UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 20549

                                 FORM 10-KSB

                   ANNUAL REPORT UNDER SECTION 13 or 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the fiscal year ended December 31, 1997

                       Commission file number 0-11057

                          VICON FIBER OPTICS CORP.
               (Name of Small Business Issuer in its Charter)

                  Delaware                      13-2615925
        (State of Incorporation)   (IRS Employer Identification No.)

              90 Secor Lane, Pelham Manor, New York       10803
            (Address of Principal Executive Offices)   (Zip Code)

Issuer's telephone number (914) 738-5006

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

Securities registered pursuant to Section 12(g) of the Act:

                        Common Stock, $.01 par value

Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, 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 which is not contained in this form, and no disclosure will
be contained, to the best of 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.____

Issuer's revenues for the year ended December 31, 1997:   $4,026,258.
Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of December 31, 1997:  $10,644,712.

Number of common shares outstanding on December 31, 1997: 8,515,770









                             Page 1 of 34 Pages

                      Exhibit Index appears at Page 33
<PAGE>


                                   PART I


Item 1.    Description of Business

General

Vicon Fiber Optics Corp. (the "Company") was incorporated in 1969 and
currently derives the majority of its revenue from the manufacture and sale
of fiber optic illuminating systems and components for use in conjunction
with dental equipment and instruments utilizing fiber optic elements.

Fiber optics are glass fibers through which light is transmitted.  Each fiber
is composed of an inner glass core with one index of refraction, covered by
an outer glass cladding or coating with a higher index of refraction.  The
difference in the index of refraction between the core glass and the outside
coating glass that forms the optical fiber substantially reduces the
dissipation of the light energy from the filament.  Optical fibers may be
bundled or employed singly, depending on their intended use.

There are two basic types of fiber optic bundles: unoriented fiber bundles
and oriented or coherent fiber bundles.  Unoriented fiber bundles are used
for the transmission of light for illumination; oriented bundles are used for
the transmission of images ("Image Bundles").

Unoriented fiber optic illuminating systems and components have been and
currently are the type manufactured and utilized by the Company in its dental
products.  Unoriented fiber optic components consist of a bundle or cable of
thousands of unoriented glass fibers to conduct, optically, light from a
source (the "illuminator") specific area to be illuminated regardless of the
curvature or other normal distortion of the fiber cable needed to avoid such
obstacles.  The use of the fiber optic cable permits the transmission of
electricity and without any significant transmission of heat.  Accordingly,
fiber optic illuminating systems are suitable for providing illumination
under circumstances where the absence of heat and electricity is desirable
and where the area to be illuminated is relatively inaccessible to
conventional means of illumination, such as in dentistry.

An Image bundle is a bundle in which each individual filament in the bundle
has the same spatial relationship to all the other fibers in the bundle at
one end of the bundle as it has at the other end.  This allows the
transmission of an image from one end of the Image Bundle to the other
without substantial distortion.  Image Bundles are used to transmit images in
industrial and medical inspection scopes.














                             Page 2 of 34 Pages
<PAGE>



Company's History in the Dental Field

The fiber optics first applied to dental instrumentation were external
attachments to standard instruments used by dentists, such as the mirror,
handpiece (commonly known to the dental patient as the "drill") and
evacuator.  This type of system was introduced into the dental market
simultaneously by four manufacturers, among them the Company.  All the
systems provide much needed light, however, the external attachments and the
multiplicity of cables made them awkward and difficult to use.

To remedy this problem, the Company developed two products:  (i) handpiece
tubing incorporating a fiber optic bundle, thereby eliminating the need for a
separate fiber optic cable for the handpiece, and (ii) coiled fiber optic
tubing, which reduced substantially the excess play found in conventional
fiber optic tubing previously used with diagnostic instruments.  Design
patents have been granted to the Company on both developments.

After many years of work with original equipment manufacturers of dental
instruments, the Company also developed a suitable design incorporating the
Company's fiber optic elements directly into the handpiece, with an ability
to be coupled to the remaining components of the Company's system.

Prior to 1981 the Company marketed, under its own name and label, its
illumination system consisting of an illuminator, fiber optic handpiece
tubing and various illuminating instruments such as the mirror, cheek
retractor and transilluminator nationally through distributors of dental
products.  From 1981 to the present, the Company has marketed its
illumination systems and fiber optic elements to manufacturers and
distributors of dental equipment on a private label, joint venture and
original equipment (OEM) basis.

Company's Current Fiber Optic Dental Products

Currently, the Company manufactures two dental illuminators, one that is
mounted away from the dental work area.  The second consists of two modules
with a small light module under a utility tray in the dental work area and a
power module mounted away from the work area.  The light in both illuminators
is air activated when the handpiece or instrument is removed from its console
hanger.

Both illuminators are composed of a cooling fan, a rheostat and a high
intensity halogen projection lamp that focuses the light onto three fiber
optic cables.  The light is transmitted through the fiber optic cables in the
handpiece tubing that interfaces with the fiber optic element in the
handpiece.

Instruments and attachments are illuminated with one fiber optic cable
(primary probe) which is interchangeable with a transilluminator (used for
the back illumination of teeth), an illuminating mirror, a cheek retractor
providing general illumination, and an evacuator clip for illuminating a
suction tip.






                             Page 3 of 34 Pages
<PAGE>



Decorative Fiber Optics Products

The Company manufactures a line of decorative fiber optic lamps under the
tradename "Fantasia Products."  The Company commenced production and national
sales of the lamps in 1995 and now has expanded its capacity with the
engagement of two excellent manufacturing facilities in southern China.

Joint Venture Agreement

In 1992, the Company entered into a Joint Venture Agreement with a
Corporation from Anshan, China.  The Joint Venture Company, Anshan Vicon
Fiber Optic Products Ltd., a Chinese corporation, will manufacture certain of
the Company's products.  The manufacturing of these products in China will
significantly reduce the cost of these products to Vicon.  During 1993, Vicon
effected a technology transfer to the joint venture Company in China.  The
manufacturing facility in China is presently in the development stage.

Raw Materials

All components of the Company's fiber optic illuminating systems other than
the fiber optic cables, which the Company manufactures with its own
equipment, are manufactured for the Company by others and assembled by the
Company at its plant.  Many of these components (such as the light source and
control module) are items inventoried by their manufacturers, and such items
or their equivalent are available from several sources.  Their respective
manufacturers make other components, such as the housing and certain of the
instrumentation for these systems, to the Company's plans and specifications.
In most cases, essential tooling for these components is owned by the
Company.  The Company uses only one source for each of these components, but
believes that alternative or supplementary sources can readily be obtained.
None of the Company's suppliers is affiliated with the Company and the
Company has no contractual relationship with any of them except for purchase
orders issued from time to time.  The Company believes that an adequate and
reliable supply of raw materials is and will continue to be available for the
manufacture its products.

Patents

The Company owns ten patents in the United States and corresponding rights
abroad related to the dental product aspect of its business.  The Company
believes that patent protection is useful, but is not a crucial factor in its
business.  The Company's patents have not yet been tested judicially and,
accordingly, there can be no assurance as to either the validity or scope of
its patent protection.  Furthermore, new technological discoveries by others
may reduce the utility of the Company's patents.












                             Page 4 of 34 Pages
<PAGE>



Distribution and Sales

During 1997 one customer purchased approximately 15% of the Company's
products, two customers purchased 14% and another customer purchased 12%.
The loss of any one or more of these four largest customers by the Company
would have a material adverse effect on the Company's business.  In 1997,
5% of the Company's sales were to foreign customers.

As of December 31, 1997, the Company had a sales backlog of approximately
$450,000.  The Company believes that the backlog represents firm orders as of
that date.  As of December 31, 1996 the Company had a backlog of
approximately $501,000.  The Company believes that the decreased backlog is
due primarily to the timing of orders from customers.

Competition

The Company believes it is one of the leading domestic manufacturers of fiber
optic components and illuminating systems for use in the dental industry and
of decorative fiber optic lamps.  While the Company has little direct
competition for its products, there are a few other domestic manufacturers
that produce similar products for the same markets as the Company.  The
Company depends on its proprietary manufacturing techniques and abilities to
design and manufacture products for the specific needs of its customers at
competitive prices with a high degree of quality and service to enable the
Company to maintain market share.

Employees

The Company has 25 full-time employees, of whom two are executives, two are
engineers, and two are administrative, with the balance consisting of
production employees.  A pool of workers adequate to accommodate projected
sales volume is available locally.  The Company considers its relations with
its employees good.

Item 2.  Description of Property

The Company's offices and plant are located at 90 Secor Lane, Pelham Manor,
New York, where the Company leases approximately 10,500 square feet, but has
made modifications to the facility that provide a total of approximately
17,500 square feet of working area.  The Company has approximately one-half
year remaining on a five-year renewable lease of space, which it intends to
renew.  The building is a two story, modern, fireproof concrete block
structure.  The aggregate annual rental paid by the Company in 1997 was
approximately $73,655.

The Company believes that the facilities currently in use are suitable and
adequate for its business.










                             Page 5 of 34 Pages
<PAGE>



Item 3.  Legal Proceedings

The Company or its property is not a party or subject to any pending legal
proceeding.

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

  (a)  The Company held its annual meeting on April 28, 1997.
  (b)  The board of directors as previously reported was re-elected in its
       entirety.
  (c)  (1)  A proposal to ratify the selection of Sheft Kahn & Company, LLP as
       the Company's independent accountants for the fiscal year ending December
       31, 1997, was approved



                                   PART II

Item 5.  Market for the Registrant's Common Equity and
         Related Stockholder Matters

         (a)  Price Range of Common Stock

Set forth below in tabular form for the quarterly periods indicated are the
high and low bid prices of Vicon Common Stock in the over-the-counter market
as quoted by the National Quotation Bureau, Inc., or by market makers.

<TABLE>
<S>                  <C>            <C>
                              Bid Prices
                               Low           High
1996 First Quarter           13/16          1 1/4
Second Quarter                 7/8          2 5/8
Third Quarter                  7/8         1 3/16
Fourth Quarter               11/16         1 1/16

1997 First Quarter           13/16          1 5/8
Second Quarter               11/16          1 1/4
Third Quarter                23/32          1 1/2
Fourth Quarter               29/32          1 1/4
</TABLE>
















                             Page 6 of 34 Pages
<PAGE>



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

         (b)  Approximate Number of Equity Security Holders

                                         Approximate Number of Record
         Title of Class                     Holders as of December 31, 1997

         Common Stock, $.01 par value                      1600

         (c)  Dividend Policy

Holders of Common Stock of the Company are entitled to a pro rata share of my
dividends when, as and if declared by the Board of Directors and to share pro
rata in any such distributions available for holders of Common Stock upon
liquidation of the Company.  There have been no cash dividends paid since the
inception of the Company and the Company's anticipated capital requirements
are such that it intends to follow a policy of retaining earnings in order to
finance growth of the business.

Item 6.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations

Financial Condition of Vicon

Vicon gauges its liquidity and financial stability by the measurements as
shown in the following table:

<TABLE>
<S>                               <C>            <C>
                                 1997           1996
Working Capital            $2,457,828     $2,055,219
Current Ratio               4.58 to 1      5.71 to 1
Shareholders' Equity       $2,965,507     $2,535,321
Net Income                   $418,935       $343,503
</TABLE>

The increase in working capital during 1997 was due to net income for the
year, less expenditures for capital equipment and long-term debt becoming due
within one year.

The increase in shareholders' equity during 1997 was due to net income for
the year plus the issuance of common stock and sale of stock options.













                             Page 7 of 34 Pages
<PAGE>



Results of Operations

Year ended December 31, 1997 Compared to Year Ended December 31, 1996

Net sales for the year ended December 31, 1997 as compared to 1996 increased
by 44%.  Management attributes this to the implementation of a national
marketing program for the Fantasia lamps and greater demand for the Dental
product line.

Cost of sales increased to 62.3% for 1997 compared to cost of sales 57.9% in
1996.  Management attributes this to a higher proportion of Fantasia lamp
sales that results in higher cost of sales than the Dental products.

Selling, general and administrative expenses increased to $783,476 in 1997 as
compared to $561,156 in 1996, an increase of $222,320.  Management attributes
this to increased marketing expenses and increased general and administrative
expenses required to administer the increased sales.





Item 7.  Financial Statements


































                             Page 8 of 34 Pages
<PAGE>





















                          VICON FIBER OPTICS CORP.



                            FINANCIAL STATEMENTS
                             FORM 10-KSB ITEM 7



                        YEAR ENDED DECEMBER 31, 1997





























                             Page 9 of 34 Pages
<PAGE>







                          VICON FIBER OPTICS CORP.

                        INDEX TO FINANCIAL STATEMENTS









                                                                PAGE
Independent Auditors' Report                                     F-3

Financial Statements:
Balance Sheet - December 31, 1997                          F-4 - F-5

Financial Statements for each of the two years in the
Period ended December 31, 1997:
Statements of Operations                                         F-6
Statements of Shareholders' Equity                               F-7
Statements of Cash Flows                                         F-8

Notes to Financial Statements                             F-9 - F-17






















                                     F-2





                             Page 10 of 34 Pages
<PAGE>






                        INDEPENDENT AUDITORS' REPORT



To the Shareholders and Board of Directors
Vicon Fiber Optics Corp.
Pelham Manor, New York


We have audited the Balance Sheet of Vicon Fiber Optics Corp. as of
December 31, 1997, and the related Statements of Operations, Shareholders'
Equity and Cash Flows for each of the two years in the period ended
December 31, 1997.  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 audits.

We conducted our audits 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 audits provide 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 Vicon Fiber Optics Corp. as
of December 31, 1997 and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.



                                           Sheft, Kahn & Company, LLP
                                           CERTIFIED PUBLIC ACCOUNTANTS



March 9, 1998
Jericho, New York






                                     F-3






                             Page 11 of 34 Pages
<PAGE>



                          VICON FIBER OPTICS CORP.

                                BALANCE SHEET

                              DECEMBER 31, 1997

                                   ASSETS





<TABLE>
<S>                                                                <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 1)                            $834,169
Accounts receivable - Net of allowance for
uncollectible accounts of $1,549                               980,083
Inventories (Note 3)                                         1,276,524
Prepaid expenses and other current assets                       19,034
Deferred income taxes (Note 6)                                  34,254

Total Current Assets                                         3,144,064

PROPERTY, PLANT AND EQUIPMENT - Net of accumulated
depreciation and amortization (Note 4)                         412,966

OTHER ASSETS:
Excess of cost over net assets of business acquired            284,767
Deposits                                                         4,487
Investment in joint venture (Note 9)                            26,515
Cash surrender value of life insurance contract                 60,764

Total Other Assets                                             376,533

TOTAL ASSETS                                                $3,933,563
</TABLE>





See accompanying Notes to Financial Statements.






                                     F-4








                             Page 12 of 34 Pages
<PAGE>



                          VICON FIBER OPTICS CORP.

                                BALANCE SHEET

                              DECEMBER 31, 1997



                    LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S>                                                        <C>
CURRENT LIABILITIES:
Accounts payable and accrued expenses                 $362,095
Income taxes payable (Note 6)                          250,591
Current portion of long-term debt (Note 5)              73,550

Total Current Liabilities                              686,236

LONG-TERM DEBT (Note 5)                                234,473

Deferred income tax payable (Note 6)                    47,347

Total Liabilities                                      968,056

COMMITMENTS AND CONTINGENCIES (Note 7)

SHAREHOLDER'S EQUITY:
Common stock - authorized 20,000,000 shares, $.01
par value, issued and outstanding
8,515,770 shares                                        85,290
Additional paid-in capital                           5,972,038
Deficit                                            (3,091,821)

Total Shareholders' Equity                           2,965,507

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $3,933,563
</TABLE>



See accompanying Notes to Financial Statements.













                                     F-5


                             Page 13 of 34 Pages
<PAGE>
                          VICON FIBER OPTICS CORP.

                          STATEMENTS OF OPERATIONS

                      FOR THE YEARS ENDED DECEMBER 31,

<TABLE>
<S>                                  <C>            <C>
SALES                                   $4,026,258     $2,784,423
COST OF GOODS SOLD                       2,506,905      1,612,425
GROSS MARGIN                             1,519,353      1,171,998
OTHER COSTS (INCOME) AND EXPENSES:
Selling, general and administrative
expenses                                   783,476        561,156
Research and development                    67,512         52,702
Interest expense                            55,443         59,180
Interest income                           (41,593)       (49,210)
TOTAL OTHER COSTS (INCOME) AND
EXPENSES:                                  864,838        623,828
INCOME BEFORE PROVISION FOR INCOME
TAXES AND EXTRAORDINARY ITEM               654,515        548,170
PROVISION FOR INCOME TAXES (Note 6)        235,580        208,750
INCOME BEFORE EXTRAORDINARY ITEM           418,935        339,420
EXTRAORDINARY ITEM (NET OF INCOME
TAXES OF $-0- AND $3,417
RESPECTIVELY) (NOTE 12)                    -------          4,083
NET INCOME                                $418,935       $343,503
INCOME PER COMMON SHARE:
INCOME BEFORE EXTRAORDINARY ITEM              $.05           $.04
EXTRAORDINARY ITEM                      ----------     ----------
NET INCOME                                    $.05           $.04
AVERAGE NUMBER OF SHARES USED IN         8,642,661      8,632,194
COMPUTATION
</TABLE>







See accompanying Notes to Financial Statements.









                                     F-6








                             Page 14 of 34 Pages
<PAGE>





                          VICON FIBER OPTICS CORP.

                     STATEMENTS OF SHAREHOLDERS' EQUITY

                  FOR THE TWO YEARS ENDED DECEMBER 31, 1997


<TABLE>
<S>                       <C>           <C>           <C>           <C>
                                         ADDITIONAL                  TOTAL
                                          PAID-IN                SHAREHOLDERS'
                          COMMON STOCK    CAPITAL       DEFICIT      EQUITY
Balance January 1, 1996        $83,406    $5,925,921  ($3,854,259)  $2,155,068
Net Income                      ------     ---------       343,503     343,503
Issuance of Common Stock         1,750        35,000       -------      36,750
Balance December 31,            85,156     5,960,921   (3,510,756)   2,535,321
1996
Net income                      ------     ---------       418,935     418,935
Issuance of Common Stock           134        11,117       -------      11,251
Balance December 31,           $85,290    $5,972,038  ($3,091,821)  $2,965,507
1997
</TABLE>















See accompanying Notes to Financial Statements.






                                     F-7










                             Page 15 of 34 Pages
<PAGE>
                          VICON FIBER OPTICS CORP.

                          STATEMENTS OF CASH FLOWS

                      FOR THE YEARS ENDED DECEMBER 31,

<TABLE>
<S>                                                    <C>         <C>
                                                          1997        1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                               $418,935    $343,503
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                              73,652      47,318
(Increase) decrease in accounts receivable              (568,456)     209,872
(Increase) in inventory                                 (293,430)   (313,264)
(Increase) decrease in prepaid expenses and other         (4,575)       4,837
current assets
Decrease in security deposits                             -------     105,072
(Increase)decrease in deferred income taxes               (1,214)      94,619
(Decrease) increase in accounts payable and accrued       243,243    (75,720)
expenses
Increase (decrease) in income taxes payable                97,949     117,547

Total Adjustments                                       (452,831)     190,281

Net Cash (Used in) Provided by Operating Activities      (33,896)     533,784

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment                (75,537)   (338,358)
(Increase) in cash surrender value of life insurance     (14,478)    (12,459)
contract

Net Cash (Used in) Investing Activities                  (90,015)   (350,817)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt                             (102,357)    (29,212)
Investment in common stock                                 11,251      36,750

Net Cash (Used in) Provided by Financing Activities      (91,106)       7,538

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS    (215,017)     190,505

CASH AND CASH EQUIVALENTS - Beginning                   1,049,186     858,681

CASH AND CASH EQUIVALENTS - End                          $834,169  $1,049,186
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the years for:
Interest                                                  $55,433     $59,448
Income taxes                                             $125,000  ----------
</TABLE>

See accompanying Notes to Financial Statements.



                                     F-8



                             Page 16 of 34 Pages
<PAGE>
                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS



NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

A summary of the significant accounting policies followed by the Company in
the preparation of the accompanying financial statements is set forth below:

a)   Cash and Cash Equivalents:

    For the purpose of the statement of cash flows, the Company considers
    cash and cash equivalents to include cash on hand, amounts due from
    banks, and any other highly liquid debt instruments purchase with a
    maturity of three months or less.

b)   Inventories:

    Inventories are valued at the lower of cost (on a first-in, first-out
    basis) or market.

c)   Property, Plant and Equipment:

    Property, plant and equipment is stated at cost.

    Depreciation of property, plant and equipment is computed on the straight-
    line basis for financial reporting purposes and on an accelerated basis
    for income tax purposes over the estimated useful lives of the related
    assets.  Cost and the related accumulated depreciation are deducted from
    the accounts on retirement or disposal and any resulting gain or loss is
    reflected in income.  Betterments and major renewals or replacements are
    capitalized.

d)   Excess of Cost Over Net Assets of Businesses Acquired:

    Represents the excess of cost over net assets of acquired companies.
    These amounts are being amortized over forty years.
















                                     F-9




                             Page 17 of 34 Pages
<PAGE>
                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (Continued)


e)   Revenue Recognition:

    Revenue is recognized on sales of products, generally at the time of
    shipment.

f)   Use of 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 disclosures 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.

g)   Financial Instruments:

    The carrying values of all assets and liabilities deemed to be financial
    instruments in accordance with SFAS No. 107 approximate their respective
    fair values.  Current market rates were used, together with credit
    worthiness and collateral, where applicable.

h)   Primary and Fully Diluted Earnings Per Share:

    Net income per share is computed by dividing the net income for the year
    by the weighted average number of shares of common stock outstanding
    during the period.  Common stock equivalents for fully diluted earnings
    per share resulted in less than a 3% dilution and have been excluded.



















                                    F-10




                             Page 18 of 34 Pages
<PAGE>
                           VICON FIBER OPTICS CORP

                        NOTES TO FINANCIAL STATEMENTS


NOTE 2 - MATTERS OF ECONOMIC INFLUENCE

Major customers of the Company, expressed as a percentage of sales, are
summarized as follows:
<TABLE>
<S>          <C>           <C>
             Year Ended December 31,
Customer            1997        1996
A                 14.39%      14.22%
B                 11.94%      12.42%
C                      *      12.07%
D                 15.44%      17.08%
E                 14.39%      ------
                  56.16%      55.79%
</TABLE>
*Less than 10 Percent of Sales.

Export sales (excluding North America), expressed as a percentage of sales
are summarized as follows:

<TABLE>
<S>          <C>          <C>
             Year Ended December 31,
Geographic          1997         1996
Area
Europe              4.9%         2.3%
Japan                 .1           .1
                    5.0%         2.4%
</TABLE>

Suppliers

The Company uses only one source for some of its components, but believes
that alternative supplementary sources can readily be obtained.  None of the
Company's suppliers are affiliated with the Company and the Company has no
contractual relationship with any of them except for purchase orders issued
from time to time.  The Company believes that an adequate and reliable supply
of raw materials is and will continue to be available for the manufacture of
its products.

NOTE 3 - INVENTORIES

The composition of inventories at December 31, 1997 is as follows:
<TABLE>
<S>                              <C>
Raw Materials               $868,648
Work-in-process               54,930
Finished goods               352,946
                          $1,276,524
</TABLE>

                                    F-11


                             Page 19 of 34 Pages
<PAGE>




                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS


NOTE 4 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 1997 is summarized as follows:

<TABLE>
<S>                         <C>        <C>
                                       Estimated Useful Life
Machinery and equipment       $419,000 3-10 years
Furniture, fixtures and        115,926 2-10 years
Office equipment
Leasehold improvements         362,292  Useful Life or Lease term, whichever
                                        is shorter
                               897,218
Accumulated depreciation       484,252
and amortization
                              $412,966
</TABLE>

Depreciation and amortization expense for the year ended December 31, 1997
amounted to $61,572.


NOTE 5 - LONG-TERM DEBT

Long-term debt at December 31, 1997 consists of the following:
<TABLE>
<S>                                       <C>
Amounts due to the former Chairman of the         $258,023
Board and President of Saxton (a)
10% convertible subordinated notes (b)              50,000
                                                   308,023
Less:  Current Portion                              73,550
                                                  $234,473
</TABLE>





                                    F-12










                             Page 20 of 34 Pages
<PAGE>
                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS


NOTE 5 - LONG-TERM DEBT (Continued)

(a)  In December 1989, pursuant to a stipulation of compromise and
     settlement, Vicon agreed to pay a total of $950,000 as follows:

     i)   $100,000 to the former President of Saxton on January 1, 1990

     ii)  Commencing January 1, 1990 and monthly thereafter until December 1,
          1997, $5,500 per month to the former Chairman of the Board of Saxton.

     iii) Commencing January 1, 1998 and monthly thereafter until December 1,
          2000, $8,944 per month to the former Chairman of the Board of Saxton.

     In December 1989, the Company recorded a liability of $489,950
     representing the present value of such payments discounted for interest
     imputed at 15 percent per annum.

(b)  In 1992, the Company issued $91,000 of convertible notes and $50,000
     during 1993, which were due in 1997.  The notes bear interest at 10% per
     annum and are convertible into shares of the Company's stock at a purchase
     price of $.75 per share.  During 1997, $81,000 of debentures were redeemed
     and $10,000 was converted into 13,333 shares of common stock.

In December 1994 the Company established a credit facility with Marine
Midland Bank, whereby the Company may borrow up to $500,000 for working
capital purposes and an additional $250,000 for support of trade service
products.  The credit facility requires monthly payments of interest,
computed at the bank's prime rate.  The credit lines are secured by an
investment account maintained with the bank.  As at December 31, 1997 the
Company had outstanding letters of credit of $102,739.

Aggregate annual maturities applicable to long-term debt are as follows:
<TABLE>
<S>                       <C>
Year Ending December 31,        Amount
1998                           $73,550
1999                            85,374
2000                            99,099
2001 and after                  50,000
                              $308,023







                                    F-13




                             Page 21 of 34 Pages
<PAGE>




                          VICON FIBER OPTICS CORP.


                        NOTES TO FINANCIAL STATEMENTS


NOTE 6 - INCOME TAXES

Under the provisions of SFAS 109, the Company recognizes deferred tax assets
and liabilities for future tax consequences of events that have been
previously recognized in the financial statements or income tax returns.  The
measurement of deferred tax assets and liabilities is based on provisions of
the enacted tax laws, and the effects of future changes in tax laws or rates
are not anticipated.  The net difference between the provision for income
taxes and income taxes currently payable is reflected in the balance sheet as
deferred income taxes.  Deferred tax assets and liabilities are classified as
current and non-current based on the classification of the related assets or
liability for financial reporting purposes or based on the expected reversal
date for deferred income taxes not related to an asset or liability.

Deferred income taxes consist of the following at December 31, 1997:

Temporary differences arising from the following:

</TABLE>
<TABLE>
<S>                       <C>            <C>            <C>            <C>
                                                                   Classified As
                                                    Short-Term      Long-Term
    Type                Amount      Deferred Tax      Assets       (Liability
Depreciation          ($126,471)      ($47,347)       $-------      ($47,347)
Reserve for bad debts     1,549            578            578       --------
Reserve for obsolete     50,692         18,977         18,977       --------
Section 263A costs       49,431         18,505         18,505       --------
Valuation allowance   ---------        (3,806)        (3,806)       --------
                       ($24,799)      ($13,093)        $34,254      ($47,347)
</TABLE>

The valuation allowance increased $3,587 during the year ended December 31,
1997.
















                                    F-14



                             Page 22 of 34 Pages
<PAGE>


                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS


NOTE 6 - INCOME TAXES (Continued)

The provision for income taxes for the years ended December 31, 1997 and 1996
consisted of the following:

<TABLE>
<S>              <C>            <C>
                           1997           1996
Current-Federal        $218,497        $97,671
Current-State            35,716         19,876
Over accrual           (26,147)         ------
adjustment
Total Current           228,066        117,547

Deferred:
Federal                   6,459         78,278
State                     1,055         16,342
Total Deferred            7,514         94,620

Total                  $235,580       $212,167

</TABLE>


A reconciliation of income tax expense computed at statutory rates to above
amounts at effective rates is as follows:

<TABLE>
<S>                                               <C>            <C>
                                                      1997           1996
Income tax expense at statutory rates                  $222,535       $188,927
State and local, net of federal benefit                  24,269         25,896
Non-deductible expenses and over-under accrual         (11,224)         14,559
Realized benefit of deferred tax asset in excess       --------       (17,215)
of valuation
Income tax expense at effective rates                  $235,580       $212,167
</TABLE>













                                    F-15




                             Page 23 of 34 Pages
<PAGE>


                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS



NOTE 7 - COMMITMENTS AND CONTINGENCIES

Leases

On August 1, 1993, the Company renegotiated its lease and is now obligated
under the terms of a new lease, expiring on July 31, 1998, which calls for a
base annual rent of $66,780 plus real estate tax escalations.  The total rent
expense under operating leases charged to operations for the years ended
December 31, 1997 and 1996 was $73,655 and $66,780, respectively.

The Company also has two auto leases totaling $899 per month through
September 1999.

As of December 31, 1997, the future lease expenditures are as follows:
<TABLE>
<S>      <C>
1998       $62,466
1999        10,788
2000         6,894
2001        ------
           $80,148
</TABLE>

As at December 31, 1997, the Company had an L/C for $102,379 outstanding.

NOTE 8 - STOCK OPTION PLAN

Effective May 11, 1984, the 1984 Stock Option Plan for Incentive Stock
Options and Non Qualified Options (the "Plan") was adopted.

The Plan provided for granting to key employees, and others who were not
employees but had made or were expected to make contributions to the success
of the Company, the option to purchase Company common stock.  Options for an
aggregate of up to 400,000 shares of common stock may have been granted under
the plan.

At a Special Board of Directors meeting held on March 20, 1996, the Board of
Directors adopted the 1996 Incentive Stock Option Plan for Key Employees
(the "1996 Plan"), which was ratified by the stockholders on May 30, 1996.
Subject to adjustment as provided below, 1,000,000 shares of Common Stock
(the "Shares") will be available for issuance under the 1996 Plan.  No awards
under the Plan ("Awards") may be granted after March 20, 2006.  Awards may be
(1) incentive stock options ("ISO's") within the meaning of Section 422 of
the Internal Revenue Service of 1986, as amended (the "Code"), (2) non-
qualified stock options, or (3) shares subject to certain restrictions
("restricted stock").




                                    F-16

                             Page 24 of 34 Pages
<PAGE>



                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS



NOTE 8 - STOCK OPTION PLAN (CONTINUED)

The purchase price of Shares covered by an Award ("Options") will be 100% of
the fair market value of the Common Stock on the date of the grant.  The fair
market value of a share of Common Stock will be the simple average of the
high and low sales prices on the date of grant.  The term of each Option will
be determined by the Committee, but cannot be more than 10 years from the
date of the grant.  If the original term is less than ten years from the date
of grant, the term may be extended prior to expiration, with the approval of
the employee, but not beyond 10 years from the date of original grant.  The
vesting period and all other terms and conditions of each Option will be
determined by the Committee; provided that, except as described below, no
Option may be exercised prior to the completion of at least six (6) months of
continuous employment from the date of grant.  The Committee may impose
restrictions, including a holding period, on Shares received upon the
exercise of Options.

Restricted Stock

Awards of restricted stock are subject to such restrictions as the Committee
determines, including, but not limited to: a vesting schedule based upon the
recipient's continuous employment and conditions based on performance
requirements.  Except as described below, no restricted stock Award may vest
in the whole or in part prior to the completion of the number of years of
continuous employment after the date of grant established by the Committee,
and restricted stock Awards shall be forfeited to the extent any restriction
is not met.  Until all conditions associated with restricted stock are met,
restricted stock may not be sold, pledged, or otherwise disposed of.  Except
for these limitations, recipients of restricted stock are entitled to all
rights of a Stockholder, including the right to vote and receive dividends or
other distributions on such restricted stock.

If the employment of a recipient of a restricted stock Award terminates by
reason of death, total and permanent disability, retirement, or discharge
other than for cause before all applicable restrictions have been met, the
Committee may remove the restrictions.












                                    F-17


                             Page 25 of 34 Pages
<PAGE>




                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS


NOTE 8 - STOCK OPTION PLAN (CONTINUED)

The 1996 Plan terminates on March 20, 2006.  The Board of Directors may at
any time terminate, amend or modify the 1996 Plan.  However, stockholder
approval is required for amendments which materially increase the benefits to
Award recipients, increase the aggregate number of Shares which may be issued
under the 1996 Plan, or materially modify eligibility requirements.

The Committee may at any time amend the terms of any Award, including
accelerating the date of exercise of any Option, terminating stock
restrictions, or converting the Option into a non-qualified Option; but no
such amendment may materially adversely affect a recipient's rights without
his consent.

Awards may provide for the adjustment of the number and class of Shares
covered by the Award, Options prices, and the number of Shares as to which
Options are exercisable in the event of stock dividends, stock splits,
recapitalization, reorganizations, or other changes in the capitalization of
the Corporation.  The number and class of Shares available under the 1996
Plan may also be adjusted in the event of any such change in capitalization.

Certain Federal Income Tax Consequences

An employee to whom an ISO is granted will not recognize income at the time
of grant or exercise of the ISO (except that the alternative minimum tax may
apply), and no federal income tax deduction will be available to the
Corporation upon the grant or exercise of an ISO more than one year after the
date of exercise and more than two years after the date of grant of the ISO,
the employee will normally recognize a long-term capital gain or loss equal
to the difference, if any, between the sale price of such Shares and the
option exercise price.  If the employee does not hold such Shares for these
periods, when the employee sells such Shares the Code and the regulation
prescribe the capital gain or loss in such amounts as thereunder.  Subject to
applicable provisions of the Code and the statutory holding periods noted
above, the Corporation will generally be entitled to a federal income tax
deduction in the amount of such ordinary compensation income.











                                    F-18



                             Page 26 of 34 Pages
<PAGE>




                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS


NOTE 8 - STOCK OPTION PLAN (CONTINUED)

An employee to whom a non-qualified stock option (which is treated as an
option for federal income tax purposes) is granted will not recognize income
at the time of grant of such option.  When the employee exercises such
option, the employee will recognize ordinary compensation income equal to the
difference, if any, between the option price paid and the fair market value,
as of the date of exercise, of the Shares received by the employee.  The tax
basis of such Shares to such employee will be equal to the fair market value
on the date of exercise, and the employee's holding period for such Shares
will commence on the date on which the employee recognized taxable income in
respect of such shares.  Subject to applicable provisions of the Code and the
regulations thereunder, the Corporation will generally be entitled to a
federal income tax deduction in respect of non-qualified stock options in an
amount equal to the ordinary compensation income recognized by the employee.
Any compensation includable in the gross income of an employee in respect of
a non-qualified option will be subject to appropriate federal income and
employment taxes.

At the Special Board of Directors meeting held on March 20, 1996, the Board
granted 50,000 stock options with an exercise price of $.96 to Leonard Scrivo
and 165,000 stock options with an exercise price of $.87 to various other
employees.  At the March 20, 1996 meeting, the Board of Directors, as part of
a consulting agreement, also granted non-qualified options to Stanley A.
Youdelman to purchase 20,000 Shares at $.87 per share.  On June 28, 1996, the
Company granted options to purchase 125,000 shares at $.875 and on July 5,
1996, the Company sold options to purchase 175,000 shares for $1,750.

<TABLE>
<S>                                  <C>              <C>  <C>
                                                 Option Price
                                  Shares     Per Share     Aggregate
Outstanding December 31, 1997    535,000  $.87 to $.96      $471,450
Outstanding December 31, 1997    535,000  $.87 to $.96      $471,450
</TABLE>











                                    F-19




                             Page 27 of 34 Pages
<PAGE>



                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS


NOTE 9 - JOINT VENTURE AGREEMENT

On March 17, 1992, the Company entered into a joint venture agreement with
China Anshan Television Broadcasting Equipment Group Company, in accordance
with the Foreign Joint Venture Enterprise Ordinance of the People's Republic
of China and other related statutes.  The Company has a 25% interest in the
joint venture.  The joint venture company, Anshan Vicon Fiber Optic Products,
Ltd., a Chinese corporation located at Anshan, Liao Ning Province, People's
Republic of China, will manufacture certain of the Company's products.  The
manufacturing of these products in China should significantly reduce the cost
of these products to Vicon.  During 1993, Vicon effected a technology
transfer to the joint venture Company in China.  The manufacturing facility
in China is presently in the development stage.

The Company has accounted for its investment using the equity method of
accounting.  During 1993 the Company sold certain manufacturing equipment to
the joint venture.  The Company reduced the resultant gain from such sale by
25%, with a corresponding reduction in their investment, based on their
ownership percentage.

NOTE 10 - FAIR VALUES OF FINANCIAL INSTRUMENTS

Disclosure of fair value information about certain financial instruments,
whether or not recognized in the balance sheet for which it is practicable to
estimate that value, is required by Statement of Financial Accounting
Standards (SFAS) 107, Disclosure About Fair Value of Financial Instruments.
The following methods and assumptions were used in estimating fair values:

Cash and cash equivalents:  the carrying amount reported in the balance sheet
approximates fair value.


















                                    F-20



                             Page 28 of 34 Pages
<PAGE>



                          VICON FIBER OPTICS CORP.

                        NOTES TO FINANCIAL STATEMENTS



NOTE 10 - FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

Short and long-term debt:  the carrying amounts of the Company's borrowings
under its revolving credit agreements, as well as all short-term borrowings,
approximate their fair values.  The fair values of the Company's long-term
debt were estimated using discounted cash flow analysis, based on the
Company's current incremental borrowing rates for similar arrangements.

The carrying amounts and fair values of the Company's financial instruments
at December 31, 1997 are as follows:
<TABLE>
<S>                        <C>               <C>
                            Carrying Amounts       Fair Value
Cash and cash equivalents           $834,169         $834,169
Short and long-term debt             308,023          308,023
</TABLE>

NOTE 11 - CONCENTRATION OF CREDIT RISK

The Company invests its excess cash in deposits with Marine Midland Bank.
The investment generally matures within six months and therefore is subject
to little risk.  The Company has not incurred losses related to this
investment.  As at December 31, 1997, $576,201 was invested at an interest
rate, which varies daily.  Deposits with Marine Midland Bank are insured
under the FDIC for up to $500,000.

NOTE 12 - EXTRAORDINARY ITEM

During the year ended December 31, 1996 the Company voided a note payable
which was redeemable or convertible through an expiration date which had
passed.  The Company has recorded this as a forgiveness of debt and reflected
a $7,500 gain in income.












                                    F-21



                             Page 29 of 34 Pages
<PAGE>



Item 8.  Disagreements with Accountants on Accounting and Financial
Disclosure

None.


                                  PART III


Item 9.  Directors and Executive Officers

                               LEONARD SCRIVO

Director, President, Chief Executive Officer and Treasurer of the Company.
Director and Officer since 1969.  Age 60.

                                 LES WASSER

Director, Secretary and Controller of the Company.  Certified Public
Accountant.  Director since June 1990.  Age 54.

                            STANLEY A. YOUDELMAN

Age 58:  Has been an oral and maxillofacial surgeon for more than 25 years.
He is chief of Oral Surgery at St. Johns Episcopal Hospital in Smithtown, New
York.  He is also past President of the Suffolk Academy of Medicine as well
as the Suffolk County Dental Society and is presently on the Board of
Directors of the Suffolk County Dental Society.  Dr. Youdelman is not an
employee of the Corporation.


Item 10.  Executive Compensation

A.   The following table sets forth cash or other compensation received by
   the Chief Executive Officer and other highly paid executive officers and
   directors of the Company for the last three fiscal years.
<TABLE>
<S>                             <C>           <C>                      <C>
                                           Annual  Long-Term Compensation
                                     Compensation
                                                      Restricted Stock
Name and Principal Position    Year   Total $ (1)   Award ($)  Options (#)
Leonard Scrivo                 1997      $101,481          $0            0
President, CEO                 1996        92,944      13,000       50,000
Chairmen of the Board          1995        84,651           0            0
All Officers and Directors     1997       160,065           0            0
As a Group                     1996       150,958      21,000      130,000
(3 persons)                    1995       133,161           0            0
</TABLE>










                             Page 30 of 34 Pages
<PAGE>




B.   Option grants in last fiscal year:  None

C.   Options exercised during the last fiscal year:  None.

D.   Fiscal year end option values:
<TABLE>
<S>                                     <C> <C>
                                Unexercised Value of Unexcercised in-
Name                            Options (#) the-money Options ($)
Leonard Scrivo                       50,000                   $14,500
All Officers and Directors
as a Group (3 persons)              130,000                   $49,500
</TABLE>

Directors' Compensation

No director receives any compensation for attending Board meetings.







































                             Page 31 of 34 Pages
<PAGE>





Item 11.  Security Ownership and Certain Beneficial Owners and Management

The following table sets forth as of December 31, 1997 the shares of Common
Stock of the Company owned by each director of the Company, the officers and
directors of the Company as a group and each person known to the Company to
own 5% or more of the outstanding shares of Common Stock of the Company:
<TABLE>
<S>                                 <C>                     <C>
Name                        Number of       Approximate % of
                          Shares Owned     Outstanding Shares
Leonard Scrivo (1)(2)         1,052,978                   12.4%
Les Wasser (1)(2)               165,000                    1.9%
Stanley A. Youdelman             61,600                    0.7%
(2)(3)
All officers and
directors as a group          1,279,578                   15.0%
(three persons)
Donald J. Unger (4)             980,000                   11.5%
Joseph Cooper                   557,478                    6.5%
</TABLE>

(1)  Officer of the Company.

(2)  Director of the Company.

(3)  Includes 6,750 shares owned by members of his family in which Dr.
     Youdelman disclaims any beneficial interest.

(4)  Includes 200,000 shares owned by members of his family in which Mr.
     Unger disclaims any beneficial interest.


Item 12.  Certain Relationships and Related Transactions

None.




















                             Page 32 of 34 Pages
<PAGE>
                                   PART IV


Item 13.  Exhibits and Reports on Form 8-K


(a)(1)  Financial Statements

    The following statements of Vicon Fiber Optics Corp. are included in Part
II, Item 7:
<TABLE>
<S>                                                <C>
                                                  Page
Audit Report of Sheft Kahn & Company                11
Financial Statements:
Balance Sheet - December 31, 1997                12-13
Statements of Operations - Years ended
December 31, 1997 and 1996                          14
Statements of Shareholders Equity -
Years ended December 31, 1997 and 1996              15
Statements of Cash Flows - Years ended
December 31, 1997 and 1996                          16
Notes to Financial Statements                    17-29
</TABLE>

(c)  No Reports on Form 8-K were filed during 1997.

(d)  Exhibits

<TABLE>
<S>          <C>
3.1          Articles of Incorporation, as amended
             (filed as Exhibit 3.1 to Form 10, Registration No. 0-11057,
             filed on June 13, 1983, and incorporated herein by
             reference).
3.2          By-laws (filed as Exhibit 3.2 to Form 10, Registration No.
             0-11057, incorporated herein by reference).
4.1          Certificate for Common Stock, $.10 par value (filed as
             Exhibit 4.1 to Form 10, Registration No. 0-11057,
             incorporated herein by reference).
4.2          Certificate for Convertible Subordinated Notes, due
             December 31, 1986, and Agreement (filed as Exhibit 4.2 to
             Form 10, Registration No. 0-11057, incorporated herein by
             reference).
4.3          Warrant to Purchase Common Stock, $.10 par value (expiring
             December 31, 1986) (filed as Exhibit 4.3 to Form 10,
             Registration No. 0-11057, incorporated herein by
             reference).
4.4          Form of 12% Convertible Subordinated Note (filed as Exhibit
             4.4 to Company's Annual Report on Form 10-K for the year
             ended December 31, 1986 (the "1986 10-K"), incorporated
             herein by reference).
4.6          Certificate of Amendment of Certificate of Incorporation to
             increase the authorized capital stock of the Company to
             twenty million shares and to change the par value to $.01
             per share.  (Filed as Exhibit 4.6 to the 1992 Form 10-KSB).
</TABLE>


                             Page 33 of 34 Pages
<PAGE>



                                 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.

                                                     VICON FIBER OPTICS CORP.




                                                    By /s/Leonard Scrivo_____
                                                    Leonard Scrivo, President


                            Date  March 31, 1998




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

Signature                Title                    Date

/s/Leonard Scrivo        President (Chief         March 31, 1998
LEONARD SCRIVO           Executive Officer),
                         Treasurer and Director

/s/Les Wasser            Director                 March 31, 1998
LES WASSER               Secretary
                         Controller

/s/Stanley A. Youdelman  Director                 March 31, 1998
STANLEY A. YOUDELMAN







                             Page 34 of 34 Pages
<PAGE>