Company.  There are no Compensation Committee interlocks
between  the  Company  and other  entities  involving  the  Company's  executive
officers and Board members who serve as executive officers of such entities.


COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors,  executive officers,  and persons who own more than ten
percent of a registered class of the Company's equity  securities,  to file with
the Commission  initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Officers,  directors
and greater than ten percent shareholders are required by Commission  regulation
to furnish the Company with copies of all Section 16(a) forms they file.

     To the Company's knowledge,  based solely on a review of the copies of such
reports  and   amendments   thereto   furnished   to  the  Company  and  written
representations  that no other reports were  required,  all Section 16(a) filing
requirements applicable to its officers,  directors and greater than ten percent
beneficial  owners were complied  with during the year ended  December 31, 1997,
provided,  however, that two timely filed Form 4 reports for Mr. Berg were later
amended to reflect the nature of ownership of the applicate securities.


<PAGE>


ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      There  is no  pending  litigation  or  proceeding  involving  a  director,
officer, employee or other agent of the Company as to which indemnification from
the  Company  is  being  sought  nor is the  Company  aware  of any  pending  or
threatened  litigation  that may  result in claims  for  indemnification  by any
director, officer, employee or other agents.

      Pursuant to Mr.  Peters'  employment  agreement,  the  Company  loaned Mr.
Peters $250,000 on January 24, 1998. The loan bears interest at a rate of 6% per
annum,  and is due and  payable in one lump sum on January 4, 2000.  The loan is
secured by a deed of trust on Mr. Peters' home in Saratoga, California.


PERFORMANCE MEASUREMENT COMPARISON

      The following  graph compares the total  shareholder  return of the Common
Stock of the  Company,  CRSP  Total  Return  Index for the Nasdaq  Stock  Market
(Domestic  Companies) and the CRSP Total Return Index for the Nasdaq  Electronic
Component Companies, since December 15, 1994. The graph assumes that $100.00 was
invested on December 15,  1994,  the  effective  date of the  Company's  initial
public offering of Common Stock.

(The following descriptive data is supplied in accordance with Rule 304(d) of 
 Regulation S-T)

<TABLE>
                                           Cumulative Total Return
                                ----------------------------------------------------
<S>                             <C>        <C>        <C>        <C>        <C> 
                                12/15/94   12/31/94   12/31/95   12/31/96   12/31/97
Videonics, Inc.                      100        116        107        81          38
Nasdaq (Domestic)                    100        103        149       183         225
Electronic Component Companies       100        106        175       303         317
</TABLE>

      The Company's stock was publicly  traded for sixteen  calendar days during
the Company's  year ended  December 31, 1994.  These indices are calculated on a
dividend  reinvested  basis. The Company  emphasizes that the performance of the
Company's  stock  over the period  shown is not  necessarily  indicative  of the
future performance of the Company's stock.


<PAGE>


                                   SIGNATURES


      Pursuant  to the  requirements  of Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Company has duly caused this  Amendment No. 1 to Form
10-K to be signed on its behalf by the  undersigned,  thereunto duly authorized,
on this 21st day of April, 1998.

                                 VIDEONICS, INC.


   By:  /s/ Michael L. D'Addio                   By: /s/ James A. McNeill
        Michael L. D'Addio                           James A. McNeill
        Chief Executive                              Vice President of Finance,
        Officer                                      Chief Financial Officer
                                                     and Assistant Secretary


      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
Amendment No. 1 to Form 10-K has been signed below by the  following  persons on
behalf of the Company and in the capacities and on the date indicated.



Name and Signature              Title                            Date


/s/ Michael L. D'Addio          Chairman of the Board            April 21, 1998
---------------------
Michael L. D'Addio              and CEO


/s/ B. Yeshwant Kamath          President                        April 21, 1998
---------------------
B. Yeshwant Kamath


/s/ Mark C. Hahn                Vice President and Chief         April 21, 1998
---------------------
Mark C. Hahn                    Technical Officer


/s/ Carl E. Berg                Director                         April 21, 1998
---------------------
Carl E. Berg


/s/ N. William Jasper, Jr.      Director                         April 21, 1998
--------------------------
N. William Jasper, Jr.