<PAGE>   1


                   U.S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549
                                 FORM 10-KSB

   [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF 1934 (FEE REQUIRED)

   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

   [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934 (NO FEE REQUIRED)

   FOR THE TRANSITION PERIOD FROM ________ TO ________

   COMMISSION FILE NO. 0-23590


                      SUPER VISION INTERNATIONAL, INC.
               (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)



            DELAWARE                                        59-3046866
------------------------------------            -------------------------------
 (State or Other Jurisdiction of                         (I.R.S. Employer
 Incorporation Or Organization)                          Identification No.)


           8210 PRESIDENTS DR., ORLANDO, FLORIDA               32809
           -------------------------------------               -----
          (Address of Principal Executive Offices)


                               (407) 857-9900
                 -----------------------------------------------
                 (Issuer's Telephone Number, Including Area Code)

Scurities registered under Section 12 (b) of the Exchange Act:   None.

Securities registered under Section 12(g) of the Exchange Act:


                    CLASS A COMMON STOCK, $.001 PAR VALUE
                    -------------------------------------  
                              (TItle of Class)


                              CLASS A WARRANTS
                    -------------------------------------  
                              (Title of Class)


                              CLASS B WARRANTS
                    -------------------------------------  
                              (TItle of Class)
<PAGE>   2

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
                ------          ------

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB. [X]


State issuer's revenues for its most recent fiscal year: $9,091,700.

The aggregate market value of the Class A Common Stock of the Registrant held
by non-affiliates of the Registrant computed by reference to the last sales
price at which the stock was sold on April 13, 1998 was $10,071,579.

As of March 26, 1998, there were issued and outstanding: 1,770,049 shares of
Class A Common Stock,  $.001 par value and 483,264 shares of Class B Common
Stock, $.001 par value.


                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement relative to the Registrant's 1998 Annual
Stockholders Meeting are incorporated by reference into Part III of this
report.


                                      2
<PAGE>   3

                                     PART I


Item 1.  Description of Business.

GENERAL

                  Super Vision International, Inc. (the "Company") is a world
leader in the design and manufacture of fiber optic lighting products, signs
and displays for applications in the signage, swimming pool, architectural, and
retail industries. The Company completed an initial public offering of its
securities in March 1994.

                  The Company was incorporated in Delaware on December 16, 1993
and is the successor by merger to a Florida corporation of the same name, which
was incorporated in January 1991. The Company's executive offices are located
at 8210 Presidents Dr., Orlando, Florida 32809 and its telephone number is
(407) 857-9900.


PRODUCTS AND SERVICES

         SIDE-GLOW(TM) AND END GLOW(TM) CABLES

                  The Company's SIDE-GLOW(TM) fiber optic lighting cables are
marketed as an alternative to neon and other conventional lighting products,
for use in accent lighting, theme lighting and in lighting areas where
maintenance and breakage are of concern to the end user. SIDE-GLOW(TM) fiber
optic lighting cable is flexible and easy to install, is not prone to the
breakage associated with glass neon tubes and is energy efficient, providing
significant savings in electrical costs and maintenance. In addition, the
cables can be combined with standard or custom manufactured light sources and
control systems to create color changing patterns and unique lighting systems.
The cables are offered in a variety of diameters with a wide range of light
sources.

                  END GLOW(TM) cables are utilized to transmit cool, ultra
violet and heat free light from a remote light source to the object or area
being lighted. The Company markets its END GLOW(TM) cables in conjunction with
its line of light sources and lighting accessories for a variety of
applications from swimming pool and spa lighting to display case lighting and
residential landscape lighting. END GLOW(TM) cables allow for unique lighting
of areas or objects with the added benefits of fiber optics.  Utilizing its
state of the art fiber optic cabling systems, the Company is able to custom
manufacture END GLOW(TM) cables to user specifications, in order to deliver the
required amount of light to the object at the most affordable cost.

                  The Company's SIDE-GLOW(TM) and END GLOW(TM) cables have been
incorporated in locations worldwide, including the Hard Rock Cafe in Dubai, the
Race For Atlantis IMAX Theater in Ceasar's Forum, Las Vegas, Nevada, and the
Victorian Arts Center in Sydney, Australia.

                  During 1997, Company's SIDE-GLOW(TM) and END GLOW(TM) cable
products accounted for approximately 50% of the Company's total revenues. The
Company believes that this product area offers the largest growth potential and
therefore, the Company intends to devote the majority of its engineering and
sales and marketing efforts to expand this area of its business and the related
light source product line described below.





                                      3
<PAGE>   4

LIGHT SOURCES

                  The Company manufactures a variety of light sources used in
conjunction with the Company's SIDE- GLOW(TM) and END GLOW(TM) fiber optic
cables and lighting accessories to create full lighting systems. Each line of
light sources was created to meet specific market needs and applications. The
light sources are manufactured to meet standards established by Underwriters
Laboratories and comparable certifying bodies worldwide. During 1997, the
Company introduced the SV1500 series of light sources for the display case and
interior theme lighting industry, as well as a DMX based control system
compatible with its SV2000 series specifically for use in the entertainment
industry.  In addition to the aforementioned, the Company currently
manufactures the SV750 light source series for endpoint fiber optic
applications and certain SIDE-GLOW(TM) applications; the SV250 series for
swimming pool and residential applications; the SV2000 series for commercial
lighting and signage; and the SV4000 series for high end lighting projects.
The Company also manufactures a wide variety of custom light sources for
specific market needs based on a survey of the customer's lighting application.

                  The Company utilizes control systems with its light sources
to allow for customization of lighting systems.  All of the Company's light
sources are designed to accept a variety of unique controller options, allowing
the basic light sources to meet a wide variety of market needs. Multiple light
sources can be sequenced using the Company's proprietary control systems to
create special lighting effects.

                  The Company's light source product lines represented
approximately 23% of the Company's total revenue during 1997. Management
believes that maintaining a competitively priced and commercially superior line
of light sources is critical to continued growth in all of the Company's
product lines and markets. The Company plans to devote significant resources to
continue development of these products and markets.

         ENDPOINT SIGNS AND DISPLAYS

                  The Company designs, manufactures, and installs endpoint
fiber optic signs and custom displays for advertising, signage and point of
purchase displays. Custom patterns are created using sophisticated design tools
and software, which are then tailored to customer specifications. These
patterns are fed into automated equipment to produce drilled patterns in the
subject material. Fiber optic filaments are then placed, treated and gathered
to a light source.  Utilizing a variety of techniques, the fibers are then
ordered within the light source and computer generated color disk assembly to
create the desired visual effects.

                  In May, 1997, the Company completed what the Company believes
to be the world's largest single integrated fiber optic display. The contract
for the display was signed in June, 1996. The Company also designed and
produced the previous two world's largest displays. Management believes this
type of acknowledged industry expertise enhances the Company's position as the
world leader in the full range of fiber optic lighting options, and provides
visibility for the marketing of the Company's other fiber optic lighting
products.
                  During 1997, endpoint signs and displays accounted for
approximately 22% of the Company's total revenues.

         LIGHTING ACCESSORIES

                  The Company sells a variety of lighting accessories and
fixtures for use with its fiber optic cables and light sources.  These fixtures
include 




                                      4

<PAGE>   5

underwater lens assemblies, display case fixtures, downlights and landscape
accessories.  The accessories and fixtures are used to provide direct object
lighting, decorative accent lighting and special effect lighting. During 1997,
the Company expanded its line of accessories and fixtures, particularly in the
decorative theme area.  Management believes that providing the fixtures and
accessories to the market enhances the Company's ability to market its fiber
optic products as a full lighting package, as opposed to a component line.

                 During 1997, lighting accessories accounted for approximately
5% of the Company's total revenues.


SALES AND MARKETING

                  The Company's products are utilized in a wide variety of
applications; consequently, the Company utilizes numerous marketing channels
and strategies to address target users. The Company currently markets to the
Architectural Lighting market through a network of lighting agents and
specifiers throughout North America. In September 1996, the Company signed an
exclusive distribution and marketing agreement with Hayward Pool Products
("Hayward"), the world's largest pool products supplier, pursuant to which
Hayward acquired the worldwide rights to market and sell the Company's fiber
optic swimming pool lighting products in the Pool and Spa lighting market.  The
Company derived 25% of total revenues from Hayward in 1997.  The Company
utilizes direct marketing for its Signage product lines worldwide in order to
reduce end use costs. In October 1997, the Company signed an exclusive
agreement with the Jim Pattison Sign Group/Western Region for the rights to
market and sell the Company's Signage products to the sign industry in the
Western Provinces of Canada.  Endpoint signs and displays are also marketed
direct to end users, principally Fortune 500 companies worldwide.

                  The Company derived 25% of total revenues from international
sales in 1997. The Company has entered into exclusive and non-exclusive
marketing and sales arrangements with leading lighting companies in
international territories. The Company provides technical expertise and limited
marketing support, while its international distributors provide sales staff,
local marketing, and product service. The Company believes its international
distributors are better able to service international markets due to their
understanding of local market conditions and business practices.

MANUFACTURING AND SUPPLIERS

                  The fiber optic strands used in the Company's endpoint signs
and displays as well as the production of its SIDE-GLOW(TM) and END GLOW(TM)
cables are purchased from several key suppliers. In October 1994, the Company
entered into a contract for the design and purchase of customized cabling and
extrusion equipment in order to produce its SIDE-GLOW(TM) and END GLOW(TM) and
END GLOW(TM) cables. The equipment became operational in December 1995. In
August, 1997, concurrent with the Company's relocation to its new facility, the
cabling and extrusion equipment were upgraded and retrofitted to increase
quality and production capability. Revision of the manufacturing process has
allowed the Company to increase quality while realizing improved gross margins
on its SIDE-GLOW(TM) and END GLOW(TM) cable products. The Company believes that
as the volume of product produced increases, the equipment may further reduce
the manufacturing costs of its SIDE-GLOW(TM) and END GLOW(TM) cables, and
therefore allow the Company to offer its products to the market at prices
equivalent to neon lighting. The Company maintains outside manufacturing
capabilities for these products in the event the cabling and extrusion
equipment were to be disabled for any period of time. The Company manufactures
the lights sources and control systems used with its SIDE-GLOW(TM) and END





                                      5

<PAGE>   6

GLOW(TM) cables and endpoint displays in its facility in Orlando, Florida. The
designs of the light sources are considered proprietary and the Company has
U.S. patents issued with respect to this design. All endpoint displays are
manufactured directly by the Company based on the clients' specifications, or
designed jointly with the Company's highly experienced personnel. The Company
believes its ability to offer a full range of products and design, engineering
and support services are unique in the market place, and are important to its
future prospects for growth.

                  The Company's strategy is to continue to reduce materials
costs and reduce its dependence on outside suppliers by expanding its
manufacturing capabilities and engineering its products around off the shelf
components combined with its proprietary designs. The relocation of the
Company's operations to a larger facility has initially increased manufacturing
overhead costs, but Management believes the relocation is critical to the
Company's ability to meet projected demand in future periods, and may
ultimately reduce unit overhead costs due to efficiencies gained from better
manufacturing flow.  The Company continues to perform research and development
to further lower the cost of production of all existing products. The
Company also plans to develop additional products and identify new markets and
distribution channels.

                  The Company will continue to purchase the fiber optic strands
from several Japanese suppliers. While the Company believes alternative sources
for fiber optics are available to enable it to produce its endpoint signs and
displays, the SIDE-GLOW(TM) and END GLOW(TM) cables require fiber optic
material of a higher quality than the Company believes is currently available
elsewhere. Accordingly, the loss of these suppliers or delays in obtaining
shipments could have a material adverse affect on the Company's operations
until such time, if ever, as an alternative supplier could be found which could
provide the quality level in the amounts the Company requires (several possible
suppliers have been identified) or until such time as the Company could
implement its own production capabilities.

RESEARCH AND PRODUCT DEVELOPMENT

                 The Company considers its ability to constantly improve
existing products, rapidly introduce new products to fill identified needs, and
design solutions for custom applications to be critical to the growth of the
Company. The Company believes this responsiveness to the market to be an
important differentiating factor, and will continue to seek rapid response to
market trends.  Management believes that the increasing market for fiber optic
lighting products in general may attract larger companies into the market with
more capital and technical personnel than the Company currently employs.
Accordingly, management increased the Company's engineering and research staff
in 1997.  Management believes this is necessary to maintain its competitive
advantage and to defend its market position.

                 During 1997, the Company spent approximately $377,000 on
engineering and product development activities, which was a significant
increase over approximately $192,000 expended in fiscal 1996.  The Company
believes its success will depend, in large part, on its ability to continue to
improve and enhance its existing products and to develop new products and
applications for its technologies.  In addition, Management believes it must
continue to improve gross margins on all product lines through engineering and
research.

                 Management believes increased levels of spending on research
and development may be necessary to successfully develop a product which has
the brightness of neon and which can be sold at a comparable price.
Additionally, as new market opportunities are found, increased levels of
product development 





                                      6
<PAGE>   7

may be warranted to rapidly design, engineer and produce products to fill these
market needs.

COMPETITION

                 The Company currently faces competition from both traditional
lighting technologies such as neon and florescent lighting and from competitors
specifically engaged in fiber optic lighting.  Additionally, Management is
aware that several larger companies currently engaged in traditional lighting
technologies or lighting component manufacture may be considering entering the
fiber optic lighting market through acquisition or formation of divisions or
subsidiaries dedicated to penetrating the fiber optic lighting market.  There
can be no assurance that a large conventional lighting company will not enter
the market and utilize its resources to capture significant market share and
adversely affect the Company's operating results.

                 Traditional lighting technologies have the advantage of a long
history of market acceptance and familiarity as compared to the Company's
products. The Company is actively seeking to educate its target markets as to
the advantages of fiber optic lighting systems. The Company believes that
achievement of this objective is critical to the Company's future. The Company
must also compete with traditional lighting on the issues of maintenance costs,
safety issues, energy usage, price and brightness.

                 The Company believes its products can effectively compete
against traditional lighting in the areas of maintenance, safety and energy
consumption. The Company's lighting systems offer the advantage of centralized
light source maintenance for lamp replacement. This feature is superior to
other lighting systems, such as neon, which require maintenance through out the
lighting system. Additionally, the Company's SIDE-GLOW(TM) and END GLOW(TM)
cables are virtually maintenance and breakage free, as opposed to neon and
other comparable lighting products which experience high field and in shipment
breakage rates. This reduced breakage also favorably compares in the area of
safety. Further, the Company's products result in a voltage free light, which
is particularly beneficial in wet and under water applications where risk of
shock from electricity in the lighted path is an issue. The Company's products
also eliminate the majority of heat and radiation at the light output, which
can be advantageous in applications where these factors may not be desirable,
particularly with respect to Lighting Accessories such as task lighting and
display case lighting.

                 The Company's products may not favorably compete with
traditional lighting on the basis of price for smaller lighting systems and in
particular with neon systems in smaller scale applications, which comprise a
large portion of the available market. Additionally, fiber optic lighting
systems do not equal neon brightness in a cost-effective manner for many
applications. In applications calling for maximum brightness and competitive
cost, the Company's products may not be able to compete effectively with
traditional lighting products.

                 The Company currently faces competition from a defined number
of companies directly involved in the field of fiber optic lighting addressed
by the Company's SIDE-GLOW(TM) and END GLOW(TM) cables and light source
products. These companies utilize a similar technology to that used by the
Company and compete generally on the basis of price and quality. The Company
believes it has the lowest cost structure of all current competitors in this
industry, and may compete favorably in markets where price is the central
issue. The Company's quality control system will also allow the Company to
compete on the basis of quality of product and services delivered. There can be
no assurance, however, that the current competitors directly involved in this
industry will 







                                      7

<PAGE>   8

not develop processes or technology which will allow them to decrease their
costs, and consequently, erode the Company's price advantage.

                 The Company's endpoint signs and displays compete with
numerous smaller companies utilizing the same or similar technologies,
including fiber optic, neon, LED and plasma displays.  In the area of custom
displays and signs, the Company's expertise in the field and history of
worldwide major installations have established the Company as the world leader
in this category.  The Company's smaller point of purchase signs compete
directly on a price basis with these smaller companies, including several
foreign competitors whose lower labor costs allow them to achieve a price
advantage over the Company's products.  These point of purchase products also
compete to some extent with customary point of purchase signage which is
considerably less expensive than fiber optic products. The Company believes
that the quality of its products is equal to or superior to those offered by
its competitors and that its products offer unique advantages over customary
signage, such as color changing, aesthetically pleasing special effects, and
motion.

PATENTS AND PROPRIETARY RIGHTS

                 The Company considers its technology and procedures
proprietary and relies primarily on patent and trade secret laws and
confidentiality agreements to protect its technology and innovations. Employees
of the Company, as well as technical consultants which from time to time may be
hired, enter into confidentiality and/or invention assignment agreements
providing for non-disclosure of proprietary and trade secret information of the
Company and the assignment to the Company of all inventions, improvements,
technical information and suggestions relating in any way to the business of
the Company (whether patentable or not) which the employee or consultant
develops during the period of their employment or association with the Company.
Despite these restrictions, it may be possible for competitors or customers to
copy one or more aspects of the Company's products or obtain information that
the Company regards as proprietary. Furthermore, there can be no assurance that
others will not independently develop products similar to those sold by the
Company. The Company therefore believes that producing the highest possible
quality products at the most competitive prices is the best means to protect
against competitive innovations.

                 The Company has been issued a United States patent relating to
the reflective center core used in the process of manufacturing its
SIDE-GLOW(TM) cables and has received Patent Cooperation Treaty protection of
this patent overseas. The Company also has two United States patents on methods
of manufacturing alternative versions of fiber optic cables. Additionally, the
Company has acquired a United States patent related to the method of
manufacture of a fiber optic image magnification device. While there is no
guarantee that this patent can be developed into a commercially viable product,
the Company believes that expansion of the applications for its fiber optic
technologies are important to the possible achievement of future growth
objectives. The Company has a fifth patent related to its light source
technology and a device for connecting fiber optic cables to the light source.
Finally, the Company has filed several patent applications for devices and
manufacturing methods which it considers to be significant to its operations.

                 The Company will continue to seek patent protection where
appropriate for future developments, improvements and enhancements to its
technology. There can be no assurance, however, that the Company's patent or
patents that may be issued in the future will provide the Company with
sufficient protection in the case of an infringement of its technology or that
others will not independently develop technology comparable or superior to the
Company's. Although the Company believes that the products sold by it do not





                                      8


<PAGE>   9

and will not infringe upon the patents or violate the proprietary rights of
others, it is possible that such infringement or violation has occurred or may
occur.  In the event that products sold by the Company are deemed to infringe
upon the patents or proprietary rights of others, the Company could be required
to modify its products or obtain a license for the manufacture and/or sale of
such products.

                 The Company has obtained approval for a registered trademark
for the "Super Vision" name, and has filed for a European community trademark.
Additionally, the Company has obtained a registered trademark on the brand name
SIDE GLOW(TM) related to the Company's fiber optic cables, and a European
community trademark application has been filed as well. The Company also has
applied for a trademark on the brand name END GLOW(TM), and received
provisional approval.  One company has challenged the END GLOW(TM) application,
and while the Company intends to aggressively defend its position, there can be
no assurance that it will be successful in defending these challenges to the
END GLOW(TM) mark.  The Company believes the trademarks may help in its efforts
to achieve brand recognition, although there can be no assurance to such
effect.

EMPLOYEES

                 At March 18, 1998, the Company had 65 full-time employees
including six in research and development, 16 in sales, marketing and customer
service, 10 in finance and administration and 33 in production and quality
control.  None of the Company's employees is currently covered by a collective
bargaining agreement and the Company considers its employee relations to be
good. The Company also utilizes temporary and part time employees as required
by the volume of business, primarily in the area of production.


COMPUTERS: YEAR 2000

                 As the year 2000 approaches, an issue impacting all companies
has emerged regarding how existing application software programs and operating
systems can accommodate this date value.  In brief, many existing application
software products in the marketplace were designed to only accommodate a two
digit date position which represents the year (i.e., "97" is stored on the
system and represents the year 1997).  As a result, the year 1999 (i.e., "99")
could be the maximum date value systems will be able to accurately process.
Management is in the process of working with its software vendors to assure
that the Company is prepared for the year 2000.  The Company does not
anticipate incurring additional expenditures to upgrade its current software
and hardware equipment in relation to the "year 2000" issue. The developers of
the accounting software and operating systems that the Company currently uses
have submitted written statements assuring the Company that the software has
the capability to handle Year 2000 issues and the Company will not have to
incur further costs for upgrades.

Item 2.  Description of Property.

                          The Company's executive offices and manufacturing
facility are located in approximately 72,000 square feet of leased space in
Orlando, Florida.  The lease expires in May 2012 and provides for a base
monthly rental of approximately $64,500. An entity ("Max King Realty")
controlled by Brett Kingstone, the Chairman and Chief Executive Officer of the
Company, owns the building that houses the Company's facilities.

Item 3.  Legal Proceedings.




                                      9


<PAGE>   10

                          There are currently no material legal proceedings to 
which the Company is a party.

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

                          No matters were submitted to a vote of the security
holders of the Company during the fourth quarter of the fiscal year covered by
this report.




                                     10

<PAGE>   11

                                    PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

                 (a)      The Company's Class A Common Stock has traded on the
Nasdaq SmallCap Market under the symbol SUPVA since March 22, 1994. The
following table sets forth the average of the high and low bid prices of the
Class A Common Stock for the fiscal years ended December 31, 1996 and 1997 as
reported by The Nasdaq Stock Market, Inc.


<TABLE>
<CAPTION>
                                        Bid Prices
                              High                      Low
                              ----                      ---
<S>                           <C>                     <C>
Year ended
December 31, 1996

First Quarter                 7-1/8                   6-13/16
Second Quarter                8-9/16                  8
Third Quarter                 8-3/16                  7-11/16
Fourth Quarter                8-1/8                   7-11/16

Year ended
December 31, 1997

First Quarter                 8-31/64                 6
Second Quarter                9                       6-13/32
Third Quarter                10-5/32                  8-15/64
Fourth Quarter                9-33/64                 5-13/64


</TABLE>


         Such market quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission and may not necessarily represent actual
transactions.

                 (b)      The number of holders of record of the Company's
Class A Common Stock as of March 18, 1998 is 45.

                 (c)      The Company has never paid a cash dividend on its
Common Stock and intends to continue to follow a policy of retaining earnings
to finance future growth. Accordingly, the Company does not anticipate the
payment of cash dividends to holders of Common Stock in the foreseeable future.

Item 6.      Management's Discussion and Analysis or Plan Of Operation.

                          The following discussion and analysis should be read
in conjunction with the Financial Statements and Notes thereto appearing
elsewhere in this report.

LIQUIDITY AND CAPITAL RESOURCES

                 At December 31, 1997, the Company had working capital of
$5,377,663.

                 Cash decreased by approximately $850,000 during the year
ended December 31, 1997 primarily as a result of the Company's relocation to a
new combined headquarters and manufacturing facility.  The Company signed a
fifteen year lease for an approximately 72,000 square foot building in Orlando,
Florida.  The facility has been recorded as a capital lease, and recorded at a
value of $3,081,000.  Approximately $825,000 was expended in tenant improvements
of the facility.  An additional $275,000 was used to 





                                      11
<PAGE>   12

acquire computer equipment, warehouse equipment and furniture for the facility.

                 Trade accounts receivable increased to approximately
$1,501,000 for the year ended December 31, 1997.  The increase was due
primarily to purchases of swimming pool lighting products by Hayward under
special dated credit terms that are commonly extended in the swimming pool
industry. The amount of the dated receivables is approximately $524,000.

                 During the year ended December 31, 1997, the Company expanded
inventory by approximately $222,000.  This expansion was due to increased
levels of the Company's swimming pool and spa product lines to support the pool
and spa segment, and to an increase in raw material fiber products due to a
planned maintenance shut down by one of the Company's fiber optic suppliers.
Management believes that these inventory levels should be sufficient to supply
current and projected revenue growth.

                 The Company used approximately $1,295,000 in 1997 in the
expansion of property and equipment, primarily in the relocation of the
Company's previous manufacturing and production facilities to a 72,000 square
foot operating center.  Approximately $1,100,000 was utilized to implement
tenant improvements to the facility to accommodate the Company's specialized
operations, and to purchase information technology hardware, storage equipment
and office furniture for the facility.  An additional amount of approximately
$195,000 was used to acquire customized manufacturing assembly lines and
equipment to increase the productivity of the Company's production staff.
Management believes these capacity increases may be needed to meet projected
demand, and the facility relocation will allow the Company to meet future
growth plans.

                 Accounts payable decreased approximately $85,000 for the year
ended December 31, 1997, primarily due to utilization of prompt payment
discounts on inventory purchases. Accrued liabilities decreased approximately
$194,000 as of December 31, 1997. As of December 31, 1996, the Company had
amounts accrued in connection with the Company's relocation to its new
facility, which occurred in August, 1997. Accrued compensation decreased
$95,000 as of December 31, 1997.  Year-end bonuses were accrued as of December
31, 1996, which were paid in January, 1997.  No bonuses were earned or accrued
as of December 31, 1997.

                 Capital lease obligations increased to approximately
$3,148,000 as of December 31, 1997.  In August, 1997, the Company's executive
offices and manufacturing facilities were relocated to an approximately 72,000
square foot space in Orlando, Florida which is occupied pursuant to a lease
which expires in May 2012 and provides for a base monthly rental of
approximately $64,500. An entity ("Max King Realty") controlled by Brett
Kingstone, the Chairman and Chief Executive Officer of the Company, owns the
building that houses the Company's executive offices.  The lease is accounted
for as a capital lease obligation.

                 The Company believes that available cash, together with funds
expected to be generated from operations, will be sufficient to finance the
Company's working capital requirements as well as planned expansion.

                 In January 1994, the Company and certain stockholders of the
Company entered into an agreement providing for the escrow of a portion of the
shares held by such individuals (the "Escrow Shares"). In the event any shares
are released from escrow to persons who are officers and other employees of the
Company, compensation expense will be recorded for financial reporting purposes
as required by Generally Accepted Accounting Principles (GAAP). As of March 31,
1997, Brett Kingstone, the CEO and Chairman, voluntarily retired 





                                      12

<PAGE>   13

2,891,870 shares of Class B Common Stock previously held in the escrow account. 
These shares were returned to the Company treasury.  The Company currently has
26,130 shares of Class B Common Stock held in escrow. In the event the Company
attains any of the earnings thresholds or the Company's Class A Common Stock
meets certain minimum bid prices required for the release of the remaining
26,130 Escrow Shares, such release will be deemed additional compensation
expense of the Company. Accordingly, the Company may, in the event of the
release of the remaining shares from escrow, recognize during the period in
which the earnings thresholds are met or are probable of being met or such
minimum bid prices attained, charges which might have the effect of increasing
the Company's loss or reducing or eliminating earnings, if any, at such time.

RESULTS OF OPERATIONS

Fiscal 1997 Compared to Fiscal 1996

                 Revenues.  Revenues are derived primarily from sales of SIDE
GLOW(TM) and END GLOW(TM) fiber optic cables, light sources, endpoint signs and
displays and lighting accessories. Revenues for the year ended December 31,
1997 ("1997") were approximately $9,092,000. This represented a 34% increase
over the year ended December 31, 1996 ("1996"). Revenues for 1997 increased
primarily as a result of continued growth in sales of the Company's pool and
spa lighting products.  The Company continues to experience increasing market
share in this product line, and sales to the Company's exclusive distributor in
the pool and spa industry, Hayward Pool Products, exceeded forecasts for 1997.
Growth was also experienced in the Company's sign company sales.  Management
anticipates that significant growth in the pool and spa market is possible, but
increased competitive response is likely. Further, Management believes that
further growth in the sign company market is possible, but will require
increased research into achieving neon brightness of the Company's fiber optic
cables.  The increase in revenues is also attributable to approximately
$830,000 of revenue recognized under a long-term contract completed in May 1997
for what the Company believes to be the world's largest custom fiber optic
display.  Although revenues increased from the prior year, Management noted
that sales in the fourth quarter of 1997 were below expectations, resulting in
revenues lower than anticipated for the year ended December 31, 1997.  Adverse
weather conditions, particularly in the Company's domestic markets, led to
delays in shipments of orders which had been scheduled for release prior to the
close of the year.  Management noted that the Company ended 1997 with the
highest year-end order backlog in the Company's history.

                 Gross Margin.  The gross margin increased 1% from 38% in 1996
to 39% in 1997.  The 1997 gross margin was favorably impacted by process
improvements in the Company's fiber optic cabling and extrusion production
lines, which improved product performance and resulted in increased yields,
thereby increasing gross margins on these products.  In conjunction with the
Company's relocation to its new facility, the cabling and extrusion lines were
modified to increase line speeds, which enhanced capacity, and improved the
quality of the end products.  The 1997 gross margin was also favorably impacted
by the effects of volume purchase discounts of product components, although the
full effects of these quantity discounts will not be fully realized until such
time, if ever, as the Company's sales volumes result in consistently improved
inventory turns.  The components subject to such discounted purchase conditions
are standard to many of the Company's end products, and are not associated with
any single product line or market. Although margins overall improved slightly,
Management noted that margin gains were offset in part due to the higher fixed
operating costs resulting from the Company's relocation to its new headquarters
and manufacturing facility.  In August 1997, the Company relocated from its
previous facilities to a single 





                                      13

<PAGE>   14

combined use building.  Fixed operating costs include lease costs, utilities,
insurance and other costs of facility maintenance and operation.  Management
believes that the increased costs associated with the new facility are necessary
for the Company to compete effectively in the market, and may result in eventual
margin increases due to improved manufacturing methods and product flow in the
new facility. Additional offset in margin improvements resulting from production
efficiencies was experienced due to downward price pressures in the Company's
pool and spa product lines, as competitors in the category responded to the
increased market penetration of the Company's products.  Management believes
such pressures may continue as existing and new competitors attempt to react to
the Company's growth strategies and regain market share from the Company. 
Management plans to respond to these competitive strategies by offering improved
products to the market and attempting to further reduce costs of manufacturing
these products.

                 Selling, General and Administrative Expenses.  Selling,
general and administrative expenses were approximately $2,792,000 for 1997
compared to approximately $2,042,000 for 1996, an increase of 37%. During 1997,
the Company greatly increased its attendance at market specific trade shows,
which resulted in increased advertising and travel related costs.  The Company
also produced a new product catalog, price guides, and fiber optic lighting
overview video in order to attempt to further expand market awareness of the
Company's products.  In addition, the Company increased personnel in the
marketing, sales and customer service areas to support increased requests for
information regarding the Company and its products.  Management believes these
personnel increases are necessary to support the anticipated further growth in
interest regarding the Company's products.  Management also noted that a
one-time charge of approximately $105,000 was incurred related to the physical
relocation of the Company's personnel and operations to the new facility, which
increased general and administrative expenses.

                 Research and Development.  Research and development costs were
approximately $377,000 for 1997 compared to approximately $192,000 for 1996,
an increase of 96%. The Company increased staffing levels in the area of
engineering and research in order to shorten development time of new product
lines and redesign of existing products to enhance performance and reduce costs
of these products.  During 1997, the Company introduced its DMX compatible
light sources for the entertainment industry, and a dimming system for halide
based lighting systems compatible with industry standard automated dimming
control systems which is targeted for the theater and high end residential
markets.  Additional expenses were incurred in the research and testing of
several promising technologies in the areas of lamp and reflector design and
fiber optic materials.  Management believes these increased research levels are
necessary due to competitive pressures in the market place for improved fiber
optic lighting systems. It also ensures the Company is potentially able to
retain its competitive advantages in the market in the event larger,
conventional lighting companies enter into the fiber optic lighting market.
Management believes research and development costs may rise in future periods
as the Company performs research which is based on improving existing
technologies, or developing new technology, as opposed to adaptation of current
technology to new products. While the Company intends to continue its low cost
development efforts, new research into lamp technology, improved cable
brightness and other long term efforts may require sustained increases in
research and development costs.

                 Interest.  The Company had net interest income for 1997 of
approximately $150,000 compared to approximately $136,000 for 1996 due to
higher average cash balances during the year, prior to the Company's
relocation.  Interest expense increased from approximately $2,500 in 1996 to
approximately $273,000 for 1997, due to the accounting treatment for the lease




                                      14

<PAGE>   15

on the Company's new facility as a capital lease under Statement of Financial
Accounting Standards No. 13, Accounting for Leases.

                 Income Tax.  In 1996 the Company realized an income tax
benefit of $230,000 compared to a tax expense in 1997 of $(82,000). The income
tax benefit for 1996 was due to recognition of a deferred tax asset of $230,000
under FAS 109.  Management believed that as of December 31, 1996, it was more
likely than not that the Company will generate taxable income sufficient to
realize a portion of the tax benefit associated with future deductible
temporary differences and NOL carryforwards prior to their expiration.
Management believes that some valuation allowance is appropriate given a
conservative estimate of future taxable income. If the Company achieves
sufficient profitability to utilize a greater portion of the deferred tax
asset, the valuation allowance will be reduced through a credit to income.  See
Note 8 of Notes to Financial Statements.  During 1997, no such income tax
benefit was realized.

                 Net Income.  Net income for 1997 was approximately $95,000,
or $0.04 per share-diluted, compared to net income of approximately $711,000,
or $.34 per share-diluted, for 1996.  The decrease is attributable to the
increase in costs and one-time expenses related to the Company's relocation to
its new manufacturing facility. The Company realized a loss on disposal of
assets of approximately $100,000 related to the relocation of the Company to
the new operating facility.  Leasehold improvements on the Company's previous
facilities were written off, and certain pieces of equipment and furniture were
disposed of in the relocation.  The decrease is further attributable to fourth
quarter revenues that were below Management's expectations.  Also included in
1996 net income was $230,000 of income tax benefits, or $0.11 per
share-diluted, compared to tax expense of $(82,000), or $(.03) per
share-diluted for 1997.

FACTORS THAT MAY AFFECT FUTURE RESULTS AND MARKET PRICE OF STOCK

                 Forward looking information; statements contained in this
document that state the Company's or Management's anticipations, beliefs,
expectations, hopes, intentions, predictions and/or strategies which
are not purely historical in fact or which apply prospectively are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21 of the Securities Exchange
Act of 1934, as amended.  All forward-looking statements contained in this
document reflect Management's opinions only as of the date hereof, and the
Company assumes no obligation to update any such forward-looking statements.
Such forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reflected in
such forward-looking statements due to, among other factors, competition in
each of the Company's product areas, dependence in suppliers, product demand,
the ability to timely respond to rapid changes in technology, the ability to
attract and retain qualified engineering and production personnel, infringement
on or a challenge to the Company's proprietary information, and changes in
economic conditions.  Additional information concerning these or other factors
which could cause actual results to differ materially from those contained or
projected in, or even implied by, such forward-looking statements is contained
in this report and also from time to time in the Company's other SEC filings.
Copies of these filings are available from the Company and/or the SEC.





                                      15

<PAGE>   16

Item 7.  Financial Statements

                 The following financial statements are filed as part of this
report.  This information appears in a separate section of this report.


<TABLE>
<CAPTION>
                                                                Page
                                                                 ---- 
      <S>                                                       <C>
      Report of Independent Certified Public Accountants
         - Ernst & Young LLP                                     F-2

      Report of Independent Certified Public Accountants
         - Coopers & Lybrand L.L.P.                              F-3

      Balance Sheets as of December 31, 1997 and 1996            F-4

      Statements of Income for the years ended
         December 31, 1997 and 1996                              F-5

      Statements of Stockholders' Equity for the years
         ended December 31, 1997 and 1996                        F-6

      Statements of Cash Flows for the years ended
         December 31, 1997 and 1996                              F-7

      Notes to the Financial Statements                          F-8

</TABLE>



Item 8.     Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure.


                 The Company's independent auditors from January 1, 1997
through September 30, 1997 was Coopers & Lybrand, L.L.P.("C&L").  The Company
terminated C&L on September 30, 1997.  The Company's decision to terminate C&L
was based on performance issues and was not the result of any dispute with C&L
concerning accounting issues.  The Company's decision was subsequently ratified
by its Board of Directors; at the time of termination, the Company did not have
an audit or similar committee charged with recommending or otherwise approving
the decision to terminate C&L.

                 The reports of C&L on the Company's financial statements as of
and for the two years ended December 31, 1996 and December 31, 1995 did not
contain an adverse opinion or a disclaimer or opinion nor were they qualified
or modified as to uncertainty, audit scope or accounting principles.

                 During the Company's two most recent fiscal years ended
December 31, 1996 and December 31, 1995, and during the interim periods up to
the date of its termination, C&L claims there was a disagreement with the
Company as to the proposed accounting treatment for a lease (the "Lease") with
an entity owned by the Company's CEO for the Company's new principal executive
offices located in Orlando, Florida.  The issue identified by C&L was whether
the Lease should be accounted for as a capital lease or an operating lease.
C&L took the position that the Lease should be accounted for as a capital
lease.  The Company, believing it had bona fide arguments that the Lease should
be accounted for as an operating lease, asked C&L's local office to appeal its
determination first to a regional, and later based on new information, to a
national level.  The question during both of these appeals was the appropriate
interpretation of "fair market value" with respect to the Lease.  C&L
ultimately determined that the Lease should be accounted for as a capital
lease.  The Company accepted this final determination and informed C&L, through
the Company's Chief Financial Officer, that the Lease would be accounted for in
accordance with C&L's finding.  The Company believes that the 





                                      16

<PAGE>   17

accounting for the Lease has been finalized by communicating its acceptance of
C&L's finding and the Company's agreement to account for the Lease as
recommended by C&L.

                 The Company's Board of Directors did not discuss the
disagreement with C&L.

                 The Company has authorized C&L to respond fully to inquiries
of the successor accountant concerning the subject matter of the aforementioned
dispute.





                                      17
<PAGE>   18
                                    PART III

Items 9 through 12:

                 The information called for by Item 9 (Directors, Executive
Officers, Promoters and Control Persons; Compliance with Section 16(a) of the
Exchange Act), Item 10 (Executive Compensation), Item 11 (Security Ownership of
Certain Beneficial Owners and Management), and Item 12 (Certain Relationships
and Related Transactions) is incorporated by reference from the Registrant's
definitive proxy statement for its Annual Stockholders Meeting to be held on
May 4, 1998.

Item 13.         Exhibits, Lists and Reports on Form 8-K

(a)
                   3.1      Certificate of Incorporation (1)

                   3.2      Certificate of Amendment to Certificate of 
                            Incorporation (1)

                   3.3      Certificate of Merger (1)

                   3.4      By laws (1)

                   4.1      Form of Unit Purchase Option (1)

                   4.2      Form of Warrant Agreement (including Forms of 
                            Class A and Class B Warrant Certificates)  (1)

                   4.3      Escrow Agreement (1)

                   4.4      Form of Amendment to Escrow Agreement  (1)

                  10.1      1994 Stock Option Plan (1)

                  10.2      Employment Agreement with Brett Kingstone (1)

                  10.3      Form of Indemnification Agreement (1)

                  10.4      Lease for Facility at Viscount Row (1)

                  10.5      Bank Loan Agreement with Barnett Bank (1)

                  10.6      Stock Purchase Agreement with Hayward Industries, 
                            Inc. (2)

                  10.7      Warrant Agreement with Brett M. Kingstone (3)

                  16        Letter on change in certifying accountant (4)

                  23.1      Consent of Ernst & Young LLP (4)

                  23.2      Consent of Coopers & Lybrand L.L.P. (4)

                  27.1      Financial Data Schedule (4)

                  27.2      Financial Data Schedule (4)
                

         (1)     Incorporated by reference from the Company's Registration
                 Statement on Form SB-2 (File No. 33-74742)    



                                      18
<PAGE>   19

         

         (2)     Incorporated by reference from the Company's Form 8-K filed on
                 October 9, 1997 (File No. 0-23590)

         (3)     Incorporated by reference from the Company's Form 10-QSB for
                 the quarter ended June 30, 1997 (File No. 0-23590)

         (4)     Filed herewith

(b)      Reports on Form 8-K.  The Company filed a report on Form 8-K on
         October 1, 1996 to report the agreement with Hayward Industries, Inc.
         to sell 249,420 shares of stock and enter into a distributorship
         arrangement for sale of fiber optic pool and spa lighting products.
         The Company also filed a report on Form 8-K on October 6, 1997 and
         amendments thereto on October 9, 1997, October 17, 1997 and December
         12, 1997 regarding the change in independent accountants.


                                      19

<PAGE>   20

                       SUPER VISION INTERNATIONAL, INC.

                        INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>              
Report of Independent Accountants - Ernst & Young LLP                        F-2

Report of Independent Accountants - Coopers & Lybrand L.L.P.                 F-3

Balance Sheets as of December 31, 1997 and 1996                              F-4

Statements of Income for the years ended
   December 31, 1997 and 1996                                                F-5

Statements of Stockholders' Equity for the years
   ended December 31, 1997 and 1996                                          F-6

Statements of Cash Flows for the years ended
   December 31, 1997 and 1996                                                F-7

Notes to the Financial Statements                                            F-8
 
</TABLE>




                                     F-1

<PAGE>   21




REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Super Vision International, Inc.
Orlando, Florida


We have audited the accompanying balance sheet of Super Vision International,
Inc. as of December 31, 1997, and the related statements of income,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Super Vision International,
Inc. as of December 31, 1997, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.




/s/ Ernst & Young LLP


Orlando, Florida
February 13, 1998


                                     F-2

<PAGE>   22


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Super Vision International, Inc.
Orlando, Florida


We have audited the accompanying balance sheet of Super Vision International,
Inc. as of December 31, 1996, and the related statements of income,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Super Vision International,
Inc. as of December 31, 1996, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.




/s/ Coopers & Lybrand L.L.P.


Orlando, Florida
February 14, 1997




                                     F-3
<PAGE>   23
SUPER VISION INTERNATIONAL, INC.

BALANCE SHEETS
<TABLE>
<CAPTION> 
                                                                                     DECEMBER 31,
                                                                                1997              1996  
                                                                            -----------       ------------
<S>                                                                        <C>                <C>
                                   ASSETS

  Current Assets:
     Cash and cash equivalents                                             $  2,478,145       $  3,327,965
     Investments                                                                102,121            107,667
     Trade accounts receivable less allowance for
       doubtful accounts of $156,517 and $41,866
       at December 31, 1997 and 1996 respectively                             1,501,340          1,310,057
     Inventories, less inventory reserve of $52,045 and $81,628
       at December 31, 1997 and 1996 respectively                             2,142,754          1,921,103
     Advances to employees                                                       14,313             25,524
     Deferred income taxes                                                      119,185            185,865     
     Other assets                                                                98,812             72,781  
                                                                           ------------       ------------
                    Total current assets                                      6,456,670          6,950,962   
                                                                           ------------       ------------
  Property and Equipment:
     Machinery and equipment                                                  1,283,345          1,240,042
     Furniture and fixtures                                                     270,200            136,264
     Computers                                                                  342,991            225,002
     Vehicles                                                                    16,581             16,581
     Leasehold improvements                                                     879,792            146,817
     Property held under capital lease                                        3,081,000                  -
                                                                           ------------       ------------
                                                                              5,873,909          1,764,706
     Less accumulated depreciation                                             (526,436)          (325,957)   
                                                                           ------------       ------------
                    Net property and equipment                                5,347,473          1,438,749   
                                                                           ------------       ------------
  Deferred income taxes                                                          39,631             63,523
                                                                           ------------       ------------
  Other assets                                                                  183,034           165,966     
                                                                           ------------       ------------
                                                                           $ 12,026,808       $  8,619,200
                                                                           ============       ============
                    LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities:
     Accounts payable                                                      $    935,943       $  1,020,478
     Accrued compensation and benefits                                           45,225            139,769
     Deposits                                                                    97,839             51,814
     Accrued liabilities                                                              -            194,247
     Payments in excess of costs and recognized profit on
       uncompleted contracts                                                          -             53,702
     Income taxes                                                                     -             19,388
                                                                           ------------       ------------
                   Total current liabilities                                  1,079,007          1,479,398 
                                                                           ------------       ------------
  Obligation under capital lease                                              3,148,359                  -
                                                                           ------------       ------------
  Commitments

  Stockholders' Equity:
     Preferred stock; $.001 par value, 5,000,000 shares authorized;
        none issued                                                                   -                  -
     Class A common stock, $.001 par value, authorized
        16,610,866 shares, 1,770,049 and 1,680,946 issued and
        outstanding at December 31, 1997 and 1996 respectively                    1,770              1,681
     Class B common stock, $.001 par value, 3,389,134 shares
        authorized, 483,264 and 3,375,134 issued and outstanding
        at December 31, 1997 and 1996 respectively                                  483              3,375
     Additional paid in capital                                               8,201,040          7,633,653
     Retained earnings (deficit)                                               (403,851)          (498,907)   
                                                                           ------------       ------------
                   Total stockholders' equity                                 7,799,442          7,139,802   
                                                                           ------------       ------------
                                                                           $ 12,026,808       $  8,619,200
                                                                           ============       ============
</TABLE>

See accompanying notes to financial statements.




                                     F-4

<PAGE>   24


SUPER VISION INTERNATIONAL, INC.

STATEMENTS OF INCOME



<TABLE>
<CAPTION>                                                        
                                                                                    YEAR ENDED
                                                                                    DECEMBER 31,
                                                                               1997             1996    
                                                                            ----------       ----------
<S>                                                                         <C>              <C>
Revenues                                                                    $9,091,700       $6,805,473


Costs and Expenses:
     Cost of sales                                                           5,520,987        4,216,104
     Selling, general, and administrative                                    2,792,294        2,041,732
     Research and development                                                  376,653          192,042
                                                                            ----------       ----------
                Total costs and expenses                                     8,689,934        6,449,878 
                                                                            ----------       ----------
Operating Income                                                               401,766          355,595   
                                                                            ----------       ----------

Non-Operating Income (Expenses):
     Interest Income                                                           149,655          136,274
     Interest expense                                                         (273,436)          (2,509)
     Net loss on disposal of assets                                           (100,482)          (8,775)   
                                                                            ----------       ----------
                Total non-operating income (expense)                          (224,263)         124,990
                                                                            ----------       ----------

Income Before Income Taxes                                                     177,503          480,585

Income Taxes (Benefit)                                                          82,447         (230,000) 
                                                                            ----------       ----------
Net Income                                                                  $   95,056       $  710,585
                                                                            ==========       ==========
                                                                                                       
Income Per Common Share:

    Basic                                                                   $     0.04       $     0.35  
                                                                            ==========       ==========

    Diluted                                                                 $     0.04       $     0.34  
                                                                            ==========       ==========


</TABLE>
See accompanying notes to financial statements.




                                     F-5

<PAGE>   25


SUPER VISION INTERNATIONAL, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY



<TABLE>
<CAPTION>
                                                                 Common Stock
                                               ------------------------------------------------
                                                                                                   Additional       Retained
                                                      Class A                    Class B            Paid-in         Earnings
                                                Shares       Amount        Shares       Amount      Capital         (Deficit)  
                                               ----------   -------     -----------     -------   ----------     -------------
<S>                                           <C>           <C>         <C>             <C>         <C>           <C>
Balance, January 1, 1996                      1,428,966     $ 1,429     3,375,134        $ 3,375    $5,669,423    $  (1,209,492)
                                              

   Sale of common stock, net of
     issuance cost                              249,480         250             -              -     1,945,480                -
                                              

   Exercise of Class A warrants                   2,500           2             -              -        18,750                -
                                              

   Net income                                         -           -             -              -             -          710,585     

                                              ---------     -------    ----------        -------    ----------    --------------
Balance, December 31, 1996                    1,680,946       1,681     3,375,134          3,375     7,633,653         (498,907)
                                              

   Retirement of Class B escrow
      shares                                          -           -    (2,891,870)        (2,892)        2,892                -
                                                                                                               

   Exercise of Class A warrants                  38,000          38             -              -       255,212                -
                                              

   Exercise of employee stock options            51,103          51             -              -       309,283                -
                                              

   Net Income                                         -           -             -              -             -           95,056

                                              ---------     -------       -------        -------    ---------     -------------
Balance, December 31, 1997                    1,770,049     $ 1,770       483,264        $   483    $8,201,040    $    (403,851)  
                                              =========     =======       =======        =======    ==========    =============

</TABLE>
See accompanying notes to financial statements.




                                     F-6
<PAGE>   26



SUPER VISION INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                          YEAR ENDED
                                                                          DECEMBER 31,
                                                                     1997             1996     
                                                                  -----------     -----------
<S>                                                              <C>              <C>
Cash Flows from Operating Activities
   Net income                                                    $   95,056       $  710,585   
                                                                 ----------       ----------
   Adjustments to reconcile net income to net cash
   used in operating activities:
       Depreciation                                                 359,147          165,030
       Net loss on disposal of fixed assets                         100,482            8,775
       Amortization of intangible assets                              6,718           13,786
       Accretion of capital lease obligation                         67,359                -
       Deferred income taxes                                         90,572         (249,388)
       Changes in operating assets and liabilities:
           Increase in:
                Account receivable                                 (191,283)        (979,487)
                Inventories                                        (221,651)      (1,021,755)
                Other assets                                        (22,320)        (132,187)
           (Decrease) increase in:
                Accounts payable                                    (84,535)         721,817
                Accrued liabilities                                (194,247)         125,612
                Accrued compensation and benefits                   (94,544)         139,769
                Deposits                                             46,025              980
                Payments in excess of costs and
                  recognized profit on uncompleted
                  contracts                                         (53,702)          43,369
                Income taxes                                        (19,388)          19,388       
                                                                 ----------       ----------
                    Total adjustments                              (211,367)      (1,144,291)  
                                                                 ----------       ----------
                    Net cash used in operating
                    activities                                     (116,311)        (433,706)    
                                                                 ----------       ----------

Cash Flows from Investing Activities:
   Purchase of investments                                         (100,041)        (107,667)
   Proceeds from investments                                        105,587                -
   Acquisition of patents                                           (14,128)         (16,043)
   Acquisition of trademarks                                         (2,158)          (3,025)
   Purchase of equipment and furniture                           (1,295,302)        (390,618)    
   Proceeds from disposal of equipment and furniture                  7,950            9,735
                                                                 ----------       ----------

                    Net cash used in investing
                    activities                                   (1,298,092)        (507,618)    
                                                                 ----------       ----------

Cash Flows from Financing Activities:
   Cost of issuance of common stock                                 (15,000)         (54,268)
   Proceeds from exercise of stock options                          309,333                -
   Proceeds from Class A warrants exercised                         270,250           18,750
   Repayment of note to officer                                           -          (22,968)
   Sale of common stock                                                   -        2,000,000    
                                                                 ----------       ----------
                    Net cash provided by financing
                    activities                                      564,583        1,941,514    
                                                                 ----------       ----------

Net Increase (Decrease) in Cash and Cash Equivalents               (849,820)       1,000,190

Cash and Cash Equivalents, Beginning of Year                      3,327,965        2,327,775    
                                                                 ----------       ----------

Cash and Cash Equivalents, End of Year                           $2,478,145       $3,327,965   
                                                                 ==========       ==========

</TABLE>



See accompanying notes to financial statements.




                                     F-7


<PAGE>   27

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 1997 and 1996


   1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

            BUSINESS - Super Vision International, Inc. (the "Company") is
            engaged in the design, manufacture and marketing of SIDE-GLOW(TM)
            and END GLOW(TM) fiber optic lighting cables, light sources and
            "point-to-point" fiber optic signs and displays. The Company's
            products have a wide variety of applications in the signage,
            swimming pool, architectural, advertising and retail industries.

            REVENUE RECOGNITION - Generally, the Company recognizes revenue for
            its products upon delivery to customers.  A portion of the
            Company's income is derived from sales contracts accounted for on
            the percentage of completion method whereby the Company recognizes
            income on the basis of costs incurred during the period plus profit
            earned, measured by the percentage of direct labor incurred
            relative to total direct labor budgeted. When contract cost
            estimates indicate costs in excess of the contract price, the
            Company records the entire loss. The paid portion of the contract
            in excess of cost incurred and gross profit recognized is included
            in current liabilities as Payments in Excess of Costs and
            Recognized Profit on Uncompleted Contracts.

            Licensing and royalty fees are recorded when amounts become payable
            to the Company based on royalty agreements and the services
            required as set forth in royalty agreements have been rendered.

            CASH EQUIVALENTS - Temporary cash investments with an original
            maturity of three months or less are considered to be cash
            equivalents.
         
            INVESTMENTS - Investments consist of held to maturity debt 
            securities carried at amortized cost which approximates market 
            value.

            INVENTORIES - Inventories are stated at the lower of cost
            (first-in, first-out method), or market.  Provision is made for 
            any inventory deemed excessive or obsolete.

            PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
            Depreciation is computed by the straight-line method and is charged
            to operations over the estimated useful lives of the assets. The
            estimated useful lives of the property and equipment range from 3
            to 20 years.  Property held under capital lease is amortized over
            the life of the lease.  Related amortization expense is included
            with depreciation in the accompanying statements of income and
            accumulated depreciation in the accompanying balance sheets.
            Maintenance and repairs are charged to expense as incurred. The
            carrying amount and accumulated depreciation of assets sold or
            retired are removed from the accounts in the year of disposal and
            any resulting gain or loss is included in results of operations.

            INTANGIBLE ASSETS - Intangible assets, which are recorded at cost,
            consist of patents and trademarks which are owned by the Company
            and are being amortized over their contractual lives using the
            straight-line method. At each balance sheet date, management
            assesses whether there has been any permanent impairment in the
            value of intangibles. The factors considered by management include
            trends and prospects as well as the effects of obsolescence,
            demand, competition and other economic factors.




                                     F-8
<PAGE>   28

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:

            DEPOSITS - Payments received by the Company for services to be
            provided in the following year are deferred and recognized as
            revenue in the period the services are provided.

            RESEARCH AND DEVELOPMENT - Research and development costs to
            develop new products are charged to expense as incurred.

            ADVERTISING - Advertising costs, included in selling, general and
            administrative expenses, are expensed when the advertising first
            takes place.

            INCOME TAXES - Income taxes are provided for the tax effects of
            transactions reported in the financial statements and consist of
            taxes currently due plus deferred taxes resulting from temporary
            differences. Such temporary differences result from differences in
            the carrying value of assets and liabilities for tax and financial
            reporting purposes. The deferred tax assets and liabilities
            represent the future tax consequences of those differences, which
            will either be taxable or deductible when the assets and
            liabilities are recovered or settled. Valuation allowances are
            established when necessary to reduce deferred tax assets to the
            amount expected to be realized.

            ESTIMATES - The preparation of financial statements in conformity
            with generally accepted accounting principles requires management
            to make estimates and assumptions that affect the reported amounts
            of assets and liabilities and disclosure of contingent assets and
            liabilities at the date of the financial statements and the
            reported amounts of revenues and expenses during the reporting
            period. Actual results could differ from those estimates.

            EARNINGS PER SHARE - In 1997, the FASB issued SFAS No. 128,
            "Earnings per Share."  Statement 128 replaced the calculation of
            primary and fully diluted earnings per share with basic and diluted
            earnings per share.  Unlike primary earnings per share, basic
            earnings per share excludes any dilutive effects of options,
            warrants and convertible securities.  Diluted earnings per share is
            very similar to the previously reported fully diluted earnings per
            share.  All earnings per share amounts for all periods have been
            presented, and where appropriate, restated to conform to the
            Statement 128 requirements.

            STOCK-BASED COMPENSATION  - The Company has elected to follow
            Accounting Principles Board Opinion No. 25, "Accounting for Stock
            Issued to Employees" and related interpretations in accounting for
            its stock-based compensation plans rather than the alternative fair
            value accounting provided under SFAS No. 123 "Accounting for
            Stock-Based Compensation."

            SFAS NO. 129, "DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE."
            In February 1997, the FASB issued SFAS Statement No. 129,
            "Disclosure of Information about Capital Structure," which is
            applicable to all companies.  Capital structure disclosures
            required by Statement 129 including liquidation preferences of
            preferred stock, information about the pertinent rights and
            privileges of the outstanding equity securities, and the redemption
            amounts for all issues of capital stock that are redeemable at
            fixed or determinable prices on fixed or determinable dates.
            Statement 129 is effective for financial statements for periods
            ending after December 15, 1997.




                                     F-9
<PAGE>   29

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED:


            SFAS NO. 130, "REPORTING COMPREHENSIVE INCOME."  In June 1997, the
            FASB issued SFAS No. 130, "Reporting Comprehensive Income."  SFAS
            No. 130 becomes effective for fiscal years beginning after December
            15, 1997 and requires reclassification of earlier financial
            statements for comparative purposes.  SFAS No. 130 requires that
            changes in the amounts of certain items, including foreign currency
            translation adjustments and gains and losses on certain securities
            be shown in the financial statements.  SFAS No. 130 does not
            require a specific format for the financial Statement in which
            comprehensive income is reported, but does require that an amount
            representing total comprehensive income be reported in that
            statement.

            SFAS No. 131, "DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND
            RELATED INFORMATION." - Also in June 1997, the FASB issued SFAS No.
            131, "Disclosures about Segments of an Enterprise and Related
            Information."  This Statement will change the way public companies
            report information about segments of their business in annual
            financial statements and requires them to report selected segment
            information in their quarterly reports issued to stockholders.  It
            also requires entity-wide disclosures about the products and
            services an entity provides, the material countries in which it
            holds assets and reports revenues, and its major customers.  The
            Statement is effective for fiscal years beginning after December
            15, 1997.

            The Company intends to adopt the provisions of SFAS 129, 130 and
            131 in 1998 and does not expect their application to have a
            material impact on the financial statements of the Company.


   2.       INVENTORIES:

            Inventories consist of the following at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                     1997            1996 
                                                 -------------   ------------            
<S>                                             <C>                <C>
Raw materials                                   $1,635,278         $1,334,429
Work in process                                          -             50,122
Finished goods                                     559,521            618,180      
                                                ----------         ----------
                                                 2,194,799          2,002,731
Less: Reserve for excess inventory                 (52,045)           (81,628)     
                                                ----------         ----------
              Net inventory                     $2,142,754         $1,921,103
                                                ==========         ==========
                                                                                
</TABLE>




                                     F-10

<PAGE>   30


SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   3.       CAPITAL LEASE OBLIGATION:

            Effective June 15, 1997, the Company leases its operating facility
            from a corporation owned by the Company's chief executive officer.
            The lease has a fifteen-year term extending through June 15, 2012.

            Assets recorded under capital lease and included in Property and
            Equipment are as follows:

<TABLE>
                            <S>                                           <C>
                            Office/Warehouse building                     $  3,081,000
                            Less accumulated amortization                     (102,700)        
                                                                          ------------
                                                                          $  2,978,300     
                                                                          ============
</TABLE>

            At December 31, 1997, the future minimum lease payments for the
capital lease are as follows:

<TABLE>
                         <S>                                            <C>
                         1998                                     $     471,900
                         1999                                           553,097
                         2000                                           581,520
                         2001                                           598,481
                         2002                                           610,596
                         2003 and thereafter                          6,533,379        
                                                                  -------------
                         Minimum lease payments                       9,348,973
                         Less amount representing interest
                            And executory costs                      (6,200,614)      
                                                                  -------------
                         Present value of net minimum lease
                            payments under capital lease          $   3,148,359    
                                                                  =============

</TABLE>
            Deposits paid under this lease agreement totaled $58,167 and
            $88,750 at December 31, 1997 and 1996, respectively.

            The Company had leased its prior operating facility from the
            Company's chief executive officer.  Rents paid under this operating
            lease were $96,892 and $113,272 in 1997 and 1996, respectively.

   4.       NOTE PAYABLE TO OFFICER:

            Note payable to officer consisted of a demand note payable owed to
            the chief executive officer of the Company. This note was only to
            be repaid from proceeds due to the exercise of the Class B
            warrants. However, during 1996, the Company received approval from
            the underwriter of the Company's initial public offering and the
            Board of Directors to repay the outstanding balance on the loan.
            Repayment of the loan consisted of $22,968 in principal and $24,883
            in accrued interest.





                                     F-11



<PAGE>   31

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   5.       CONCENTRATION OF RISK:

            The Company's financial instruments that are exposed to
            concentrations of credit risk consist of cash and cash equivalents.
            The Company places its cash and cash equivalents with high credit
            quality institutions. At times such investments may be in excess of
            the FDIC insurance limit. The Company also places its cash and cash
            equivalents in money market funds with a major brokerage firm.
            These money market funds are uninsured.  The total amount invested
            in money market funds at December 31, 1997 and 1996 was $1,842,810
            and $2,868,561, respectively.

            The Company relies on several Japanese companies as suppliers for
            fiber optics. While the Company believes alternative sources for
            fiber optics are available, the loss of these suppliers or
            significant delays in obtaining shipments could have a material
            adverse affect on the Company's operations until such time as
            alternative suppliers could be found or the Company could implement
            its own production capabilities.


   6.       INCOME TAXES:
            The provision (benefit) for income taxes for the years ended
            December 31, 1997 and 1996 are as follows:


<TABLE>
<CAPTION>
                                                          1997            1996 
                                                      ----------       ----------
                <S>                                   <C>              <C>
                Current:
                  Federal                             $  (8,125)       $  19,388
                  State                                       -                -          
                                                      ---------        ---------
                     Total                               (8,125)          19,388     
                                                      ---------        ---------

                Deferred:
                  Federal                                77,334         (216,144)
                  State                                  13,238          (33,244)   
                                                      ---------        ---------
                     Total                               90,572         (249,388)  
                                                      ---------        ---------
                     Total Expense (Benefit)          $  82,447        $(230,000) 
                                                      =========        =========



</TABLE>
            As of December 31, 1997, the Company had approximately $664,000 in
            net operating loss carryforwards for federal and state income tax
            purposes, which expire in 2012.





                                     F-12


<PAGE>   32

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   6.       INCOME TAXES - CONTINUED:

            Components of deferred tax assets (liabilities) are as follows:

<TABLE>
<CAPTION>
                                                                               December 31,
                                                                          1997            1996 
                                                                        ----------     ----------
                          <S>                                           <C>            <C>
                          Accounts receivables                          $ 58,897       $      -
                          Long-term contract                              (5,326)        84,521
                          Inventory                                       46,191         62,912
                          Accrued expenses                                10,017         42,522
                          Depreciation                                  (118,330)       (63,708)
                          Other                                          (10,178)        19,834
                          Tax credits                                     11,157         19,388
                          Net operating loss carry forwards              250,017        167,548   
                                                                        --------       --------
                                                                         242,445        333,017
                          Valuation allowance                            (83,629)       (83,629)  
                                                                        --------       --------
                                                                        $158,816       $249,388      
                                                                        ========       ======== 


</TABLE>
            The following is a reconciliation of tax computed at the statutory
            federal rate to the income tax expense (benefit) in the statements
            of income for the years ended December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                               1997                   1996      
                                                     ---------------------    ----------------------
                                                       Amount         %         Amount         %   
                                                     ----------   --------    ----------    --------
           <S>                                       <C>          <C>         <C>           <C>
           Tax computed at statutory federal
             rate                                    $  60,351      34.00%      $ 163,399     34.00%

           State taxes (benefits)                        7,943       4.48         (21,941)    (4.56)

           Reduction of valuation allowance                  -          -        (374,017)   (77.83)
                                                                                    
           Non-deductible expenses                      14,047       7.91           3,992      0.83

           Other, net                                      106        .06          (1,433)    (0.30)  
                                                     ---------     ------       ----------   ------
           Income tax expense (benefit)              $  82,447      46.45%      $(230,000)   (47.86)%
                                                     =========     ======       =========    ======


</TABLE>




                                     F-13

<PAGE>   33


SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   7.       CAPITAL STOCK:

            CLASS B COMMON STOCK - Each share of Class B Common Stock is
            entitled to five votes on all matters on which stockholders may
            vote, including the election of directors. Shares of Class B
            Common Stock are automatically convertible into an equivalent number
            of shares of Class A Common Stock upon the sale or transfer of such
            shares.

            STOCK WARRANTS - At December 31, 1997, the Company has Class A and
            Class B Warrants to purchase shares of Class A Common Stock. The
            following warrants were outstanding at year-end:


<TABLE>
<CAPTION>
                         Number of         Exercise
              Class       Shares            Price         Expiration Date 
              -----      ---------         --------       --------------- 
              <S>        <C>               <C>            <C>
                A        1,639,500           $7.50        March 29, 1999
                B        1,420,500          $10.50        March 29, 1999
</TABLE>



            STOCK WARRANTS - CONTINUED - The Class A Warrants are redeemable by
            the Company on 30 days' written notice at a redemption price of
            $.05 per Class A Warrant if the "closing price" of the Company's
            Class A Common Stock for any 30 consecutive trading days ending
            within 15 days of the notice of redemption averages in excess of
            $10.50 per share. The Class B Warrants are redeemable by the
            Company on 30 days' written notice at a redemption price of $.05
            per Class B Warrant if the "closing price" of the Company's Class A
            Common Stock for any 30 consecutive trading days ending within 15
            days of the notice of redemption averages in excess of $14.70 per
            share. In addition, the Company has 771,480 Class A Warrants
            outstanding in connection with the capital transaction described
            below.

            CAPITAL STOCK TRANSACTION - On September 25, 1996, the Company
            entered into a Stock Purchase Agreement and Distributorship
            Agreement with Hayward Industries, Inc. ("Hayward"). Under the
            terms of the Stock Purchase Agreement, Hayward purchased 249,480
            shares of the Company's Class A Common Stock from the Company, at a
            price of $8.02 per share, the approximate market value of the Class
            A Common Stock at the time. In addition, the Company granted
            249,480 matching warrants for the purchase of additional shares, at
            an exercise price of $8.02 per share. Vesting of the warrants is
            tied to achievement of annual minimum purchase commitments
            contained in the Distributorship Agreement. The warrants have a
            10-year life and expire September 25, 2006.  As of December 31,
            1997, total vested warrants in relation to Hayward's achievement of
            annual minimum purchase commitments is 49,896. Additionally, the
            Company issued 522,000 warrants to Hayward, as well as certain
            other pre-emptive rights, intended to ensure that Hayward's
            ownership of the Company does not fall below 10% of the Company's
            publicly traded shares. The 522,000 warrants are exercisable only
            upon the occurrence of a dilutive event as defined in the Stock
            Purchase Agreement, at a price equal to the average closing sale
            price for 30 consecutive business days ending within 15 days of the
            dilutive event. These warrants expire in May, 1999.  As of December
            31, 1997, 3,800 warrants were exercisable as defined in the Stock
            Purchase Agreement.

            The Company had sales of $2,307,385 and $666,518 to Hayward during
            1997 and 1996, respectively.  Trade accounts receivable includes
            $523,560 and $321,901 due from Hayward at December 31, 1997 and
            1996, respectively.






                                     F-14

<PAGE>   34

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   7.       CAPITAL STOCK - CONTINUED:

            ESCROWED SHARES - In connection with the Company's initial public
            offering, certain stockholders agreed to place an aggregate of
            2,918,000 shares of their Class B Common Stock into escrow. The
            first 1,898,000 escrowed shares will be released to the
            stockholders on a pro rata basis, if and only if, any of the
            following conditions are met: minimum pretax income (as defined) is
            at least $5.0 million for fiscal year 1996; $6.9 million for fiscal
            year 1997; $8.9 million for fiscal year 1998 or the bid price of
            the Company's common stock averages, for 30 consecutive business
            days, in excess of $13.30 during the 18-month period following the
            date of the public offering or $16.65 during the 18-month period
            following the 18-month period from the date of the public offering.
            Also, if the Company is acquired or merged into another company for
            which the stockholders receive per share consideration equal to or
            greater than those stated above, the shares will be released.

            The remaining 1,020,000 escrowed shares will be released to the
            stockholders on a pro rata basis, if and only if, any of the
            following conditions are met: minimum pretax income (as defined) is
            at least $8.5 million for fiscal year 1996; $10.2 million for
            fiscal year 1997; $12.7 million for fiscal year 1998 or the bid
            price of the Company's common stock averages, for 30 consecutive
            business days, in excess of $18.30 during the 18-month period
            following the date of the public offering or $23.30 during the
            18-month period following the 18-month period from the date of the
            public offering.  Also, if the Company is acquired or merged into
            another company for which the stockholders receive per share
            consideration equal to or greater than those stated above, the
            shares will be released.

            The escrowed shares will be transferred to the Company for no
            consideration if the future earnings thresholds or stock bid price
            levels are not achieved. In the event the Company attains any of
            the earnings thresholds or stock bid prices for the release of
            escrowed shares to such stockholders, the Company will recognize
            compensation expense at such time based on the fair market value of
            the shares released to officers, directors and employees.

            During 1997, 2,891,870 shares of Class B Common Stock which were
            held in escrow were voluntarily retired and returned to the Company
            treasury.  At December 31, 1997, 26,130 shares of Class B Common
            Stock are held in escrow.


   8.       STOCK OPTION PLAN:

            On December 27, 1993, the Company adopted a stock option plan that
            provides for the grant of incentive stock options and nonqualified
            stock options, and reserved 150,000 shares of the Company's Class A
            Common Stock for future issuance under the plan. Effective August
            27, 1996, the Company reserved an additional 100,000 shares of the
            Company's Class A common stock for future issuance under the plan.
            Another reserve of 100,000 shares was issued effective October 24,
            1997. The option price must be at least 100% of market value at the
            date of the grant and the options have a maximum term of 10 years.






                                     F-15
<PAGE>   35

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   8.       STOCK OPTION PLAN - CONTINUED:

            The following table summarizes activity of the stock option plan
            for the years ended December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                Options            Number of          Weighted
                                              Available for          Shares            Average
                                              Future Grant        Under Option      Option Price
                                             -------------      --------------     -------------
             <S>                             <C>                <C>                <C>
             Balance, January 1, 1996            38,269             107,631              5.86

                Options authorized              100,000                   -                 -
                Options granted                 (74,900)             74,900              7.71
                Options exercised                     -                   -                 -
                Options cancelled                 6,400              (6,400)             6.51
                                               --------           ---------         
             Balance, December 31, 1996          69,769             176,131       
                                               --------           ---------

                Options authorized              100,000                   -                 -
                Options granted                (156,600)            156,600              7.94
                Options exercised                     -             (51,103)             6.08
                Options cancelled                 9,533              (9,533)             7.31
                                               --------           ---------         
             Balance, December 31, 1997          22,702             272,095       
                                               ========           =========     


</TABLE>

            The weighted average fair value of options granted during 1997 and
            1996 were $2.89 and $2.80 per option, respectively. At December 31,
            1997, the 272,095 options outstanding under the plan are summarized
            in the following table:

<TABLE>
<CAPTION>
                               Range of            Weighted              Weighted
               Option          Exercise             Average              Average
               Shares           Prices          Exercise Price        Remaining Life
             -----------      -----------       ---------------       --------------
               <S>          <C>                 <C>                   <C>
               112,975      $5.00-$7.49              $6.20                 7.9
               159,120      $7.50-$9.25              $8.37                 9.5
</TABLE>



            Options granted vest ratably over a three-year period or vest based
            on achievement of performance criteria.  As of December 31, 1997,
            137,366 options were vested and exercisable. These options are
            summarized below:


<TABLE>
<CAPTION>
                              Range of            Weighted              Weighted
              Option          Exercise             Average              Average
              Shares           Prices          Exercise Price        Remaining Life
            -----------      -----------       ---------------       --------------
            <S>              <C>               <C>                   <C>
             105,642           $5.00-$7.49          $6.14                 7.8
              31,724           $7.50-$9.25          $8.33                 8.9
                                                 
</TABLE>




                                     F-16

<PAGE>   36

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   8.       STOCK OPTION PLAN - CONTINUED:

            The Company applies the disclosure-only provisions of Statement of
            Financial Accounting Standards (SFAS) No. 123, but applies
            Accounting Principles Board Opinion No. 25 and related
            interpretations in accounting for its plan. Accordingly, no
            compensation expense has been recognized for stock options granted
            under the plan.  If the Company had elected to recognize
            compensation expense for stock options based on the fair value at
            grant date, consistent with the method prescribed by SFAS No. 123,
            net income and earnings per share would have been reduced to the
            proforma amounts shown below:

<TABLE>
<CAPTION>
                                                     1997             1996  
                                                 ------------      -----------
           <S>                                   <C>               <C>
           Net income:
              As reported                          95,056            710,585
              Proforma (loss)                     (51,991)           678,979

           Basic EPS:
              As reported                            0.04              0.35
              Proforma (loss)                       (0.02)             0.34

           Diluted EPS:
              As reported                            0.04              0.34
              Proforma (loss)                       (0.02)             0.32

</TABLE>


            These proforma amounts were determined using the Black-Scholes
            Valuation model with the following key assumptions:
                  (a)     an average discount rate of 6.17%;
                  (b)     a volatility factor of 35% based upon volatility of a
                          comparable group companies; and
                  (c)     an average expected option life of 4 years.


   9.       SIGNIFICANT CUSTOMERS:

            Sales to foreign markets and significant customers as a percentage
            of the Company's total revenues were as follows:

<TABLE>
<CAPTION>
                                                            1997            1996  
                                                          --------         -------
               <S>                                          <C>             <C>
               Foreign markets                               25%             29%

               Significant customer A                        25%             10%

               Significant customer B                         0%             12%

</TABLE>





                                     F-17


<PAGE>   37

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996


   10.      EARNINGS PER SHARE:

            The following table sets for the computation of basic and 
            diluted earnings per share:

<TABLE>
<CAPTION>
                                                                               1997               1996  
                                                                           -----------        -----------
            <S>                                                           <C>                 <C>
            Numerator:
            Net income (numerator for basic and
               diluted earnings per share)                                $   95,056          $   710,585  
                                                                          ----------          -----------
            Denominator:
            Denominator for basic earnings per share
               -weighted average shares                                    2,170,291            2,012,484

            Effect of dilutive securities:
               Options                                                        29,264               22,719
               Warrants                                                      210,349               66,877       
                                                                          ----------          -----------
               Dilutive potential shares                                     239,973               89,596
            Denominator for diluted earnings per share
               -adjusted weighted average shares                           2,410,264            2,102,080

            Basic earnings per share                                      $     0.04          $      0.35   
                                                                          ==========          ===========

            Diluted earnings per share                                    $     0.04          $      0.34   
                                                                          ==========          ===========

</TABLE>

            The Class B warrants, certain warrants issued to Hayward and the
            escrowed shares (see Note 7) are not included in the computation of
            earnings per share because  the related shares are contingently
            issuable or to do so would have been anti-dilutive for the periods
            presented.


   11.      BENEFIT PLANS:

            The Company has established a profit sharing plan that permits
            participants to make contributions by salary reduction pursuant to
            Section 401(k) of the Internal Revenue Code. The Company made
            matching contributions equal to 50% of the participants'
            contributions, to a maximum of 3% of the participants' salary,
            totaling $23,226 for 1997.  The Company made no matching
            contributions for 1996.

            Beginning in 1996, the Company implemented a bonus plan, based on
            targeted sales levels, which provides incentive compensation for
            sales employees.  Amounts charged to expense for bonuses to these
            employees was $17,239 and $199,213 for 1997 and 1996, respectively.


   12.      ADVERTISING COSTS:

            The Company promotes its product lines primarily through print
            media.  Such media includes trade publications, trade shows and
            promotional brochures. Advertising expenses included in selling,
            general and administrative expenses were approximately $101,00 and
            $77,000 for the years ended December 31, 1997 and 1996,
            respectively.







                                     F-18

<PAGE>   38

SUPER VISION INTERNATIONAL, INC.

NOTES TO FINANCIAL STATEMENTS - CONTINUED

Years Ended December 31, 1997 and 1996



   13.      LINE OF CREDIT:

            The Company has available a $100,000 bank line of credit. Amounts
            outstanding under the line are due on demand with interest payable
            monthly at the prime rate (8.50% December 31, 1997).  Certain
            securities serve as collateral for this line of credit. As of
            December 31, 1997 and 1996, there was no balance outstanding.


   14.      SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

            During 1996, the Company paid approximately $25,000 of accrued
            interest on a note payable to an officer.

            During 1997, the Company acquired property of $3,081,000 under a
            capital lease obligation.



                                     F-19

<PAGE>   39

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                        SUPER VISION INTERNATIONAL, INC.  
Date: April 13, 1998                    By: /s/ Brett M. Kingstone
                                            --------------------------------
                                            Brett M. Kingstone - Chairman, 
                                            Chief Executive Officer

                        In accordance with the Exchange Act, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.



 /s/ Brett M. Kingstone                                     April 13, 1997
---------------------------------- 
Brett M. Kingstone - Chairman of the Board
of Directors, Chief Executive Officer 
(Principal Executive Officer)


 /s/ John P. Stanney                                        April 13, 1997
----------------------------- 
John P. Stanney - President, Chief Operating
Officer and Chief Financial Officer 
(Principal Financial and Accounting Officer)


 /s/  Edgar Protiva                                         April 13, 1997
------------------------ 
Edgar Protiva - Director


 /s/ Eric Protiva                                           April 13, 1997
----------------------- 
Eric Protiva - Director


 /s/ Brian McCann                                           April 13, 1997
----------------------- 
Brian McCann - Director


 /s/ Anthony Castor                                         April 13, 1997
------------------------- 
Anthony Castor - Director




<PAGE>   40

                                 EXHIBIT INDEX


<TABLE>
<S>              <C>
16               Letter on change of certifying accountant

23.1             Consent of Ernst & Young LLP

23.2             Consent of Coopers & Lybrand L.L.P.

27.1             Financial Data Schedule for year ended December 31, 1997

27.2             Financial Data Schedule for year ended December 31, 1996
                                                                         
</TABLE>