This Small Business Innovation Research (SBIR) Phase II research project will develop a non-contact optical stethoscope for use in Neonatal Intensive Care Units (NICU). Premature babies in NICU require monitoring for signs of lung congestion and heart disease. Currently NICU medical personnel use acoustic stethoscopes. The use of acoustic stethoscope has a number of highly undesirable side effects including withdrawal response, flinching, apnea, hypoxemia, change in sleep state, and possibility of contamination. During Phase I a prototype non-contact optical stethoscope, capable of recording good quality heart and lung sounds was developed. The non-contact stethoscope is based on a standard technique of interferometry with a novel fiber optic design. The fiber optic design avoids the use of glass components - mirrors, lenses, splitters, and prisms - and yields a light, rugged and inexpensive interferometer. The non-contact optical stethoscope based on the fiber optic interferometer could greatly improve the quality of care for neonates, burn victims, immuno-suppressed patients, and in those cases where direct contact should be avoided. A laser interferometer based on a novel fiber optic design has been developed. The interferometer based on fiber optics is light, inexpensive, and rugged as it does not require component alignment. The handheld point-and-listen microphone based on the fiber optic interferometer can be ideally positioned to enter the existing laser interferometry market and to open new markets including medical, preventive maintenance of rotating machinery, military urban and rescue operations, as well as law enforcement surveillance