UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                           Washington, DC 20549

                                FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934

                For the fiscal year ended December 31, 2001


[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

                      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 [ ] No [X]

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, 2001:   $2,056,561.

Aggregate market value of the voting stock held by non-affiliates of the
Registrant as of December 31, 2001:  $2,052,977.

Number of common shares outstanding on December 31, 2001:  8,554,069


                                       -1-

<PAGE>

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,(1) the manufacture and sale of fiber
optic illuminating systems and components for use in conjunction with dental
equipment and instruments utilizing fiber optic elements, and,(2) the
manufacture and sale of decorative lamps utilizing fiber optics for their
illumination and color display.

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
and lamp 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.


                                       -2-
<PAGE>

Company's History in the Dental Field

Fiber optics were first applied to dental instrumentation as 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. 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.

The Company's Current Fiber Optic Dental Products

Currently, the Company manufactures two styles of dental illuminators. One 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 styles of illuminators
is air activated when the handpiece or instrument is removed from its console
hanger.

Both styles of 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.

Decorative Fiber Optics Products

The Company manufactures a line of decorative fiber optic lamps under the trade
name "Fantasia Products". The Company commenced production and national sales of
the lamps in 1995.

Manufacturing in China

The Company manufactures its line of decorative fiber optic lamps in two modern
manufacturing facilities in southern China.


                                       -3-

<PAGE>

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, the 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.

Distribution and Sales

During 2001 one customer purchased approximately 19.18% of the Company's
products, another customer purchased 13.36% and another two customers purchased
22.90%. 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 2001,
19.7% of the Company's sales were to foreign customers.

As of December 31, 2001, the Company had a sales backlog of approximately
$675,000. The Company believes that the backlog represents firm orders as of
that date. As of December 31, 2000 the Company had a backlog of approximately
$500,000. The Company believes that the increased 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 19 full-time employees, of whom two are executives, two are
engineers, and one is 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 3.5 years remaining
on a four-year lease of space. The building is a two-story concrete block
structure. The aggregate annual rental paid by the Company in 2001 and 2000 was
approximately $104,076 and $93,127, respectively.

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


                                       -4-

<PAGE>

Item 3.  Legal Proceedings

In December 2001, the Company filed a civil legal suit against several of its
former officers, as well as against its former independent auditors. This suit
was filed with the U.S. District Court, Southern District of New York and
alleges, among other things, that the former officers misappropriated Company
funds, and falsified certain of the Company's books and records. The suit also
alleges that the former auditors failed, among other things, to conduct a number
of annual Company audits in accordance with generally accepted auditing
standards. The former auditors have filed a counter-claim with the court against
the Company alleging that the Company has failed to pay them approximately
$53,000 for past services. Because these legal actions are in their initial
stages (pre-discovery), Company counsel cannot express an opinion as to the
possible outcome, and therefore no provision for possible gain from the
Company's suit has been recorded. Refer to pages 28 and 29, "SEC Inquiry," for
further information concerning this matter.


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

None.


                                       -5-

<PAGE>

                                     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.


                                   Bid Prices
                               Low           High
                               ---           ----
         2001
----------------------
First Quarter                0.16             0.50
Second Quarter               0.20             0.45
Third Quarter                0.25             0.60
Fourth Quarter               0.20             0.50

         2000
----------------------
First Quarter                0.875           1.750
Second Quarter               0.468           1.187
Third Quarter                0.437           1.000
Fourth Quarter               0.160           0.500


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, 2001

         Common Stock, $.01 par value               1,300

         (c)  Dividend Policy

Holders of Common Stock of the Company are entitled to a pro rata share of any
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.


                                       -6-

<PAGE>

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:

                                          2001            2000
                                          ----            ----
Working Capital                        $ 764,113      $1,468,702
Current Ratio                           2.5 to 1        5.3 to 1
Shareholders' Equity                  $1,270,907      $1,703,196
Net Loss                              $ (420,620)     $ (501,579)

The decrease in working capital at December 31, 2001 was due to the reduction of
inventory and the increase in the current portion of long-term debt.

The decrease in shareholders' equity at December 31, 2001 was due to the net
loss incurred for the year.

Results of Operations

Year ended December 31, 2001 Compared to Year Ended December 31, 2000

Net sales for the year ended December 31, 2001 as compared to 2000 decreased by
17.8%.

Cost of sales as a percentage of sales decreased to 83.6% for 2001 compared to
89.5% in 2000. The decrease was offset, in part, by a write-off of inventory
during the year in the amount of $90,000.

Selling, general and administrative expenses decreased to $746,762 in 2001 as
compared to $858,936 in 2000, a decrease of $112,174. Management attributes this
to a general reduction in the costs of marketing and administrative expenses.


                                       -7-

<PAGE>

Item 7.  Financial Statements

                            VICON FIBER OPTICS CORP.

                              FINANCIAL STATEMENTS

                               FORM 10-KSB ITEM 7


                     YEARS ENDED DECEMBER 31, 2001 and 2000


                                       -8-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          INDEX TO FINANCIAL STATEMENTS

                                                                      PAGE
                                                                      ----
Independent Auditors' Report                                          F-2

Financial Statements:

      Balance Sheet - December 31, 2001 and 2000                      F-3, F-4

Financial Statements for the years
      ended December 31, 2001 and 2000:

       Statements of Operations                                       F-5
       Statements of Shareholders' Equity                             F-6
       Statements of Cash Flows                                       F-7

Notes to Financial Statements                                         F-8 - F-21


                                       F-1


                                       -9-

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


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

We have audited the balance sheets of Vicon Fiber Optics Corp. as of December
31, 2001 and 2000 and the related statements of operations, shareholders' equity
and cash flows for the years ended December 31, 2001 and 2000. 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 audit in accordance with auditing standards generally accepted
in the United States of America. 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, financial statements referred to above present fairly, in all
material respects, the financial position of Vicon Fiber Optics Corp. as of
December 31, 2001 and 2000 and the results of its operations and its cash flows
for the years ended December 31, 2001 and 2000, in conformity with accounting
principles generally accepted in the United States of America.

The Company's financial statements have been prepared assuming the Company will
continue as a going concern, as discussed in Note 5. The Company is required to
pay $335,000 of debentures due June 30, 2002. Based on the current condition of
the Company's balance sheet, the payment of these debentures raises substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these issues are also described in Note 5. The financial
statements do not include any adjustments that might result from the outcome of
the required payment of the debentures.


                                         Todres & Company, LLP
                                         CERTIFIED PUBLIC ACCOUNTANTS


Westbury, New York
March 6, 2002


                                       F-2


                                      -10-

<PAGE>

                            VICON FIBER OPTICS CORP.

                                  BALANCE SHEET

                           DECEMBER 31, 2001 and 2000


                                     ASSETS

<TABLE>
<CAPTION>

                                                           2001              2000
                                                           ----              ----
CURRENT ASSETS:
<S>                                                   <C>               <C>
 Cash and cash equivalents (Note 2)                    $  213,379        $    67,438
 Accounts receivable - Net of allowance for
  uncollectible accounts of $16,775                       320,119            394,554
 Inventories (Note 3)                                     661,800          1,091,040
 Prepaid expenses                                           4,798              7,155
 Income tax benefit (Note 6)                               55,358            253,219
                                                       ----------         ----------

          Total current assets                          1,255,454          1,813,406
                                                       ----------         ----------



PROPERTY AND EQUIPMENT - Net of accumulated
 depreciation and amortization (Note 4)                   256,421            308,110
                                                       ----------         ----------



OTHER ASSETS:
 Excess of cost over net assets of
  businesses acquired                                     233,647            248,527
 Deferred income taxes (Note 6)                            87,910             87,910
 Deposits                                                   4,487              4,487
                                                       ----------         ----------

         Total other assets                               326,044            340,924
                                                       ----------         ----------

         Total assets                                  $1,837,919         $2,462,440
                                                       ==========         ==========
</TABLE>


                -See accompanying notes to financial statements-


                                       F-3


                                      -11-

<PAGE>

                            VICON FIBER OPTICS CORP.

                                  BALANCE SHEET

                           DECEMBER 31, 2001 and 2000



                      LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                           2001               2000
                                                           ----               ----
CURRENT LIABILITIES:
<S>                                                    <C>               <C>
 Current portion of long-term debt (Note 5)            $  338,869        $     3,354

 Accounts payable and accrued expenses                    152,472            341,350
                                                       ----------         ----------

       Total current liabilities                          491,341            344,704

Long-term debt (Note 5)                                     5,269            344,138

Deferred income taxes (Note 6)                             70,402             70,402
                                                       ----------        -----------

       Total liabilities                                  567,012            759,244
                                                       ----------        -----------

COMMITMENTS AND CONTINGENCIES (Note 7)                       -                   -

SHAREHOLDERS' EQUITY:
 Common stock - authorized 20,000,000 shares,
  $.01 par value, issued and outstanding
  8,554,069 shares                                         85,390             85,540
 Additional paid-in capital                             5,982,905          5,999,705
 Deficit                                               (4,793,868)        (4,373,248)
 Deferred stock incentive (Note 8)                         (3,520)            (8,801)
                                                       ----------         -----------

         Total shareholders' equity                     1,270,907          1,703,196
                                                       ----------         ----------

         Total liabilities and
          shareholders' equity                         $1,837,919         $2,462,440
                                                       ==========         ==========


                -See accompanying notes to financial statements-


                                       F-4


                                      -12-

<PAGE>

                            VICON FIBER OPTICS CORP.

                            STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED DECEMBER 31, 2001 and 2000



                                                          2001              2000
                                                          ----              ----

SALES                                                  $2,056,561     $2,504,028

COST OF GOODS SOLD                                      1,718,447      2,241,571
                                                       ----------     ----------

     Gross margin                                         338,114        262,457
                                                       ----------     ----------

OPERATING EXPENSES:
    Selling, general and administrative expenses          746,762        858,936
   Research and development                                 1,600          1,407
                                                       ----------      ---------

     Total operating expenses                             748,362        860,343
                                                       ----------      ---------

     Loss from operations                                (410,248)      (597,886)
                                                       ----------      ---------

OTHER INCOME (EXPENSES)
    Income from reversal of stock incentive                11,669         65,259
    Interest expense                                      (42,046)       (59,928)
    Interest income and other                              20,005         18,320
                                                       ----------      ---------

       Total other income (expenses)                      (10,372)        23,651
                                                       ----------      ----------

       Loss before income tax benefit                    (420,620)      (574,235)

INCOME TAX BENEFIT (Note 6)                                   -           72,656
                                                       ----------     ----------

       Net loss                                        $ (420,620)    $ (501,579)
                                                       ==========     ==========

LOSS PER COMMON SHARE:
 BASIC AND DILUTED                                     $     (.05)   $      (.06)
                                                       ==========    ===========

AVERAGE NUMBER OF SHARES USED
 IN COMPUTATION:
  BASIC                                                 8,651,985      8,651,985
                                                        =========      =========
  DILUTED                                               8,651,985      8,651,985
                                                        =========      =========


</TABLE>

                -See accompanying notes to financial statements-


                                       F-5


                                      -13-

<PAGE>

                            VICON FIBER OPTICS CORP.

                       STATEMENTS OF SHAREHOLDERS' EQUITY

                 FOR THE YEARS ENDED DECEMBER 31, 2001 and 2000

<TABLE>
<CAPTION>

                                              TOTAL
                                            ADDITIONAL                  DEFERRED         SHARE-
                                 COMMON      PAID-IN                     STOCK           HOLDERS'
                                  STOCK      CAPITAL      DEFICIT      INCENTIVE         EQUITY
                                  -----      -------      -------      ---------         ------
<S>                            <C>         <C>          <C>            <C>             <C>
Balance - January 1, 2000      86,790      $6,139,288   $(3,871,669)   $(84,375)       $2,270,034

Net Loss                          -               -        (501,579)        -            (501,579)

Reversal of Stock
Incentive                      (1,250)       (139,583)           -       75,574           (65,259)
                              -------     -----------   -----------    --------        ----------

Balance -
 December 31, 2000             85,540       5,999,705    (4,373,248)     (8,801)        1,703,196


Net Loss                          -               -        (420,620)        -            (420,620)

Reversal of Stock
Incentive                        (150)        (16,800)         -          5,281           (11,669)
                              -------       ---------   -----------    --------        ----------



Balance -
 December 31, 2001             85,390      $5,982,905   $(4,793,868)   $ (3,520)       $1,270,907
                              =======      ==========   ===========    ========        ==========

</TABLE>


                -See accompanying notes to financial statements-


                                       F-6


                                      -14-

<PAGE>

                            VICON FIBER OPTICS CORP.

                            STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED DECEMBER 31, 2001 and 2000

                                                      2001               2000
                                                      ----               ----

CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                       $  (420,620)     $ (501,579)
                                                   -----------      ----------
     Adjustments to reconcile net income to
     net cash provided by operating activities:
     Depreciation and amortization                      69,453          66,350
     Decrease in accounts receivable                    74,435         258,417
     (Increase) decrease in inventory                  429,240        (116,497)
     Decrease in prepaid expenses and
      other assets                                       2,357          16,448
    Decrease (increase) in income tax benefit          197,861        (148,060)
    Decrease(increase)in deferred tax asset               -             34,696
    Increase (decrease) in accounts payable and
      accrued expenses                                (188,878)        167,023
    (Decrease) in income taxes payable                    -            (25,609)
    Increase in deferred tax liability                    -             11,863
                                                    ----------      ----------
          Total adjustments                            584,468         264,631
                                                    ----------      -----------

  Net cash provided by (used for)
   operating activities                                163,848        (236,948)
                                                    ----------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment, net               (2,884)         21,245
  Decrease in cash surrender value of life
    insurance contract                                    -             96,027
                                                    ----------       ---------

  Net cash provided by (used for)
   investing activities                                 (2,884)        117,272
                                                    ----------       ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of long-term debt                           (3,354)       (102,006)
  Reversal of deferred stock incentive                 (11,669)        (65,259)
                                                    ----------       ----------
   Net cash used for financing activities              (15,023)       (167,265)
                                                    ----------       ----------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                 145,941        (286,941)

CASH AND CASH EQUIVALENTS - Beginning                   67,438         354,379
                                                    ----------       ---------

CASH AND CASH EQUIVALENTS - End                     $  213,379       $  67,438
                                                    ==========       =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
  Cash paid during the years for:
    Interest                                        $   42,046       $  59,928
                                                    ==========       =========
    Income taxes                                    $     -          $  25,609
                                                    ==========       =========


                -See accompanying notes to financial statements-


                                       F-7


                                      -15-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000

NOTE 1 - NATURE OF THE BUSINESS

Vicon Fiber Optics Corp. (the "Company") was incorporated in 1969 and derives
the majority of its revenues 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. The Company, also manufacturers
and sells decorative lamps, which utilize fiber optics for illumination.


NOTE 2 - SUMMARY OF SIGNIFICANT 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:


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 purchased with an initial maturity of three
months or less.


Inventories

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


Property and Equipment and Depreciation

Property and equipment is stated at cost. Expenditures for maintenance and
repairs are charged to operations as incurred. Additions and betterments are
capitalized.

Depreciation for financial reporting is computed on the straight-line method
over the estimated useful life of the asset beginning in the year of
acquisition. Accelerated methods are used for income tax reporting. When assets
are disposed of, the related costs and accumulated depreciation are removed from
the accounts and any resulting gain or loss is reflected in the operations for
the period.


Intangibles

Intangibles represent acquisition costs in excess of the fair value of net
tangible assets of businesses purchased and consist primarily of the value of
ongoing client relationships and goodwill. These costs are being amortized over
forty years on a straight-line basis.


                                       F-8


                                      -16-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Bad Debts

The Company uses the allowance method to account for uncollectible accounts
receivable. The allowance for doubtful accounts is based on prior years'
experience and management's analysis of possible bad debts. Bad debt recoveries
are charged against the allowance account as realized.

Revenue Recognition

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

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 reported period. Actual
results could differ from those estimates.

Fair Value of Financial Instruments

SFAS No. 107, Disclosure about Fair Value of Financial Instruments, requires
disclosure of estimates of the fair value of certain financial instruments. The
Company's financial instruments consist of cash equivalents, accounts
receivable, accounts payable, promissory notes payable and debentures payable.
The estimated fair value of these financial instruments approximates their
carrying value at December 31, 2001 and 2000 because of the short-term nature of
these instruments.

Earnings Per Share

The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share" in 1998. Basic earnings per share, is calculated using
the average number of shares of common stock outstanding during the year.
Diluted earnings per share is computed on the basis of the average number of
common shares outstanding plus the effect of outstanding stock options using the
"treasury stock method" and convertible debentures using the "if-converted"
method. Common stock equivalents refer to stock options.


                                       F-9


                                      -17-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounting for Investments

Investments in which the Company has less than a 20% interest are carried at
cost. Dividends received are included in other income.

Income Taxes

The provision for income taxes is computed on the pretax income (loss) based on
the current tax law. Deferred income taxes are recognized for the tax
consequences in future years of difference between the tax basis of assets and
liabilities and their financial reporting amounts at each year-end based on
enacted tax laws and statutory tax rates.

Commitments and Contingencies

The Company is involved in litigation on a number of matters and is subject to
certain claims, which arise in the normal course of business, none of which in
the opinion of management, is expected to have a materially adverse effect on
the Company's financial position

Concentration of Credit Risk and Significant Customers

SFAS No. 105, Disclosure of Information About Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit
Risk, requires disclosure of any significant off-balance-sheet and credit risk
concentrations. Financial instruments that potentially expose the Company to
concentrations of credit risk consist primarily of cash and cash equivalents and
trade accounts receivable. The Company places its temporary cash investments in
financial institutions. To date, the Company has not experienced significant
losses related to receivables from individual customers or groups of customers
in any specific industry or by geographic area.

Major customers of the Company, expressed as a percentage of sales, are
summarized as follows:


                                                       Year Ended December 31,
Customer                                               2001               2000
--------                                             --------------------------

    A                                                19.18%              13.30%
    B                                                13.36%              10.60%
    C                                                12.42%               8.30%
    D                                                10.48%               6.60%
    E                                                 9.48%               2.50%
                                                     ------              ------
                                                     64.92%              41.30%
                                                     ======              ======


                                      F-10


                                      -18-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Concentration of Credit Risk and Significant Customers (Continued)


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



                                                        Year Ended December 31,
Geographic Area                                        2001               2000
---------------                                       --------------------------
    Europe                                              5.3%              2.3%
    Brazil                                              1.0%              2.5%
    Asia                                               13.4%              3.7%
                                                       ----               ---
                                                       19.7%              8.5%
                                                       ====               ===

Suppliers

The Company uses only one source for some of its components, but believes that
alternative or 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.


Impairment of Long-Lived Assets

SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of, requires impairment losses to be recognized
for long-lived assets used in operations when indicators of impairment are
present and when the undiscounted cash flows are not sufficient to recover the
assets' carrying amount. The impairment loss is measured by comparing the fair
value of the assets to its carrying amount. As of December 31, 2001, the Company
does not believe impairment of its long-lived assets exists.



NOTE 3 - INVENTORIES

The composition of inventories consist of the following:

                                                   2001                2000
                                                   ----                ----
    Raw materials and Work-in-process          $ 302,594           $  525,449
    Finished goods                               359,206              565,591
                                               ---------           ----------
                                               $ 661,800           $1,091,040
                                               =========           ==========


                                      F-11


                                      -19-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000



NOTE 4 - PROPERTY AND EQUIPMENT

The estimated useful lives for depreciation purposes are as follows:

Machinery and equipment                                   3-10 years
Furniture, fixtures and office equipment                  2-10 years
Leasehold improvements                       Lower of lease term or useful life


Property and equipment consists of the following:
                                                         2001             2000
                                                         ----             ----

    Machinery and equipment                            $ 490,217      $ 490,217
    Furniture, fixtures and office equipment              62,043         59,159
    Leasehold improvements                               362,292        362,292
                                                       ---------      ---------
                                                         914,552        911,668
    Accumulated depreciation and amortization           (658,131)      (603,558)
                                                       ---------      ---------
                                                       $ 256,421      $ 308,110
                                                       =========      =========


Depreciation and amortization expense for the years ended December 31, 2001 and
2000 amounted to $54,573 and $54,270, respectively.


NOTE 5 - LONG-TERM DEBT

Long-term debt consists of the following:
                                                       2001            2000
                                                       ----            ----

    Note payable - Textron (A)                       $  9,138      $  12,492

    Debentures payable (B)                            335,000        335,000
                                                     --------      ---------
                                                      344,138        347,942

    Less:  Current portion                            338,869          3,354
                                                     --------      ---------

                                                     $  5,269      $ 344,138
                                                     ========      =========

    (A)  Note payable - Textron represents a five-year note for the purchase of
         equipment. The note bears interest at 14.349% and will be paid at the
         rate of $411 per month. Certain machinery is pledged as collateral
         pursuant to this note.


                                      F-12


                                      -20-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000

NOTE 5 - LONG-TERM DEBT (Continued)

    (B)  Debentures - These are 8% convertible notes due June 30, 2002. Interest
         will be paid semi-annually until conversion or maturity. The notes may
         be converted at the rate of $1 for one common share but in increments
         of no less than $1,000.

Annual principal payments on long-term debt are as follows:

     Year Ending
    December 31,                                        Amount
    ------------                                        ------

         2002                                           $ 338,869
         2003                                               4,462
         2004                                                 807
         2005                                                 -
                                                        ---------
                                                        $ 344,138
                                                        =========

The required payment of $335,000 of the debentures due June 30, 2002 raises
substantial doubt about the Company's ability to continue as a going concern,
particularly in light of consecutive operating losses over the past several
years. The Company plans to implement significant cost reductions and a
liquidation of lamp inventories to raise the cash required to pay the
debentures. If the Company is unable to pay the debentures, an alternative
payment plan may be pursued with the debenture holders. It is uncertain whether
such a plan could be agreed upon.


NOTE 6 - INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No.109, Accounting
for Income Taxes, the objective of which is to recognize the amount of current
and deferred income taxes at the date of the financial statements as a result of
all differences in the tax basis and financial statement carrying amounts of
assets and liabilities, as measured by enacted tax laws.


                                      F-13


                                      -21-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000




NOTE 6 - INCOME TAXES (Continued)

Deferred income taxes consist of the following:

The tax effects of temporary differences that give rise to the Company's
deferred tax liability are presented below:
                                                        2001             2000
                                                        ----             ----
Deferred tax assets
    Tax loss carryforward                            $ 87,910         $ 87,910
                                                     ========         ========
Deferred tax liability
    Depreciation                                     $ 70,402         $ 70,402
                                                     ========         ========

The income tax benefits recognized for the years ended December 31, 2001 and
2000 were $0 and $72,656, respectively.

No income tax benefit has been recognized for the net operating loss incurred
for the year ended December 31, 2001. In accordance with FAS-109, the Company
has determined that, based on the recent history of loss carryforwards, which
have not yet been utilized and potential losses in early future years, it is not
likely that the most current operating loss carryforwards will be realized in
the foreseeable future.

As of December 31, 2001, net operating loss carryforwards total approximately
$650,000.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Leases

The Company leases warehouse and office space. In 2001, the Company renegotiated
its lease and is committed under this agreement for payments through July 2005.
The lease requires monthly rental payments and is subject to certain operating
cost and real estate tax increments.


                                      F-14


                                      -22-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000

NOTE 7 - COMMITMENTS AND CONTINGENCIES (Continued)

Future rental payments required under this lease agreement for the years ending
December 31, are as follows:

                  Year                                 Amount
                  ----                                 ------

                  2002                                $105,377
                  2003                                 108,538
                  2004                                 111,794
                  2005                                  66,340
                  2006 and thereafter                      -

The total rent expense charged to operations for the years ended December 31,
2001 and 2000 was $104,076 and $93,127, respectively.

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 ("ISOs") 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").

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 10 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. 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.


                                      F-15


                                      -23-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000

NOTE 8 - STOCK OPTION PLAN (Continued)

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 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.

During 1998, the Company issued an aggregate of 150,000 shares of common stock
to five key employees. The Company accounted for the issuance of restricted
stock with an estimated fair value of $168,750 by recording as current
compensation of $28,125 and deferred compensation of $140,625 to be recognized
over the three-year restriction on the stock.

In the third quarter of 2000, certain senior management was suspended from the
Company (see Note 12) and certain stock options and restricted stock issues were
terminated. As a result, the Company recognized $65,259 of income from the
return of 125,000 shares of restricted stock and the reversal of previously
expensed deferred compensation. During 2001, the Company recognized $11,669 of
income from the return of restricted stock.

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, Option 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 changes in capitalization.


                                      F-16


                                      -24-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000

NOTE 8 - STOCK OPTION PLAN (Continued)

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 allowable to the Corporation
upon the grant or exercise of the ISO. When the employee sells shares received
upon the 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 employee will recognize ordinary compensation income and
possibly capital gain or loss in such amounts as are prescribed by the Code and
the regulations there under. Subject to applicable provisions of the Code and
the regulations there under, in the event of a disposition prior to the end of
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.

An employee to who 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 there under, 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.

On July 5, 1996 the Company sold options to purchase 175,000 shares for $1,750.

As of April 1, 1998, five year warrants to purchase 100,000 shares each of
common stock of the Company at $1.00 per share were issued to Messrs. Allan
Borkowski, Robert Figliozzi, Michael Funke, Thomas Furey, Jr., Mike Scrivo and
Kenneth Zimmerman upon their election as directors of the Company.


                                      F-17


                                      -25-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000

NOTE 8 - STOCK OPTION PLAN (Continued)

In April 1998, five year warrants to purchase 100,000 shares each of common
stock of the Company at $1.00 per share were issued to Messrs. Allan Borkowski,
Robert Figliozzi, James Leonard and Dr. Stanley Youdelman, in consideration for
entering into consulting agreements by each of the above individuals.

In April 1998, five year warrants to purchase an aggregate of 435,000 common
shares of the Company at prices of $1.00 to $1.10 were issued to three officers
and two former employees.

In April 1999, five year warrants to purchase 700,000 shares of common stock at
$1.00 per share were issued to the following: Zachary Liebman and Barry Hawk -
125,000 each, Allan Borkowski and Robert Figliozzi - 100,000 each, James
Leonard, Mike Scrivo, Michael Funke, Thomas Furey, Jr., and Kenneth Zimmerman -
50,000 each.

The following summarizes the stock options outstanding under these plans as of
December 31, 2001:
                                 Number                 Per Share
                                   of                   Option
Date Granted                     Shares                  Price        Expiration
------------                     ------                  -----        ----------

July 1996                       175,000                   .875            2005
April 1998                    1,285,000                   1.00            2003
April 1998                      150,000                   1.10            2003
April 1999                      700,000                   1.00            2004
                              ---------

                              2,310,000
                              =========


                                      F-18


                                      -26-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000


NOTE 8 - STOCK OPTION PLAN (Continued)

The following summarizes the activity of shares under option for the two years
ended December 31, 2001:
<TABLE>
<CAPTION>

                                         Number                       Per Share
                                           Of                          Option
                                         Shares                         Price                       Value
                                         ------                         -----                       -----
<S>                                      <C>                        <C>                           <C>
Balance - January 1, 2000                2,670,000                  $ .87 - $1.10                 $ 2,621,450
  Granted                                   -                               -                           -
  Exercised                                 -                               -                           -
  Expired                                   -                               -                           -
  Cancelled                                 -                               -                           -
                                         ---------                  -------------                 -----------
Balance - December 31, 2000              2,670,000                    .87 -  1.10                   2,621,450
  Granted                                   -                               -                           -
  Exercised                                 -                               -                           -
  Expired                                   -                               -                           -
  Cancelled                                 -                               -                           -
                                         ---------                  -------------                 -----------

Balance - December 31, 2001              2,670,000                  $ .87 - $1.10                 $ 2,621,450
                                         =========                  =============                 ===========

</TABLE>

NOTE 9 - 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.

Short and long-term debt: The carrying amounts of the Company's 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, 2001 are as follows:

                                                       Carrying
                                                        Amounts       Fair Value
                                                        -------       ----------
    Cash and cash equivalents                         $ 213,379       $ 213,379
    Short and long-term debt                            344,138         344,138


                                      F-19


                                      -27-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000


NOTE 10 - CONCENTRATION OF CREDIT RISK

The Company invests its excess cash in deposits with HSBC Bank. The investment
generally matures within six months and, therefore, subject to little risk. The
Company has not incurred losses related to this investment. At December 31, 2001
and 2000, $189,730 and $99,587, respectively was invested at an interest rate,
which varies daily. Deposits with HSBC Bank are insured under the FDIC for up to
$500,000.

NOTE 11 - SEC INQUIRY

In October 2000, present management notified the Northeast Regional Office of
the Securities and Exchange Commission ("NRO") of suspected discrepancies and/or
irregularities in prior financial statements, filed by prior management. By
letter dated October 19, 2000, and in response to such notification, the NRO
confirmed that it had initiated an informal inquiry into alleged inventory
discrepancies and unauthorized payments to certain prior officers of the
Company.

In connection with the above, the Company concluded that amounts recorded as
expense or expense reimbursement, were included in the operations of the Company
and reported in the Company's financial statements for the years ended December
31, 1999 and 1998. These amounts approximated $101,000 and $85,000 in 1999 and
1998, respectively, and were made to or for the benefit of certain former
officers of the Company. The minutes of the Board of Directors do not reflect
any approval by the Board for these payments. Because of the preliminary nature
of this matter, counsel is unable to express any opinion as to the probable
outcome thereof.

A letter, dated June 8, 2001, was received stating that the NRO is conducting a
formal investigation in the matter identified above.


                                      F-20


                                      -28-

<PAGE>

                            VICON FIBER OPTICS CORP.

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 and 2000


NOTE 12 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

During the third quarter of 2000, Vicon discovered errors in the prior three
years' financial statements resulting from the overstatement of the inventory
value in 1999 and 1998 by including approximately $180,000 and $34,000,
respectively, worth of inventory items which did not exist. In addition, the
financial statements did not reflect the appropriate value for inventory as it
pertains to the future usefulness and/or realizable value of much of the slow
moving inventory for the years ended December 31, 1999, 1998 and 1997; and as
such understated the value of the obsolete inventory by approximately $197,000,
$103,000 and $81,000, respectively.

The financial statements also incorrectly reported the status of a joint venture
the Company had been involved in, and did not write off the investment of
approximately $27,000 due to the abandonment of the project and related
equipment as of December 31, 1997.

NOTE 13 - LEGAL PROCEEDINGS

In December 2001, the Company filed a civil legal suit against several of its
former officers, as well as against its former independent auditors. This suit
was filed with the United States District Court, southern District of New York
and alleges, among other things, that the former officers misappropriated
Company funds, and falsified certain of the Company's books and records. The
suit also alleges that the former auditors failed, among other things to
conduct a number of annual Company audits in a accordance with generally
accepted auditing standards. The former auditors have filed a counter-claim
with the court against the Company alleging that the Company has failed to pay
them approximately $53,000 for past services. Because these legal actions are in
their initial stages (pre-discovery), Company counsel cannot express an opinion
as to the possible outcome, and therefore no provision for possible gain from
the Company's suit has been recorded. Refer to page 28, "SEC Inquiry," for
further information concerning this matter.


                                      F-21


                                      -29-

<PAGE>

Item 8.  Disagreements with Accountants on Accounting and Financial
Disclosure

None.

                                 PART III

Item 9.  Directors, Executive Officers and Board Members

Arthur Levine, Age 45: Director, President, and Chief Executive Officer.
Employed by the Company on September 1, 2000. Previous positions include: Chief
Operating Officer of General Vision, a retail chain of optical stores; Interim
Chief Executive Officer of Skyline Bouquet, a supplier of floral products
serving the supermarket industry; Vice President of Corporate Utilities, a
consulting firm providing services to Fortune 500 clientele.

Allan Borkowski, Age 61: Director since April 23, 1998. Business and financial
consultant for over the past five years. Principal stockholder and President of
ASB Consultants, Inc. a privately held business consulting firm. Since June,
1982 he has been Chairman and Chief Executive Officer of Optivest Technologies
Corp., a privately held business development company. Formerly, Chairman of the
Board of Selvac Corp. through June 1996 and Director of Mehl/Biophile
International Corp. until February 1997.

Robert J. Figliozzi, Age 64: Director since April 23, 1998. Executive Vice
President of Mehl/ Biophile International Corp. from April 1997 to July 1998.
From August 1994 to April 1997, Vice President of World Fuel Corporation, an
aviation and fueling services corporation listed on the New York Stock Exchange.
Prior thereto, he was Senior Managing Director and Director of Research of
Stamford Securities Corporation, a brokerage firm and member of the New York
Stock Exchange.

Michael J. Funke, Age 58: Director since April 23, 1998. Former Editor/Publisher
of the MJF/Ruta Financial Newsletter. Private investment consultant and
financial advisor since 1992. Consultant to the Company since July 1996.
Employed 1967-1992 by IBM in numerous management and consulting positions. MBA
from The Wharton School.

Zachary Liebman, Age 42: Director. Elected to the Board at a special meeting of
the Board of Directors on December 15, 1998. Mr. Liebman is a Managing Director
in Crestwood Capital Group Corp., which is a consulting firm in assisting
emerging growth companies in raising capital, management placements and
marketing strategies. Mr. Liebman is a partner in Arthur Miller's Talent
Management, Inc., an agency dealing with casting for industrial films and
movies.

During 2001, Kenneth Zimmerman, Barry Hawk and Thomas Furey resigned from the
Company's Board of Directors.

Former Directors, Executive Officers and Board Members - Resigned During 2001

Kenneth Zimmerman, Age 50: Director since April 23, 1998. Founder and Chief
Executive Officer, President and sole stockholder of Kenar Enterprises, Ltd., a
privately held women's apparel manufacturer and retailer for the past twenty-one
years, which has declared bankruptcy. Former Director of Chic by H.I.S., Inc.
listed on the New York Stock Exchange. Kenneth Zimmerman resigned as a Board
Member in September 2001.


                                      -30-

<PAGE>

Item 9.  Directors and Executive Officers (continued)

Barry Hawk. Elected to the Board at a special meeting of the Board of Directors
on December 15, 1998. Mr. Hawk is presently the Vice President of Corporate
Development for Ferro Foods, Corp., a large specialty food and restaurant
supplier serving the Northeast and Mid-Atlantic region. Mr. Hawk is a Founder
and Managing Director of Crestwood Capital Group, Corp. In that capacity, he
advises companies on investment banking, strategic planning, corporate finance,
mergers and acquisitions. Mr. Hawk has developed an expertise in innovative
financing techniques and structures for both public and private companies. Prior
to that, Mr. Hawk served as President of Win Capital Corp., an N.A.S.D. member
Broker/Dealer with three offices nationwide. Mr. Hawk graduated from Yeshiva
University with Honors with a BA. in Political Science and Economics and from
the University of Maryland School of Law. Barry Hawk resigned as a Board Member
in July 2001.

Thomas E. Furey, Jr. Age 61: Director since April 23, 1998. Employed by IBM
since 1963. Presently worldwide general manager for technology development,
architecture and implementation for the Olympic Games. Prior to this position he
was general manager of IBM's Worldwide Network Computing Solutions Unit and has
been a leader in the development of IBM's most advanced hardware and software
systems. It should be noted that Thomas E. Furey resigned as Board member in
April 2001.

Former Directors, Executive Officers and Board Members

Leonard Scrivo, Age 64: Director, President, Chief Executive Officer and
Treasurer of the Company.  Director and Officer since 1969.  It should be
noted that Leonard Scrivo resigned as an officer, employee, and Board
member in July, 2000.

Les Wasser, Age 58: Director, Secretary and Controller of the Company.
Certified Public Accountant.  Director since June 1990.  It should be noted
that Mr. Wasser resigned as a Board member in October, 2000, and ceased
being an employee of the Company in February, 2001.

Michael Scrivo, Age 36: Director, Vice-President Operations. Director since
April 23, 1998.  Employed by the Company since 1988.  Son of Leonard
Scrivo.  It should be noted that Michael Scrivo resigned as an officer,
employee and Board member in October, 2000.


                                      -31-

<PAGE>

Item 10.  Executive Compensation

A. The following summary compensation table sets forth information concerning
the annual and long-term compensation for the years ended December 31, 2001,
2000, 1999 and 1998, of those persons who were, (i) serving as the chief
executive officer of the Company or acting in a similar capacity during the year
and (ii) the other most highly compensated executive officers of the Company,
whose annual base salary and bonus compensation was in excess of $100,000 (the
named executive officers):


                                          Annual          Long-Term Incentive
                                       Compensation              Plans
                                                         Restricted  Stock Name
Name and Principal Position    Year        Total          Shares(#)  Options(#)
---------------------------    ----        -----          ---------  ----------

Arthur Levine                  2001      $135,000*               0      100,000
                               2000      $135,000*               0      100,000

Former President, CEO and
Chairman of the Board

Leonard Scrivo                 1999      $109,000*               0            0
                               1998       116,192           75,000      150,000


         *Executive Compensation Expense for the year ended December 31, 2000:

                                    Months Employed             Compensation
                                    ---------------             ------------
         Arthur Levine              September - December           $44,135
         Leonard Scrivo             January - July                 $64,981

A.   Option grants in last fiscal year for named executive officers: 100,000

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

C.   Fiscal year end option values for named executive officers:

                                Unexercised    Value of Unexercised in-
     Name                        Options (#)     the-money Options ($)
     -----                       -----------     ---------------------

Leonard Scrivo                      200,000             $ -0-
Arthur Levine                       100,000             $ -0-

Directors' Compensation

     No director receives any compensation for attending Board meetings.


                                      -32-

<PAGE>

Item 11.  Security Ownership and Certain Beneficial Owners and Management

The following table sets forth as of December 31, 2001 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:

                            Number of              Approximate % of
    Name                   Shares Owned            Outstanding Shares
    ----                   ------------            ------------------

Allan Borkowski (2)(3)        241,000                      2.8%
Michael J. Funke (4)           70,100                      0.8%
Thomas E. Furey, Jr. (1)       20,000                      0.2%


Directors and Executive       311,100                      3.6%
Officers as a group
(1)(2)(3)(4)(5)


Former Directors
Leonard Scrivo                967,978                     11.3%
Les Wasser                    130,000                      1.5%
Michael Scrivo (1)            105,000                      1.2%


Other Owners Over 5%
Donald J. Unger               980,000                     11.5%
Joseph Cooper                 557,478                      6.5%

   o        less than 1%

(1)  Does not include warrants currently exercisable to purchase 150,000 shares
     of common stock.

(2)  Does not include warrants exercisable to purchase 450,000 shares of common
     stock at $1.00 per share.

(3)  Includes 80,000 shares owned by members of his family in which Mr.
     Borkowski disclaims any beneficial interest.

(4)  Does not include warrants exercisable to purchase 475,000 shares of common
     stock.

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

(6)  Does not include warrants exercisable to purchase 125,000 shares of
     common stock at $1.00 per share.


                                      -33-

<PAGE>

Item 12.  Certain Relationships and Related Transactions

None

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K

On July 26, 2000, the Company filed a Form 8K with the Securities Exchange
Commission stating that Leonard Scrivo had resigned from the Company, and that
Robert J. Figliozzi had been selected by the Board of Directors to be its acting
Chairman. Additionally, it stated that Michael Scrivo had been appointed as the
Company's Chief Operating Officer. On October 11, 2000, the Company filed a Form
8K with the Securities and Exchange Commission stating that Company management
had uncovered certain financial reporting irregularities affecting the financial
statements of the Company for the fiscal years 1999 and 1998. This 8K filing
also disclosed that Leonard Scrivo and Michael Scrivo had been suspended from
association with the Company as of October 5, 2000, and that Michael Scrivo had
resigned from the Company as an officer, employee, and Director on October 6,
2000.

(a)      Financial Statements

The following statements of Vicon Fiber Optics Corp. are included in
Part II, Item 7:

                                                                         Page
                                                                         ----
Audit Report of Todres & Company LLP                                     10
Financial Statements:
Balance Sheet - December 31, 2001 and 2000                               11-12
Statements of Operations - Years ended
 December 31, 2001 and 2000                                              13
Statements of Shareholders' Equity -
Years ended December 31, 2001 and 2000                                   14
Statements of Cash Flows - Years ended
December 31, 2001 and 2000                                               15
Notes to Financial Statements - December 31, 2001
  and 2001                                                               16-30

(b)      Exhibits

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).


                                      -34-

<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/Arthur W. Levine
                                 Arthur W. Levine, President


                           Date

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/Arthur W. Levine      Director, President, Chief
ARTHUR W. LEVINE         Executive Officer and Chief
                         Financial Officer

/s/Robert J. Figliozzi   Director
ROBERT J. FIGLIOZZI

/s/Allan Borkowski       Director
ALLAN BORKOWSKI

/s/Michael J. Funke      Director
MICHAEL J. FUNKE

/s/Zachary Liebman       Director
ZACHARY LIEBMAN


                                      -35-