VISION TWENTY ONE INC, S-1/A, 1998-05-12

VISION TWENTY ONE INC
S-1/A, 1998-05-12
MANAGEMENT SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 1998

REGISTRATION NO. 333-51437

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

PRE-EFFECTIVE

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

VISION TWENTY-ONE, INC.
(Exact name of registrant as specified in its charter)
---------------------

<TABLE>
<S> <C> <C>
FLORIDA 8741 59-3384581
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
THEODORE N. GILLETTE, PRESIDENT AND CEO
VISION TWENTY-ONE, INC. VISION TWENTY-ONE, INC.
7209 BRYAN DAIRY ROAD 7209 BRYAN DAIRY ROAD
LARGO, FL 33777 LARGO, FL 33777
(813) 545-4300 (813) 545-4300
(Address, including zip code, and telephone number, area (Name, address, including zip code, and telephone including
code, of registrant's principal executive offices) number, including area code, of agent for service)
</TABLE>

---------------------
WITH COPIES TO:
DARRELL C. SMITH, ESQUIRE
MARK A. CATCHUR, ESQUIRE
SHUMAKER, LOOP & KENDRICK, LLP
101 E. KENNEDY BLVD., SUITE 2800
TAMPA, FLORIDA 33602
(813) 229-7600

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times as practicable after this Registration Statement becomes effective
as the Selling Stockholders may determine.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8 (A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8 (A),
MAY DETERMINE.
================================================================================
<PAGE> 2

PROSPECTUS

VISION TWENTY-ONE, INC.

This Prospectus relates to up to 1,206,718 shares of Common Stock, par
value $.001 per share ("Common Stock") of Vision Twenty-One, Inc. (together with
its subsidiaries as applicable, the "Company"), which are being offered and sold
by certain stockholders of the Company described herein, (the "Selling
Stockholders"). Such shares represent the number of shares that have been issued
by the Company to the Selling Stockholders in transactions exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") in connection with acquisitions made by the Company.

The Common Stock is included in The Nasdaq Stock Market's National Market
(the "Nasdaq National Market") under the symbol "EYES." On May 11, 1998, the
last reported sales price for the Common Stock on the Nasdaq National Market was
$8.3125 per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" ON PAGES 5 TO 16 FOR A DISCUSSION OF CERTAIN MATERIAL
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON
STOCK OFFERED HEREBY.

The Common Stock may be sold by the Selling Stockholders from time to time
directly to purchasers or through agents, underwriters or dealers. See "Plan of
Distribution." If required, the names of any such agents or underwriters
involved in the sale of the Common Stock in respect of which this Prospectus is
being delivered and the applicable agent's commission or underwriter's discount,
if any, will be set forth in an accompanying supplement to this Prospectus (the
"Prospectus Supplement"). Furthermore, information concerning Selling
Stockholders may change from time to time and the changes will be set forth in
such a Prospectus Supplement.

The Selling Stockholders will receive all of the net proceeds from the sale
of the Common Stock pursuant to this Prospectus and will pay all underwriting
discounts and selling commissions, if any, applicable to the sale of the Common
Stock. The Company is paying all other expenses incident to the registration of
the securities registered hereunder.

The Selling Stockholders and any broker-dealers, agents or underwriters
which participate in the distribution of the Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them, or purchases by them of the Common Stock at a price less than
prevailing market price, may be deemed to be underwriting commissions or
discounts under the Securities Act. All sales of Common Stock registered hereby
shall be sold in connection with this Prospectus.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS MAY 12, 1998.

<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus and information under "Risk Factors." Unless the
context otherwise requires, references in this Prospectus to the Company or
Vision Twenty-One include Vision Twenty-One, Inc., its predecessors and its
subsidiaries. As used herein, the term "Managed Providers" refers to the
licensed optometrists and ophthalmologists employed by professional associations
and providing eye care services at Company clinic facilities and ambulatory
surgical centers ("ASCs"); "Managed Professional Associations" refers to the
professional associations which are managed by the Company pursuant to long-term
management agreements ("Management Agreements"); "Contract Providers" refers to
the licensed optometrists and ophthalmologists who are credentialed, or in the
process of being credentialed, to provide eye care services at optometry and
ophthalmology clinics and ASCs pursuant to the Company's managed care contracts;
"Affiliated Providers" refers collectively to the Managed Providers and the
Contract Providers; "Initial Public Offering" refers to the Company's initial
public offering of 2,100,000 shares of Common Stock on August 18, 1997; and
"Secondary Offering" refers to the Company's second public offering of 2,300,000
shares of Common Stock on November 20, 1997. Except as otherwise indicated, the
information contained in this Prospectus gives retroactive effect to a June,
1997 reverse stock split, resulting in an exchange of 1 share for 1.5 shares of
Common Stock issued and outstanding at the time of such split.

THE COMPANY

The Company provides a wide range of management and administrative services
to local area delivery systems ("LADS(sm)") established by the Company. LADS are
developed to provide for integrated networks of optometrists, ophthalmologists,
ASCs and retail optical centers which offer the full continuum of eye care
services in local markets. The Company began operations in 1984, providing
management services to seven optometrists practicing at eight clinic locations.
The Company currently provides its services to LADS located throughout the
United States through which its Affiliated Providers deliver eye care services.
The Affiliated Providers consist of Managed Providers and Contract Providers.
The Company's Affiliated Providers, in conjunction with select national retail
optical chains, deliver eye care services under the Company's managed care
contracts and discount fee-for-service plans covering the Company's exclusively
contracted patient lives.

The Company's goal is to enable each of its LADS to capture the leading
market share of fee-for-service patients and managed care members. To achieve
its goal, the Company is focused on the following strategies: (i) developing
LADS in order to provide for a complete continuum of easily accessible, high
quality and affordable eye care services, (ii) increasing patient revenue and
cost efficiencies for each LADS through practice development and managed care
initiatives and (iii) expanding into select new markets to create regional
networks of LADS.

The Company earns practice management fees by providing Managed Providers
with a wide range of management and administrative services. These management
and administrative services are designed to increase patient flow, while
effecting cost efficiencies, and to permit the Managed Provider to concentrate
on the delivery of easily accessible, high quality and affordable eye care
services. The Company also earns revenues by entering into capitated managed
care contracts with third-party insurers and payors and by administering
indemnity fee-for-service plans for its Affiliated Providers. The Company
believes it provides its Affiliated Providers with significant advantages in
negotiating, obtaining and effectively administering managed care contracts
through its experienced management team, management information systems, greater
capital resources and more efficient cost structure.

RECENT DEVELOPMENTS

1
<PAGE> 4

and other tangible and intangible assets. Concurrently with these acquisitions,
the Company entered into long-term Management Agreements with the related
professional associations employing 31 optometrists and one ophthalmologist.
These acquisitions were accounted for by recording assets and liabilities at
fair value and allocating the remaining costs to the related Management
Agreements. Additionally, the Company closed the acquisition of all of the
outstanding stock of The Complete Optical Laboratory, Ltd., Corp., located in
New Jersey which services the New Jersey optometry clinics acquired by the
Company and the Company closed the acquisition of substantially all of the
business assets of a managed care company located in Florida servicing over
82,700 patient lives. These acquisitions were accounted for under the purchase
method of accounting. In connection with these acquisitions, the Company
provided aggregate consideration of approximately $16.7 million, consisting of
786,952 shares of Common Stock and approximately $8.7 million in cash and
promissory notes in the aggregate principal amount of $21,000, subject to
closing adjustments. In addition, the Company is required to provide additional
contingent consideration consisting of 33,695 shares of Common Stock and up to
$600,000, to be paid to certain sellers if certain post-acquisition performance
targets are met.

In March 1998, the Company completed pooling of interests transactions with
EyeCare One Corp. ("EyeCare One") and Vision Insurance Plan of America, Inc.
("VIPA"). EyeCare One was the parent company of Stein Optical which operates 16
optometric retail locations in Milwaukee, Wisconsin. VIPA holds a single service
insurance license and delivers vision care benefits to approximately 19,000
patient lives in Wisconsin. These transactions were accounted for by the Company
as pooling of interests, and the costs of approximately $500,000 incurred in
connection with such transactions were charged to expense. In connection with
these transactions, the Company issued 1,109,806 shares of Common Stock, subject
to closing adjustments, valued at approximately $10.5 million.

The Company has also entered into binding letters of intent to acquire the
business assets of four optometry clinics, one ophthalmology clinic, four
optical dispensaries and one ASC located in Arizona and Florida. Concurrently
with the closing of these acquisitions, the Company expects to enter into
long-term Management Agreements with the related professional associations
employing four optometrists and two ophthalmologists. These acquisitions are
expected to be accounted for by recording assets and liabilities at fair value
and allocating the remaining costs to the related Management Agreements. In
connection with these acquisitions, the Company is providing aggregate
consideration of approximately $3.0 million, consisting of approximately 21,000
shares of Common Stock and approximately $2.8 million in cash, subject to
closing adjustments.

RISK FACTORS

Investors should consider the material risk factors involved in connection
with an investment in the Common Stock and the impact to investors from various
events which could adversely affect the Company's business. See "Risk Factors."

2
<PAGE> 5

SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
PRO FORMA
1995 1996 1997 1997(1)
--------- --------- --------- -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARES DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................. $ 3,082 $ 9,564 $56,267 $181,534
Operating expenses....................................... 4,300 15,524 55,353 173,970
------- ------- ------- --------
Income (loss) from operations............................ (1,218) (5,960) 914 7,564
Income (loss) before extraordinary charge................ (1,226) (6,120) (199) 2,488
Pro forma income (loss) before extraordinary charge per
common share(2) -- assuming dilution................... $ 0.17
========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------
PRO FORMA
ACTUAL AS ADJUSTED(2)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 4,554 $ 970
Total assets................................................ 116,558 136,135
Long-term debt and capital lease obligations, including
current maturities........................................ 25,883 34,865
Total stockholders' equity........................ $ 66,647 $ 75,928
</TABLE>

- ---------------

(1) Gives effect to the following transactions as if they were completed on
January 1, 1997: (i) the 1997 Acquisitions, (ii) the Block Acquisition,
(iii) the LaserSight Acquisitions, (iv) the EyeCare One and VIPA Merger, (v)
the 1998 Acquisitions, (vi) the Pending Acquisitions, and (vii) the
Company's Initial Public Offering and Secondary Offering and the application
of the net proceeds therefrom. See "The Acquisitions" and "Selected Pro
Forma Financial Data."
(2) Gives effect to the following transactions as if they were completed as of
December 31, 1997 (i) the EyeCare One and VIPA Merger, (ii) the 1998
Acquisitions and (iii) the Pending Acquisitions. See "The Acquisitions" and
"Selected Pro Forma Financial Data."

3
<PAGE> 6

SUPPLEMENTAL SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------- PRO FORMA
1995(1) 1996(1) 1997(1) 1997(2)
--------- --------- --------- -----------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................. $14,865 $21,854 $69,544 $181,534
Operating expenses....................................... 15,535 27,241 67,887 173,970
------- ------- ------- --------
Income (loss) from operations............................ (670) (5,387) 1,657 7,564
Income (loss) before extraordinary charge................ (816) (5,647) 83 2,488
Pro forma income (loss) before extraordinary charge per
common share -- assuming dilution...................... $ 0.17
========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1997
--------------------------------
PRO FORMA
SUPPLEMENTAL(1) AS ADJUSTED(3)
--------------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 4,868 $ 970
Total assets................................................ 120,357 136,135
Long-term debt and capital lease obligations, including
current maturities........................................ 27,284 34,865
Total stockholders' equity........................ 67,731 75,928
</TABLE>

- ---------------

(1) Gives effect to the EyeCare One and VIPA Merger which was accounted for as a
pooling of interests.
(2) Gives effect to the following transactions as if they were completed on
January 1, 1997: (i) the 1997 Acquisitions, (ii) the Block Acquisition,
(iii) the LaserSight Acquisitions, (iv) the 1998 Acquisitions, (v) the
Pending Acquisitions, and (vi) the Company's Initial Public Offering and
Secondary Offering and the application of the net proceeds therefrom. See
"The Acquisitions" and "Selected Pro Forma Financial Data."
(3) Gives effect to the 1998 Acquisitions and the Pending Acquisitions as if
they were completed as of December 31, 1997. See "The Acquisitions" and
"Selected Pro Forma Financial Data."

4
<PAGE> 7

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should carefully consider the following
risk factors, in addition to the other information set forth in this Prospectus,
in connection with an investment in the Common Stock offered hereby.

This Prospectus and certain information provided periodically in writing
and orally by the Company's designated officers and agents contain statements
which constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. The words "expect," "believe," "goal," "plan," "intend," "estimate," and
similar expressions and variations thereof used in this Prospectus are intended
to specifically identify forward-looking statements. Those statements appear in
a number of places in this Prospectus, particularly "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and include
statements regarding the intent, belief or current expectations of the Company,
its directors or its officers with respect to, among other things; (i) the
financial prospects of the Company; (ii) potential acquisitions by the Company
and the successful integration of both completed and future acquisitions; (iii)
the ability of the Company to efficiently and effectively manage its Managed
Providers; (iv) the Company's financing plans including the Company's ability to
raise additional debt and equity capital; (v) trends affecting the Company's
financial condition or results of operations including the company's stock price
and its potential impact on the number of shares utilized in acquisitions and on
future earnings per share; (vi) the Company's growth strategy and operating
strategy; (vii) the impact of current and future governmental regulations;
(viii) the Company's current and future managed care contracts; (ix) the
Company's ability to continue to recruit Contract Providers, to convert Contract
Providers to Managed Providers, and to maintain its relationships with
Affiliated Providers; (x) the Company's relationships with affiliated retail
optical companies; (xi) the Company's relationships with its buying group
participants and suppliers of eye care products and supplies; (xii) the
Company's ability to operate efficiently, profitably and effectively its new
Block Vision subsidiary, which includes a new business line and a significant
increase in the Company's managed care business; and (xiii) the Company's
revenue run rate and the impact thereon of acquisitions by the Company.
Prospective investors are cautioned that any such forward looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected in the forward
looking statements as a result of various factors. The factors that might cause
such differences include, among others, the following: (i) the Company
experiencing future operating and net losses; (ii) any material inability of the
Company to successfully integrate and profitably operate Block Vision and other
acquisitions; (iii) any material inability of the Company to identify,
consummate and integrate suitable acquisitions in conjunction with its growth
strategy or to ultimately close pending and identified acquisitions; (iv) any
material inability of the Company to acquire sufficient capital and financing to
fund its growth strategy; (v) the inability of the Company to expand its managed
care business, renew existing managed care contracts and maintain and expand its
Contract Provider Network; (vi) the Company's inability to negotiate managed
care contracts with HMOs; (vii) the inability of the Company to successfully and
profitably operate its managed care business; (viii) the managed practices'
inability to operate profitably; (ix) changes in state and/or federal
governmental regulations which could materially affect the Company's ability to
operate or materially affect the Company's profitability; (x) the inability of
the Company to maintain or obtain required licensure in the states in which it
operates and in the states in which it may seek to operate in the future, (xi)
the inability of the Company to successfully obtain public and/or private
investment capital to expand its operations; (xii) the Company's inability to
meet its financing covenants and commitments; (xiii) consolidation of the
Company's competitors, poor operating results by its competitors, or adverse
governmental or judicial rulings against its competitors; and (xiv) any adverse
change in the Company's medical claims to managed care revenue ratio. The
Company undertakes no obligation to publicly update or revise forward looking
statements to reflect events or circumstances after the date of this Prospectus
or to reflect the occurrence of unanticipated events.

LIMITED OPERATING PROFITABILITY. Although the Company has recently
operated profitably, the same has been for a short period of time and there can
be no assurance that the Company will not incur operating and net losses or
continue to achieve continued profitability in the future. Although the Company
has experienced substantial revenue growth, the Company incurred operating and
net losses in the past four years.

5
<PAGE> 8

RISKS ASSOCIATED WITH EXPANSION STRATEGY. A significant portion of the
Company's expansion strategy is to grow its Managed Provider network through the
acquisition of certain assets of ophthalmology and optometry practices, ASCs and
related businesses. The Company from time to time reviews and will continue to
review acquisition opportunities (some of which may be material to the Company)
that will further broaden its LADS or geographic presence. The Company is
currently engaged in preliminary discussions regarding various possible
acquisitions, some of which are material. However, the Company currently has no
agreement, arrangement or understanding which at this time, based upon all
factors considered is reasonably certain to close, with respect to any
acquisitions that are, individually or in the aggregate, material to the
Company. The Company's acquisition strategy places significant demands on the
Company's resources and there can be no assurance that the Company's management
and operational systems and structure can be expanded to effectively support the
Company's continued acquisition strategy. The success of the Company's expansion
strategy will depend on factors which include the following:

The Company's Stock Price. The Company expects to continue to use its
Common Stock as consideration for future acquisitions in conjunction with
its expansion strategy, which will be a factor in the Company's future
acquisitions, financial position and performance. The number of shares of
Common Stock the Company is ultimately required to provide in connection
with its acquisitions will be affected by the market price for its Common
Stock and the number of such shares so provided will affect the Company's
future earnings per share. The Company's stock price has fluctuated since
the Initial Public Offering and any significant and continuing decline in
the Company's stock price would have a negative impact on the Company's
ability to implement its growth strategy in the future and would have a
negative impact on the Company's financial position and performance.

Ability to Identify and Consummate Suitable Acquisitions. The Company
intends to devote substantial resources to identifying, negotiating and
consummating appropriate acquisitions. The Company may compete for
acquisition opportunities with entities that have greater resources than
the Company. There can be no assurance that suitable acquisition candidates
are available or can be identified or that acquisitions can be consummated
on terms favorable to the Company. Additionally, several acquisitions by
the Company have been closed in escrow and another acquisition which has
been agreed to but not completed, all of which have been included in the
pro forma calculations contained herein. Any failure by the Company
ultimately to close a material portion of such acquisitions and, where
applicable, to obtain a release from escrow could have a material adverse
effect on the Company's pro forma financial statements contained herein and
on the Company's future results of operations and financial condition. See
"The Acquisitions."

Integration of Acquisitions. The Company has made significant
acquisitions in the past year. In the past twelve months, the size of its
Contract Provider network, the number and size of its managed care
contracts and related covered lives and the number of clinics and ASCs
managed by the Company have increased significantly. The Company's
financial results in fiscal quarters immediately following a material
acquisition or series of acquisitions may be adversely impacted while the
Company attempts to integrate the acquisition or acquisitions. There can be
no assurance that there will not be substantial unanticipated costs or
problems associated with the integration effort. During the first few
months after an acquisition, the Company's expenses related to an
acquisition may exceed the revenue it realizes from the acquisition and,
accordingly, any such acquisition may have a negative effect on the
Company's short-term operating results. As the Company pursues its
expansion strategy, there can be no assurance that the Company will be able
to continue to successfully integrate acquisitions and any failure or
inability to do so may have a material adverse effect on the Company's
results of operations or financial condition. In addition, acquisitions
require the Company to attract and retain competent and experienced
management personnel and require the integration of reporting and tracking
systems, management information systems and other operating systems. At
present, the Company's recent acquisitions have not been fully integrated
into its management information systems and there can be no assurance that
the Company will be able to successfully integrate its management
information systems in the near future. There can also be no assurance that
the Company will be able to attract suitable management or other personnel
or effectively expand, its operating systems. The success of the Company's
expansion strategy will depend on the

6
<PAGE> 9

Company's ability to effectively manage an increasing number of new
acquisitions while continuing to manage its existing business.
Additionally, in acquisitions where the practice does not, after closing,
obtain employment agreements with its professionals due to its negotiations
with the Company, the Company has a risk that the practice it manages could
lose a significant portion of its income in the event such professionals
terminate their affiliations with the practice.

Availability of Funds for Expansion Strategy. The Company's expansion
strategy will require that substantial capital investment and adequate
financing be available to the Company. Capital is needed not only for
acquisitions, but also for the integration of operations and the addition
of equipment and technology. As of April 27, 1998, the Company had borrowed
approximately $41.0 million under its current bank credit facility for use
in repaying its previous bridge credit facility, funding certain
acquisitions and for general working capital purposes. In the future, the
Company may be required to obtain additional financing through other
borrowings or the issuance of additional equity or debt securities to
finance its growth and acquisition strategies, which could have an adverse
effect on the value of the shares of the Company's Common Stock. There can
be no assurance that the Company will be able to obtain such financing or
that, if available, such financing will be on terms acceptable to the
Company. An inability of the Company to obtain suitable additional future
financing could cause the Company to substantially change its expansion
strategy, which could have a material adverse effect on the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

Managed Care Contract Expansion. The success of the Company's
expansion strategy also will be dependent on its ability to maintain and
expand its managed care contract relationships with HMOs and other third
party payors. The ability of the Company to maintain and expand its
Contract Provider network and retail affiliations will be important in
expanding these contractual relationships with both existing and new
payors. Correspondingly, expanding managed care contract relationships will
be important in maintaining and expanding its Contract Provider network and
retail affiliations. Additionally, the ability to engage in acquisitions
that add to the Company's Managed Provider network will be dependent upon
the Company's ability to expand its managed care contract relationships.

Risks Associated with Merger Transactions. Several of the Company's
acquisitions have been accomplished by way of merger. As a result of such
merger transactions, there could be potential liabilities to which the
Company could be subject. The agreements entered into in connection with
the acquisitions provide for the Company to be fully indemnified against
any losses incurred by the Company as a result of certain material
liabilities. However, while the Company is not aware of any such
liabilities, there can be no assurance that the Company will not incur
losses in the event that the indemnifications are inadequate to reimburse
the Company for any such losses.

Information Systems. The Company is currently in the process of
modifying its information systems to be year 2000 compliant. The Company
expects its information systems to be year 2000 compliant within a
sufficient amount of time to meet its needs, however, expenses to the
Company will result in connection with its effort to make these
modifications. The Block Vision managed care information systems are
currently year 2000 compliant and Block Vision is in the process of
modifying its remaining information systems to be year 2000 compliant.
While the Company also expects to initiate communications with significant
suppliers, customers and other third parties with which the Company does
business in an attempt to minimize the potential disruption to the
Company's operations resulting from year 2000 problems at such other
places, there can be no assurances, however, that the computer systems of
other companies would not have an adverse effect on the Company's
operations.

RELIANCE ON AFFILIATED PROVIDERS. The Company's revenue depends on revenue
generated by the Affiliated Providers. There can be no assurance that the
practices managed by the Company will continue to maintain successful practices,
that the Management Agreements between the Company and such professional
associations will not be terminated or that the Managed Providers will continue
to be employed by the professional associations. Under the Management
Agreements, the Company has agreed with the professional associations that,
subject to certain exceptions, it will not provide management services for any
practice

7
<PAGE> 10

located within five miles of such professional associations without first
obtaining the express written consent of the professional associations. The
Company's ability to expand the managed care business will be dependent upon the
Company's ability to recruit and maintain an expanded Contract Provider network
as well as to market such network successfully to payors. The inability to
effectively expand the network and contractual relationships with payors would
have a material adverse effect on the Company's growth strategy. Additionally,
the practice management fees earned by the Company pursuant to substantially all
of its Management Agreements will fluctuate depending on variances in revenues
and expenses of the Managed Professional Association and thus the Company's
revenue and profitability in connection with its Management Agreements will be
directly and adversely affected by poor operating results of its Managed
Professional Associations.

RISKS ASSOCIATED WITH MANAGED CARE CONTRACTS AND CAPITATED FEE
ARRANGEMENTS. As a result of the Block Acquisition, the Company's managed care
business has increased significantly. Additionally, as an increasing percentage
of the population is covered by managed care organizations, the Company believes
that its success will be, in part, dependent upon its ability to negotiate
managed care contracts with HMOs, health insurance companies and other third
party payors pursuant to which services will be provided on a risk sharing or
capitated basis. Additionally, a significant portion of the Company's managed
care business is pursuant to a small percentage of its contracts and the loss of
any one of those could have an adverse effect on the Company's results of
operations. Most of the Company's managed care contracts are for one year terms
which automatically renew and the contracts are terminable by either party on
sixty days notice. Under some of these contracts, the health care provider may
accept a pre-determined amount per month per patient in exchange for providing
all necessary covered services to the patients covered under the agreement.
These contracts pass much of the risk of providing care from the payor to the
provider. The proliferation of these contracts in markets served by the Company
could result in greater predictability of revenue, but less certainty with
respect to profitability. There can be no assurance, however, that the Company
will be able to negotiate satisfactory arrangements on a risk-sharing or
capitated basis. In addition, to the extent that patients or enrollees covered
by these contracts require, in the aggregate, more frequent or extensive care
than is anticipated, operating margins may be reduced or the revenue derived
from these contracts may be insufficient to cover the costs of the services
provided. Any such developments could have a material adverse effect on the
Company's results of operations or financial condition.

RISKS ASSOCIATED WITH BLOCK VISION'S BUYING GROUP. As a result of the
Block Acquisition, the Company provides billing and collection services to
suppliers of optical products benefiting suppliers and buyers of eye care
products. Block Vision had revenues of $54.6 million from its buying group
division for the year ended April 30, 1997. The Company's business arrangements
are terminable at any time by Block Vision or its customers. Any loss of a
significant number of customers in connection with this business could have a
material adverse effect on the results of operations of the Company. In
connection with its buying group services, Block Vision bears substantial credit
risk, which if not managed successfully could have a material adverse effect on
the Company, its cash flows and results of operations. In addition, the
operations of the buying group may be subject to certain federal laws, including
anti-kickback laws. A determination that the buying group operations are in
violation of such laws could have a material adverse effect on the results of
operations of the buying group division.

GOVERNMENT REGULATIONS. Business arrangements between business
associations that provide practice management services and ophthalmologists and
optometrists are regulated extensively at the state and federal levels,
including regulation in the following areas:

Corporate Practice of Optometry and Ophthalmology. The laws of many
states prohibit corporations that are not owned entirely by eye care
professionals from employing eye care professionals, having control over
clinical decision-making, or engaging in other activities that are deemed
to constitute the practice of optometry and ophthalmology. The Company
contracts with professional associations (which are owned by one or more
licensed optometrists or ophthalmologists), which in turn employ or
contract with licensed optometrists or ophthalmologists to provide
professional services. The Company performs only non-professional services,
is not representing to the public or its customers that it provides
professional eye care services, and is not exercising influence or control
over the practices of the eye care practitioners employed by the
professional associations. Furthermore, the Management Agreements
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between the Company and the Managed Professional Associations specifically
provide that all decisions required by law to be made by professionals
shall be made by such professionals. While certain shareholders of Managed
Professional Associations that perform the practice of medicine or
optometry are also involved in Company management, they act independently
when making decisions on behalf of their professional corporations and the
Company has no right (and does not attempt to exercise any right) to
control those decisions.

Fee-Splitting and Anti-kickback Laws

State Law. Most states have laws prohibiting paying or receiving any
remuneration, direct or indirect, that is intended to induce referrals for
health care products or services. Many states also prohibit "fee-splitting"
by eye care professionals with any party except other eye care
professionals in the same professional corporation or practice association.
In most cases, these laws apply to the paying of a fee to another person
for referring a patient or otherwise generating business, and do not
prohibit payment of reasonable compensation for facilities and services
(other than the generation of business), even if the payment is based on a
percentage of the practice's revenues.

The Florida fee-splitting law prohibits paying or receiving any
commission, bonus, kickback, or rebate, or engaging in any split-fee
arrangement in any form for patient referrals or patronage. According to a
Florida court of appeals decision interpreting this law, it does not
prohibit a management fee that is based on a percentage of gross income of
a professional practice. However, the Florida Board of Medicine recently
issued an order determining that a management fee charged by a publicly
held national management company based upon a percentage of revenue
constitutes illegal fee-splitting. The case before the Board involved
arrangements that are different from the Company's arrangements in certain
respects, including the fact the management fee was based on a percentage
of the increase in net revenues of the practice after the management
arrangement commenced. The ruling is limited to the facts presented to the
Board. The Board's statement of the rationale for its opinion is unclear as
to whether it would also apply to arrangements similar to those utilized by
the Company. The Board of Medicine's order has been stayed to permit an
appeal to a Florida district court of appeals. The appellate court could
reverse or affirm the Board's opinion, or clarify that it is correct only
in limited situations. If the Board's order is allowed to stand without
clarification, there is a risk that the Company's arrangements with
physicians in the State of Florida could be determined to be in violation
of the fee-splitting statute. Since the same statute applies to
optometrists, a risk would also exist as to the Company's arrangements with
them. The Company's Management Agreements provide that if they are
determined in the future to violate any law, the parties agree to use their
best efforts to modify the arrangement to approximate as closely as
possible, consistent with law, the economic position of the parties prior
to the modification and, if they are unable to reach agreement on a new
arrangement, to submit the matter to arbitration for the purpose of
reaching an equitable alternative arrangement. In the event the form of
Management Agreement utilized by the Company in Florida is ever determined
to be in violation of state law, and the parties or the arbitrator are
unable to arrive at a satisfactory modification to the Management
Agreement, there could be a material adverse impact on the Company's
current Florida Management Agreements and therefore, the Company's results
of operations.

An Arizona law prohibits "dividing a professional fee" only if it is
done "for patient referrals," similar to the language of the Florida law.
Other states, such as Illinois and New York, have fee-splitting statutes
that have been interpreted to prohibit any compensation arrangements that
are based on a percentage of a physician's revenue, and such laws shall
preclude the Company from using its typical management arrangements at such
time as Managed Provider relationships are created in those states.

Federal Law. Federal law prohibits the offer, payment, solicitation
or receipt of any form of remuneration in return for the referral of
patients covered by federally funded health care programs such as Medicare
and Medicaid, or in return for purchasing, leasing, ordering or arranging
for the purchase, lease or order of any product or service that is covered
by a federal program. For this reason, the Management Agreement provides
that the Company will not engage in direct marketing to potential sources
of business, but will only assist the practice's personnel in these
endeavors by providing training,
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<PAGE> 12

marketing materials and technical assistance. On April 15, 1998 the Office
of Inspector General of the U.S. Department of Health and Human Services
("OIG") issued Advisory Opinion 98-4, which raised questions about whether
a percentage of revenue management fee arrangement could be viewed as
violating the federal anti-kickback law if the manager is involved in
helping generate revenues derived from Medicare and Medicaid programs.
Under the arrangement reviewed by the OIG, the manager's duties included
management and marketing services, negotiation and oversight of health care
contracts with various payors, including Federal health care programs, and
setting up provider networks that included the physician. Payments to the
management company included a "fair market value payment" for operating
services provided by the manager, a payment based on a percentage of the
cost of capital assets, and an additional 20% of net revenues of the
practice for management services. The OIG noted that since the manager was
paid a percentage of net revenue, including revenue from business derived
from managed care contracts arranged by the manager, that a potential
technical violation of the anti-kickback statute existed. The OIG further
noted that since the manager would presumably receive some compensation for
management efforts in connection with the development and operation of
specialist networks, any evaluation by the OIG would require information
about the relevant financial relationships. The OIG summarized that while
the management arrangement "may" violate the anti-kickback statute, a
definitive conclusion would require a determination of the parties' intent,
which is beyond the scope of the advisory opinion process.

The Company's Management Agreements under which the Company operates
are factually distinct from the arrangements reviewed by the OIG in its
advisory opinion. Therefore, management believes the opinion to be
inapplicable relative to the relationships with its Managed Providers. As a
result, management will not change the terms of these relationships, but
will continue to monitor any clarifications or determinations in this area.
The Company's Management Agreements provide that if they are determined in
the future to violate any law, the parties agree to use their best efforts
to modify the arrangement to approximate as closely as possible, consistent
with law, the economic position of the parties prior to the modification
and, if they are unable to reach agreement on a new arrangement, to submit
the matter to arbitration for the purpose of reaching an equitable
alternative arrangement, however, in the event the form of Management
Agreement utilized by the Company is ever determined to be in violation of
the federal anti-kickback statute, it is likely that there would be a
material adverse impact on the Company and its results of operation.

Advertising Restrictions. Many states prohibit eye care professionals
from using advertising which includes any name other than their own, or
from advertising in any manner that is likely to lead a person to believe
that a non eye care professional is engaged in the delivery of eye care
services. The Management Agreement provides that all advertising shall
conform to these requirements.

In addition, the Company's managed care arrangements with health care
service payors on the one hand, and its network of Affiliated Providers on the
other, are subject to federal and state regulations, including the following:

Insurance Licensure. Most states impose strict licensure requirements
on health insurance companies, HMOs, and other companies that engage in the
business of insurance. In most states, these laws do not apply to
discounted fee-for-service arrangements or networks that are paid on a
"capitated" basis, i.e. based on the number of covered persons the network
is required to serve without regard to the cost of service actually
rendered, unless the association with which the network provider is
contracting is not a licensed health insurer or HMO. There are exceptions
to these rules in some states. For example, certain states require a
license for a capitated arrangement with any party unless the risk-bearing
association is a professional corporation that employs the eye care
professionals. In the event that the Company is required to become licensed
under these laws, the licensure process can be lengthy and time consuming
and, unless the regulatory authority permits the Company to continue to
operate while the licensure process is progressing, the Company could
experience a material adverse change in its business while the licensure
process is pending. In addition, many of the licensing requirements mandate
strict financial and other requirements which the Company may not
immediately be able to meet. Once licensed, the Company would be subject to
continuing oversight by and reporting to the respective regulatory agency.
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<PAGE> 13

Limited Health Service Plans and Third Party Administration
Licensing. Some states permit managed care networks that assume insurance
risk, but only as to a limited class of health services, to be licensed as
limited health service plans, and thereby avoid the need to be licensed as
an insurer or HMO even if its arrangements are with individual subscribers
or self-insured employers. Additionally, some states require licensing for
companies providing administrative services in connection with managed care
business. The Company intends to seek such licenses in those states where
it is available for eye care networks. However, the Company may not be able
to meet such requirements in all cases and should this result in the loss
of any material business (individually or in the aggregate) it could have a
material adverse effect on the Company's business and operating results.

Physician Incentive Plans. Medicare regulations impose certain
disclosure requirements on managed care networks that compensate providers
in a manner that is related to the volume of services provided to Medicare
patients (other than services personally provided by the provider). If such
incentive payments exceed 25 percent of the provider's potential payments,
the network is also required to show that the providers have certain "stop
loss" financial projections and to conduct certain Medicare enrollee
surveys.

"Any Willing Provider" Laws. Some states have adopted, and others are
considering, legislation that requires managed care networks to include any
provider who is willing to abide by the terms of the network's contracts
and/or prohibit termination of providers without cause. Such laws would
limit the ability of the Company to develop effective managed care networks
in such states.

The Company and its affiliated professional associations are subject to a
range of antitrust laws that prohibit anti-competitive conduct, including price
fixing, concerted refusals to deal and divisions of markets. Among other things,
these laws limit the ability of the Company to enter into Management Agreements
with separate practice groups that compete with one another in the same
geographic market. This does not apply to professionals within the same practice
group. In addition, these laws prevent acquisitions of business assets that
would be integrated into existing professional associations if such acquisitions
substantially lessen competition or tend to create a monopoly.

The several laws described above have civil and criminal penalties and have
been subject to limited judicial and regulatory interpretation. They are
enforced by regulatory agencies that are vested with broad discretion in
interpreting their meaning. The Company's agreements and activities have not
been examined by federal or state authorities under these laws and regulations.
For these reasons, there can be no assurance that review of the Company's
business arrangements will not result in determinations that adversely affect
the Company's operations or that certain agreements between the Company and eye
care providers or third-party payors will not be held invalid and unenforceable.
In addition, these laws and their interpretation vary from state to state. The
regulatory framework of certain jurisdictions may limit the Company's expansion
into, or ability to continue operations within, such jurisdictions if the
Company is unable to modify its operational structure to conform with such
regulatory framework. Any limitation on the Company's ability to expand could
have an adverse effect on the Company.

COST CONTAINMENT AND REIMBURSEMENT TRENDS. A significant portion of the
revenues received by the Affiliated Providers are derived from government
sponsored health care programs and private third-party payors. The health care
industry has experienced a trend toward cost containment as government and
private third-party payors seek to impose lower reimbursement and utilization
rates and negotiate reduced payment schedules with service providers. The
Company believes that these trends may result in a reduction from historical
levels in per patient revenue received by the professional associations. Recent
changes in Medicare payment rates will reduce payments to optometrists and
ophthalmologists. Medicare payments to physicians and other practitioners are
based on the "relative value units" ("RVUs") assigned to the service in
question. These RVUs were adjusted effective January 1, 1997 in a manner that
generally assigns a relatively lower value to services performed by optometrists
and ophthalmologists. As a result of these changes, the projected Medicare
payments to optometrists and ophthalmologists have and will be reduced by less
than five percent. Additionally, these RVUs were adjusted further as to
ophthalmologists' services, effective January 1, 1998, whereupon projected
Medicare payments for such services have and will be reduced by approximately
two and

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<PAGE> 14

one-half percent. Private insurance payments could also be affected to the
extent that the payment methodologies used by insurance companies are based on
the Medicare RVUs. Further reductions in payments to professionals or other
changes in reimbursement for health care services could have an adverse effect
on the Company's results of operations. There can be no assurance that any
potential reduced revenues and operating margins from such trends could be
offset through cost reductions, increased volume, introduction of new procedures
or otherwise.

RISKS ARISING FROM HEALTH CARE REFORM. There can be no assurance that the
laws and regulations of the states in which the Company operates will not change
or be interpreted in the future either to restrict or adversely affect the
Company's relationships with its Affiliated Providers or the operation of the
professional associations with which it contracts. Federal and state governments
are currently considering various types of health care initiatives and
comprehensive revisions to the health care and health insurance systems. Some of
the proposals under consideration, or others that may be introduced, could, if
adopted, have a material adverse effect on the Company's financial condition and
results of operations. It is uncertain what legislative programs, if any, will
be adopted in the future, or what actions Congress or state legislatures may
take regarding health care reform proposals or legislation. In addition, changes
in the health care industry, such as the growth of managed care organizations
and provider networks, may result in lower payments for the services of the
Affiliated Providers, which could have a material adverse effect on the Company.
On August 5, 1997, the President signed into law a number of Medicare provisions
as part of the Balanced Budget Act of 1997. When compared to projected Medicare
spending levels under current law, the legislation would reduce Medicare
spending by $115.0 billion over five years. The vast majority of these savings
would come from reductions in payments for services of health care facilities,
practitioners and other providers. The legislation eliminated disparities in
payment rates for similar services by physicians in different specialties
effective January 1, 1998. Payment rates for physician services will no longer
necessarily be updated for inflation. Beginning in 1998, inflation increases
have been adjusted based on a "sustainable growth rate" defined with reference
to the change in (i) the number of Medicare beneficiaries, (ii) the gross
domestic product per capita, and (iii) the level of expenditures for physician
services. The legislation will also revise Medicare payments for practice
expense costs. The legislation will also, among other things, change payments to
managed care plans from the current rate of 95% of fee-for-service rates in the
area to a system based on nationwide average per capita fee-for-service
spending, with an adjustment factor for local area wage rates. This will result
in curbing future increases in high payment urban areas while increasing
payments in rural areas. The legislation will also reduce the annual inflation
adjustment for ASC fees by two percentage points. It is impossible to determine
precisely how these changes will affect payments for services of
ophthalmologists, optometrists and ASC facilities. Any reductions in payment for
these services could have an adverse effect on the Company's results of
operations and financial condition.

NON-COMPETITION COVENANTS. The Management Agreements require each
professional association to use its best efforts to enter into employment
agreements with each Managed Provider that include covenants not to compete with
the professional association for periods ranging from one to two years after
termination of employment, and which require the professional association's
shareholders to pay certain specified amounts to the Company if such shareholder
professionals violate their respective covenants not to compete. Laws affecting
the enforceability of such covenants vary significantly from state to state. In
most states, a covenant not to compete will be enforced only to the extent it is
necessary to protect a legitimate business interest of the party seeking
enforcement, does not unreasonably restrain the party against whom enforcement
is sought, and is not contrary to the public interest. This determination is
made based on all the facts and circumstances of the specific case at the time
enforcement is sought. For this reason, one cannot predict with certainty
whether a court will enforce such a covenant in a given situation. In addition,
it is unclear whether a management company's interest under a management
agreement will be viewed by the courts as the type of protectable business
interest that would permit the management company to enforce such a covenant or
to require the managed professional association to enforce such a covenant
against the employed Managed Provider. Furthermore, liquidated damages
provisions will not be enforced unless the court determines that the amount is a
reasonable estimate of actual damages that would be difficult to ascertain in a
precise manner. Since the intangible value of the Management Agreement depends
primarily on the ability of the professional association to preserve its
business, which could be harmed if employed professionals went into competition
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<PAGE> 15

with the professional association, a determination that these provisions will
not be enforced could have a material adverse effect on the Company. See
"Business -- Management Agreements." Additionally, the Company is not permitted
under certain circumstances to expand its Affiliated or Managed Provider network
within a certain geographical area surrounding a Managed Provider without prior
consent of the Managed Provider. Such covenants could serve to limit market
penetration opportunities within a LADS and thus have an adverse effect on the
Company's ability to expand within a LADS.

RISKS ASSOCIATED WITH BSM RELATIONSHIP. The Company has exclusive
consulting agreements with leading ophthalmology practice consultants BSM
Consulting Group ("BSM") and Bruce S. Maller. The agreements are for a term of
five years and may be terminated by a party only for "cause" in the event of a
material breach which remains uncured for 30 days or the occurrence of certain
events related to bankruptcy. Mr. Maller is the chief executive officer of BSM
and a director of the Company. BSM and Mr. Maller assist the Company in
identifying and evaluating suitable ophthalmology practices for acquisition,
integrating the acquired practices and providing strategic planning designed to
enhance the growth and development of the Affiliated Providers. A large part of
the success of the Company in implementing its growth strategy will depend on
the ability of such consultants to identify and evaluate suitable ophthalmology
practices and to assist Managed Providers in growing their practices, and there
can be no assurance that the consultants will be able to provide such services
successfully. Furthermore, in the event that such consultants are no longer able
to provide such services for any reason, there can be no assurance that the
Company will be able to retain other consultants with similar expertise or
undertake these tasks internally. Therefore, the loss of the services of either
BSM or Maller could have a material adverse effect on the Company. See "Certain
Transactions."

RISKS RELATED TO AMORTIZATION OF INTANGIBLE VALUE IN MANAGEMENT
AGREEMENTS. The Company's pro forma combined total assets reflect substantial
intangible assets in the form of Management Agreements with Managed Providers.
The intangible asset value represents the excess of cost over the fair value of
the separate net assets acquired in connection with rights received by the
Company under its acquired Management Agreements and goodwill. There can be no
assurance that the value of such assets will ever be realized by the Company.
These intangible assets are expected to be amortized on a straight-line method
over a life of 25 years. The Company evaluates on a regular basis whether events
and circumstances have occurred that indicate that all or a portion of the
carrying amount of the asset may no longer be recoverable, in which case an
additional charge to earnings would become necessary. Any determination
requiring the write-off of a significant portion of unamortized intangible
assets would adversely affect the Company's results of operations. See "Selected
Pro Forma Financial Data."

COMPETITION. The health care industry is highly competitive and subject to
continual changes in the methods by which services are provided and the manner
in which health care providers are selected and compensated. The Company
believes that private and public reforms in the health care industry emphasizing
cost containment and accountability will result in an increasing shift of eye
care from highly fragmented, individual or small practice providers to larger
group practices, affiliated practice groups or other eye care delivery systems.
The Company competes with other physician practice management companies which
seek to acquire the allowable business assets of and provide management services
to eye care professionals, some of which have substantially greater financial
resources than the Company. Companies in other health care industry segments,
such as managers of other hospital-based specialties or currently expanding
large group practices, some of which have financial and other resources greater
than those of the Company, may become competitors in providing management to
providers of eye care services. Increased competition could have a material
adverse effect on the Company's financial condition and results of operations.
The basis for competition in the practice management area is service, pricing,
strength of the delivery network, strength of operational systems, the degree of
cost efficiencies and synergies, marketing strength, management information
systems, managed care expertise, patient access and quality assessment programs.
The Company also competes with other providers of eye care services, including
HMOs, PPOs and private insurers, for managed care contracts, many of which have
larger provider networks and greater financial and other resources than the
Company. Managed care organizations compete on the basis of administrative
strength, size, quality and geographic coverage of their provider networks,
marketing abilities, informational systems, the strategy of their managed care
contracts, operating efficiencies and price. The Company also competes with
other buying group

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<PAGE> 16

organizations for group members. Buying group organizations compete on the basis
of size and purchasing power of its member buying group, the strength of its
credit, and the strength of its supplier agreements and relationships. See
"Business -- Competition."

RISKS ASSOCIATED WITH EYE CARE SERVICES. The Company's business entails an
inherent risk of claims of liability. The optometrists, ophthalmologists and
ASCs which the Company contracts with are involved in the delivery of health
care services to the public and, therefore, are exposed to the risk of
professional liability claims. As a result of the Company providing management
services pursuant to its Management Agreements, the Company may also be named as
a co-defendant in professional liability lawsuits against its Affiliated
Providers from time to time. The Company does not control the practice of
optometry or ophthalmology by the Affiliated Providers or the compliance with
regulatory and other requirements directly applicable to the Affiliated
Providers and their practices. Claims of this nature, if successful, could
result in substantial damage awards to the claimants that may exceed the limits
of any applicable insurance coverage. Insurance against losses related to claims
of this type can be expensive and varies widely from state to state. The Company
is indemnified under the Management Agreements for claims against the
professional associations with which it contracts and maintains liability
insurance for itself. Successful malpractice claims asserted against the
professional associations, however, could have an adverse effect on the
Company's profitability. While the Company believes it maintains reasonable
levels of liability insurance coverage, there can be no assurance that a pending
or future claim or claims will not be successful or, if successful, will not
exceed the limits of available insurance coverage or that such coverage will
continue to be available at acceptable costs and on favorable terms. See
"Business -- Management Agreements."

DEPENDENCE ON KEY INDIVIDUALS. The success of the Company is dependent
upon the continued services of the Company's senior management. The loss of the
services of one or more of these individuals, including the Company's Chairman,
President and Chief Executive Officer, Theodore N. Gillette, O.D. could have a
material adverse effect on the Company. The Company and Dr. Gillette are parties
to an employment agreement which expires on September 30, 2001 and is renewable
for subsequent one year terms. See "Management -- Employment Agreements." There
can be no assurance that Dr. Gillette will remain employed by the Company during
such period or that his employment agreement will be renewed. The Company
believes that its future success will also depend in part upon its ability to
attract and retain qualified management personnel. Competition for such
personnel is intense and the Company competes for qualified personnel with
numerous other employers, some of whom have greater financial and other
resources than the Company. There can be no assurance that the Company will be
successful in attracting and retaining such personnel. See "Management."

CONTROL BY CURRENT STOCKHOLDERS AND MANAGEMENT. The Company's current
officers and directors own a significant portion of the outstanding shares of
Common Stock. Accordingly, these individuals, as a group, will have the ability
to significantly influence and may be able to control all matters requiring
stockholder approval, including the election of the Company's directors and any
amendments to the Company's Articles of Incorporation and Bylaws, and to control
the business of the Company. Such control could preclude any acquisition of the
Company and could adversely affect the market price of the Common Stock. See
"Principal Stockholders" and "Description of Capital Stock."

SHARES ELIGIBLE FOR FUTURE SALE. Upon sale by the Selling Stockholders of
the shares being offered hereby, the Company will have 14,180,657 shares of
Common Stock outstanding of which 1,206,718 shares being offered hereby,
2,300,000 shares sold in the Secondary Offering, the 2,100,000 shares sold in
the Initial Public Offering and 25,386 shares issued pursuant to the stock
option exercises covered under the Company's Form S-8 registration statement
will be freely tradeable without restriction or the requirement of future
registration under the Securities Act of 1933 (the "Securities Act"). All of the
remaining 8,548,553 shares are Restricted Securities ("Restricted Securities")
as that term is defined by Rule 144 promulgated under the Securities Act and are
subject to certain restrictions described below. Holders of 5,624,363 of the
Restricted Shares are eligible to sell a portion of such shares pursuant to Rule
144 under the Securities Act subject to manner of sale, volume, notice and
information requirements of Rule 144 and certain of such holders are subject to
lock-up agreements described below. Holders of the 2,924,190 remaining
Restricted Shares will be eligible to sell a portion of such shares pursuant to
Rule 144 at differing dates on and after June 1, 1998. A
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<PAGE> 17

portion of these shares are subject to certain registration rights agreements
requiring the Company to register such shares under certain circumstances. See
"Description of Capital Stock -- Registration Rights" and "Shares Eligible for
Future Sale." The Company has reserved 1,600,000 shares of Common Stock under
the Incentive Plan and the Professional's Plan for issuance pursuant to stock
options granted by the Company, of which options to purchase approximately 1.1
million shares have been granted. See "Management -- Stock Option Plans." In
addition 974,808 shares of Common Stock are reserved for issuance in the event
of the exercise of warrants granted by the Company. See "Description of Capital
Stock -- Warrants." The warrant shares are subject to registration rights
agreements requiring the Company to register such shares under certain
circumstances and otherwise will be eligible for resale subject to all of the
limitations on resale imposed by Rule 144. See "Description of Capital -- Stock
Registration Rights."

The Company has filed a Form S-8 registration statement under the
Securities Act to register all shares of Common Stock subject to then
outstanding stock options and Common Stock issuable pursuant to the Incentive
Plan. Shares covered by this registration statement are eligible for sale in the
public markets, subject to the Lock-up Agreements relating to shares held by
executive officers. See "Management" and "Shares Eligible for Future Sale."

The Company is unable to predict the effect, if any, that future sales of
shares, or the availability of shares for future sale, will have on the market
price of the Common Stock prevailing from time to time. Sales of substantial
amounts of Common Stock in the public market, or the availability of such shares
for future sale, could adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise additional capital through an
offering of its equity securities. See "Shares Eligible for Future Sale" and
"Plan of Distribution."

The Company may issue its Common Stock from time to time in connection with
the acquisition of stock or assets of other companies. Such securities may be
issued in transactions exempt from registration under the Securities Act. The
Company currently expects for the foreseeable future to continue to require
contractual lock-up agreements and to provide registration rights consistent
with previous transactions for sellers receiving stock in acquisitions.

CERTAIN ANTI-TAKEOVER PROVISIONS. Certain provisions in the Company's
Articles of Incorporation and Bylaws and Florida law may make a change in
control of the Company more difficult to effect, even if a change in control
were in the stockholders' interest. Such provisions include certain
supermajority voting requirements contained in the Company's Articles of
Incorporation. The Company's Articles of Incorporation also provide that the
Board of Directors is divided into three classes of directors, elected for
staggered three year terms. In addition, the Company's Articles of Incorporation
allow the Board of Directors to determine the terms of preferred stock which may
be issued by the Company without approval of the holders of the Common Stock,
and thereby enable the Board of Directors to inhibit the ability of the holders
of the Common Stock to effect a change in control of the Company. See
"Description of Capital Stock -- Certain Provisions of Florida Law." The Company
has entered into employment agreements with executive officers Theodore
Gillette, Richard Sanchez, Richard Welch and Michael Block, as well as certain
other employees of the Company, that require the Company to pay certain amounts
to such employees upon their termination following certain events including a
change in control of the Company. Such agreements may inhibit a change in
control of the Company. See "Management -- Employment Agreements."

RESTRICTIONS ON PAYMENT OF DIVIDENDS. The Company's bank credit facility
places certain restrictions on the future payment of dividends. Furthermore, the
Company currently intends to retain all future earnings for the operation and
expansion of its business and, accordingly, the Company does not anticipate that
any dividends will be declared or paid for the foreseeable future. See "Dividend
Policy" and "Management Discussion and Analysis of Financial Conditions and
Results of Operations -- Liquidity and Capital Resources."

POTENTIAL CONFLICTS OF INTEREST FROM RELATED PARTY TRANSACTIONS. There are
currently Management Agreements existing between the Company and professional
associations owned and controlled by several of the Company's officers,
directors and key employees which could create the potential for possible
conflicts of interests for such individuals. Any future transactions and
agreements or modifications of current agreements
15
<PAGE> 18

between the Company and such individuals, other affiliates and their
professional associations will be approved by a majority of the Company's
independent directors and will be on terms no less favorable to the Company than
those that could be obtained from unaffiliated parties. See "Certain
Transactions."

POSSIBLE VOLATILITY OF STOCK PRICE. The market price of the Common Stock
could be subject to significant fluctuations in response to variations in
financial results or announcements of material events by the Company or its
competitors. Quarterly operating results of the Company, changes in general
conditions in the economy or the health care industry, or other developments
affecting the Company or its competitors, could cause the market price of the
Common Stock to fluctuate substantially. The equity markets have, on occasion
experienced significant price and volume fluctuations that have affected the
market prices for many companies' securities and that have often been unrelated
to the operating performance of these companies. Concern about the potential
effects of health care reform and regulatory measures has contributed to the
volatility of stock prices of companies in health care and related industries
and may similarly affect the price of the Company's Common Stock. Any such
fluctuations that occur following completion of the sale of shares being
registered hereby may adversely affect the market price of the Common Stock.

16
<PAGE> 19

THE COMPANY

Vision 21 Physician Practice Management Company, Inc., a current subsidiary
of the Company ("Vision 21 PPMC"), was founded in 1984 to provide management
services to optometry practices owned primarily by the Company's Chief Executive
Officer, Theodore N. Gillette, O.D. At such time, Vision 21 PPMC contracted with
VisionWorks and Eckerd Optical (subsidiaries of Eckerd Corporation) to manage
optometry practices located within VisionWorks and Eckerd retail optical
centers. As Vision 21 PPMC expanded its network of optometry practices under
management, its management services were also expanded to include management
information systems, electronic claims processing, practice administration,
continuing education and credentialing of associated optometrists. By 1987,
management services were provided to over 20 optometry clinics located in the
state of Florida in close proximity to retail optical centers. Additionally,
during that period, Vision 21 PPMC began to form strategic relationships with
independent ophthalmologists to provide its optometric patients with access to
secondary and tertiary eye care services.

In 1986, Vision 21 Managed Eye Care of Tampa Bay, Inc., a current
subsidiary of the Company ("Vision 21 MCO"), began to provide management and
administrative services to networks of eye care providers that offered primary,
secondary and tertiary eye care services. Vision 21 MCO was awarded its first
managed care contract in 1988 covering in excess of 18,000 patient lives, with
retail optical and optometric services provided by its network of eye care
providers.

The Company was incorporated in Florida on May 9, 1996. The principal
operating subsidiaries of the Company are Vision 21 MCO, Vision 21 PPMC and
BBG-COA, Inc. (together with its subsidiaries "Block Vision"). Vision 21 MCO and
Vision 21 PPMC were merged with the Company in November 1996. In the merger, all
of the outstanding shares of stock of Vision 21 PPMC and Vision 21 MCO were
exchanged for an aggregate of 2,685,318 shares of Common Stock of the Company.
The previous shareholders of these two entities consisted of certain executive
officers and directors of the Company. See "Certain Transactions."

The Company's Affiliated Providers provide eye care services to LADS
located throughout the United States. The Affiliated Providers consist of
Managed Providers and Contract Providers. The Company's Affiliated Providers, in
conjunction with select national retail optical chains, deliver eye care
services under the Company's managed care contracts and discount fee-for-service
plans covering the Company's exclusively contracted patient lives.

The principal executive office of the Company is located at 7209 Bryan
Dairy Road, Largo, Florida 33777, and its telephone number is (813) 545-4300.

THE ACQUISITIONS

1998 ACQUISITIONS

To date in 1998 and in addition to the other acquisitions finalized or
pending and described below, the Company completed the acquisition of the
business assets of 28 optometry clinics two ophthalmology clinics and 20 optical
dispensaries located in Texas, Arizona, New Jersey and Minnesota. Business
assets consist of certain non-medical and non-optometric assets, including
accounts receivable, leases, contracts, equipment and other tangible and
intangible assets. Concurrently with these acquisitions, the Company entered
into long-term Management Agreements with the related professional associations
employing 31 optometrists and one ophthalmologist. These acquisitions were
accounted for by recording assets and liabilities at fair value and allocating
the remaining costs to the related Management Agreements. Additionally, the
Company closed the acquisition of all of the outstanding stock of The Complete
Optical Laboratory, Ltd., Corp., located in New Jersey which services the New
Jersey optometry clinics acquired by the Company and the Company closed the
acquisition of substantially all of the business assets of a managed care
company located in Florida servicing over 82,700 patient lives. These
acquisitions were accounted for under the purchase method of accounting. Such
acquisitions are collectively referred to herein as the "1998 Acquisitions." In
connection with these acquisitions, the Company provided aggregate consideration
of approximately $16.7 million, consisting of 786,952 shares of Common Stock and
approximately $8.7 million in cash and promissory notes in

17
<PAGE> 20

the aggregate principal amount of $21,000, subject to closing adjustments. In
addition, the Company is required to provide additional contingent consideration
consisting of 33,695 shares of Common Stock and up to $600,000, to be paid to
certain sellers if certain post-acquisition performance targets are met.

In March 1998, the Company completed pooling of interests transactions with
EyeCare One Corp. ("EyeCare One") and Vision Insurance Plan of America, Inc.
("VIPA"). EyeCare One was the parent company of Stein Optical which operates 16
optometric retail locations in Milwaukee, Wisconsin. VIPA holds a single service
insurance license and delivers vision care benefits to approximately 19,000
patient lives in Wisconsin. Such transactions are collectively referred to
herein as the "EyeCare One and VIPA Merger." These transactions were accounted
for by the Company as pooling of interests, and the costs of approximately
$500,000 incurred in connection with such transactions were charged to expense.
In connection with these transactions, the Company issued 1,109,806 shares of
Common Stock, subject to closing adjustments, valued at approximately $10.5
million.

The Company has also entered into binding letters of intent to acquire the
business assets of four optometry clinics, one ophthalmology clinic, four
optical dispensaries and one ASC, located in Arizona and Florida. Concurrently
with the closing of these acquisitions, the Company expects to enter into
long-term Management Agreements with the related professional associations
employing four optometrists and two ophthalmologists (the "Pending
Acquisitions"). The Pending Acquisitions are expected to be accounted for by
recording assets and liabilities at fair value and allocating the remaining
costs to the related Management Agreements. In connection with the Pending
Acquisitions, the Company is providing aggregate consideration of approximately
$3.0 million, consisting of approximately 21,000 shares of Common Stock and
approximately $2.8 million in cash, subject to closing adjustments.

1997 ACQUISITIONS

LaserSight Acquisition. Effective December 1, 1997, the Company acquired
all of the issued and outstanding stock of LSI Acquisition, Inc. ("LSI") and MEC
Health Care, Inc. ("MEC"), both of which were wholly-owned subsidiaries of
LaserSight, Incorporated (the "LaserSight Acquisitions"). LSI has a twenty-five
year service agreement with Northern New Jersey Eye Institute, an ophthalmology
practice located in South Orange, New Jersey, with four locations including an
ambulatory surgery center. The LSI acquisition allows the Company to further
expand its LADS in the state of New Jersey. MEC is a managed care company
located in Baltimore, Maryland. MEC operates an Administrative Service Center
and holds eleven managed eye care contracts covering over 650,000 capitated
optometry and ophthalmology lives which are serviced through a provider panel
consisting of over 400 contracted eye care physicians, principally located in
the greater Baltimore, Washington, D.C. and Virginia metropolitan areas. With
the substantial increase in covered lives, the MEC acquisition continues the
Company's strategy of capturing managed care business. The LaserSight
Acquisitions were accounted for under the purchase method of accounting. The
aggregate consideration paid by the Company for the LaserSight Acquisitions was
approximately $13.0 million consisting of $6.5 million in cash and 820,085
shares of Company common stock, subject to certain post-closing adjustments. The
cash portion of the consideration paid by the Company for the LaserSight
Acquisitions was financed through a letter amendment to the Company's credit
facility with Prudential Securities Credit Corporation. In addition, LaserSight,
Incorporated and the Company entered into a Stock Distribution Agreement for the
liquidation of the shares of Company common stock received by LaserSight,
Incorporated by May 29, 1998 through, at the Company's option, the filing of a
shelf registration statement, a private placement, a direct redemption by the
Company, or other method acceptable to the Company and LaserSight, Incorporated.
Under the Stock Distribution Agreement, LaserSight, Incorporated is entitled to
receive a minimum of $6.5 million and a maximum of $7.475 million from the
liquidation subject to certain post-closing adjustments and subsequent
redemptions by the Company. On March 10, 1998 the Company redeemed 168,270
shares of its Common Stock from LaserSight Incorporated at $9.20 per share for
an aggregate amount of $1,548,084.

Block Acquisition. Effective October 31, 1997, the Company acquired all of
the issued and outstanding stock of Block Vision (the "Block Acquisition").
Block Vision provides administration services on behalf of managed vision care
plans for a nationwide network of 5,171 Contract Providers who provide eye care
services
18
<PAGE> 21

pursuant to 58 capitated and five discount fee-for-service managed care
contracts covering over 2.1 million exclusively contracted patient lives. The
Block Acquisition has enabled the Company to establish 28 new LADS for future
development. Furthermore, Block Vision has established a network of
approximately 4,500 additional credentialed Contract Providers, and another
1,400 Contract Providers in the process of being credentialed, to provide eye
care services to capture future managed care business in anticipated new local
markets. In addition, Block Vision operates a buying group division which
provides billing and collection services to suppliers of optical products. The
Block Acquisition was accounted for under the purchase method of accounting. The
aggregate consideration paid by the Company was approximately $35.0 million,
consisting of $25.6 million in cash, 458,365 shares of Common Stock, subject to
certain post-closing adjustments, and 219,633 shares of Common Stock to be held
in escrow as contingent consideration, of which 109,816 shares of Common Stock
are to be delivered by the Company to the sellers if earnings before interest,
taxes, depreciation and amortization ("EBITDA") of Block Vision reaches $4.5
million for the year ended December 31, 1998. The remaining 109,817 shares will
be deliverable on a pro rata escalating basis if Block Vision reaches $4.5
million of EBITDA for 1998 with the full contingent consideration deliverable
upon Block Vision attaining $4.9 million of EBITDA for 1998.

During 1997, the Company also completed the acquisition of the business
assets of one optometry clinic, 19 ophthalmology clinics, nine optical
dispensaries and five ASCs. Concurrently with these acquisitions, the Company
entered into long-term Management Agreements with the related professional
associations employing nine optometrists and 29 ophthalmologists. These
acquisitions were accounted for by recording assets and liabilities at fair
value and allocating the remaining costs to the related Management Agreements.
Additionally, the Company completed the acquisition of substantially all the
business assets of a managed care company servicing two capitated managed care
contracts covering over 134,000 patient lives. Such acquisitions (excluding the
Block and LaserSight Acquisitions) are collectively referred to herein as the
"1997 Acquisitions." In connection with the 1997 Acquisitions, the Company
provided aggregate consideration of $20.1 million, consisting of 1,480,122
shares of Common Stock, $6.7 million in cash and $364,000 in promissory notes.
Additionally, the Company is required to provide additional contingent
consideration, consisting of approximately 174,021 shares of Common Stock and
approximately $821,000 in cash, and approximately $467,000 in shares of Common
Stock, to be paid to certain sellers if post-acquisition performance targets are
met.

1996 ACQUISITIONS

In December 1996, the Company completed a series of transactions resulting
in the acquisition of the business assets of 22 optometry clinics, nine
ophthalmology clinics, 15 optical dispensaries and one ASC. Concurrently, the
Company entered into Management Agreements with the related professional
associations employing 34 optometrists and 13 ophthalmologists. These
acquisitions were accounted for by recording the assets and liabilities at fair
value and allocating the remaining costs to the related Management Agreements.
Additionally, the Company acquired substantially all the business assets of a
managed care company servicing four capitated managed care contracts covering
over 100,000 patient lives, which was accounted for under the purchase method of
accounting (collectively, the "1996 Acquisitions"). In connection with the 1996
Acquisitions, the Company provided aggregate consideration of $11.2 million,
consisting of 2.1 million shares of Common Stock, promissory notes in the
aggregate principal amount of $1.9 million and $800,000 in assumed debt.
Additionally, the Company is required to provide additional consideration of up
to $316,000, consisting of up to 79,805 shares of Common Stock, in connection
with several of the 1996 Acquisitions, which will be transferred out of escrow
to certain sellers in the event that certain post-acquisition performance
targets are met. See "Certain Transactions."

USE OF PROCEEDS

The Selling Stockholders will receive all of the proceeds from sales of
Common Stock pursuant to this Prospectus. Accordingly, the Company will not
receive any of the proceeds from the sale of Common Stock by the Selling
Stockholders.

19
<PAGE> 22

SELLING STOCKHOLDERS

The Common Stock offered hereby was originally issued by the Company as a
result of certain acquisition transactions exempt from the registration
requirements of the Securities Act. The Selling Stockholders may from time to
time offer and sell pursuant to this Prospectus any or all of such Common Stock
so owned. With the exception of a Selling Stockholders previous ownership of an
entity acquired by the Company, the sale of such ownership to the Company and in
some cases employment with the Company of certain individuals employed by the
entity acquired (not as an executive officer or Director of the Company), none
of the Selling Stockholders has, or within the past three years has had, any
relationship with the Company or any of its predecessors or affiliates other
than arising from or as a result of the Selling Stockholders acquisition
transaction with the Company. None of the contractual relationships have been
material. Because the Selling Stockholders may offer all or some portion of the
Common Stock pursuant to this Prospectus, no estimate can be given as to the
amount of the Common Stock that will be held by the Selling Stockholders upon
termination of any such sales. The Selling Stockholders identified below may
have sold, transferred or otherwise disposed of all or a portion of their Common
Stock since May 12, 1998 in transactions exempt from the registration
requirements of the Securities Act. In addition, some of the Selling
Stockholders may acquire or otherwise own varying interests in the Company's
securities other than the securities described below and which are registered
hereunder. The following table which has been prepared based upon information
furnished to the Company by the Selling Stockholders sets forth information, as
of May 12,1998 with respect to the Common Stock owned by the Selling
Stockholders that may be offered or sold pursuant to this Prospectus.

<TABLE>
<CAPTION>
SHARES OF PERCENT NUMBER OF
COMMON OF SHARES THAT PERCENT OF
SELLING STOCKHOLDERS STOCK OWNED OUTSTANDING(1) MAY BE SOLD OUTSTANDING(1)
- -------------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
LaserSight Incorporated.................... 651,815 4.6% 651,815(2) 4.6%(2)
Other shareholders......................... 1,109,806 7.8% 554,903(3) 3.9%(3)
--------- ---- --------- ---
Total............................ 1,761,621 12.4% 1,206,718 8.5%
========= ==== ========= ===
</TABLE>

- ---------------

(1) Based upon 14,180,657 shares of Common Stock outstanding as of April 27,
1998.
(2) Represents shares of Common Stock received by LaserSight Incorporated
pursuant to the Company's acquisition of all of the outstanding stock of LSI
and MEC from LaserSight Incorporated. See "The Acquisitions," and
"Description of Capital Stock -- Registration Rights."

(3) Represents a portion of the shares of Common Stock received by the
stockholders of EyeCare One and VIPA pursuant to the EyeCare One and VIPA
Merger. See "The Acquisitions," and "Description of Capital
Stock -- Registration Rights." The names of these stockholders and the
number of shares each desires to sell will be set forth in a future
supplement to this Prospectus. The shares listed represent the maximum
amount that may be sold by such stockholders pursuant to certain
registration rights.

20
<PAGE> 23

PRICE RANGE OF COMMON STOCK

The Common Stock has been included for quotation in the Nasdaq National
Market under the symbol "EYES" since August 18, 1997. The following table sets
forth, for the periods indicated, the range of high and low sales prices per
share of Common Stock, as reported by the Nasdaq National Market:

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
1997:
Third Quarter (beginning August 18, 1997)................... $ 15.00 $ 9.00
Fourth Quarter.............................................. 14.75 7.00
1998:
First Quarter............................................... 11.875 7.875
Second Quarter (through May 11, 1998)....................... 11.625 7.125
</TABLE>

On May 11, 1998, the last reported sales price of the Common Stock on the
Nasdaq National Market was $8.3125 per share. The number of holders of record of
the Common Stock on April 27, 1998 was approximately 165.

DIVIDEND POLICY

The Company has not paid or declared any dividends since its inception. The
Company currently intends to retain all future earnings for the operation and
expansion of its business and, accordingly, the Company does not anticipate that
any dividends will be declared or paid on the Common Stock for the foreseeable
future. Any future determination to pay cash dividends will be at the discretion
of the Board of Directors and will be dependent upon the Company's financial
condition, results of operations, capital requirements and other factors the
Board of Directors deems relevant. In addition, the Company's bank credit
facility places certain restrictions on the payment of dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

21
<PAGE> 24

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
December 31, 1997, (i) on an actual basis and (ii) on a pro forma basis to give
effect to the Eye Care One and VIPA Merger, the 1998 Acquisitions and the
Pending Acquisitions. This table should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and Unaudited Pro Forma
Consolidated Financial Information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------
ACTUAL PRO FORMA
------- ---------
(IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt and capital lease
obligations............................................... $ 670 $ 670
Long-term debt and capital lease obligations................ 25,213 34,195
Stockholders' equity(1):
Common Stock: $.001 par value; 50,000,000 shares
authorized, 12,420,086 shares outstanding, 14,357,702
shares outstanding, pro forma.......................... 12 14
Additional paid-in capital.................................. 75,159 84,613
Deferred compensation....................................... (409) (409)
Notes receivable from officer............................... -- (175)
Accumulated deficit......................................... (8,115) (8,115)
------- --------
Total stockholders' equity........................ 66,647 75,928
------- --------
Total capitalization.............................. $92,530 $110,793
</TABLE>

- ---------------

(1) Excludes (a) an aggregate of 1,600,000 shares of Common Stock reserved for
issuance under the Company's stock plans, pursuant to which options to
purchase approximately 1,067,128 shares of Common Stock have been granted as
of April 29, 1998, (b) an aggregate of 974,808 shares of Common Stock, which
are reserved for issuance in the event of the exercise of warrants granted
by the Company and (c) shares of Common Stock which are being held in escrow
and represent contingent consideration to be paid by the Company in
conjunction with certain acquisitions if post closing performance targets
are met. See "Acquisitions," "Management -- Stock Option Plans," and
"Certain Transactions."

22
<PAGE> 25

SELECTED PRO FORMA FINANCIAL DATA

The pro forma financial data are derived from the Unaudited Pro Forma
Consolidated Financial Information of the Company appearing elsewhere in this
Prospectus. The Pro Forma Statement of Operations Data for the year ended
December 31, 1997 give effect to the following transactions as if they had
occurred on January 1, 1997; (i) the 1997 Acquisitions, (ii) the Block
Acquisitions, (iii) the LaserSight Acquisitions (iv) the EyeCare One and VIPA
Merger, (v) the 1998 Acquisitions, (vi) the Pending Acquisitions and (vii) the
Company's Initial Public Offering and Secondary Offering and the application of
net proceeds therefrom. The Pro Forma Balance Sheet Data as of December 31, 1997
give effect to the (i) the 1998 Acquisitions and (ii) the EyeCare One and VIPA
Merger, and (iii) the Pending Acquisitions if they had occurred as of December
31, 1997.

The pro forma financial data should be read in conjunction with the
Unaudited Pro Forma Consolidated Financial Information of the Company and the
related notes thereto included elsewhere in this Prospectus. Management believes
the assumptions used in the Unaudited Pro Forma Consolidated Financial
Information provide a reasonable basis on which to present the pro forma
financial data. The Pro forma financial data are provided for informational
purposes only and should not be construed to be indicative of the Company's
financial position or results of operations had the transactions and events
described in the notes thereto been consummated on the dates assumed and are not
intended to project the Company's financial condition or results of operations
on any future date or for any future period.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
-----------------
(IN THOUSANDS)
<S> <C>
PRO FORMA STATEMENT OF OPERATIONS DATA:
Revenues:
Practice management fees.................................. $ 72,433
Managed care.............................................. 41,444
Buying group.............................................. 54,233
Sale of optical goods..................................... 12,570
Other revenue............................................. 854
--------
Total revenues.................................... 181,534
--------
Operating expenses:
Practice management expenses.............................. 59,384
Medical claims............................................ 31,101
Buying group.............................................. 51,435
Cost of optical goods sold................................ 3,114
Salaries, wages and benefits.............................. 14,233
General and administrative................................ 8,300
Depreciation and amortization............................. 6,403
--------
Total operating expenses.......................... 173,970
--------
Income (loss) from operations............................. 7,564
Amortization of loan fees................................. 179
Interest expense.......................................... 2,710
--------
Income (loss) before income taxes......................... 4,675
Income tax expense........................................ 2,187
--------
Net income before extraordinary charge.................... $ 2,488
========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------
(IN THOUSANDS)
<S> <C>
PRO FORMA BALANCE SHEET DATA:
Working capital............................................. $ 970
Total assets................................................ 136,135
Long-term debt and capital lease obligations, including
current maturities........................................ 34,865
Total stockholders' equity........................ $ 75,928
</TABLE>

23
<PAGE> 26

SELECTED FINANCIAL DATA

The following selected financial data with respect to the Company's
statements of operations for the years ended December 31, 1994, 1995, 1996, and
1997 and the balance sheet data as of December 31, 1995, 1996 and 1997 are
derived from the Consolidated Financial Statements of the Company which have
been audited by Ernst & Young LLP, independent certified public accountants. The
selected financial data presented below for the year ended December 31, 1993 are
unaudited and were prepared by management of the Company on the same basis as
the audited Consolidated Financial Statements included elsewhere herein and, in
the opinion of management of the Company, include all adjustments necessary to
present fairly the information set forth therein. The results for the year ended
December 31, 1997 are not necessarily indicative of the results to be expected
for future periods. The following data should be read in conjunction with the
Consolidated Financial Statements of the Company and the related notes thereto
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1993 1994 1995 1996 1997
---- ------ ------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Practice management fees..................... $653 $ 392 $ 424 $ 1,943 $ 30,952
Managed care(1).............................. -- 669 2,446 7,315 17,446
Buying group................................. -- -- -- -- 7,261
Other revenue................................ 6 131 212 306 608
---- ------ ------- -------- --------
Total revenues....................... 659 1,192 3,082 9,564 56,267
---- ------ ------- -------- --------
Operating expenses:
Practice management expenses................. -- -- -- 1,244 25,295
Medical claims............................... -- 551 2,934 9,129 13,832
Buying group................................. -- -- -- -- 6,882
Salaries, wages and benefits................. 501 538 904 1,889 5,025
Business development......................... -- -- -- 1,927 --
General and administrative................... 168 238 443 1,209 2,515
Depreciation and amortization................ 8 13 18 126 1,804
---- ------ ------- -------- --------
Total operating expenses............. 677 1,340 4,299 15,524 55,353
==== ====== ======= ======== ========
Income (loss) from operations.................. (18) (148) (1,217) (5,960) 914
Amortization of loan fees...................... -- -- -- -- 179
Interest expense............................... 5 5 9 160 934
---- ------ ------- -------- --------
Loss before income taxes....................... (23) (153) (1,226) (6,120) (199)
Income taxes................................... -- -- -- -- --
Loss before extraordinary charge............... (23) (153) (1,226) (6,120) (199)
---- ------ ------- -------- --------
Extraordinary charge -- early extinguishment of
debt......................................... -- -- -- -- (323)
Net loss............................. $(23) $ (153) $(1,226) $ (6,120) $ (522)
==== ====== ======= ======== ========
Loss before extraordinary charge per common
share(2)..................................... $ (2.13) $ (0.03)
Extraordinary charge per common share(2)....... -- (0.05)
-------- --------
Net loss per common share(2)......... $ (2.13) $ (0.08)
======== ========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1993 1994 1995 1996 1997
---- ------ ------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).......................... $ (5) $ (193) $(1,499) $ (2,857) $ 4,554
Total assets....................................... 67 49 165 15,712 116,558
Long-term debt and capital lease obligations,
including current maturities..................... 89 85 363 7,735 25,883
Total stockholders' equity (deficit)............... (38) (191) (1,439) 2,536 66,647
</TABLE>

- ---------------

(1) Revenues related to managed care for 1993 are included under other revenue
as managed care revenues were not separately accounted for during such
period.
(2) The loss per share amounts prior to 1997 have been restated as required to
comply with Statement of Financial Accounting Standards No. 128, Earnings
Per Share. For further discussion of loss per share and the impact of
Statement No. 128, see the Notes to the Consolidated Financial Statements.

24
<PAGE> 27

SUPPLEMENTAL SELECTED FINANCIAL DATA

The following supplemental selected financial data with respect to the
Company's supplemental statements of operations for the years ended December 31,
1995, 1996, and 1997 and the supplemental balance sheet data as of December 31,
1995, 1996 and 1997 are derived from the Supplemental Consolidated Financial
Statements of the Company which have been audited by Ernst & Young LLP,
independent certified public accountants and give effect to the EyeCare One and
VIPA merger which was accounted for as a pooling of interests. The supplemental
results for the year ended December 31, 1997 are not necessarily indicative of
the results to be expected for future periods. The following data should be read
in conjunction with the Supplemental Consolidated Financial Statements of the
Company and the related notes thereto and "Management's Discussion and Analysis
of Financial Condition and Supplemental Results of Operations" included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Practice management fees................... $ 653 $ 392 $ 424 $ 1,943 $30,952
Managed care............................... 14 1,093 3,017 7,887 18,154
Buying group............................... -- -- -- -- 7,261
Sale of optical goods...................... 10,929 10,914 11,212 11,719 12,569
Other revenue.............................. 6 131 212 305 608
------- ------- ------- ------- -------
Total revenues..................... $11,602 $12,530 $14,865 $21,854 $69,544
------- ------- ------- ------- -------
Operating Expenses:
Practice management expenses............... -- -- -- 1,244 25,295
Medical claims............................. 2 862 3,350 9,475 14,090
Buying group............................... -- -- -- -- 6,882
Cost of optical goods sold................. 2,545 2,480 2,684 2,808 3,114
Salaries, wages and benefits............... 4,801 4,930 5,588 6,853 10,431
Business development....................... -- -- -- 1,927 --
General and administrative................. 3,117 3,330 3,524 4,447 5,879
Depreciation and amortization.............. 405 386 389 487 2,196
------- ------- ------- ------- -------
Total operating expenses........... $10,870 $11,988 $15,535 $27,241 $67,887
------- ------- ------- ------- -------
Income (loss) from operations................ 732 542 (670) (5,387) 1,657
Amortization of loan fees.................... -- -- -- -- 179
Interest expense............................. 265 185 146 260 1,072
------- ------- ------- ------- -------
Income (loss) before income taxes............ 467 357 (816) (5,647) 406
Income taxes................................. -- -- -- -- --
------- ------- ------- ------- -------
Loss before extraordinary charge............. 467 357 (816) (5,647) 406
Extraordinary charge -- early extinguishment
of debt.................................... -- -- -- -- 323
------- ------- ------- ------- -------
Net income (loss)............................ $ 467 $ 357 $ (816) $(5,647) $ 83
======= ======= ======= ======= =======
Loss before extraordinary charge per common
share(1)................................... $ (0.24) $ (1.42) $ 0.05
Extraordinary charge per common share........ -- -- (0.04)
------- ------- -------
Net loss per common share(1)....... $ (0.24) $ (1.42) $ 0.01
======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit)..................... $ 466 $ (131) $(1,237) $(2,303) $ 4,868
Total assets.................................. 4,074 3,690 3,485 20,576 120,357
Long-term debt and capital lease obligations,
including current maturities................ 2,664 1,612 1,690 9,087 27,284
Total stockholders' equity.................... 358 697 (289) 3,624 67,731
</TABLE>

- ---------------

(1) The loss per share amounts prior to 1997 have been restated as required to
comply with Statement of Financial Accounting Standards No. 128, Earnings
Per Share. For further discussion of loss per share and the impact of
Statement No. 128, see the Notes to the Consolidated Financial Statements.

25
<PAGE> 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Company provides a wide range of management and administrative services
to local area delivery systems ("LADS") established by the Company. LADS are
developed to provide for integrated networks of optometrists, ophthalmologists,
ASCs and retail optical centers which offer the full continuum of eye care
services in local markets. The Company began operations in 1984, providing
management services to seven optometrists practicing at eight clinic locations.
the Company currently provides its services to 39 LADS located in 26 states
through which 5,810 Affiliated Providers delivery eye care services. Of these
Affiliated Providers, 105 are Managed Providers, consisting of 61 optometrists
and 44 ophthalmologists practicing at 70 clinic locations and seven ASCs, and
5,705 are Contract Providers, consisting of 4,982 optometrists and 723
ophthalmologists practicing at over 4,300 clinic locations and 35 ASCs. The
Company's Affiliated Providers, in conjunction with select national retail
optical chains, deliver eye care services under the Company's 88 managed care
contracts and 12 discount fee-for-service plans covering approximately 5.0
million exclusively contracted patient lives. Furthermore, the Company has
established a nationwide eye care provider network of over 1,400 additional
Contract Providers thereby positioning the Company to capture future managed
care business in anticipated new local markets.

RECENT DEVELOPMENTS

by recording assets and liabilities at fair value and allocating the remaining
costs to the related Management Agreements. In connection with the Pending
Acquisitions, the Company is providing aggregate consideration of approximately
$3.0 million, consisting of approximately 21,000 shares of Common Stock and
approximately $2.8 million in cash, subject to closing adjustments.

In addition to the Company's acquisitions, Block Vision has entered into
three new managed care contracts with Vanderbilt Health Plans, Southeast Medical
Alliance and Methodist Care which added an additional 63,000 exclusively
contracted patient lives. With these additions, the Company now has
approximately 5.0 million exclusively covered patient lives under contract.
During fiscal 1998, the Company has initiated a new managed care contract for
the provision of ophthalmology services to 250,000 existing vision care lives.

The Company expects to continue to use its Common Stock as consideration
for future acquisitions in conjunction with its expansion strategy, which will
be a factor in the Company's future acquisitions, financial position and
performance. The number of shares of Common Stock the Company is ultimately
required to provide in connection with its acquisitions will be effected by the
market price for its Common Stock and will effect the Company's future earnings
per share. The Company from time to time reviews and will continue to review
acquisition opportunities (some of which may be material to the Company) that
will further broaden its LADS or geographic presence. The Company is currently
engaged in preliminary discussions regarding various possible acquisitions, some
of which could be material. However, the Company currently has no agreement,
arrangement or understanding which at this time, based upon all factors
considered is reasonably certain to close, with respect to any acquisitions that
are, individually or in the aggregate, material to the Company. The Company's
acquisition strategy places significant demands on the Company's resources and
there can be no assurance that the Company's management and operational systems
and structure can be expanded to effectively support the Company's continued
acquisition strategy.

HISTORICAL OVERVIEW

The Company enters into Management Agreements with the Managed Professional
Associations pursuant to which the Company is the sole provider of comprehensive
management, business and administrative services for the non-professional
aspects of the Professional Practices which obligate the Company to provide
certain facilities and equipment, accounting services, purchasing, assistance in
managed care, contract negotiations, management and clinical personnel
information systems, training, and billing and collection services. Each managed
Provider maintains full authority, control and responsibility over the provision
of professional care and services to its patients. The Company does not provide
professional care to patients nor does the Company employ any of the
ophthalmologists or optometrists, or any other Professional health care provider
personnel, of the Managed Professional Association. The Managed Professional
Association is responsible for, among other things, hiring, supervising, and
directing certain of the Managed Professional Association's professional
employees, adopting a peer review/quality assurance program and maintaining
appropriate workers' compensation, professional and comprehensive general
liability insurance. The managed Professional Associations derive their revenues
from fees received for the use of ASCs and sales of optical goods. The Managed
Professional Associations currently receive revenues from a combination of
sources, including capitation payments from managed care companies and
government funded reimbursements (Medicare and Medicaid).

The initial term of the Management Agreement is typically 40 years. Under
substantially all of the Company's Management Agreements, the management fee
ranges from 24% to 37% of the Managed Professional Association's gross revenues
after deducting from such revenues all expenses of the clinic other than those
related to shareholders of the Managed Professional Associations. This type of
arrangement is usually utilized in management relationships with ophthalmology
practices. Additionally, the Company has Management Agreements with management
fees ranging form 70% to 87% of gross revenues of a practice and the Company is
required to pay generally all of the expenses at the clinic with the exception
of professional salaries and benefits. Such arrangements are typically utilized
in management relations with optometrists. The practice management fees earned
by the Company pursuant to these Management Agreements fluctuate depending on
variances in clinic revenues and expenses of the Managed Professional
Association. Therefore,
27
<PAGE> 30

in connection with the Management Agreements, the amount of such fees will be
significantly affected by the degree of success of operations of the Managed
Professional Association and the Company's ability to successfully manage the
practice.

The Company recognizes as managed care revenue certain fixed payments
received pursuant to its managed care contracts on a capitated or risk-sharing
basis. The Company also recognizes fees received for the provision of certain
financial and administrative services related to its indemnity fee-for-service
plans. The Company manages risk of capitated managed care contracts by
monitoring utilization of each Affiliated Provider and comparing their
utilization to national averages, expected utilization at the time the contract
was bid, utilization of other providers and historical utilization of the
Affiliated Provider. Abnormal utilization of an Affiliated Provider results in a
medical chart review by the Company and further counseling on appropriate
clinical protocols. To further manage the risk of capitated managed care
contracts, the Company, in certain instances, enters into agreements to pay
Affiliated Providers a fixed per member per month fee for eye care services
rendered or a pro rata share of managed care capitated payments received (as
determined by the number of eye care procedures performed relative to other
Affiliated Providers). The Company targets these payments at a range of 80% to
90% of total payments received pursuant to the Company's capitated managed care
contracts. Pursuant to its capitated managed care contracts, the Company
receives a fixed payment per member per month for a predetermined benefit level
of eye care services, as negotiated between the Company and the payor.
Profitability of the Company's capitated managed care contracts is directly
related to the specific terms negotiated, utilization of eye care services by
member patients and the effectiveness of administering the contracts. The
Company receives a percentage of collected medical billings for administering
indemnity fee-for-service plans for its Affiliated Providers. Although the terms
and conditions of the Company's managed care contracts vary considerably, they
are typically for a one-year term.

The Company has made a substantial number of acquisitions beginning in
December 1996 and continuing through to the present. Such acquisitions have made
a significant impact on the Company's historical financial performance and will
impact its future financial statements. See "The Acquisitions," and
"-- Liquidity and Capital Resources."

Effective October 1996, the Company renegotiated its agreements to pay
certain ophthalmology Contract Providers a per member per month fee for surgical
eye care services provided under the Company's largest capitated managed care
contract. Previously, the Company had paid these Contract Providers pursuant to
a fee schedule for eye care services provided under the same capitated managed
care contract. In exchange for entering into the renegotiated agreement,
selected ophthalmology Contract Providers obtained dedicated groups of managed
care members and the right to manage the utilization by these members.

Effective June 1997, the Company renegotiated its agreement to pay the
existing operator of multiple surgical eye care facilities a per member per
month fee for facility services provided at its facilities pursuant to the
Company's largest capitated managed care contract. Previously, the Company had
paid these Contract Providers, pursuant to a fee schedule for eye care services
provided under the same capitated managed care contract. In exchange for
entering into the renegotiated agreement, the facility operator obtained
dedicated groups of managed care members. The effect of the renegotiated
agreements of October 1996 and June 1997 was to shift the risk of any increased
utilization of services by members from the Company to the Contract Providers.

28
<PAGE> 31

RESULTS OF OPERATIONS

The following table sets forth, as a percentage of total revenues, certain
items in the Company's statement of operations for the periods indicated. As a
result of the 1996 Acquisitions, 1997 Acquisitions, the Block Acquisition and
LaserSight Acquisition, and the Company's entering into capitated arrangements
with its Contract Providers, the Company does not believe that the historical
percentage relationships for 1995, 1996 and 1997 reflect the Company's expected
future operations.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
REVENUES:
Practice management fees.................................... 13.8% 20.3% 55.0%
Managed care................................................ 79.4 76.5 31.0
Buying group................................................ -- -- 12.9
Other revenues.............................................. 6.8 3.2 1.1
----- ----- -----
Total revenues.................................... 100.0 100.0 100.0
----- ----- -----
OPERATING EXPENSES:
Practice management expenses................................ -- 13.0 45.0
Medical claims.............................................. 95.2 95.5 24.6
Buying group................................................ -- -- 12.2
Salaries, wages and benefits................................ 29.3 19.8 8.9
Business development........................................ -- 20.1 --
General and administrative.................................. 14.4 12.6 4.5
Depreciation and amortization............................... 0.6 1.3 3.2
----- ----- -----
Total operating expenses.......................... 139.5 162.3 98.4
----- ----- -----
Income (loss) from operations............................... (39.5) (62.3) 1.6
Interest expense............................................ 0.3 1.7 2.0
----- ----- -----
Loss before income taxes.................................... (39.8) (64.0) (0.4)
Income taxes................................................ -- -- --
----- ----- -----
Loss before extraordinary charge............................ (39.8)% (64.0)% (0.4)%
Extraordinary charge -- early extinguishment of debt........ -- -- (0.5)
----- ----- -----
Net loss.......................................... (39.8)% (64.0)% (0.9)%
===== ===== =====
Medical claims ratio........................................ 120.0% 124.8% 79.3%
===== ===== =====
</TABLE>

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

Revenues. Revenues increased 488% from $9.6 million for the year ended
December 31, 1996 to $56.3 million for the year ended December 31, 1997. This
increase was caused primarily by an increase in practice management fees
attributable to the 1996 Acquisitions, the 1997 Acquisitions and the Block
Acquisition, which accounted for $29.1 million of the increase, and an increase
in buying group revenues attributable to the Block Acquisition, which accounted
for $7.3 million of the increase, and an increase in managed care revenues
attributable to the 1996 Acquisitions,, the 1997 Acquisitions, the Block
Acquisition, the addition of three capitated contracts and the expansion of an
existing contract which accounted for $10.3 million of the increase. Comparable
clinic revenues increased 12% over 1996 levels for practices managed by the
Company for the entire year. Managed care revenues on a comparable basis
increased 45% over 1996 levels for business units operated by the Company for
the entire year.

29
<PAGE> 32

benefits of certain clinic staff, professional fees, medical supplies,
advertising, building and occupancy costs, and other general and administrative
costs related to the operation of clinics and ASCs.

Medical Claims. Medical claim expense increased 51.5% from $9.1 million
for the year ended December 31, 1996 to $13.8 million for the year ended
December 31, 1997. The Company's medical claims ratio decreased from 124.8% for
the year ended December 31, 1996 to 79.3% for the year ended December 31, 1997.
This decrease was caused primarily by the Company's Block Acquisition and the
renegotiated agreement to pay its ophthalmology and ASC Contract Providers a per
member per month fee for surgical eye care services provided under the Company's
largest capitated managed care contract. Medical claims expense consists of
payments by the Company to its Affiliated Providers for primary eye care
services, medical and surgical eye care services and facility services. These
payments are based on fixed payments per member per month, a pro rata share of
managed care capitated payments received (as determined by the number of eye
care procedures performed relative to other Affiliated Providers) or negotiated
fee-for-service schedules. Capitated payments and pro rata payments collectively
represented 16.2% and fee-for-service claims represented 83.8% of total medical
claims expense for the year ended December 31, 1997. Medical claims for the year
ended December 31, 1996 were based entirely on negotiated fee-for-service
schedules.

Buying Group Cost of Sales. Buying group cost of sales were incurred by
the Company as a result of its acquisition of Block Vision. The buying group
cost of sales represents two months of expenses attributable to Block Vision's
buying group business.

Salaries, Wages and Benefits. Salaries, wages and benefits expense
increased 166.0% from $1.9 million for the year ended December 31, 1996 to $5.0
million for the year ended December 31, 1997. This increase was caused primarily
by an increase in corporate staff necessary to support the Company's expanded
practice management and managed care business. Salaries, wages and benefits
expense consists of expenses related to management and administrative staff
located at the Company's corporate headquarters and regional offices. As a
percentage of revenues, salaries, wages and benefits expense decreased from
19.8% for the year ended December 31, 1996 to 8.9% for the year ended December
31, 1997. This decrease was caused primarily by increased economies of scale
resulting from the Company's expanding business.

General and Administrative. General and administrative expenses increased
108.1% from $1.2 million for the year ended December 31, 1996 to $2.5 million
for the year ended December 31, 1997. This increase was caused primarily by
increases in travel expenses, professional fees and occupancy costs. As a
percentage of revenues, general and administrative expenses decreased from 12.6%
for the year ended December 31, 1996 to 4.5% for the year ended December 31,
1997. This decrease was caused primarily by increased economies of scale
resulting from the Company's expanding business.

Depreciation and Amortization. Depreciation and amortization expense
increased from $.1 million for the year ended December 31, 1996 to $1.8 million
for the year ended December 31, 1997. As a percentage of revenues, depreciation
and amortization expense increased from 1.3% for the year ended December 31,
1996 to 3.2% for the year ended December 31, 1997. These increases were caused
primarily by the amortization of intangibles attributable to the 1996
Acquisitions, the 1997 Acquisitions, and the Block Acquisition.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenues. Revenues increased 210.3% from $3.1 million for 1995 to $9.6
million for 1996. This increase was caused primarily by a 358.3% increase in
practice management fees attributable to the 1996 Acquisitions, which accounted
for $1.5 million of the increase, and a 199.1% increase in managed care revenues
attributable to the addition of one new capitated contract and the expansion of
the Company's largest managed care contract, which accounted for $4.9 million of
the increase.

Practice Management Expenses. Practice management expenses were $1.2
million for 1996, all of which resulted from the 1996 Acquisitions. Prior to the
1996 Acquisitions, the Company recognized no practice management expenses
related to its management services, because the Company was not liable for
expenses of the practices.

30
<PAGE> 33

Medical Claims. Medical claims expense increased 211.1% from $2.9 million
in 1995 to $9.1 million in 1996. The Company's medical claims ratio increased to
124.8% for 1996 from 120.0% for 1995. These increases were caused primarily by
excess utilization of surgical eye care services and facility services related
to the Company's largest managed care contract, which accounted for $4.8 million
of the increase, and an increase in members covered by the Company's capitated
managed care contracts, which accounted for $1.8 million of the increase.
Capitated payments and pro rata payments represented 11.3% and fee-for-service
payments represented 88.7% of total medical claim expense for 1996. Medical
claims for 1995 were based entirely on negotiated fee-for-service schedules.

Buying Group Cost of Sales. The Company incurred no buying group cost of
sales during fiscal year ended December 31, 1995 and 1996.

Salaries, Wages and Benefits. Salaries and benefits expense increased
109.0% from $904,000 in 1995 to $1.9 million in 1996. This increase was caused
primarily by an increase in corporate staff necessary to support the Company's
expanded practice management and managed care business. As a percentage of
revenues, salaries, wages and benefits expense decreased from 29.3% in 1995 to
19.8% in 1996. This decrease was caused primarily by increased economies of
scale resulting from the Company's expanding business.

Business Development. Business development expenses were $1.9 million in
1996. Business development expenses consisted of a one-time charge of $1.4
million related to potential acquisitions that were not completed and $500,000
related to the amortization of deferred compensation charges attributable to
consulting services.

General and Administrative. General and administrative expenses increased
172.6% from $443,000 in 1995 to $1.2 million in 1996. This increase was caused
primarily by increases in travel expenses, professional fees, occupancy costs,
temporary labor and recruitment costs related to the Company's expanding
business. As a percentage of revenues, general and administrative expenses
decreased from 14.4% in 1995 to 12.6% in 1996. This decrease was caused
primarily by increased economies of scale resulting from the Company's expanding
business.

Depreciation and amortization. Depreciation and amortization expense
increased from $18,000 in 1995 to $126,000 in 1996. As a percentage of revenues,
depreciation and amortization expense increased from 0.6% in 1995 to 1.3% in
1996. This increase was caused primarily by the amortization of intangibles
attributable to the 1996 Acquisitions.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Revenues. Revenues increased 158.6% from $1.2 million for 1994 to $3.1
million for 1995. This increase was primarily caused by an increase in managed
care revenues as a result of the Company obtaining its first complete eye care
capitated contract from a leading HMO, which accounted for $1.8 million in the
increase.

Practice Management Expenses. The Company incurred no practice management
expenses during 1994 or 1995. Prior to the 1996 Acquisitions, the Company
recognized no practice management expenses related to its management services
because the Company was not liable for the expenses of the practices.

Medical Claims. Medical claims expense increased 432.1% from $551,000 for
1994 to $2.9 million for 1995. The Company's medical claims ratio increased to
120.0% for 1995 from 82.5% for 1994. These increases were caused primarily by
excess utilization of surgical eye care services and facility services related
to the Company's largest managed care contract. All medical claims for 1995 and
1994 were based on negotiated fee-for-service schedules.

Buying Group Cost of Sales. The Company had no buying group business in
1994 and 1995. Such business was acquired in 1997 in conjunction with the Block
Acquisition.

Salaries, Wages and Benefits. Salaries, wages and benefits expense
increased 68.1% from $538,000 in 1994 to $904,000 in 1995. This increase was
caused primarily by an increase in corporate staff necessary to support the
Company's expanded practice management and managed care business. As a
percentage of

31
<PAGE> 34

revenues, salaries, wages and benefits expense decreased from 45.1% in 1994 to
29.3% in 1995. This decrease was caused primarily by increased economies of
scale resulting from the Company's expanding business.

Business Development. The Company incurred no business development
expenses during 1994 or 1995.

General and Administrative. General and administrative expenses increased
86.5% from $238,000 in 1994 to $443,000 in 1995. This increase was caused
primarily by increases in travel expenses, professional fees, occupancy costs
and temporary labor and recruitment costs. As a percentage of revenues, general
and administrative expenses decreased from 19.9% in 1994 to 14.4% in 1995. This
decrease was caused primarily by increased economies of scale resulting from the
Company's expanding business.

Depreciation and Amortization. Depreciation and amortization expense
increased 37.9% from $13,000 in 1994 to $18,000 in 1995. This increase was
caused primarily by the amortization of intangibles. As a percentage of
revenues, depreciation and amortization expense decreased from 1.1% in 1994 to
0.6% in 1995.

SUPPLEMENTAL RESULTS OF OPERATIONS

The following table sets forth, as a percentage of total revenues, certain
items in the Company's statement of operations for the periods indicated which
give effect to the EyeCare One and VIPA Merger accounted for as a pooling of
interests. As a result of the 1996 Acquisitions, 1997 Acquisitions, the Block
Acquisition and LaserSight Acquisition, and the Company's entering into
capitated arrangements with its Contract Providers, the company does not believe
that the historical percentage relationships for 1995, 1996 and 1997 reflect the
Company's expected future operations.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1996 1997
------ ------ ------
<S> <C> <C> <C>
REVENUES:
Practice management fees.................................... 2.9% 8.9% 44.5%
Managed care................................................ 20.3 36.1 26.1
Buying group................................................ -- -- 10.4
Sale of optical goods....................................... 75.4 53.6 18.1
Other revenue............................................... 1.4 1.4 0.9
----- ----- -----
Total revenues.................................... 100.0 100.0 100.0
----- ----- -----
OPERATING EXPENSES:
Practice management expenses................................ -- 5.7 36.3
Medical claims.............................................. 22.5 43.4 20.3
Buying group................................................ -- -- 9.9
Cost of optical goods sold.................................. 18.1 12.8 4.5
Salaries, wages and benefits................................ 37.6 31.4 15.0
Business development........................................ -- 8.8 --
General and administrative.................................. 23.7 20.3 8.4
Depreciation and amortization............................... 2.6 2.2 3.2
----- ----- -----
Total operating expenses.......................... 104.5 124.6 97.6
----- ----- -----
Income (loss) from operations............................... (4.5) (24.6) 2.4
Amortization of loan fees................................... -- -- 0.3
Interest expense............................................ 1.0 1.2 1.5
----- ----- -----
Income (loss) before income taxes........................... (5.5)% (25.8)% 0.6%
Income taxes................................................ -- -- --
----- ----- -----
Net Income (loss) before extraordinary charge............... (5.5)% (25.8)% 0.6%
Extraordinary charge -- early extinguishment of debt........ -- -- 0.5
----- ----- -----
Net Income (loss)................................. (5.5)% (25.8)% 0.1%
===== ===== =====
</TABLE>

32
<PAGE> 35

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

Revenues. Revenues increased 218% from $21.9 million for the year ended
December 31, 1996 to $69.5 million for the year ended December 31, 1997. This
increase was caused primarily by an increase in practice management fees
attributable to the 1996 Acquisitions, the 1997 Acquisitions and the Block
Acquisition, which accounted for $29.1 million of the increase, and an increase
in buying group revenues attributable to the Block Acquisition, which accounted
for $7.3 million of the increase, and an increase in managed care revenues
attributable to the 1996 Acquisitions, the 1997 Acquisitions, the Block
Acquisition, the addition of three capitated contracts and the expansion of an
existing contract which accounted for $10.3 million of the increase. Comparable
clinic revenues increased 12% over 1996 levels for practices managed by the
Company for the entire year. Managed care revenues on a comparable basis
increased 45% over 1996 levels for business units operated by the Company for
the entire year.

Practice Management Expenses. Practice management expenses were $25.3
million for the year ended December 31, 1997 as a result of the 1996 and the
1997 Acquisitions. Prior to the 1996 Acquisitions, the company recognized no
practice management expenses related to its management services because the
Company was not liable for such expenses. Practice management expenses consist
of salaries, wages and benefits of certain clinic staff, professional fees,
medical supplies, advertising, building and occupancy costs, and other general
and administrative costs related to the operation of clinics and ASCs.

Medical Claims. Medical claim expense increased 48.7% from $9.5 million
for the year ended December 31, 1996 to $14.1 million for the year ended
December 31, 1997. The Company's medical claims ratio decreased from 120.1% for
the year ended December 31, 1996 to 77.6% for the year ended December 31, 1997.
This decrease was caused primarily by the Company's Block Acquisition and the
renegotiated agreement to pay its ophthalmology and ASC Contract Providers a per
member per month fee for surgical eye care services provided under the Company's
largest capitated managed care contract. Medical claims expense consists of
payments by the Company to its Affiliated Providers for primary eye care
services, medical and surgical eye care services and facility services. These
payments are based on fixed payments per member per month, a pro rata share of
managed care capitated payments received (as determined by the number of eye
care procedures performed relative to other Affiliated Providers) or negotiated
fee-for-service schedules. Capitated payments and pro rata payments collectively
represented 16.2% and fee-for-service claims represented 83.8% of total medical
claims expense for the year ended December 31, 1997. Medical claims for the year
ended December 31, 1996 were based entirely on negotiated fee-for-service
schedules.

Cost of Optical Goods Sold. Optical costs of sales increased 10.9% from
$2.8 million for the year ended December 31, 1996 to $3.1 million for the year
ended December 31, 1997. The cost of sales as a percentage of optical sales was
consistent from 24.0% in 1996 to 24.8% in 1997.

Salaries, Wages and Benefits. Salaries, wages and benefits expense
increased 52.2% from $6.9 million for the year ended December 31, 1996 to $10.4
million for the year ended December 31, 1997. This increase was caused primarily
by an increase in corporate staff necessary to support the Company's expanded
practice management and managed care business. Salaries, wages and benefits
expense consists of expenses related to management and administrative staff
located at the Company's corporate headquarters and regional offices. As a
percentage of revenues, salaries, wages and benefits expense decreased from
31.4% for the year ended December 31, 1996 to 15.0% for the year ended December
31, 1997. This decrease was caused primarily by increased economies of scale
resulting from the Company's expanding business.

General and Administrative. General and administrative expenses increased
32.2% from $4.4 million for the year ended December 31, 1996 to $5.9 million for
the year ended December 31, 1997. This increase was caused primarily by
increases in travel expenses, professional fees and occupancy costs. As a
percentage of revenues, general and administrative expenses decreased from 20.3%
for the year ended December 31, 1996 to

33
<PAGE> 36

8.4% for the year ended December 31, 1997. This decrease was caused primarily by
increased economies of scale resulting from the Company's expanding business.

Depreciation and Amortization. Depreciation and amortization expense
increased from $.5 million for the year ended December 31, 1996 to $2.2 million
for the year ended December 31, 1997. As a percentage of revenues, depreciation
and amortization expense increased from 2.2% for the year ended December 31,
1996 to 3.2% for the year ended December 31, 1997. These increases were caused
primarily by the amortization of intangibles attributable to the 1996
Acquisitions, the 1997 Acquisitions, and the Block Acquisition.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Revenues. Revenues increased 47.0% from $14.9 million for 1995 to $21.9
million for 1996. This increase was caused primarily by a 358.3% increase in
practice management fees attributable to the 1996 Acquisitions, which accounted
for $1.5 million of the increase, and a 199.1% increase in managed care revenues
attributable to the addition of one new capitated contract and the expansion of
the Company's largest managed care contract, which accounted for $4.9 million of
the increase.

Medical Claims. Medical claims expense increased 182.9% from $3.3 million
in 1995 to $9.5 million in 1996. The Company's medical claims ratio increased to
120.1% for 1996 from 111.0% for 1995. These increases were caused primarily by
excess utilization of surgical eye care services and facility services related
to the Company's largest managed care contract, which accounted for $4.8 million
of the increase, and an increase in members covered by the Company's capitated
managed care contracts, which accounted for $1.8 million of the increase.
Capitated payments and pro rata payments represented 11.3% and fee-for-service
payments represented 88.7% of total medical claim expense for 1996. Medical
claims for 1995 were based entirely on negotiated fee-for-service schedules.

Buying Group Cost of Sales. The Company incurred no buying group cost of
sales during fiscal year ended December 31, 1995 and 1996.

Cost of Optical Goods Sold. Optical cost of sales increased 4.6% from $2.7
million for the year ended December 31, 1995 to $2.8 million for the year ended
December 31, 1996. The cost of sales as a percentage of sales was consistent at
23.9% in 1995 and 24.0% in 1996.

Salaries, Wages and Benefits. Salaries and benefits expense increased
22.6% from $5.6 million in 1995 to $6.9 million in 1996. This increase was
caused primarily by an increase in corporate staff necessary to support the
Company's expanded practice management and managed care business. As a
percentage of revenues, salaries, wages and benefits expense decreased from
37.6% in 1995 to 31.4% in 1996. This decrease was caused primarily by increased
economies of scale resulting from the Company's expanding business.

General and Administrative. General and administrative expenses increased
26.2% from $3.5 million in 1995 to $4.4 million in 1996. This increase was
caused primarily by increases in travel expenses, professional fees, occupancy
costs, temporary labor and recruitment costs related to the Company's expanding
business. As a percentage of revenues, general and administrative expenses
decreased from 23.7% in 1995 to 20.3% in 1996. This decrease was caused
primarily by increased economies of scale resulting from the Company's expanding
business.

Depreciation and Amortization. Depreciation and amortization expense
increased from $390,000 in 1995 to $487,000 in 1996. As a percentage of
revenues, depreciation and amortization expense decreased from
34
<PAGE> 37

2.6% in 1995 to 2.2% in 1996. This increase was caused primarily by the
amortization of intangibles attributable to the 1996 Acquisitions.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Revenues. Revenues increased 18.6% from $12.5 million for 1994 to $14.9
million for 1995. This increase was primarily caused by an increase in managed
care revenues as a result of the Company obtaining its first complete eye care
capitated contract from a leading HMO, which accounted for $1.8 million in the
increase.

Medical Claims. Medical claims expense increased 288.6% from $862,000 for
1994 to $3.3 million for 1995. The Company's medical claims ratio increased to
111.0% for 1995 from 78.9% for 1994. These increases were caused primarily by
excess utilization of surgical eye care services and facility services related
to the Company's largest managed care contract. All medical claims for 1995 and
1994 were based on negotiated fee-for-service schedules.

Buying Group Cost of Sales. The Company had no buying group business in
1994 and 1995. Such business was acquired in 1997 in conjunction with the Block
Acquisition.

Cost of Optical Goods Sold. Optical cost of sales increased 8.2% from $2.5
million for the year ended December 31, 1994 to $2.7 million for the year ended
December 31, 1995. The cost of sales as a percentage of sales increased from
22.7% in 1994 to 23.7% in 1995. The increase was caused primarily by lower
margins on contact lenses as opposed to frames.

Salaries, Wages and Benefits. Salaries, wages and benefits expense
increased 13.3% from $4.9 million in 1994 to $5.6 million in 1995. This increase
was caused primarily by an increase in corporate staff necessary to support the
Company's expanded practice management and managed care business. As a
percentage of revenues, salaries, wages and benefits expense decreased from
39.3% in 1994 to 37.6% in 1995. This decrease was caused primarily by increased
economies of scale resulting from the Company's expanding business.

Business Development. The Company incurred no business development
expenses during 1994 or 1995.

General and Administrative. General and administrative expenses increased
5.8% from $3.3 million in 1994 to $3.5 million in 1995. This increase was caused
primarily by increases in travel expenses, professional fees, occupancy costs
and temporary labor and recruitment costs. As a percentage of revenues, general
and administrative expenses decreased from 26.6% in 1994 to 23.7% in 1995. This
decrease was caused primarily by increased economies of scale resulting from the
Company's expanding business.

Depreciation and Amortization. Depreciation and amortization expense
increased 1.0% from $386,000 in 1994 to $390,000 in 1995. This increase was
caused primarily by the amortization of intangibles. As a percentage of
revenues, depreciation and amortization expense decreased from 3.1% in 1994 to
2.6% in 1995.

SUMMARY OF FIRST QUARTER 1998 RESULTS

The Company's revenue for the three months ended March 31, 1998 was $48.0
million compared to $11.0 million for the three months March 31, 1997. The
income before income taxes of $1,899,000 for the three months ended March 31,
1998 is net of approximately $500,000 in merger costs. Net income before taking
into consideration an extraordinary item of $397,000 (net of taxes) was
$1,187,000 or $0.08 per diluted share as compared to a net loss of ($238,000) or
($0.04) per diluted share for the three months ended March 31, 1997. The
Company's net income for the three months ended March 31, 1998 after the
extraordinary charge for early extinguishment of debt was $790,000 or $0.06 per
diluted share. Comparable clinic revenues increased 14% for practices managed by
the Company during the three months ended March 31, 1997 and 1998. On a
comparable basis, managed care revenues for the three months ended March 31,
1998 increased 40% over the three months ended March 31, 1997, for business
units operated by the Company in both

35
<PAGE> 38

periods. The following financial statements reflect the Company's statement of
operations for the three months ended March 31, 1997 and 1998 and the balance
sheet as of March 31, 1998. Such financial statements are unaudited and were
prepared by management of the Company on the same basis as the audited
consolidated financial statements included elsewhere herein and, in the opinion
of management, include all adjustments necessary to present fairly the
information set forth therein including the EyeCare One and VIPA Merger which
was accounted for as a pooling of interests.

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS(1)

(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------
1997 1998
---------------------- -------
(RESTATED FOR POOLING)
<S> <C> <C>
Revenues:
LADS operations net revenues.............................. $ 7,968 $21,220
Managed care.............................................. 3,047 13,007
Buying group revenue...................................... 13,725
------- -------
Total revenue............................................... 11,015 47,952
------- -------
Operating expenses:
LADS operating expenses................................... 6,794 16,969
Medical claims............................................ 2,444 9,658
Buying group cost of sales................................ 0 12,795
Regional service centers.................................. 0 554
Corporate expenses........................................ 1,459 3,554
Depreciation and amortization............................. 301 1,352
Merger costs.............................................. 0 508
------- -------
Total operating expenses.................................... 10,998 45,390
------- -------
Income from operations...................................... 17 2,562
Interest expense............................................ 255 663
------- -------
Income (loss) before income taxes........................... (238) 1,899
Income taxes................................................ 0 712
------- -------
Income (loss) before extraordinary charge................... (238) 1,187
Extraordinary charge -- early extinguishment of debt (net of
income taxes of $238)..................................... 0 397
------- -------
Net income (loss)........................................... $ (238) $ 790
======= =======
Earnings (loss) per common share -- assuming dilution:
Income (loss) before extraordinary charge................. $ (0.04) $ 0.08
Extraordinary charge...................................... -- (0.02)
------- -------
Net income (loss) per common share assuming dilution........ $ (0.04) $ 0.06
======= =======
Weighted average number of common shares outstanding on a
diluted basis............................................. 6,171 14,313
======= =======
Supplemental information:
Income (loss) before extraordinary charge................. $ (238) $ 1,187
Merger costs (net of income taxes)........................ -- 317
------- -------
Income (loss) before extraordinary charge and merger
costs.................................................. $ (238) $ 1,504
======= =======
Income (loss) before extraordinary charge and merger costs
per common share assuming dilution..................... $ (0.04) $ 0.11
======= =======
Medical claims to managed care revenue...................... 80.2% 74.3%
======= =======
</TABLE>

- ---------------

(1) The description of certain captions on these unaudited consolidated
statements of operations for the three months ended March 31, 1997 and 1998
differ from the description of similar captions in the Company's historical
consolidated statements of operations and supplemental consolidated
statements of operations included on pages F-34 and F-13, respectively.

36
<PAGE> 39

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
MARCH 31,
1998
-----------
<S> <C>
ASSETS
Cash........................................................ $ 12,225
Receivables and other current assets........................ 27,597
--------
Total current assets.............................. 39,822
--------
Property and equipment, net................................. 9,649
Intangibles and other assets................................ 97,271
--------
Total assets...................................... $146,742
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses....................... $ 13,207
Other current liabilities................................... 15,316
--------
Total current liabilities......................... 28,523
--------
Long-term liabilities....................................... 45,611
Stockholders' equity........................................ 72,608
--------
Total liabilities and stockholders' equity........ $146,742
========
</TABLE>

The Company's historical medical claims ratio has varied on a quarter to
quarter basis. Variances in the Company's medical claims ratio can impact the
Company's future earnings. For the year ended December 31, 1997 the Company's
medical claims ratio was 79.3% and for the three months ended March 31, 1998 was
74.3%.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically funded its working capital and capital
expenditure requirements primarily through institutional borrowings and private
debt and equity financings. Net cash used in operating activities for the years
ended December 31, 1995, 1996 and 1997 was $138,000, $4.2 million and $4.6
million, respectively. Net cash used in operating activities for the years ended
December 31, 1995, 1996 and 1997 was caused primarily by net losses offset in
part by increases in medical claims payable, deferred compensation and
acquisition expenses.

Net cash used in investing activities for the years ended December 31,
1995, 1996 and 1997 was $88,000, $1.6 million and $43.1 million, respectively,
and was caused primarily by payments for acquisitions, the purchase of furniture
and equipment and payments for capitalized acquisition and offering costs.

Net cash provided by financing activities for the years ended December 31,
1995, 1996 and 1997 was $256,000, $5.8 million and $51.5 million, respectively.
The amounts for 1996 and 1997 were attributable to debt and equity financings
and higher levels of institutional borrowings to support the Company's internal
expansion and acquisition activities.

On January 30, 1998 the Company entered into a five year, $50.0 million
bank credit agreement (the "Credit Agreement") with the Bank of Montreal as
agent (the "Agent") for a consortium of banks. The Credit Agreement, which
matures in January, 2003, provided the Company with a revolving credit facility
component in an aggregate amount of up to $10.0 million and a term loan
component in an aggregate amount of up to $40.0 million. The Credit Agreement is
secured by a pledge of the stock of substantially all of the Company's
subsidiaries and the assets of the Company and certain of its subsidiaries and
is guaranteed by certain of the Company's subsidiaries. The Credit Agreement
contains negative and affirmative covenants and

37
<PAGE> 40

agreements which place restrictions on the Company regarding disposition of
assets, capital expenditures, additional indebtedness, permitted liens and
payment of dividends, as well as requiring the maintenance of certain financial
ratios. The interest rate on the Credit Agreement is, at the option of the
Company, either (i) the London InterBank Offered Rate plus an applicable margin
rate, (ii) the greater of (a) the Agent's prime commercial rate or (b) the
"federal funds" rate plus 0.5%, or (iii) a fixed rate loan as determined by the
Agent at each time of borrowing. At the closing of the Credit Agreement the
Company used approximately $26.9 million of its available borrowing to repay the
outstanding balance under the Company's Bridge Credit Facility with Prudential
Credit and related accrued interest and transaction costs. The Company has used
approximately $41.0 million of its available borrowings under the Credit
Agreement and currently has a balance available of approximately $9.0 million
which it expects will be utilized for acquisitions and for working capital and
general corporate purposes.

On November 20, 1997, the Company completed the sale of 2,300,000 shares of
its common stock at a price of $9.50 in a secondary public offering (the
"Secondary Offering"). The net proceeds of $20.5 million from the Secondary
Offering were used to fund a portion of the consideration for the Block
Acquisition.

In October 1997, the Company received a commitment from Prudential
Securities Credit Corporation ("Prudential Credit") for a credit facility in the
aggregate amount of $37.0 million pursuant to a Note Purchase Agreement (the
"Bridge Credit Facility"). Approximately $27.0 million of the Bridge Credit
Facility was available, if needed, to fund the cash portion of the Block
Acquisition to the extent the net proceeds from the Company's Secondary Offering
were insufficient for such purpose. The remaining balance of approximately $10.0
million of the Bridge Credit Facility was available for optometry and
ophthalmology practice acquisitions. The Company borrowed $5.6 million and $6.5
million for use in funding the cash portions of the Block Acquisition and
LaserSight Acquisitions, respectively. Additionally, the Company borrowed
approximately $3.5 million for use in the funding of certain optometry and
ophthalmology practice acquisitions. Amounts borrowed pursuant to the Bridge
Credit Facility were secured by a first security interest in all of the
Company's assets. The Bridge Credit Facility was required to be repaid at the
earlier of six months from the date of any borrowing from the Bridge Credit
Facility or upon the closing of any future debt or equity offering by the
Company. The Bridge Credit Facility contained negative and affirmative covenants
and agreements which included covenants requiring the maintenance of certain
financial ratios. The Company repaid its Bridge Credit Facility borrowings in
full from available proceeds under its Credit Agreement.

On August 18, 1997, the Company completed the sale of 2,100,000 shares of
its common stock at a price of $10.00 per share in an initial public offering
(the "Initial Public Offering"). The net proceeds from the Initial Public
offering were used to repay substantially all of the Company's outstanding
indebtedness and to provide funding to continue acquisitions of optometry and
ophthalmology clinics and ASCs.

In April 1997, the Company entered into a credit facility in the aggregate
amount of $4.9 million with Prudential Securities Group Inc. ("Prudential")
pursuant to a "Note and Warrant Purchase Agreement" (as amended and restated,
the Note and Warrant Purchase Agreement'). The proceeds from the borrowing were
used to repay the Company's credit facility with Barnett Bank N.A. in the
principal amount of $2.0 million and for general working capital purposes. Under
the Note and Warrant Purchase Agreement, the Company issued a senior note
secured by all the Company's assets (the "Prudential Note"). The Prudential Note
accrued interest at 10% per annum with a maturity of the earlier of January 1,
1998 or upon completion of the Initial Public Offering. In addition, the note
and Warrant Purchase Agreement included a detachable warrant to purchase 210,000
shares of Common Stock at an exercise price per share equal to $10.00 per share,
the price of the Common Stock in the Initial Public Offering. The Prudential
Note was repaid by the Company from the net proceeds of the Initial Public
Offering.

In February 1997, the Company borrowed an aggregate of $2.0 million from
Piper Jaffray Healthcare Fund II Limited Partnership ("Piper Jaffray") for
working capital purposes pursuant to the issuance of senior subordinated notes
bearing interest at 10% per annum (the "1997 Subordinated Notes"). The 1997
Subordinated Notes included a detachable warrant to purchase an aggregate of
333,333 shares of Common Stock which have an exercise price of $6.00 per share.
The 1997 Subordinated Notes were repaid by the Company from the net proceeds of
the Initial Public Offering.

38
<PAGE> 41

In December 1996, the Company borrowed an aggregate of $1.3 million from
certain individuals for working capital purposes pursuant to the issuance of
senior subordinated notes bearing interest at 10% per annum (the "1996
Subordinated Notes"). The 1996 Subordinated Notes included detachable warrants
to purchase an aggregate of 208,333 shares of Common Stock at an exercise price
of $6.00 per share. The 1996 Subordinated Notes were repaid by the Company from
the net proceeds of the Initial Public Offering.

In June 1996, the Company borrowed $3.0 million from Peter Fontaine, a
director of the Company, for working capital purposes pursuant to an unsecured
Promissory Note bearing interest at 8.0% per annum (the "Fontaine Note"). The
Fontaine Note was repaid by the Company from the net proceeds of the Initial
Public Offering. In addition, the Company borrowed $200,000 and $500,000 from
Mr. Fontaine in November and December 1996, respectively, for working capital
purposes pursuant to unsecured promissory notes bearing interest at 8.5% per
annum. The unsecured promissory notes were repaid from the net proceeds of the
Initial Public Offering.

To date in 1998, the Company completed the 1998 Acquisitions and in
connection with the 1998 Acquisitions, the Company provided aggregate
consideration of approximately $16.7 million, consisting of 786,952 shares of
Common Stock, $8.7 million in cash and promissory notes in the aggregate
principal amount of approximately $21,000, subject to closing adjustments. In
addition the Company is required to provide additional contingent consideration,
consisting of 33,695 shares of Common Stock and up to $600,000 in cash, to be
paid to certain sellers if certain post-acquisition performance targets are met.

In March 1998, the Company closed pooling of interests transactions with
EyeCare One and VIPA In connection with these pooling transactions, the Company
issued 1,109,806 shares of Common Stock, subject to closing adjustments, valued
at approximately $10.5 million.

The Company has also entered into binding letters of intent with respect to
the Pending Acquisitions for which the Company is providing aggregate
consideration of approximately $3.0 million, consisting of approximately 21,000
shares of Common Stock and approximately $2.8 million in cash, subject to
closing adjustments.

Effective December 1, 1997, the Company completed the LaserSight
Acquisitions in exchange for aggregate consideration paid to the seller of
approximately $13.0 million, consisting of $6.5 million in cash and 812,500
shares of Common Stock, subject to certain post-closing adjustments. The cash
portion of the consideration paid by the Company for the LaserSight Acquisitions
was financed through a letter amendment to the Company's credit facility with
Prudential Securities Credit Corporation. The LaserSight Acquisitions were
accounted for under the purchase method of accounting. The aggregate
consideration paid by the Company for the LaserSight Acquisitions was
approximately $13.0 million consisting of $6.5 million in cash and 812,500
shares of Company common stock, subject to certain post-closing adjustments. The
cash portion of the consideration paid by the Company for the LaserSight
Acquisitions was financed through a letter amendment to the Company's credit
facility with Prudential Securities Credit Corporation. In addition, LaserSight,
Inc. and the Company entered into a Stock Distribution Agreement for the
liquidation of the shares of Company Common Stock received by LaserSight, Inc.
by May 29, 1998 through, at the Company's option, the filing of a shelf
registration statement, a private placement, a direct redemption by the Company,
or other method acceptable to the Company and LaserSight, Inc. Under the Stock
Distribution Agreement, LaserSight, Inc. is entitled to receive a minimum of
$6.5 million and a maximum of $7.475 million from the liquidation subject to
certain post-closing adjustments. On March 11, 1998 the Company redeemed 168,270
shares of its Common Stock pursuant to the Stock Distribution Agreement from
LaserSight, Inc. for an aggregate purchase price of approximately $1.5 million.

Effective October 31, 1997, the Company completed the Block Acquisition in
exchange for aggregate consideration paid to the sellers of approximately $35.0
million, consisting of $25.6 million in cash, 458,365 shares of Common Stock,
subject to certain post-closing adjustments and 219, 633 shares of Common Stock
to be held in escrow as contingent consideration, of which 109,816 shares are to
be delivered by the Company to the sellers if EBITDA of Block Vision reaches
$4.5 million for the year ended December 31, 1998. The remaining 109,817 shares
will be deliverable on a pro rata escalating basis if Block Vision reaches $4.5
million of EBITDA for 1998 with the full contingent consideration deliverable
upon Block Vision attaining $4.9
39
<PAGE> 42

million of EBITDA for 1998. Approximately $2.4 million in net indebtedness of
Block Vision was assumed in connection with the Block Acquisition.

During 1997, the Company also completed the 1997 Acquisitions, and in
connection with the 1997 Acquisitions, the Company provided aggregate
consideration of $20.1 million, consisting of 1,480,122 shares of Common Stock,
$6.7 million in cash and $364,000 in promissory notes. Additionally, the Company
is required to provide additional contingent consideration, consisting of
approximately 174,021 shares of Common Stock, approximately $821,000 in cash,
and approximately $467,000 in shares of Common Stock, to be paid to certain
sellers if post-acquisition performance targets are met.

In December 1996, the Company completed the 1996 Acquisitions for an
aggregate consideration of $11.2 million, consisting of 2.1 million shares of
Common Stock, unsecured promissory notes in the aggregate principal amount of
$1.9 million bearing interest at 8.0% per annum and $800,000 in assumed debt.
The promissory notes were repaid by the Company from the net proceeds of the
Initial Public Offering.

The Company has treated as deferred compensation the issuance of shares of
restricted stock in September and October 1996, for future services related to
various business development initiatives and management incentives. In September
1996, the Company entered into a five-year services agreement with its Chief
Medical Officer and current director of the Company and issued 108,133 shares of
restricted Common Stock. These shares were valued at $2.77 per share or
$300,000. Of these shares, 40% vested immediately and the Company recorded a
business development charge of $120,000. The remaining 60% of the shares were
recorded as an offset in stockholders' equity as deferred compensation for
$180,000. In October 1996, the Company entered into a five-year advisory
agreement with an industry consultant and issued 125,627 shares of restricted
Common Stock which vest over the life of the advisory agreement. These shares
were valued at $2.77 per share or $349,000. The Company recorded the issuance of
these shares as an offset in stockholder's equity as deferred compensation. This
deferred compensation is being amortized as the shares vest on a pro rata basis.

Intangible assets consist of the excess of the purchase price over the fair
values of the net assets acquired from the business acquisitions, which is being
amortized on a straight-line method over 25 years, and the Management Agreements
with the Managed Professional Associations. The Management Agreements have
40-year terms and are being amortized over an average life of 25 years.
Intangible assets represented 72.2% of the Company's total assets as of December
31, 1997. In determining the useful life of a Management Agreement, the Company
considers the operating history and other characteristics of each practice. A
principal consideration is the degree to which the practice has demonstrated its
ability to extend its existence indefinitely. The Company will review the
carrying value of its intangible assets at least quarterly on an entity-
by-entity basis to determine if facts and circumstances exist which would
suggest that the intangible assets may be impaired or that amortization periods
need to be modified. Among the factors the Company considers in making the
valuation are changes in the Managed Professional Associations market position,
reputation, profitability, and geographic penetration.

In addition to the business assets purchased, the Company assumes certain
payables and accrued expenses in connection with its acquisitions. Generally,
the acquired tangible assets exceed the assumed liabilities. The Company has
assumed liabilities of $3.2 million, including $791,000 of long-term debt, in
connection with acquisitions (including the Block Acquisition) completed through
December 31, 1997.

40
<PAGE> 43

Currently many computer systems in use today were designed and developed
using two digits, rather than four, to specify the calendar year and as a
result, such systems are unable to recognize the year "2000." The inability of a
computer system to recognize the year 2000 could cause many computer
applications to fail or create erroneous results unless corrective measures are
taken. The Company utilizes software and related computer technologies essential
to its operations that could be affected by the year "2000" computer system
problem. Block Vision's managed care computer systems are year 2000 compliant.
The Company has implemented a plan of action which it believes will make its
other computer systems year 2000 compliant and the expense associated with such
action is not expected to have a material effect on the Company's future
financial condition and results of operations. The Company also expects to
initiate communications with significant suppliers, customers and other third
parties with which the Company does business, to minimize disruptions to the
Company's operations resulting from the year 2000 problem and to ensure that
year 2000 issues are satisfactorily resolved. There can be no assurances,
however, that the computer systems of other companies may have an adverse effect
on the Company's operations. The Company expects to work with such parties to
resolve or minimize year 2000 problems. The Company believes it currently has no
material exposure to contingencies related to the year 2000 issue.

The Company believes the effects of inflation have not had a material
adverse impact on its operations or financial condition to date. Substantial
increases in prices in the future, however, could have a material adverse effect
on the Company's results of operations.

Based upon the Company's anticipated capital needs for operation of its
business, general corporate purposes, the acquisition of clinics and ASCs and
repayment of certain indebtedness, management believes that the combination of
the funds expected to be provided from the Company's operations, Credit
Agreement, anticipated future increases of borrowings under its Credit
Agreement, supplemental borrowings and seller financing and the use of Common
Stock in acquisitions will be sufficient to meet the Company's funding
requirements to conduct its operations and for further implementation of its
growth strategy for a period of approximately twelve months. The Company will
continue to offer Common Stock, notes or combinations thereof as consideration
for certain future mergers and acquisitions related to the growth of its LADS.
After the twelve-month period, or in the event the Company's capital
expenditures are greater than currently expected and to the extent additional
capital resources are needed, the Company expects to utilize supplemental
borrowings to the extent available and/or the net proceeds from the offering of
debt or equity securities.

41
<PAGE> 44

BUSINESS

OVERVIEW

MANAGEMENT AGREEMENTS

The Company intends to continue to acquire the business assets of select
optometry and ophthalmology practices as it establishes and develops LADS and
expands into new markets. In conjunction with acquiring the assets of eye care
practices, the Company has entered, and will continue to enter, into long-term
business management agreements with the professional associations conducting
such practices (the "Managed Professional Associations") to provide management
and administrative services to Managed Professional Associations. The Company
also expects to acquire ASC facilities.

The Company enters into Management Agreements with the Managed Professional
Associations pursuant to which the Company is the sole provider of comprehensive
management, business and administrative services for the non-professional
aspects of the professional practices. Each Managed Provider maintains full
authority, control and responsibility over the provision of professional care
and services to its patients. The Company does not provide professional care to
patients nor does the Company employ any of the ophthalmologists or
optometrists, or any other professional health care provider personnel, of the
Managed Professional Association. The following is a summary of the typical form
of the Management Agreements the Company enters into with each Managed
Professional Association, and is qualified by reference to the actual Management
Agreements and terms may vary depending upon the particular facts and
circumstances, as well as the different laws and regulations of each state.
Additionally, as health care governmental regulations and their interpretations
change in the future, the Company may have to revise terms in its Management
Agreements to comply with the regulatory changes. See "Risk
Factors -- Governmental Regulations."

The Company enters into Management Agreements with professional
associations managed by the Company, the initial term of which is typically 40
years. Under significantly all of the Company's Management Agreements, the
management fee ranges from 24% to 37% of the Managed Professional
42
<PAGE> 45

Associations' gross revenues after deducting from such revenues all expenses of
the clinic other than those related to shareholders of the Managed Professional
Associations. This type of arrangement is usually utilized in management
relationships with ophthalmology practices. Additionally, the Company has
Management Agreements with management fees ranging from 70% to 87% of gross
revenues of a practice and the Company is required to pay generally all the
expenses of the clinic with the exception of professional salaries and benefits.
Such arrangements are typically utilized in management relations with
optometrists. The practice management fees earned by the Company pursuant to
these Management Agreements fluctuate depending on variances in revenues and
expenses of the Managed Professional Associations.

Under the Management Agreements, the Company is obligated, among other
things, to (i) provide, maintain and repair office and clinical equipment for
the Managed Professional Association, (ii) order and purchase all reasonable
supplies on behalf of the Managed Professional Association, (iii) provide
appropriate support services for the operation of the Managed Professional
Association's offices, (iv) assist the Managed Professional Association in
establishing and implementing quality assessment, risk management and
utilization review programs, (v) employ all management, clinicians,
administrative, clerical, secretarial, bookkeeping, accounting, payroll, billing
and collection personnel, and other nonprofessional personnel as necessary, (vi)
assist the Managed Professional Association in negotiating managed care
contracts, (vii) bill and collect professional and other fees on behalf of the
Managed Professional Association, (viii) establish and administer accounting
procedures, controls and systems for the financial books and records relating to
the business of the Managed Professional Association, (ix) monitor and maintain
the files and records of the Managed Professional Association and (x) provide
such management services as are necessary and appropriate for the day-to-day
administration of the business aspects of the Managed Professional Association.

The Management Agreements provide that the Managed Professional Association
is responsible for, among other things, (i) hiring, supervising, and directing
certain of the Managed Professional Association's professional employees, (ii)
adopting a peer review/quality assurance program and (iii) maintaining
appropriate worker's compensation, professional and comprehensive general
liability insurance.

Pursuant to the Management Agreements, a Practice Advisory Council,
consisting of equal representation for the Company and the Managed Professional
Association, is responsible for (i) reviewing and making recommendations
regarding any renovation and expansion plans and capital equipment expenditures
relating to the Managed Professional Association's facilities, (ii) reviewing
and making recommendations regarding all marketing and public relations
services, (iii) reviewing and making recommendations regarding the fee schedule
and collection policies for the Managed Professional Association, (iv) approving
new nonprofessional ancillary services provided by the Managed Professional
Association, (v) approving and making recommendations regarding agreements with
institutional care providers and third party payors which are not in accordance
with guidelines established by the applicable Local Advisory Council (described
below), (vi) assisting the Managed Professional Association in developing
long-term strategic planning objectives, (vii) making recommendations regarding
the priority of major capital expenditures, (viii) recommending to the Managed
Professional Association the number and type of health care personnel required
for the efficient operation of the Managed Professional Association, (ix) making
recommendations regarding fee disputes, (x) approving the decision to terminate
higher level non-professional personnel employed by the Company who are
performing services at the Managed Professional Associations' offices, (xi)
approving any office relocation or expansion and the establishment of any new
ASC or optical business of the Managed Professional Association and (xii)
adopting, approving and amending the Managed Professional Association's budget.

Local Advisory Councils consist of Company representatives and delegates
from Managed Professional Associations located in each region. Each Managed
Professional Association is entitled to appoint one delegate to the Local
Advisory Council and the Company is entitled to appoint two delegates who will
have voting power equal to the combined voting power of all delegates appointed
by the Managed Professional Association. The Local Advisory Council makes
recommendations to the Company and the Managed Professional Associations as to
the regional policy and strategy issues within the region and as to (i) the
establishment of private pay fee schedules where permitted by law, (ii) the
establishment of guidelines for agreement with institutional health care
providers and third party payors and (iii) any agreement with an institutional
health care provider or third-party payor which materially differs from
guidelines established by
43
<PAGE> 46

the Local Advisory Council. The Local Advisory Council may also select
commercial carriers for professional, casualty and comprehensive general
liability insurance for the Managed Professional Associations in the region.
Finally, the Local Advisory Council considers and determines any issue upon
which the Practice Advisory Council is deadlocked, except for the determination
of the budget of each Managed Professional Association. Decisions of the Local
Advisory Council may be appealed to the National Appeal Council consisting of
one delegate appointed by each of the Local Advisory Councils and two delegates
appointed by the Company.

Each Managed Professional Association has the sole authority to set its
fees for patients, subject to obligations pursuant to managed care contracts. In
connection with managed care contracts the Managed Professional Associations may
contract directly with third-party payors. Otherwise, the managed care contracts
are entered into by the Company and at the option of the Managed Professional
Association the practice can be part of the provider group offered by the
Company in connection with the contract. See "-- Managed Care Contracts."

In accordance with its standard Management Agreement entered into with each
Managed Professional Association, the Company is responsible for, and authorized
to bill, in the Managed Professional Association's name, patients, third-party
payors and other fiscal intermediaries for all billable health care services
rendered by the practice. The Company is responsible for collecting and
receiving all payments for such health care services. Collections from
receivables are deposited by the Company into a cash collateral account from
which all amounts for the payment of expenses and other obligations are drawn.
In the event that any payments for billable services are received by the Managed
Professional Association or its employed professionals, such entities and
individuals are obligated to transfer such funds to the cash collateral account.
The Company has been provided a security interest in the cash collateral account
whereupon the Company is permitted, except where specifically limited by the
Management Agreement, to borrow against the account as well as against
receivables of the practice. The Company has the power to endorse checks payable
to the Managed Professional Association. The Company continuously monitors
outstanding accounts receivable and is authorized to take certain collection
actions, including extending the time for payment of accounts, and jointly
decides with the Managed Professional Association concerning any decision to
undertake extraordinary collection efforts. The Company has the obligation to
fund shortages in the account as necessary to pay practice management expenses
which must be paid as they become due. The Company reconciles the results of its
billing and collection efforts for its Managed Professional Associations on a
quarterly basis.

The Management Agreements are terminable by either party if the other party
materially defaults in the performance of any of its obligations under the
Management Agreement and such default continues for a certain period of time
after notice, if the other party files a petition for bankruptcy or upon the
occurrence of other similar events. The Management Agreements may also be
terminated by mutual agreement in writing.

During the term of the Management Agreement, the Company and the Managed
Professional Association agree not to compete with each other in the business of
providing management services to professional associations and agree not to
disclose certain confidential and proprietary information regarding the other.
The Management Agreements require the Company and the Managed Professional
Associations to indemnify and hold harmless the other party against claims
resulting from negligent or intentional acts or omissions.

The Managed Professional Association is generally required under each
Management Agreement to enter into written employment agreements with each of
its professional employees containing covenants not to compete with the Managed
Professional Association in a specified geographic area for a specified period
of time after termination of the employment agreement. The employment agreements
also require the payments of significant liquidated damages in the event of a
default by shareholders of the Managed Professional Associations and certain
employees of the Managed Professional Associations, early termination by such
shareholders and key non-shareholder professionals, or a breach of the covenant
not to compete. In such acquisitions where the practice does not after closing
obtain employment agents with professionals due to its negotiations with the
Company, the Company has a risk that the practice it manages could lose a
significant portion of its income in the event such professionals terminate
their affiliations with the practice.

44
<PAGE> 47

Upon the expiration of the term of the Management Agreement, or in the
event that the Managed Professional Association breaches the Management
Agreement, and to the extent permitted by law, the Managed Professional
Association is obligated to purchase the related assets owned by the Company
(including the unamortized portion of the Management Agreement) at book value
and assume all related liabilities. For a period of five years from the date of
the Management Agreement, the shareholders of the Managed Professional
Association are in most cases required to personally guarantee any note provided
in connection with the repurchase. If the Company breaches the Management
Agreement, the Managed Professional Association has the option to purchase the
related assets owned by the Company pursuant to terms described in the
Management Agreement.

MANAGED CARE CONTRACTS

As an increasing percentage of the population is covered by managed care
organizations, the Company believes that its success will be, in part, dependent
upon its ability to negotiate managed care contracts with HMOs, health insurance
companies and other third-party payors pursuant to which services will be
provided on a risk-sharing or capitated basis. The Company also has contracts
for the provision of certain financial and administrative services related to
its indemnity insurance and fee-for-service plans. Managed care contracts are
typically for one year terms that renew automatically and the contracts are
terminable by either party on sixty days notice.

The Company's typical contracts with third-party health benefits payors
(insurance companies and HMOs) provide that the Company will arrange and pay for
eye care services that are needed by the payor's members in exchange for a fixed
amount per patient per month or a percentage of the premiums paid on behalf of
the patient, without regard to the volume of services that the patient requires.
Under these arrangements, the Company accepts the risk that the cost and
utilization of services may exceed expectations in exchange for its ability to
profit if cost and utilization are kept below expected levels. The Company can
directly benefit by effectively managing costs and utilizing its relationships
with its Affiliated Providers. Because the Company assures the credentials of
the providers, establishes quality and utilization control systems and
implements payment arrangements with the providers, third-party payors are able
to use their limited resources in other areas where they have greater expertise.

GOVERNMENTAL REGULATIONS

The health care industry is highly regulated, and there can be no assurance
that the regulatory environment in which the Company operates will not change
significantly and adversely in the future. In general, regulation of health care
providers and companies is increasing. Such governmental regulations can
significantly limit and restrict various areas the Company conducts its business
and such restrictions and limitations could increase in the future and could
affect the Company's financial performance. See "Risk Factors -- Governmental
Regulations, -- Risks Arising From Health Care Reform and -- Cost Containment
And Reimbursement Trends."

COMPETITION

The health care industry is highly competitive and subject to continual
changes in the method in which services are provided and the manner in which
health care providers are selected and compensated. The Company believes that
private and public reforms in the health care industry emphasizing cost
containment and accountability will result in an increasing shift of eye care
from highly fragmented, individual or small practice -providers to larger group
practices or other eye care delivery services. Companies in other health care
industry segments, such as managers of other hospital-based specialties or
currently expanding large group practices, some of which have financial and
other resources greater than those of the Company, may become competitors in
providing management to providers of eye care services. Increased competition
could have a material adverse effect on the Company's financial condition and
results of operations. The basis for competition in the practice management area
includes service, pricing, strength of the Company's delivery network (where
applicable), strength of operational systems, the degree of cost efficiencies
and synergies, marketing strength, managed care expertise, patient access and
quality assessments and assurances programs.
45
<PAGE> 48

The Company also competes with other providers of eye care services for managed
care contracts, many of which have greater financial and other resources than
the Company. These include HMOs, PPOs and private insurers. The basis for
competition in the managed care organization area includes administrative
strength, size and quality of network, marketing abilities, informational
systems and operating efficiencies. The future success of the Company will be
directly related to its ability to expand the managed eye care delivery network
geographically, attract reputable providers, expand the scope of services
offered by associated practices (i.e. not only optical and optometric, but also
ophthalmological), and dedicate resources to an active sales team focused
exclusively on the Company's sales effort.

EMPLOYEES

In most circumstances, at the time of its integration into the Company's
managed operations, each Managed Provider enters into an employment agreement
with his or her respective professional association. The employment agreements
with shareholder professionals are for an initial term of five years and for
non-shareholder professionals are for an initial term of two years. Shareholder
professionals are obligated to work for the full five-year term unless the
professional employment is terminated for reasons such as the professional's
death or disability or the occurrence of certain events outside the
professional's control. The professional employment agreements provide that the
employed professionals will not compete with the professional association during
the term of the agreement and following the termination of the agreement for a
term of two years for a shareholder professional and one year for a
non-shareholder professional in a specified geographical area. At April 29,
1998, the Company had approximately 1,250 employees.

INSURANCE

The Company's business entails an inherent risk of claims of liability. The
optometrists and ophthalmologists with which the Company associates and certain
employees of the Company are involved in the delivery of health care services to
the public and, therefore, are exposed to the risk of professional liability
claims. Claims of this nature, if successful, could result in substantial damage
awards to the claimants that may exceed the limits of any applicable insurance
coverage. Insurance against losses related to claims of this type can be
expensive and varies widely from state to state. The Company is indemnified
under its service agreements for claims against the its Managed Providers
practices and maintains a blanket liability insurance policy for itself.
Successful malpractice claims asserted against the Managed Practices, however,
could have an adverse effect on the Company's profitability. The Company
maintains umbrella general liability insurance on a claims made basis in the
amounts of $5.0 million per incident, and $5.0 million in the aggregate per
annum. While the Company believes it has adequate liability insurance coverage,
there can be no assurance that a pending or future claim or claims will not be
successful or, if successful, will not exceed the limits of available insurance
coverage or that such coverage will continue to be available at acceptable costs
and on favorable terms.

LITIGATION

There are no material pending legal proceedings against the Company.

SERVICE MARKS

The Company believes that its trademarks and service marks are important
and accordingly, it has registered "A Different Point of View," "LADS," and the
Company's "Vision Twenty-One" design logo with the United States Patent and
Trademark Office and has applied for registration of "Vision 21," "Eye Care for
the 21st Century" and "Elite Vision Plans," with the United States Patent and
Trademark Office, which applications are currently pending. Through its
LaserSight Acquisition, the Company also acquired New Jersey State registrations
for "Rapid Vision Cataract Surgery" and "Instant Vision Cataract Surgery."

46
<PAGE> 49

PROPERTIES

The Company leases 9,902 square feet of office space in Largo, Florida, for
its corporate headquarters. The lease is for a term through September 1998, and
the Company believes that the facility is adequate for its current needs.

The Company leases 10,586 square feet of office space in Boca Raton,
Florida for Block Vision's corporate office under a lease expiring May 31, 2001.
The Company believes that the facility is adequate for Block Vision's current
needs.

The Company leases or subleases the clinic locations it manages pursuant to
the Management Agreements with the Managed Professional Associations. The
Company anticipates that expanded facilities will be needed as the Managed
Professional Associations grow. The Company also expects to enter into leases
and subleases in the future as it acquires the allowable assets of Contract
Providers and enters into Management Agreements.

The Company also leases and subleases the ASC facilities it manages. The
Company does not expect that the current ASCs will need to be expanded. However,
the Company does anticipate that it will enter into leases and subleases as it
acquires additional ASC facilities.

The Company also leases minimal but adequate facilities in certain business
regions for regional support.

47
<PAGE> 50

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the names and ages of the Directors and
executive officers of the Company and the positions they hold with the Company.
Executive officers serve at the pleasure of the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Theodore N. Gillette, O.D.................. 44 Chairman of the Board, Chief Executive
Officer, President and Director(1)
Richard L. Sanchez......................... 44 Chief Development Officer, Secretary and
Director
Richard T. Welch(3)........................ 46 Chief Financial Officer, Treasurer and
Director(2)
Richard L. Lindstrom, M.D.................. 50 Chief Medical Officer and Director
Michael P. Block........................... 46 Executive Vice President -- Managed Care
Peter J. Fontaine.......................... 45 Director(1)(2)
Herbert U. Pegues, II, M.D.(3)............. 47 Director(1)(2)
Bruce S. Maller............................ 44 Director
Jeffrey I. Katz, M.D.(3)................... 51 Director
</TABLE>

- ---------------

(1) Member of Compensation Committee.
(2) Member of Audit Committee.

(3) Directors Currently Nominated for Re-Election.

THEODORE N. GILLETTE, O.D., CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER,
PRESIDENT AND DIRECTOR. Dr. Gillette has served as Chairman of the Board, Chief
Executive Officer, President, and Director of the Company since its inception.
Dr. Gillette has served as President and Director of the Company's wholly-owned
subsidiaries, Vision 21 Physician Practice Management Company and Vision 21
Managed Eyecare of Tampa Bay, Inc. since 1984 and 1993, respectively. He
obtained his Doctorate of Optometry from Southern California College of
Optometry in 1979 and his Bachelor of Science from Florida State University in
1975.

RICHARD L. SANCHEZ, CHIEF DEVELOPMENT OFFICER, SECRETARY AND DIRECTOR. Mr.
Sanchez has served as Chief Development Officer, Secretary and Director of the
Company since its inception. From 1993 until assuming his positions with the
Company, Mr. Sanchez was Vice President of Marketing and Administration of the
Company's wholly-owned subsidiary, Vision 21 Managed Eyecare of Tampa Bay, Inc.
Prior to November of 1992, Mr. Sanchez worked for Exxon Corporation for over 18
years in various management positions including divisional management
responsibility for over 300 employees and $600 million in revenues. Mr. Sanchez
obtained his Bachelor of Science in Chemistry from Florida State University in
1975.

RICHARD T. WELCH, CHIEF FINANCIAL OFFICER, TREASURER AND DIRECTOR. Mr.
Welch has served as Chief Financial Officer, Treasurer and Director of the
Company since August 1996. Prior to joining the Company, Mr. Welch served as
Executive Vice President of Finance and Administration, and as Vice Chairman of
the Board of Directors of Sports & Recreation, Inc., a public company engaged in
the business of retail sporting goods and equipment sales generating over $500
million in annual revenue, from December 1994 to March 1996. He served as its
Chief Financial Officer and a Director from January 1992 to December 1994. Mr.
Welch is a certified public accountant and graduated from Louisiana State
University in 1973 with a Bachelor of Science in Management and Accounting.

RICHARD L. LINDSTROM, M.D., CHIEF MEDICAL OFFICER AND DIRECTOR. Dr.
Lindstrom has served as Chief Medical Officer of the Company since September
1996 and has served as a Director since January 1997. Since October 1989, Dr.
Lindstrom has maintained a private practice adjacent to the Phillips Eye
Institute in Minneapolis where he serves as the Medical Director for Research
and Teaching. Dr. Lindstrom holds 22 patents in ophthalmology and has given
numerous presentations throughout the world including 13 named lectures. He is
active on multiple educational and advisory boards including chief medical
editor of Ocular

48
<PAGE> 51

Surgery News. He has co-authored two books, published 50 chapters in other books
and published over 300 articles in referred journals. Dr. Lindstrom graduated
from the University of Minnesota Medical School in 1972 followed by a research
residency and cornea fellowship at the University of Minnesota, an Anterior
Segment fellowship at Mary Shields Eye Hospital in Dallas and a third fellowship
in Glaucoma/Anterior Segment at University Hospitals in Salt Lake City.

MICHAEL P. BLOCK, EXECUTIVE VICE PRESIDENT -- MANAGED CARE. Mr. Block has
served as Executive Vice President of Managed Care for the Company since the
Company's acquisition of BBG-COA, Inc. (together with its subsidiaries "Block
Vision") in November 1997. Mr. Block was the founder of Block Vision and served
as its Chairman of the Board, President and Treasurer since its inception in
1984. Mr. Block graduated from Farleigh Dickinson University in 1973 with a
Bachelor of Arts degree and has been a licensed optician in the State of New
Jersey since 1974. Mr. Block is a member of the New Jersey Society of Dispensing
Opticians, holds a Fellowship with the National Academy of Opticianary and is a
member of the Board of Overseers of Lynn University.

PETER J. FONTAINE, DIRECTOR. Mr. Fontaine has served as a Director of the
Company since July 1996. Mr. Fontaine is currently the Chairman of the Board of
Directors and Chief Executive Officer of Discount Auto Parts, Inc., a public
company engaged in the business of retail automotive parts sales, and he has
been employed by Discount Auto Parts, Inc. in various capacities since 1977. Mr.
Fontaine has served on the Board of Directors of Discount Auto Parts, Inc. since
1996 and as its Chief Executive Officer since 1994. From 1994 to January 1997,
Mr. Fontaine also served as its President.

HERBERT U. PEGUES, II, M.D., DIRECTOR. Dr. Pegues has served as a Director
of the Company since November 1996. He is currently Medical Director for managed
care at the Miami Children's Hospital, Miami, Florida and administers its
physician hospital organization. He has been the Vice President/Medical Director
for Memorial Sisters of Charity Health System in Houston, Texas from 1995 to
1996. From 1988 to 1992, Dr. Pegues was the Associate Executive Director of
Medical Affairs for Humana Healthcare Plans in Tampa, Florida and Assistant
Clinical Professor of the Department of Family Medicine at the University of
South Florida College of Medicine. Dr. Pegues graduated from the University of
Illinois College of Medicine in 1975. He received his B.A. from Grinnell College
in Grinnell, Iowa and is a Diplomate, Certified by the American Board of Family
Practice and National Board of Medical Examiners. Dr. Pegues is also a Fellow of
the American Academy of Family Physicians, and is licensed to practice medicine
in Florida.

BRUCE S. MALLER, DIRECTOR. Mr. Maller has served as a Director of Vision
Twenty-One since November 1996 and is an ophthalmology practice management
consultant to the Company. He is the founder of, and has been the President of,
the BSM Consulting Group of Incline Village, Nevada since 1978. BSM provides
consulting services predominantly in the fields of ophthalmology, cardiology and
to individual physicians and corporate clients such as Allergan, Inc., Boston
Scientific, Columbia/HCA Healthcare, Inc. and Vision Twenty-One. Mr. Maller has
served as a Vice-President of Summit Medical Systems, Inc., the parent company
of BSM since October 1995. Mr. Maller is a frequent lecturer for various medical
societies, including the American Academy of Ophthalmology and the American
Society of Cataract and Refractive Surgery. Mr. Maller also heads BSM Healthcare
Publications, which produces works related to the field of medical practice
management. Mr. Maller received his Bachelor of Arts degree from the University
of Colorado in 1975.

JEFFREY KATZ, M.D., DIRECTOR. Dr. Katz has served as a Director of the
Company since January 1997. Dr. Katz has operated an ophthalmology practice at
the Eye Institute of Southern Arizona in Tucson since 1984. He also serves as a
clinical associate professor in the Department of Ophthalmology at the
University of Arizona in Tucson and is the past president of the Tucson
Ophthalmologic Society. Dr. Katz graduated from George Washington University
Medical School in 1972. He was chief of ophthalmic surgery at El Dorado Hospital
in Tucson and has served as the Medical Director for the Tucson Laboratory of
the Arizona Lions eye Bank since 1978.

Pursuant to the terms of the Company's Articles of Incorporation and
Bylaws, the Board of directors has the power to set the number of directors. The
number of directors is presently set at eight members. The directors are divided
into three classes. Each director in a particular class is elected to serve a
three-year term
49
<PAGE> 52

or until his or her successor is duly elected and qualified. The classes are
staggered so that their terms expire in successive years resulting in the
election of only one class of directors each year. The Class I directors are Mr.
Welch and Drs. Pegues and Katz, the Class II directors are Messrs. Sanchez and
Fontaine, and the Class III directors are Drs. Gillette and Lindstrom and Mr.
Maller. The initial terms of the current Class I, Class II and Class III
directors will expire at the annual meeting of the stockholders of the Company
in 1998, 1999 and 2000, respectively. Officers of the Company are appointed by
the Board of Directors and hold office until the first meeting of directors
following the annual meeting of stockholders and until their successors are
appointed, subject to earlier removal by the Board of Directors.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Articles of Incorporation (the "Articles") provide that a
Director will not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except: (i) for any
breach of duty of loyalty; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of laws; (iii) for
liability under the Florida Business Corporation Act (relating to certain
unlawful dividends, stock repurchases or stock redemptions); or (iv) for any
transaction from which the director derived any improper personal benefit. The
Company's Bylaws provides that the Company will indemnify each director and such
of the Company's officers, employees and agents as the Board of Directors shall
determine from time to time to the fullest extend provided by the Florida
Business Corporation Act.

The Company has entered into indemnification agreements (the
"Indemnification Agreements") with all of its directors and certain of its
officers. Similar Indemnification Agreements may from time to time be entered
into with additional officers of the Company or certain other employees or
agents of the Company. At present, there is no material pending litigation or
proceeding involving a director, officer, employee or agent of the Company where
indemnification is required or permitted, nor is the Company aware of any
threatened litigation or proceeding that may result in a claim for such
indemnification. The Company is also empowered under its Articles to purchase
and maintain insurance or furnish similar protection on behalf of any person who
is required or permitted to indemnify and the Company has acquired such
insurance in connection with such individuals that the Company believes is
warranted.

DIRECTORS' COMPENSATION

Directors are reimbursed for expenses in connection with attendance at
Board of Director and Committee meetings. Directors who are not officers of the
Company or affiliates of major stockholders are paid $1,000 per meeting plus
expenses. In addition, non-employee directors may be awarded options under the
Company's Stock Incentive Plan.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established an Audit Committee, the members of
which are Messrs. Welch, Fontaine and Pegues, and a Compensation Committee, the
members of which are Messrs. Gillette, Fontaine and Pegues. A majority of the
members of the Audit and Compensation Committees are non-employee directors.

The functions of the Audit Committee are to recommend annually to the Board
of Directors the appointment of the independent public accountants of the
Company, discuss and review the scope and the fees of the prospective annual
audit, to review the results thereof with the independent public accountants,
review and approve non-audit services of the independent public accountants,
review compliance with existing major accounting and financial policies of the
Company, review the adequacy of the financial organization of the accounting
controls, review compliance with federal and state laws relating to accounting
practices and review and approve (with the concurrence of a majority of the
disinterested directors of the Company) transactions, if any, with affiliated
parties.

The functions of the Compensation Committee are to review and approve
annual salaries and bonuses for the executive officers, review, approve and
recommend to the Board of Directors the terms and conditions of
50
<PAGE> 53

all employee benefit plans or changes thereto, to administer the Company's stock
option plans, and to carry out the responsibilities required by state rules of
the Securities and Exchange Commission.

EXECUTIVE COMPENSATION

The following table is a summary of the compensation paid or accrued by the
Company for the years ended December 31, 1996 and 1997 for services rendered in
all capacities to the Company by the Chief Executive Officer and each of the
persons who qualified as a "named executive officer" (as defined in Item
402(a)(3) of Regulation S-K under the Securities Exchange Act of 1934) during
fiscal year 1997 ("Named Executive Officers"). The Company anticipates that it
will pay compensation in excess of $100,000 to the Chief Executive Officer,
Chief Financial Officer, Chief Development Officer, and the President of its
Block Vision subsidiary for the year ended December 31, 1998 pursuant to certain
employment agreements. See "-- Employment Agreements." The Company made no other
awards of any other type of compensation to the Chief Executive Officer during
1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ---------------
COMPENSATION SECURITIES
--------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS COMPENSATION(2)
- --------------------------- ---- -------- --------------- ---------------
<S> <C> <C> <C> <C>
Theodore N. Gillette, O.D. ................ 1996 $189,072 -- $ 8,200
Chief Executive Officer 1997 220,000 -- $11,138
Richard L. Sanchez......................... 1996 $143,984 -- $ 5,700
Chief Development Officer 1997 180,000 -- $ 8,368
Richard T. Welch........................... 1996 $ 57,600(1) -- --
Chief Financial Officer 1997 150,000 70,000 --
</TABLE>

- ---------------

(1) Represents the salary earned by Mr. Welch for the portion of the year he was
employed.
(2) Amounts for fiscal 1997 represent automobile allowances of $8,174 and $5,586
and premiums paid by the Company for life insurance policies of $2,964 and
$2,782 for Dr. Gillette and Mr. Sanchez, respectively. Amounts for fiscal
1996 represent automobile allowances.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OPTIONS EXERCISE ANNUAL RATES OF STOCK
OF SECURITIES GRANTED TO OR PRICE APPRECIATION
UNDERLYING EMPLOYEES BASE FOR OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------
NAME GRANTED YEAR(1) ($/SHARE) DATE 5% 10%
- ---- ------------- ---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Theodore N. Gillette............ 0 --% -- -- $ -- $ --
Richard L. Sanchez.............. 0 -- -- -- -- --
Richard T. Welch(3)............. 20,000 5.5 10.00 07/01/2007 125,779 318,748
50,000 13.8 11.38 10/27/2007 357,841 906,839
</TABLE>

- ---------------

(1) Based upon 362,496 shares of Common Stock underlying stock options, granted
during 1997.
(2) The U.S. dollar amounts under these columns are the result of calculations
at 5% and 10% which reflect rates of potential appreciation set by the
Securities and Exchange Commission and therefore are not intended to
forecast possible future appreciation, if any, of the Company's Common Stock
price. The gains reflect a future value based upon growth at these
prescribed rates. It is important to note that options have value to
recipients only if the Company's stock price advances beyond the grant date
price shown in the table during the effective option periods.
(3) Mr. Welch was granted options to purchase 20,000 and 50,000 shares of Common
Stock in July and October of 1997, respectively.

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<PAGE> 54

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED DECEMBER 31, 1997 DECEMBER 31, 1997(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE(1) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard T. Welch............ -- -- 68,000 82,000 $417,520 $73,680
</TABLE>

- ---------------

(1) There were no options exercised during fiscal year 1997 by any Named
Executive Officer.
(2) Based upon the Company's closing stock price of $9.25 at December 31, 1997.

EMPLOYMENT AGREEMENTS

Theodore N. Gillette, O.D. and Richard L. Sanchez have each entered into
Employment Agreements with the Company (the "Employment Agreements"), pursuant
to which they have agreed to serve as the Company's Chief Executive Officer and
Chief Development Officer, respectively. Each Employment Agreement is for a term
of five years subsequent one-year terms by mutual agreement of the parties. Dr.
Gillette and Mr. Sanchez will receive annual base salaries which are subject to
review by the Compensation Committee of the Board of Directors at annual
intervals and may be adjusted from time to time as the Compensation Committee
deems to be appropriate. Under the Employment Agreements, Dr. Gillette and Mr.
Sanchez have agreed to devote their best efforts and substantially all of their
business time and services to the business and affairs of the Company. Dr.
Gillette and Mr. Sanchez will each be eligible for annual incentive bonuses, up
to 50% of their annual base salary, in an amount to be determined by the
Compensation Committee to the extent that the Company achieves certain
performance measures set by the Committee. Dr. Gillette and Mr. Sanchez are also
entitled to receive stock options or other stock awards under the Company's
Stock Incentive Plan to the extent that the Compensation Committee determines
such awards to be appropriate. Each Employment Agreement provides that in the
event that employment is terminated by the Company other than (i) for cause,
(ii) upon death or disability, or (iii) upon voluntary termination by the
employee, such employee will be entitled to receive from the Company monthly
payments equal to one-twelfth of the employee's annual base salary for each
month during the remaining term of such Employment Agreement, but not less than
twenty-four months. In the event of a change in control (as defined in the
Employment Agreements), each Employment Agreement provides that if such
employee's employment is terminated other than for cause within twelve months
following a change of control of the Company, the Company shall pay such
employee thirty-six monthly payments of one-twelfth of the sum of such
employee's base salary plus his previous year's bonus. Each Employment Agreement
also contains a covenant not to compete with the Company for a period of
twenty-four months following termination of employment.

The Company and Richard T. Welch are parties to an Employment Agreement
(the "Employment Agreement"), pursuant to which Mr. Welch has agreed to serve as
Chief Financial Officer of the Company. The term of the Employment Agreement is
for two years ending on August 31, 1998, and is renewable for subsequent
one-year terms by mutual agreement of the parties. Under the Employment
Agreement, Mr. Welch will receive an annual base salary which is subject to
review by the Compensation Committee of the Board of Directors at annual
intervals and may be adjusted from time to time as the Compensation Committee
deems to be appropriate. Under the Employment Agreement, Mr. Welch has agreed to
devote his best efforts and substantially all of his business time and services
to the business and affairs of the Company. Mr. Welch will be eligible for
annual incentive bonuses, up to 50% of his annual base salary, in an amount to
be determined by the Compensation Committee of the Board of Directors to the
extent that the Company achieves certain performance measures set by the
Committee. Under the Employment Agreement, Mr. Welch received non-statutory
stock options to purchase 80,000 shares of Common Stock pursuant to the
Company's Stock Incentive Plan. The options are exercisable at a price of $3.11
per share and 64,000 shares became vested at the time of the Company's Initial
Public Offering on August 18, 1997. The remaining 16,000 shares vest pro rata on
an equal basis over a four-year period. Mr. Welch is also entitled to receive
such additional stock options or other stock awards under the Company's Stock
Incentive Plan to the extent the

52
<PAGE> 55

Compensation Committee determines such awards to be appropriate. The Employment
Agreement provides substantially similar terms with respect to termination and
changes in control as the employment agreements with Dr. Gillette and Mr.
Sanchez. The Employment Agreement also contains a covenant not to compete with
the Company for a period of twelve months following termination of employment.

At the time of the Block Acquisition, Michael Block entered into an
employment agreement with the Company (the "Employment Agreement"), pursuant to
which he has agreed to serve as President of Block Vision, Inc., the Company's
wholly-owned subsidiary. The Employment Agreement is for a term of two years
ending on October 30, 1999, and is renewable for subsequent one-year terms by
mutual agreement of the parties. Mr. Block will receive an annual base salary of
$250,000, which is subject to review by the Compensation Committee of the Board
of Directors at annual intervals and may be adjusted from time to time as the
Compensation Committee deems appropriate. Under the Employment Agreement, Mr.
Block has agreed to devote his best efforts and substantially all of his
business time and services to the business and affairs of Block Vision. Mr.
Block will be eligible for an annual incentive bonus of up to 25% of his annual
base salary, if Block Vision's earnings before interest, taxes, depreciation and
amortization reaches certain levels, which target levels will increase in 1999.
Under the Employment Agreement, Mr. Block received non-statutory stock options
to purchase 40,000 shares of Common Stock, pursuant to the Company's Stock
Incentive Plan. The options are exercisable at a price of $13.20 per share and
vest pro rata on an equal basis over a four-year period subject to acceleration
upon the occurrence of certain events. In the event 25% of Block Vision's
capitated lives are expanded to include medical and surgical services, 50% of
the unvested options would vest at such time and in the event that 50% of Block
Vision's capitated lives are expanded to include medical and surgical services,
all remaining options will vest at such time. Mr. Block is also entitled to
receive such additional stock options or other stock awards under the Company's
Stock Incentive Plan to the extent determined by the Compensation Committee as
successful integration and growth of Block Vision occurs. The Employment
Agreement provides substantially similar terms with respect to termination and
changes in control as the employment agreements with Dr. Gillette and Mr.
Sanchez. The Employment Agreement also contains a covenant not to compete with
the Company for a period of three years following termination of employment.

STOCK OPTION PLANS

In July 1996, the Board of Directors adopted, and the stockholders of the
Company approved, the 1996 Stock Incentive Plan (the "Incentive Plan") and the
1996 Affiliated Professionals Stock Plan (the "Professionals Plan," and together
with the Incentive Plan, the "Plans"). The purpose of the Plans is to provide
non-employee directors, officers, key employees, advisors and medical
professionals employed by Affiliated Practices with additional incentives by
increasing their proprietary interest in the Company or tying a portion of their
compensation to increases in the price of the Company's Common Stock. The
aggregate number of shares of Common Stock subject to the Plans is 1,600,000
shares. The Company has granted options to purchase the aggregate maximum number
of shares available under the Incentive Plan. The Company has submitted an
amendment to its shareholders for approval at the next annual meeting for the
purpose of amending the Incentive Plan to increase the aggregate number of
shares available for issuance thereunder by 500,000 shares. Additionally, the
Company has submitted a proposal at its next annual meeting for approval by
shareholders to authorize the Company's Board of Directors to reallocate unused
shares currently reserved for issuance under the Plans to and for issuance
pursuant to either of the Company's Plans.

The Incentive Plan permits the Company to grant incentive stock options
("ISOs"), as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonqualified stock options ("Nonqualified Options"), stock
appreciation rights ("SARs"), restricted shares of Common Stock ("Restricted
Shares") and performance shares of Common Stock (individually, an "Award" and
collectively, "Awards") to directors, officers, key employees and consultants of
the Company. The Professionals Plan permits the Company to grant Awards of
Nonqualified Stock Options, SARs and Restricted Shares to medical professionals
employed by Affiliated Practices. The various types of Awards are described in
more detail below.

53
<PAGE> 56

The Incentive Plan is intended to qualify for favorable treatment under
Section 16 of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder
("Rule 16b-3") and Awards under the Incentive Plan are intended to qualify for
treatment as "performance-based compensation" under Section 162(m) of the
Internal Revenue Code ("Section 162(m)"). Following the consummation of this
Offering, the Plans will be administered by the Compensation Committee, which
will be comprised of two or more non-employee directors who are "disinterested"
within the meaning of Rule 16b-3 and Section 162(m) (the "Committee"). The
Committee will have, subject to the terms of the Plans, the sole authority to
grant Awards under the Plans, to construe and interpret the Plans and to make
all other determinations and take any and all actions necessary or advisable for
the administration of the Plans. Prior to the consummation of this Offering, the
Plans have been administered by the Company's full Board of Directors.

Options. Options for the purchase of shares of the Common Stock may be
granted under both Plans. The exercise price for the ISOs granted under the
Incentive Plan may be no less than the fair market value of the Common Stock on
the date of grant (or 110% in the case of ISOs granted to employees owning more
than 10% of the Common Stock). Only employees of the Company are eligible to
receive ISOs. The exercise price for Nonqualified Options granted under the
Plans will generally be the fair market value of the Common Stock on the date of
grant; however, the Compensation Committee may set an exercise price at less
than fair market value if it determines that special circumstances warrant a
lower price. Options will be exercisable during the period specified in each
option agreement and will generally be exercisable in installments pursuant to a
vesting schedule to be designated by the Committee. No Option will remain
exercisable later than ten years after the date of grant (or five years from the
date of grant in the case of ISOs granted to holders of more than 10% of the
Common Stock).

SARs. Stock appreciation rights may be granted under both Plans in tandem
with Options. An SAR represents the right to receive from the Company the
difference (the "Spread"), or a percentage thereof not in excess of 100 percent,
between the exercise price of the related Option and the market value of the
Common Stock on the date of exercise of the SAR. SARs may only be exercised at a
time when the related Option is exercisable and the Spread is positive, and the
exercise requires the surrender of the related Option for cancellation. The
amount payable by the Company upon exercise may be paid in cash, Common Stock or
a combination thereof, as determined by the Committee.

Restricted Shares. Restricted Shares may be granted under both Plans. An
award of Restricted Shares involves the immediate issuance by the Company to a
participating employee of ownership of a specific number of shares of Common
Stock in consideration of the performance of services. The employee is entitled
immediately to voting, dividend and other ownership rights in the shares. The
issuance may be made without additional consideration, or for payment of an
amount that is less than the market value of the shares on the date of grant, as
the Committee may determine. Restricted Shares must be subject to a "substantial
risk of forfeiture" for a period to be determined by the Committee. An example
of such forfeiture would be a provision that the employee's Restricted Shares
would be forfeited if he or she ceased to serve the Company as an officer at any
time before the end of a specified period of years. In order to enforce these
forfeiture provisions, the transferability of Restricted Shares will be
prohibited or restricted in a manner and to the extent prescribed by the
Committee for the period during which the forfeiture provisions are to continue.
The Committee may also condition the vesting of the Restricted Shares on the
achievement of specified performance objectives ("Management Objectives").

Performance Shares. Performance Shares may be granted under the Incentive
Plan. A Performance Share is the equivalent of one share of Common Stock. An
Incentive Plan participant may be granted any number of Performance Shares. The
participant will be given one or more Management Objectives to meet within a
specified period (the "Performance Period"). Maximum or minimum level of
acceptable achievement for each Management Objective will be established by the
Committee. If, by the end of the Performance Period, the specified Management
Objectives have been satisfied, the participant will be deemed to have fully
earned the Performance Shares. If the Management Objectives have not been
satisfied in full but predetermined minimum level of acceptable achievement has
been attained or exceeded, the participant will be deemed to have partly earned
the Performance Shares in accordance with a predetermined formula. To the

54
<PAGE> 57

extent earned, the Performance Shares will be paid to the participant at the
time and in the manner determined by the Committee in cash or in shares of
Common Stock or any combination thereof.

Management Objectives may be described in terms of either Company-wide
objectives or objectives that are related to the performance of a department or
function within the Company or with respect to which the participant provides
services. The Committee may adjust any Management Objectives and the related
minimum level of acceptable achievement if, in its judgment, transactions or
events have occurred after the date of grant that are unrelated to the
participant's performance and result in distortion of the Management Objectives
or the related minimum level of acceptable achievement.

Notwithstanding the provisions of any agreement relating to an Award, in
the event of a change or threatened "change in control" (as defined in the
Plans) of the Company and in the event of certain mergers and reorganizations of
the Company, the Committee will have the discretion to (i) declare all Options
immediately exercisable, (ii) determine that all or any portion of conditions
associated with a Restricted Share or Performance Share award have been met,
(iii) grant SARs or cash bonus awards to holders of outstanding Options, (iv)
pay cash in exchange for the cancellation of Nonqualified Options, SARs,
Performance Share Awards or Restricted Shares, or (v) make other adjustments or
amendments to the Plans and outstanding Awards and/or substitute new Awards.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Executive compensation in the past has been determined by the Company's
chief executive officer and approved by the Board of Directors. After completion
of the Initial Public Offering, the Company established the Compensation
Committee of the Board of Directors, which is comprised of a majority of
non-employee independent directors and is responsible for establishing salaries,
bonuses and other compensation for the Company's executive officers.

CERTAIN TRANSACTIONS

The information set forth herein briefly describes transactions since the
beginning of the Company's last fiscal year between the Company and its
directors, officers and 5% stockholders. These transactions have been approved
by the Company's Board of Directors. Transactions after the Company's Initial
Public Offering, if any, with affiliated parties were approved by a majority of
the Company's independent directors and were on terms no less favorable to the
Company than those that could be obtained from unaffiliated parties.

As part of a reorganization of the Company in November 1996, the Company
completed an acquisition of all the outstanding stock of Vision 21 Managed
Eyecare of Tampa Bay, Inc. in exchange for a certain number of shares of Common
Stock of the Company. In addition, in November 1996, the Company completed an
acquisition of all of the outstanding stock of Dr. Gillette & Associates, Inc.
(renamed Vision 21 Physician Practice Management Company). The shareholders of
these entities acquired by the Company were Theodore Gillette, Richard Sanchez
and Peter Fontaine. Dr. Gillette and Mr. Sanchez are executive officers and
directors of the Company and Mr. Fontaine is a director of the Company. In
connection with these transactions, Gillette, Sanchez and Fontaine received an
aggregate of 1,724,574, 600,302 and 360,442 shares of Common Stock,
respectively.

Effective December 1, 1996 the Company acquired all the business assets of
Gillette, Beiler & Associates, #6965 P.A. ("G&A"), a Florida professional
association owned in part by Theodore Gillette, an executive officer and
director of the Company, with nine optometry offices located in Tampa, Port
Richey, Clearwater, St. Petersburg, Palm Harbor, and Seminole, Florida. As
consideration for the acquisition, G&A received 373,971 shares of Common Stock,
of which Dr. Gillette is the beneficial owner of 196,064 shares, and a
promissory note in the amount of $416,103, which bears interest at 8% per annum.
The promissory note was repaid in full from the net proceeds of the Initial
Public Offering.

The Company has an agreement to provide practice management services to
G&A, pursuant to which G&A made payments of $392,206, $423,890 and $538,882 in
1994, 1995 and 1996, respectively. In December 1996, the Company and G&A entered
into a new Management Agreement pursuant to which the Company
55
<PAGE> 58

provides practice management services for a management fee equal to a gross
percentage of the revenue of G&A's eye care practice. Payments earned by the
Company under the new Management Agreement in the year ended December 31, 1997
were approximately $1.2 million.

The Company entered into an Agreement with Bruce S. Maller, a director of
the Company, dated May 10, 1996, pursuant to which the Company issued to Maller
144,705 shares of Common Stock for services previously rendered by Mr. Maller to
the Company. In October 1996, the Company finalized a five-year Advisory
Agreement with Mr. Maller (the "Advisory Agreement"), pursuant to which Mr.
Maller agreed to render certain advisory services to the Company, including the
identification and integration of ophthalmology practices and the provision of
assistance to the Company with its strategic planning, growth and development.
In consideration for such services, the Company issued to Mr. Maller 125,627
shares of Common Stock. A decreasing percentage of such shares are subject to
forfeiture in the event the Advisory Agreement is terminated "for cause" prior
to January 1, 2000. The shares issued to Mr. Maller pursuant to the Advisory
Agreement are subject to certain piggyback and demand registration rights. See
"Description of Capital Stock -- Registration Rights."

The Company entered into a Services Agreement with the BSM Consulting Group
("BSM"), a consulting company which employs Mr. Maller, dated as of March 10,
1996 (the "BSM Services Agreement"), pursuant to which BSM agreed to provide
substantial consulting services to assist the Company with its operational and
management development. The BSM Services Agreement is for a term of five years
and the fees payable to BSM for such services are approximately $40,000 per
month. Payments earned by BSM under the BSM Services Agreement were
approximately $333,000 and approximately $600,000 in the years ended December
31, 1996 and 1997, respectively.

The Company borrowed $3.0 million from Mr. Fontaine pursuant to a
Promissory Note dated June 1996 (the "Fontaine Note") bearing interest at 8% per
annum. The Fontaine Note was repaid in full from the proceeds of the Initial
Public Offering. In addition, the Company borrowed 200,000 and $500,000 from Mr.
Fontaine in November and December 1996, respectively, for working capital
pursuant to unsecured promissory notes bearing interest at 8.5% per annum. The
unsecured promissory notes were repaid in full from the net proceeds from the
Initial Public Offering.

Effective September 9, 1996, the Company entered into a Services Agreement
(the "Lindstrom Services Agreement") with Dr. Richard L. Lindstrom, a director
of the Company, who pursuant to the Lindstrom Services Agreement provides
certain consulting and advisory services primarily related to assisting the
Company in the identification and integration of Affiliated Providers into the
Company's managed eye care delivery network and assistance in the development of
Affiliated Provider practices. In consideration for his services, Dr. Lindstrom
is paid $60,000 annually and received 108,133 shares of Common Stock, of which
40% is nonforfeitable and the remaining 60% is subject to forfeiture in various
amounts if the Lindstrom Services Agreement is terminated by the Company for
cause or by Dr. Lindstrom prior to August 31, 2000. The shares issued to Dr.
Lindstrom pursuant to the Lindstrom Services Agreement are subject to certain
piggyback and demand registration rights. Payments earned by Dr. Lindstrom under
the Lindstrom Services Agreement were $5,000 and $60,000 in the years ended
December 31, 1996 and 1997, respectively. See "Description of Capital
Stock -- Registration Rights."

Effective December 1, 1996, the Company acquired all the business assets of
Lindstrom, Samuelson and Hardten Ophthalmology Associates, P.A. ("Lindstrom
P.A."), in which Dr. Lindstrom owns a majority interest, at a purchase price of
247,108 shares of Common Stock of the Company, of which Lindstrom received
151,732 shares, and a promissory note in the amount of $460,416 bearing interest
at 8% per annum. The shares are subject to certain registration rights. See
"Description of Capital Stock -- Registration Rights." In connection with the
acquisition, Lindstrom P.A. and the Company entered into a Management Agreement
which provides for a management fee of 30% of the amounts remaining after
certain expenses are paid as set forth in the Management Agreement. The Company
earned fees of $3,800 and $526,000 under the Management Agreement in the years
ended December 31, 1996 and 1997, respectively. The promissory note was repaid
in full from the net proceeds of the Initial Public Offering.

56
<PAGE> 59

The Company acquired all of the stock of Midwest Eye Care Alliance, Inc.
("M.E.C.A."), a corporation in which Dr. Lindstrom owned an 8% interest, for a
total purchase price of $700,000, which was paid in full from the net proceeds
from the Initial Public Offering. The Company also entered into Regional
Services Agreements with the shareholders of M.E.C.A., including Dr. Lindstrom
(collectively the "Coordinators"), effective at the time of the Initial Public
Offering of the Company (collectively the "Regional Agreements"). The Regional
Agreements provide for the Coordinators to render advisory services to the
Company in connection with identifying potential ophthalmology and optometry
practices in the Midwestern region of the United States for acquisition or
affiliation and assisting the Company in negotiating agreements with such
practices in exchange for specific cash compensation that varies among the
Regional Agreements. Dr. Lindstrom will receive a total of $40,000 per year for
each of three years for his advisory services.

Effective December 1, 1996, the Company acquired all the business assets of
Eye Institute of Southern Arizona, P.C. ("Eye Institute"), an Arizona
professional corporation located in Tucson, Arizona and engaged in the provision
of ophthalmology services. Jeffrey I. Katz, M.D., a director of the Company,
owns a 50% interest in Eye Institute. The acquisition was accomplished by a
merger of Eye Institute into the Company's wholly-owned subsidiary, Vision 21 of
Southern Arizona, Inc. As consideration for the acquisition, Dr. Katz received
198,306 shares Common Stock. The shares are subject to certain registration
rights. See "Description of Capital Stock -- Registration Rights." As a result
of the merger of Eye Institute with and into Vision 21 of Southern Arizona,
Inc., Vision 21 of Southern Arizona, Inc. assumed Eye Institute's role as
business manager under a Management Agreement between Eye Institute and Vital
Sight, P.C., a newly-formed Arizona professional corporation to which Eye
Institute had transferred its medical assets prior to the merger. The Management
Agreement provides for a management fee of 35% of the amounts remaining after
certain expenses are paid as set forth in the Management Agreement. The Company
earned fees of approximately $38,000 and $564,000 under the Management Agreement
in the years ended December 31, 1996 and 1997, respectively. The Company, the
former shareholders of Eye Institute and certain other related entities closed
in escrow an agreement dated as of July 31, 1997 to transfer certain ASC assets
from Vital Sight, P.C. and such shareholders' limited liability company to
Vision 21 of Southern Arizona, Inc. When the State of Arizona approves Vital
Sight, P.C.'s application for a license to conduct an ASC business, all income
associated with such ASC business shall be subject to the business management
fee and until such time the Company receives a fee approximately equal to the
business management fee. The Company earned fees of approximately $111,000 for
the year ended December 31, 1997. The Company's obligation to purchase the ASC
business shall terminate if the ASC license is not obtained within eighteen
months of the closing date of the merger of Eye Institute into Vision Twenty-One
of Southern Arizona, Inc. As consideration for this ASC transaction, Dr. Katz
will be entitled, subject to post-closing adjustments, to receive 69,169 shares
of Common Stock.

Effective October 31, 1997, the Company acquired all of the stock of
BBG-COA, Inc., a corporation in which Michael P. Block, President of Block
Vision, Inc., and his wife owned a 25.6% interest, for a total purchase price of
approximately $35.0 million consisting of cash and Common Stock of which Mr.
Block received his pro rata share. The shares are subject to certain
registration rights. See "Description of Capital Stock -- Registration Rights."
Additionally, Mr. and Mrs. Block may receive up to an additional 56,018 shares
of Common Stock contingent upon Block Vision successfully attaining certain 1998
targets agreed to as part of the Block Acquisition. See "The
Acquisitions -- Block Acquisition."

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<PAGE> 60

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the beneficial
ownership of the Company's outstanding Common Stock as of May 11, 1998 and as
adjusted to reflect the sale of the Common Stock offered hereby by (i) each
person or entity known by the Company to be the beneficial owners of more than
5% of the outstanding shares of Common Stock, (ii) each director or executive
officer of the Company who beneficially owns any shares of Common Stock, (iii)
each Selling Stockholder, and (iv) all directors and executive officers of the
Company as a group. Except as otherwise indicated, the persons listed below have
sole voting and investment power with respect to all shares of Common Stock
owned by them, except to the extent such power may be shared with a spouse.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED(2) OWNED(2)
- --------------------------------------- ------------------- --------------------
<S> <C> <C>
Theodore N. Gillette, O.D.(3)............................... 1,860,558 13.1%
Gillette Family Limited Partnership(4)...................... 1,702,494 12.0
Richard L. Sanchez(5)....................................... 593,329 4.2
Peter J. Fontaine(6)........................................ 361,755 2.6
Bruce S. Maller(7).......................................... 271,644 1.9
Jeffrey I. Katz, M.D.(8).................................... 270,808 1.9
Richard L. Lindstrom, M.D.(9)............................... 261,197 1.8
Michael P. Block(10)........................................ 116,908 *
Richard T. Welch(11)........................................ 68,000 *
Herbert U. Pegues, II, M.D.(11)............................. 1,333 *
All directors and executive officers as a group (9
persons).................................................. 3,805,532 26.7
</TABLE>

- ---------------

* Less than one percent.
(1) Unless otherwise indicated, the address of each of the beneficial owners
identified is 7209 Bryan Dairy Road, Largo, Florida 33777.
(2) Based on 14,180,657 shares of Common Stock outstanding (excluding
contingent shares held in escrow in conjunction with certain acquisitions).
Pursuant to the rules of the Securities and Exchange Commission (the
"Commission"), certain shares of Common Stock which a person has the right
to acquire within 60 days of the date hereof pursuant to the exercise of
stock options are deemed to be outstanding for the purpose of computing the
percentage ownership of such person but are not deemed outstanding for the
purpose of computing the percentage ownership of any other person.
(3) Represents (a) 1,702,494 shares owned by the Gillette Family Limited
Partnership over which Dr. Theodore Gillette has voting control as the sole
shareholder of the corporate general partners (b) 9,077 shares owned by
Gillette, Beiler & Associates, P.A. and (c) 148,987 shares owned
individually. See "Certain Transactions."
(4) Shares are owned by the Gillette Family Limited Partnership, a Nevada
Limited Partnership, in which Dr. Theodore Gillette exercises voting and
investment control as the majority shareholder of the corporate general
partner.
(5) Represents shares owned by the Sanchez Family Limited Partnership over
which Richard L. Sanchez has voting and investment control as the majority
shareholder of the corporate general partner.
(6) Represents 360,422 shares owned by the Fontaine Industries Limited
Partnership over which Peter Fontaine has voting and investment control and
1,333 shares issuable upon the exercise of stock options granted, pursuant
to the Company's 1996 Stock Incentive Plan, which have vested and are fully
exercisable.
(7) Includes 108,976 owned by BSM Investment, Ltd., over which Bruce Maller has
voting and investment control and 1,333 shares issuable upon the exercise
of stock options granted, pursuant to the Company's 1996 Stock Incentive
Plan, which have vested and are fully exercisable.
(8) Includes 1,333 shares issuable upon the exercise of stock options granted,
pursuant to the Company's Stock Incentive Plan, which have vested and are
fully exercisable and 69,189 shares held in escrow pending receipt by the
Company of an ASC license in the state of Arizona.

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<PAGE> 61

(9) Includes 1,333 shares issuable upon the exercise of stock options granted,
pursuant to the Company's Stock Incentive Plan, which have vested and are
fully exercisable.
(10) Includes 58,670 shares owned by Mr. Block's wife and excludes 56,018
contingent shares Mr. and Mrs. Block may receive in connection with the
Company's acquisition of Block Vision if certain post acquisition
performance targets are met.
(11) Represents shares issuable upon the exercise of stock options granted
pursuant to the Company's Stock Incentive Plan, which have vested and are
fully exercisable.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of (i) 50,000,000
shares of Common Stock, and (ii) 10,000,000 shares of preferred stock, $.001 par
value per share (the "Preferred Stock"). As of May 11, 1998, an aggregate of
14,180,657 shares of Common Stock were outstanding and no shares of Preferred
Stock were outstanding. At April 27, 1998 there were approximately 165
stockholders of record. Copies of the Articles of Incorporation and Bylaws have
been filed as exhibits to the Registration Statement and are incorporated by
reference herein.

COMMON STOCK

Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to the prior fights of the
holders of Preferred Stock, holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors from funds legally
available therefor, and to share ratably in the assets of the Company legally
available for distribution to the stockholders in the event of liquidation or
dissolution. The Common Stock has no preemptive rights and no subscription or
redemption privileges. The Common Stock does not have cumulative voting rights,
which means the holder or holders of more than half of the shares voting for the
election of directors can elect all the directors then being elected. See
"Principal and Selling Shareholders." All the outstanding shares of Common Stock
are fully paid and not liable for further call or assessment. The Common Stock
being registered hereby was issued in connection with certain acquisitions made
by the Company. The acquisition transactions were exempt from the registration
requirements of the Act. Accordingly, the Common Stock issued in the acquisition
transactions and being registered hereby is subject to resale restrictions and
any sale of such shares must be registered under the Act or exempt from the
registration requirements of the Act.

WARRANTS

In December 1996, the Company issued to certain unrelated parties warrants
exchangeable for an aggregate maximum of 208,333 shares of Common Stock at an
exchange price of $6.00 per share, or in a cashless exchange for a reduced
number of shares pursuant to a formula. The warrants are exchangeable at any
time through August 18, 2002. Pursuant to exchanges in 1997, warrants
exchangeable for an aggregate of 200,000 shares of Common Stock remain
outstanding.

In February 1997, the Company issued to Piper Jaffray Healthcare Fund 11
Limited Partnership ("Piper Jaffray") a warrant exchangeable for an aggregate
maximum of 333,333 shares of Common Stock at an exchange price of $6.00, or in a
cashless exchange for a reduced number of shares pursuant to a formula. The
warrants are exchangeable at any time through August 18, 2002.

In July 1997, the Company entered into an amended and restated credit
facility in the aggregate amount of $4.9 million with Prudential, pursuant to
the Note and Warrant Purchase Agreement. Under the Note and Warrant Purchase
Agreement, the Company sold to Prudential for $126,000 a warrant exchangeable
for 210,000 shares of Common Stock at any time during the five-year period
commencing at the effective date of the Initial Public Offering, at an exercise
price of $10.00 per share (equal to the Initial Public Offering price). See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 10 to Notes to Consolidated Financial Statements.
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In October 1997, the Company received a commitment from Prudential Credit
for a credit facility in the aggregate amount of $37.0 million pursuant to the
Bridge Credit Facility. As a commitment fee for the Bridge Credit Facility,
Prudential Credit received warrants to purchase up to 50,000 shares of Common
Stock at an exercise price of $11.50 per share based upon the closing price of
the Common Stock on the date of issuance, for which Prudential Credit paid the
Company $2.80 per warrant. In addition, upon borrowings by the Company,
Prudential Credit received funding fees which included warrants to purchase up
to 107,000 shares of Common Stock calculated on a pro rata basis with respect to
the actual amount borrowed by the Company at exercise prices between $8.25 and
$12.50 per share based upon the closing prices of the Company's Common Stock on
the date of issuance, for which Prudential Credit paid to the Company $2.80 per
warrant. The Bridge Credit Facility was repaid in full with proceeds from the
Company's Credit Agreement.

In addition, in October 1997 the Company entered into an advisory agreement
with Prudential Securities Incorporated whereby Prudential Securities
Incorporated provided certain advisory services in connection with the Block
Acquisition. Prudential Securities Incorporated received an advisory fee which
included warrants to purchase up to 25,000 shares of Common Stock at an exercise
price of $13.25 per share.

In October 1997, Prudential Securities Incorporated also received warrants
to purchase up to 10,000 shares of Common Stock at an exercise price of $13.625
per share as a retainer in connection with the Company's obtaining a bank credit
facility which the Company subsequently obtained in January 1997. At the closing
of the bank credit facility, Prudential Securities Incorporated received certain
compensation including warrants to purchase an additional 40,000 shares of
Common Stock at an exercise price of $8.75 per share.

PREFERRED STOCK

The Company is authorized to issue 10,000,000 shares of Preferred Stock.
The Preferred Stock may be issued from time to time in one or more series, and
the Board of Directors is authorized to fix the dividend rights, dividend rates,
any conversion or exchange rights, any voting rights, rights and terms of
redemption (including sinking fund provisions), the redemption price or prices,
the liquidation preferences and any other rights, preferences, privileges and
restrictions of any series of Preferred Stock and the number of shares
constituting such series and the designation thereof. The Company has no present
plans to issue any shares of Preferred Stock.

Depending upon the rights of such Preferred Stock, the issuance of
Preferred Stock could have an adverse effect on holders of Common Stock by
delaying or preventing a change in control of the Company, making removal of the
present management of the Company more difficult or resulting in restrictions
upon the payment of dividends and other distributions to the holders of Common
Stock.

CERTAIN FLORIDA LEGISLATION

The Company is subject to (i) the Florida Control Share Act, which
generally provides that shares acquired in excess of certain specified
thresholds will not possess any voting rights unless such voting rights are
approved by a majority vote of the corporation's disinterested shareholders, and
(ii) the Florida Fair Price Act, which generally requires supermajority approval
by disinterested directors or shareholders of certain specified transactions
between a corporation and holders of more than 10% of the outstanding shares of
the corporation (or their affiliates).

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE COMPANY'S ARTICLES OF INCORPORATION
AND BYLAWS

Certain provisions of the Articles of Incorporation and the Bylaws of the
Company could have an anti-takeover effect. These provisions are intended to
enhance the likelihood of continuity and stability in the composition of the
Board of Directors of the Company and in the policies formulated by the Board of
Directors and to discourage certain types of transactions, described below,
which may involve an actual or threatened change of control of the Company. The
provisions are designed to reduce the vulnerability of the Company to an
unsolicited proposal for a takeover of the Company that does not contemplate the
acquisition of all of its outstanding shares or an unsolicited proposal for the
restructuring or sale of all or part of the Company. The provisions are also
intended to discourage certain tactics that may be used in proxy fights. The
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Board of Directors believes that, as a general rule, such takeover proposals
would not be in the best interests of the Company and its stockholders.

Classified Board of Directors. The Articles of Incorporation provide for
the Board of Directors to be divided into three classes of directors serving
staggered three-year terms. As a result, approximately one-third of the Board of
Directors will be elected each year.

The Board of Directors believes that a classified Board of Directors will
help to assure the continuity and stability of the Board of Directors and the
business strategies and policies of the Company as determined by the Board of
Directors, because the likelihood of continuity and stability in the composition
of the Company's Board of Directors and in the policies formulated by the Board
will be enhanced by staggered three-year terms.

The classified board provision could have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain control
of the Company, even though such an attempt might be beneficial to the Company
and its stockholders. In addition, the classified board provision could delay
stockholders who do not agree with the policies of the Board of Directors from
removing a majority of the Board for two years, unless they can show cause and
obtain the requisite vote. See "Number of Directors; Removal" below.

Special Meetings of Stockholders. The Articles of Incorporation provide
that no business may be brought up by a stockholder at a meeting of stockholders
except in accordance with certain provisions set forth in the Articles. Such
provisions require a minimum amount of notice to the Company of any such
business and certain disclosures relating to the business intended to be brought
up.

Amendment of Certain Provisions of the Articles of Incorporation. The
Articles of Incorporation requires the affirmative vote of the holders of at
least 8.0% of the votes entitled to be cast by the holders of all then
outstanding shares of voting stock in order to amend the Articles' provisions
relating to (i) the classified board, (ii) the method of bringing up business at
stockholders' meetings, (iii) the limitation on the liability of directors, (iv)
indemnification of officers and directors, and (v) the required vote to amend
the foregoing provisions. These voting requirements will make it more difficult
for stockholders to make changes in the Articles which would be designed to
facilitate the exercise of control over the Company. In addition, the
requirement for approval by at least an 8.0% stockholder vote will enable the
holders of a minority of the voting securities of the Company to prevent the
holders of a majority or more of such securities from amending such provisions
of the Articles.

Number of Directors; Removal. The Articles of Incorporation provide that
the Board of Directors will consist of between two and fifteen members, the
exact number to be fixed from time to time by resolution adopted by a majority
of the directors then in office. The Company currently has eight directors and
no vacancies. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, the Articles provide that directors of the Company may
be removed only for cause and only by the affirmative vote of holders of a
majority of the outstanding shares of voting stock. This provision will preclude
a stockholder from removing incumbent directors without cause and simultaneously
gaining control of the Board of Directors by filling the vacancies created by
such removal with its own nominees.

REGISTRATION RIGHTS

The Company has granted holders of 3,518,813 shares of Common Stock
received in connection with the Company's acquisitions of the allowable assets
of certain optometric and ophthalmology practices certain piggyback and demand
registration rights pursuant to registration rights agreements. In general, each
holder has piggyback registration rights with respect to a maximum of 60% of
such holder's shares in the event the Company proposes to file a registration
statement under the Securities Act of 1933 for the purposes of effecting an
underwritten public offering of shares of the Company's Common Stock. Each
holder also has demand registration rights, which are effective one year after
completion of the Initial Public Offering, to obligate the Company to file up to
two registration statements covering shares that were not registered in a prior
registration statement up to the 60% maximum. These rights expire two years from
the date of

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completion of an initial public offering and are subject to certain conditions
and limitations, including the right of the Company to limit the number of
shares included in the registration statement to the amount recommended by the
managing underwriter. The Company is obligated to pay all costs and expenses of
the registration statement except for underwriting discounts, fees and
commissions.

The Company has granted certain piggyback and demand registration rights to
Bruce Maller and Richard Lindstrom with respect to a total of 378,463 shares of
Common Stock. Following an initial public offering of Common Stock of the
Company, if the Company proposes to file a registration statement under the
Securities Act for purposes of effecting a public offering of the Company's
Common Stock, Maller and Lindstrom will be entitled to include up to 20% of
their shares in the registration statement. If Maller and Lindstrom are unable
to sell 20% of their shares pursuant to such piggyback registration rights, they
may require the Company, on one occasion, to file a registration statement under
the Securities Act registering such number of shares as is necessary to permit
them to sell the full 20%. These rights expire upon the expiration of their
respective advisory and services agreements with the Company and are subject to
certain conditions and limitations, including the right of the Company to limit
the number of shares included in the registration statement to the amount
recommended by the managing underwriter. The Company is obligated to pay all
costs and expenses of the registration statement except for underwriting
discounts, fees and commissions.

The Company has granted certain piggyback and demand registration rights to
Michael Block, his wife, Saree Block and certain unrelated parties (the "BBG
Shareholders") with respect to an aggregate of 475,397 shares issued in
connection with the Company's acquisition of the stock of BBG-COA, Inc. In the
event the Company files a registration statement under the Securities Act for
purposes of effecting a public offering of shares of Common Stock, the BBG
Shareholders will be entitled to include their shares in the registration
statement. The BBG Shareholders also have demanded registration rights to
obligate the Company at any time after six months from the date of any public
offering, on up to two occasions, to use its best efforts to file a registration
statement covering shares not registered in a prior registration statement.
These rights are subject to certain conditions and limitations including the
right of the Company to limit the number of shares in the registration to the
amount recommended by the managing underwriter. The Company is obligated to pay
all costs and expenses of the registration statement except for underwriting
discounts and commissions.

The Company has granted certain piggyback and demand registration rights to
Prudential Securities Incorporated and its affiliates, Piper Jaffray and certain
unrelated parties (the "Warrant Holders") with respect to a maximum total of
974,808 shares of Common Stock underlying the warrants issued to the Warrant
Holders. In the event the warrants are exchanged for shares, the Warrant Holders
have piggyback registration rights with respect to the shares in the event the
Company proposes to file a registration statement under the Securities Act for
purposes of effecting a public offering of shares of the Common Stock. Each of
the Warrant Holders also have demand registration rights to obligate the Company
at any time after six months from the date of any public offering, on one
occasion, to use its best efforts to file a registration statement covering any
or all shares not registered in a prior registration statement. These rights are
subject to certain conditions and limitations, including the right of the
Company to limit the number of shares in the registration to the amount
recommended by the managing underwriter. The Company is obligated to pay all
costs and expenses of the registration statement except for underwriting
discounts, fees and commissions.

Under the terms of a Stock Distribution Agreement between the Company and
LaserSight, Inc., the Company is obligated to include in this registration
statement 651,815 shares of Common Stock received by LaserSight, Inc. in
connection with the Company's acquisition of MEC Health Care, Inc. and LSI
Acquisition, Inc. The Stock Distribution Agreement limits the amount that
LaserSight, Inc. can receive from the sale of the shares to a minimum of
approximately $4.952 million and a maximum of approximately $5.927 million and
if LaserSight, Inc. realizes such maximum amount prior to the sale of all of the
shares then it will be obligated to return the remaining shares to the Company.
The Company has the right to redeem the shares at any time prior to sale for a
per share price equal to the greater of the Valuation Price (as defined in the
Stock Purchase Agreement among the parties) and the closing price on Nasdaq on
the date of the redemption. The Company is obligated to pay all costs and
expenses of the registration statement except for underwriting discounts and
commissions.

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The Company has granted certain mandatory and piggyback registration rights
to holders (the "EyeCare Shareholders") of an aggregate of 1,109,806 shares of
Common Stock received in connection with the Company's acquisitions of EyeCare
One Corporation and Vision Insurance Plan of America, Inc. The Company is
obligated to include 554,903 of the EyeCare Shareholders' shares in this
registration statement. If the Company files a secondary registration statement
covering an underwritten offering for selling stockholders, the above-referenced
554,903 shares may be included in such registration statement. After the initial
554,903 shares are disposed of pursuant to such registration statements, each
EyeCare Shareholder has piggyback registration rights with respect to the
remaining 554,903 shares in the event the Company files a registration statement
under the Securities Act of 1933 for the purposes of effecting a public offering
of shares. These rights expire March 31, 2000 and are subject to certain
conditions and limitations including the right of the Company to limit the
number of shares carrying piggyback rights included in a registration statement
to the amount recommended by the managing underwriter. The Company is obligated
to pay all costs and expenses of the registration statements except for
underwriting discounts and commissions.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar of the Common Stock is American Stock
Transfer & Trust Company, New York, New York.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have 14,180,657 shares of
Common Stock outstanding. Of these shares, the 1,206,718 shares offered hereby,
the 4,400,000 shares sold in the Company's Initial and Secondary Public
Offerings and 25,386 shares issued pursuant to the stock option exercises
covered under the Company's Form S-8 registration statement will be freely
tradeable without restriction or further registration under the Securities Act
except for those shares, if any, purchased by "affiliates" of the Company as
that term is defined in Rule 144 under the Securities Act. The remaining
8,548,553 shares outstanding are "Restricted Securities" as that term is defined
in Rule 144 and fall into four categories: (i) 3,580,830 shares held by
"affiliates" who have already held their shares for more than one year, (ii)
186,077 shares held by affiliates who have not held their shares for more than
one year, (iii) 2,043,533 shares held by non-affiliates who have held their
shares for more than one year, and (iv) 2,918,674 shares held by non-affiliates
who have not held their shares for more than one year. In addition, 1,600,000
shares of Common Stock are reserved under the Plans for exercise of stock
options granted by the Company, of which options to purchase approximately 1.1
million shares have been granted (the "Option Shares"). See "Management -- Stock
Option Plans." Finally, 974,808 shares of Common Stock are reserved for issuance
in the event the warrants issued to Prudential, Piper Jaffray and certain
unrelated parties are exercised (the "Warrant Shares"). See "Description of
Capital Stock -- Warrants" and "Plan of Distribution."

The Restricted Securities may not be sold unless they are registered under
the Securities Act or are sold pursuant to an exemption from registration, such
as the exemption provided by Rule 144. Rule 144 imposes certain restrictions and
limitations on resale. In general, under Rule 144 as currently in effect, any
affiliate of the Company or any person (or persons whose shares are aggregated
in accordance with the Rule), who has beneficially owned Restricted Securities
for at least one year would be entitled to sell, within any three-month period a
number of such shares that does not exceed the greater of 1% of the then
outstanding shares of Common Stock (approximately 141,806 shares after the
Offering), or the reported average weekly trading volume of the Common Stock on
the Nasdaq National Market during the four calendar weeks preceding the date on
which notice of the sale is filed with the Commission. Sales under Rule 144 are
also subject to certain manner of sale restrictions and notice requirements and
to the availability of current public information concerning the Company. A
person (or persons whose shares are aggregated) who is not an "affiliate" of the
Company at any time during the 90 days preceding a sale, and who has
beneficially owned such shares for at least two years, is currently entitled to
sell such shares under Rule 144(k) without regard to the availability of current
public information, volume limitations, manner of sales provisions or notice
requirements. Currently, 3,580,830 Restricted Securities held by affiliates are
eligible for sale in the public market pursuant to Rule 144, but are subject to
certain "lock-up" agreements described below and beginning July 1, 1998 and
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October 31, 1998, respectively, 69,169 and 121,702 Restricted Securities held by
affiliates will be eligible for sale in the public market pursuant to Rule 144
unless otherwise registered pursuant to certain registration rights agreements,
but are subject to certain lock-up and other contractual arrangements described
below. Currently, 2,065,273 Restricted Securities held by non-affiliates are
eligible for sale in the public market pursuant to Rule 144 and beginning on
June 1, 1998; July 1, 1998; September 1, 1998; October 22, 1998; October 31,
1998; December 24, 1998; January 1, 1999; January 13, 1999; February 1, 1999;
March 30, 1999; March 31, 1999; and April 1, 1999, respectively, 429,084;
79,645; 374,759; 70,659; 341,457; 4,833; 96,833; 57,604; 16,779; 541,998;
554,903; and 221,442 Restricted Securities held by non-affiliates will be
eligible for sale on the public market pursuant to Rule 144 unless otherwise
registered pursuant to certain registration rights agreements, but are subject
to certain lock-up and other contractual agreements related to Rule 144
described below.

Option Shares granted under the Professional's Plan are subject to the
resale restrictions of Rule 144. Additionally, the Company filed a Form S-8
registration statement under the Securities Act to register the shares of Common
Stock subject to then outstanding stock options and the 933,333 shares of Common
Stock issuable pursuant to the Incentive Plan. Shares covered by this
registration statement will thereupon be eligible for sale in the public
markets. The Warrant Shares are also subject to registration rights agreements
requiring the Company to register such shares under certain circumstances and
otherwise will be eligible for resale subject to all of the limitations on
resale imposed by Rule 144.

Sales of substantial amounts of Common Stock, or the perception that such
sales could occur, could adversely affect market prices for the Common Stock and
could impair the Company's future ability to obtain capital through offerings of
equity securities.

PLAN OF DISTRIBUTION

The Common Stock offered hereby may be sold from time to time to purchasers
directly by the Selling Stockholders. Alternatively, the Selling Stockholders
may from time to time offer the Common Stock to or through underwriters,
broker/dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholders
or the purchasers of Common Stock for whom they may act as agents. The Selling
Stockholders and any underwriters, broker/dealers or agents that participate in
the distribution of Common Stock may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of Common Stock by them
and any discounts, commissions, concessions or other compensation received by
any such underwriter, broker/dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act.

The Common Stock offered hereby may be sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
The sale of the Common Stock may be effected in transactions (which may involve
crosses or block transactions) (i) on any national securities exchange or
quotation service on which the Common Stock may be listed or quoted at the time
of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise
than on such exchanges or in the over-the-counter market or (iv) through the
writing and exercise of options or the related hedging transactions thereunder.
At the time a particular offering of the Common Stock is made, a Prospectus
Supplement, if required, will be distributed which will set forth the aggregate
amount of Common Stock being offered and the terms of the offering, including
the name or names of any underwriters or agents, any discounts, commissions and
other terms constituting compensation from the Selling Stockholders and any
discounts, commissions or concessions allowed or reallowed or paid to such
underwriters or agents.

To comply with the securities laws of certain jurisdictions, if applicable,
the Common Stock will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the Common Stock may not be offered or sold unless they have been registered or
qualified for sale in such jurisdictions or any exemption from registration or
qualification is available and is complied with.

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Pursuant to the registration agreements, with the Selling Stockholders, all
expenses of the registration of the Common Stock will be paid by the Company,
including, without limitation, Commission filing fees and expenses of compliance
with state securities or "blue sky" laws; provided, however, that the Selling
Stockholders will pay all underwriting discounts and selling commissions, if
any. Pursuant to their respective acquisition agreements, certain Selling
Stockholders will be indemnified by the Company against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith. Additionally, Selling
Stockholders may agree to indemnify any broker-dealer or agents that participate
in transactions involving sales of Common Stock against certain liabilities
arising under the Act.

LEGAL MATTERS

Certain legal matters in connection with the sale of the shares of Common
Stock offered hereby will be passed upon for the Company by Shumaker, Loop &
Kendrick, LLP, Tampa, Florida. Members in the law firm of Shumaker, Loop &
Kendrick, LLP own an aggregate of approximately 20,000 shares of Common Stock as
of May 11, 1998.

EXPERTS

The financial statements of the following entities, appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent certified public accountants, to the extent indicated in their
reports thereon also appearing elsewhere in this Prospectus and the Registration
Statement:

- Vision Twenty-One, Inc. and Subsidiaries

- Supplemental Financial Statements of Vision Twenty-One, Inc. and
Subsidiaries.

- Vision Insurance Plan of America, Inc.

- EyeCare One Corp.

- Managed Health Service, Inc.

- MEC Health Care, Inc. and LSI Acquisition, Inc.

- Swagel-Wootton Eye Center, Ltd. and Aztec Optical Limited Partnership

- Cochise Eye & Laser, P.C.

- Richard L. Short, D.O., P.A. d/b/a Eye Associates of Pinellas

- Retina Associates, Southwest, P.C. and DGL Properties, Inc.

The financial statements of BBG-COA, Inc. as of April 30, 1997 and 1996 and
for each of the three years in the period ended April 30, 1997 included in this
Prospectus and Registration Statement have been so included in reliance on the
report of Price Waterhouse LLP, independent accountants.

Such financial statements have been included herein in reliance upon such
reports given upon the authority of such firm as an expert in accounting and
auditing.

ADDITIONAL INFORMATION

The Company is subject to the informational requirement of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission.

The Company has filed with the Commission a Registration Statement on Form
S-1 (herein, together with all amendments, exhibits and schedules, referred to
as the "Registration Statement"), under the Securities Act, with respect to the
Common Stock offered hereby. This Prospectus omits certain of the information
contained in the Registration Statement, and reference is hereby made to the
Registration

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Statement for further information with respect to the Company and the Common
Stock offered hereby. Any statements contained herein concerning the provisions
of any document are not necessarily complete, and in each such instance
reference is made to the copy of such document filed as an exhibit to the
Registration Statement. Each such statement is qualified in its entirety by such
reference.

Reports and other information filed by the Company with the Commission and
copies of the Registration Statement can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington DC 20549, and should also be available for inspection
and copying at the following regional offices of the Commission: 7 World Trade
Center, Suite 1300, New York, New York 10048; and Northwestern Atrium Center,
500 West Madison Street, Suite 1400 Chicago, Illinois 60661-2511. Copies of such
material also may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington DC 20549, at prescribed rates.
The Commission also maintains a web site that contains reports, proxy statements
and other information regarding registrants that file electronically with the
Commission. The address of such site is http://www.sec.gov. Such material can
also be inspected at the reading room of the library of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., 2nd Floor, Washington, D.C.
20006.

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INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

Basis of Presentation....................................... F-4
Unaudited Pro Forma Consolidated Statements of
Operations -- Year Ended December 31, 1997................ F-6
Unaudited Pro Forma Consolidated Balance Sheet as of
December 31, 1997......................................... F-7
Notes to Unaudited Pro Forma Consolidated Financial
Information............................................... F-8

SUPPLEMENTAL FINANCIAL STATEMENTS OF VISION TWENTY-ONE, INC. AND
SUBSIDIARIES

Report of Independent Certified Public Accountants.......... F-11
Supplemental Consolidated Balance Sheets as of December 31,
1996 and 1997............................................. F-12
Supplemental Consolidated Statements of Operations for the
Years Ended December 31, 1995, 1996 and 1997.............. F-13
Supplemental Consolidated Statements of Stockholders' Equity
for the Years Ended December 31, 1995, 1996 and 1997...... F-14
Supplemental Consolidated Statements of Cash Flows for the
Years Ended December 31, 1995, 1996 and 1997.............. F-15
Notes to Supplemental Consolidated Financial Statements..... F-16

FINANCIAL STATEMENTS OF VISION TWENTY-ONE, INC. AND SUBSIDIARIES

Report of Independent Certified Public Accountants.......... F-32
Consolidated Balance Sheets as of December 31, 1996 and
1997...................................................... F-33
Consolidated Statements of Operations for the Years Ended
December 31, 1995, 1996 and 1997.......................... F-34
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1995, 1996 and 1997.............. F-35
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1996 and 1997.......................... F-36
Notes to Consolidated Financial Statements.................. F-37

FINANCIAL STATEMENTS OF EYECARE ONE CORP.

Report of Independent Certified Public Accountants.......... F-52
Balance Sheets as of December 31, 1996 and 1997............. F-53
Statements of Income and Retained Earnings for the Years
Ended December 31, 1995, 1996 and 1997.................... F-54
Statements of Cash Flows for the Years Ended December 31,
1995, 1996 and 1997....................................... F-55
Notes to Financial Statements............................... F-56

FINANCIAL STATEMENTS OF VISION INSURANCE PLAN OF AMERICA, INC.

Report of Independent Certified Public Accountants.......... F-60
Balance Sheets as of December 31, 1996 and 1997............. F-61
Statements of Income for the Years Ended December 31, 1995,
1996 and 1997............................................. F-62
Statements of Changes in Shareholders' Equity for the Years
Ended December 31, 1995, 1996 and 1997.................... F-63
Statement of Cash Flows for the Years Ended December 31,
1995, 1996 and 1997....................................... F-64
Notes to Financial Statements............................... F-65
</TABLE>

F-1
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
FINANCIAL STATEMENTS OF BBG-COA, INC.

Report of Independent Certified Public Accountants.......... F-67
Consolidated Balance Sheets as of April 30, 1997 and 1996... F-68
Consolidated Statements of Operations and Accumulated
Deficit for the Years Ended April 30, 1997, 1996 and
1995...................................................... F-69
Consolidated Statements of Cash Flows for the Years Ended
April 30, 1997, 1996 and 1995............................. F-70
Notes to Consolidated Financial Statements.................. F-71
Consolidated Balance Sheets as of July 31, 1997
(Unaudited)............................................... F-77
Consolidated Statements of Operations and Accumulated
Deficit for the Three-Month Periods Ended July 31, 1997
and 1996 (Unaudited)...................................... F-78
Consolidated Statements of Cash Flows for the Three-Month
Periods Ended July 31, 1997 and 1996 (Unaudited).......... F-79
Notes to Consolidated Financial Statements (Unaudited)...... F-80

FINANCIAL STATEMENTS OF SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

Report of Independent Certified Public Accountants.......... F-81
Combined Balance Sheets as of December 31, 1996 and May 31,
1997 (Unaudited).......................................... F-82
Combined Statements of Operations for the Year Ended
December 31, 1996 and the Five-Month Periods Ended May 31,
1996 and 1997 (Unaudited)................................. F-83
Combined Statements of Stockholders' (Partners') Equity for
the Year Ended December 31, 1996, and the Five-Month
Period Ended May 31, 1997 (Unaudited)..................... F-84
Combined Statements of Cash Flows for the Year Ended
December 31, 1996 and the Five-Month Period Ended May 31,
1996 and 1997 (Unaudited)................................. F-85
Notes to Combined Financial Statements...................... F-86

FINANCIAL STATEMENTS OF RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

Report of Independent Certified Public Accountants.......... F-90
Balance Sheet as of December 31, 1996....................... F-91
Statement of Income for the Year Ended December 31, 1996.... F-92
Statement of Stockholder's Equity for the Year Ended
December 31, 1996......................................... F-93
Statement of Cash Flows for the Year Ended December 31,
1996...................................................... F-94
Notes to Financial Statements............................... F-95

FINANCIAL STATEMENTS OF COCHISE EYE & LASER, P.C.

Report of Independent Certified Public Accountants.......... F-101
Balance Sheets as of July 31, 1996 and April 30, 1997
(Unaudited)............................................... F-102
Statements of Income for the Year Ended July 31, 1996 and
the Nine-Month Periods Ended April 30, 1996 and 1997
(Unaudited)............................................... F-103
Statements of Stockholders' Equity for the Year Ended July
31, 1996 and the Nine-Month Period Ended April 30, 1997
(Unaudited)............................................... F-104
Statements of Cash Flows for the Year Ended July 31, 1996
and the Nine-Month Periods Ended April 30, 1996 and 1997
(Unaudited)............................................... F-105
Notes to Financial Statements............................... F-106
</TABLE>

F-2
<PAGE> 71

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
FINANCIAL STATEMENTS OF RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL
PROPERTIES, INC.
Report of Independent Certified Public Accountants.......... F-110
Combined Balance Sheet as of July 31, 1997.................. F-111
Combined Statement of Operations for the Year Ended July 31,
1997...................................................... F-112
Combined Statement of Stockholders' Equity for the Year
Ended July 31, 1997....................................... F-113
Combined Statement of Cash Flows for the Year Ended July 31,
1997...................................................... F-114
Notes to Combined Financial Statements...................... F-115
FINANCIAL STATEMENTS OF MANAGED HEALTH SERVICE, INC.
Report of Independent Certified Public Accountants.......... F-119
Balance Sheets as of December 31, 1996 and August 31, 1997
(Unaudited)............................................... F-120
Statements of Operations for the Year Ended December 31,
1996 and the Eight-Month Periods Ended August 31, 1996 and
1997 (Unaudited).......................................... F-121
Statements of Stockholders' Equity (Deficit) for the Year
Ended December 31, 1996 and the Eight-Month Period Ended
August 31, 1997 (Unaudited)............................... F-122
Statements of Cash Flows for the Year Ended December 31,
1996 and the Eight-Month Periods Ended August 31, 1996 and
1997...................................................... F-123
Notes to Financial Statements............................... F-124
FINANCIAL STATEMENTS OF MEC HEALTH CARE, INC. AND LSI ACQUISITION,
INC.
Report of Independent Certified Public Accountants.......... F-126
Combined Balance Sheet as of November 30, 1997.............. F-127
Combined Statement of Operations for the Eleven-Month Period
November 30, 1997......................................... F-128
Combined Statement of Stockholder's Equity for the
Eleven-Month Period Ended November 30, 1997............... F-129
Combined Statement of Cash Flows for the Eleven-Month Period
Ended November 30, 1997................................... F-130
Notes to Combined Financial Statements...................... F-131
</TABLE>

F-3
<PAGE> 72

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

BASIS OF PRESENTATION

During the time period from March 1, 1997 to the Company's Initial Public
Offering on August 18, 1997 (the "Initial Public Offering"), the Company
acquired the business assets of one optometry clinic, 11 ophthalmology clinics,
six optical dispensaries and four ASCs located in Arizona and Florida (the "Pre
IPO Acquisitions"). In conjunction with the Pre IPO Acquisitions, the Company
entered into Management Agreements with the professional associations operating
the practices. In September 1997, the Company acquired the business assets of
four ophthalmology clinics and two optical dispensaries located in Arizona,
Florida and New York and acquired the business assets of a managed care company
(the "September Acquisitions"). In October 1997, the Company acquired the
business assets of one optical dispensary, two ophthalmology clinics and one ASC
located in Florida (the "October Acquisitions"). In December 1997, the Company
acquired the business assets of one optical dispensary and two ophthalmology
clinics in Arizona and Minnesota (the "December Acquisitions"). In conjunction
with the September, October and December Acquisitions, the Company entered into
various Management Agreements with the professional associations operating those
practices. The Pre IPO Acquisitions, the September Acquisitions, the October
Acquisitions and the December Acquisitions are collectively referred to as the
"Managed Professional Associations & Managed Care Company" under the 1997
Acquisitions caption on pages F-6 through F-7 herein. Effective October 31,
1997, the Company acquired all of the issued and outstanding stock of BBG-COA,
Inc. (the "Block Acquisition"). The Company completed a secondary public
offering in November, 1997 (the "Offering") in order to fund a portion of the
cash consideration for the Block Acquisition. Effective December 1, 1997, the
Company acquired all of the issued and outstanding stock of MEC Health Care,
Inc. (the "MEC Acquisition") and LSI Acquisition, Inc. ("LSIA"). LSIA is
included in "Managed Professional Associations & Managed Care Company" under the
1997 Acquisitions caption on pages F-6 through F-7 herein. Except for the
Company's acquisitions of managed care companies, the Block Acquisition and the
MEC Acquisition, which were accounted for under the purchase method of
accounting, its acquisitions have been accounted for by recording the assets and
liabilities at fair value and allocating the remaining costs to the related
Management Agreements.

During 1998, the Company acquired six eye care practices, one managed care
company and one optical company and has also entered into binding letters of
intent to acquire two eye care practices. The Company expects to enter into
long-term Management Agreements with the related professional associations
operating these practices. These acquisitions are expected to be accounted for
under the purchase method of accounting by recording assets and liabilities at
fair value and allocating the remaining costs to the related Management
Agreements. The acquisitions are referred to as "Managed Professional
Associations, Managed Care Company & Optical Company" under the 1998
Acquisitions caption on pages F-6 through F-7 herein. On March 31, 1998, the
Company completed a merger with EyeCare One Corp. ("EyeCare One") and Vision
Insurance Plan of America, Inc. ("VIPA") referred to hereinafter as the "EyeCare
One & VIPA Merger". This merger transaction was accounted for as a pooling of
interests.

The following unaudited pro forma consolidated financial statements are
based on the historical consolidated financial statements of the Company,
adjusted to give effect to the transactions described below. The unaudited pro
forma consolidated statements of operations of the Company for the year ended
December 31, 1997 give effect to the following transactions as if they had
occurred on January 1, 1997: (i) the Block Acquisition and the MEC Acquisition,
(ii) the Managed Professional Associations & Managed Care Company (1997), (iii)
the EyeCare One & VIPA Merger, (iv) the Managed Professional Associations,
Managed Care Company & Optical Company (1998) and (v) the Initial Public
Offering and the Offering and the application of the net proceeds therefrom. The
unaudited pro forma consolidated balance sheet of the Company as of December 31,
1997 gives effect to the following transactions as if they had occurred on
December 31, 1997: (i) the EyeCare One & VIPA Merger and (ii) the Managed
Professional Associations, Managed Care Company & Optical Company (1998).

F-4
<PAGE> 73

The unaudited pro forma consolidated financial statements are based on the
historical financial statements of the Company, BBG-COA, Inc., MEC Health Care,
Inc., EyeCare One & VIPA and the professional or other entities which owned the
business assets which were the subject of the 1997 and 1998 Acquisitions and
give effect to the 1997 Acquisitions, the 1998 Acquisitions, the Initial Public
Offering and the Offering and the assumptions and adjustments described in the
notes thereto. The unaudited pro forma consolidated financial information does
not purport to indicate what the results of operations or financial condition of
the Company would have been if the 1997 Acquisitions, the 1998 Acquisitions, the
Initial Public Offering and the Offering had been effected on the dates
indicated or to project the future results of operations or financial condition
of the Company. Such pro forma financial information should be read in
conjunction with the consolidated financial statements of the Company and the
financial statements of the other entities included in this Registration
Statement.

F-5
<PAGE> 74

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
1997 ACQUISITIONS 1998 ACQUISITIONS
------------------------------------------- ---------------------------
MANAGED
MANAGED PROFESSIONAL
HISTORICAL PROFESSIONAL ASSOCIATIONS,
COMPANY FOR BLOCK ASSOCIATIONS MANAGED CARE
THE YEAR ENDED ACQUISITION & & 1997 EYECARE ONE COMPANY &
DECEMBER 31, MEC MANAGED CARE ACQUISITION & VIPA OPTICAL
1997 ACQUISITION COMPANY ADJUSTMENTS MERGER COMPANY
-------------- ------------- ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Practice management
fees................. $30,951,922 $14,497,000(2) $ -- -- $26,984,000(2)
Managed care........... 17,446,107 $21,363,000 1,461,000(1) -- 708,000 466,000(1)
Buying group........... 7,260,797 46,972,000 -- -- -- --
Sale of optical
goods................ -- -- -- -- 12,570,000 --
Other revenue.......... 607,953 246,000 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
56,266,779 68,581,000 15,958,000 -- 13,278,000 27,450,000
----------- ----------- ----------- ----------- ----------- -----------
Expenses:
Practice management
expenses............. 25,294,565 -- 11,376,000(2) -- -- 22,713,000(2)
Medical claims......... 13,831,360 15,452,000 1,186,000(1) -- 259,000 373,000(1)
Buying group........... 6,882,199 44,553,000 -- -- -- --
Cost of optical goods
sold................. -- -- -- -- 3,114,000 --
Salaries, wages and
benefits............. 5,025,105 3,605,000 272,000(1) (75,000)(4) 5,406,000 --
General and
administrative....... 2,515,257 2,317,000 104,000(1) -- 3,364,000 --
Depreciation and
amortization......... 1,803,991 648,000 1,203,500(3) (330,000)(5) 392,000 1,197,000(3)
1,142,000(5)
(61,000)(6)
407,000(6)
----------- ----------- ----------- ----------- ----------- -----------
55,352,477 66,575,000 14,141,500 1,083,000 12,535,000 24,283,000
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from
operations............. 914,302 2,006,000 1,816,500 (1,083,000) 743,000 3,167,000
Amortization of loan
fees................... 178,677 -- -- -- -- --
Interest expense........ 934,190 203,000 34,000 -- 138,000 --
468,000(9)
280,000(9)
595,000(9)
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
income taxes........... (198,565) 1,803,000 1,782,500 (2,426,000) 605,000 3,167,000
Income tax expense
(benefit).............. -- 866,000 -- 109,000(8) 1,234,000(8)
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before
extraordinary
charge(10)............. $ (198,565) $ 937,000 $ 1,782,500 $(2,535,000) $ 605,000 $ 1,933,000
=========== =========== =========== =========== =========== ===========
Income (loss) before
extraordinary charge
per common share....... $ (0.03)
===========
Income (loss) before
extraordinary charge
per common share --
assuming dilution...... $ (0.03)
===========

INITIAL
PUBLIC PRO FORMA
OFFERING CONSOLIDATED
AND 1998 AFTER OFFERING
PRO FORMA ACQUISITION AND
CONSOLIDATED ADJUSTMENTS ADJUSTMENTS
------------ ----------- --------------
<S> <C> <C> <C>
Revenues:
Practice management
fees................. $ 72,432,922 -- $ 72,432,922
Managed care........... 41,444,107 41,444,107
Buying group........... 54,232,797 -- 54,232,797
Sale of optical
goods................ 12,570,000 -- 12,570,000
Other revenue.......... 853,953 -- 853,953
------------ --------- ------------
181,533,779 -- 181,533,779
------------ --------- ------------
Expenses:
Practice management
expenses............. 59,383,565 -- 59,383,565
Medical claims......... 31,101,360 -- 31,101,360
Buying group........... 51,435,199 -- 51,435,199
Cost of optical goods
sold................. 3,114,000 -- 3,114,000
Salaries, wages and
benefits............. 14,233,105 -- 14,233,105
General and
administrative....... 8,300,257 -- 8,300,257
Depreciation and
amortization......... 6,402,491 -- 6,402,491
------------ --------- ------------
173,969,977 -- 173,969,977
------------ --------- ------------
Income (loss) from
operations............. 7,563,802 -- 7,563,802
Amortization of loan
fees................... 178,677 -- 178,677
Interest expense........ 2,652,190 (700,000)(7) 2,710,190
758,000(12)
------------ --------- ------------
Income (loss) before
income taxes........... 4,732,935 (58,000) 4,674,935
Income tax expense
(benefit).............. 2,209,000 (22,000)(8) 2,187,000
------------ --------- ------------
Income (loss) before
extraordinary
charge(10)............. $ 2,523,935 $ (36,000) $ 2,487,935
============ ========= ============
Income (loss) before
extraordinary charge
per common share....... $ 0.18
============
Income (loss) before
extraordinary charge
per common share --
assuming dilution...... $ 0.17
============
</TABLE>

See accompanying notes to unaudited pro forma consolidated financial
information.

F-6
<PAGE> 75

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997

<TABLE>
<CAPTION>
1998 ACQUISITIONS
-------------------------------------
HISTORICAL MANAGED PROFESSIONAL
COMPANY ASSOCIATIONS, PRO FORMA
AS OF MANAGED CARE CONSOLIDATED
DECEMBER 31, EYECARE ONE COMPANY & OPTICAL ACQUISITION AFTER
1997 & VIPA MERGER COMPANY ADJUSTMENTS ADJUSTMENTS
------------ ------------- -------------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............. $ 3,871,864 $ 176,494 $(11,479,000)(11) $7,581,000(12) $ 150,358
Accounts receivable due from:
Buying group members................... 5,427,592 -- -- -- 5,427,592
Patients............................... 5,387,381 114,729 -- -- 5,502,110
Managed Professional Associations...... 4,950,067 -- -- -- 4,950,067
Managed health benefits payors......... 1,276,790 -- -- -- 1,276,790
Other receivables...................... 146,436 18,856 -- -- 165,292
Inventories............................. -- 936,242 -- -- 936,242
Prepaid expenses and other current
assets................................. 1,819,475 196,561 -- -- 2,016,036
------------ ----------- ------------ ---------- -------------
Total Current Assets............. 22,879,605 1,442,882 (11,479,000) 7,581,000 20,424,487
Fixed assets, net....................... 6,503,719 2,123,245 -- -- 8,626,964
Intangible Assets....................... 84,143,508 20,833 19,676,000(11) -- 103,840,341
Deferred tax asset...................... 1,882,000 -- -- -- 1,882,000
Cash surrender value of life
insurance.............................. -- 205,596 -- -- 205,596
Other Assets............................ 1,149,559 5,800 -- -- 1,155,359
------------ ----------- ------------ ---------- -------------
Total assets..................... $116,558,391 $ 3,798,356 $ 8,197,000 $7,581,000 $ 136,134,747
============ =========== ============ ========== =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................... $ 5,015,668 $ 303,986 $ -- $ -- $ 5,319,654
Accrued expenses..................... 1,917,028 791,713 -- -- 2,708,741
Accrued acquisition and offering
costs.............................. 1,045,905 -- -- -- 1,045,905
Accrued compensation................. 1,381,497 -- -- -- 1,381,497
Due to managed professional
associations....................... 1,938,309 -- -- -- 1,938,309
Due to selling shareholders.......... 2,811,809 -- -- -- 2,811,809
Current portion of deferred leasehold
incentive.......................... -- 23,046 -- -- 23,046
Current portion of long-term debt.... 104,371 -- -- -- 104,371
Current portion of obligations under
capital leases..................... 566,084 -- -- -- 566,084
Medical claims payable............... 3,545,195 10,000 3,555,195
------------ ----------- ------------ ---------- -------------
Total current liabilities............ 18,325,866 1,128,745 -- -- 19,454,611
Deferred rent payable................... 261,117 -- -- -- 261,117
Obligations under capital leases........ 632,850 -- -- -- 632,850
Long-term debt, less current portion.... 24,580,071 1,400,182 -- 7,581,000(12) 33,561,253
Deferred leasehold incentive............ -- 186,323 -- -- 186,323
Deferred income taxes................... 6,111,000 -- -- -- 6,111,000
Stockholders' equity:
Common stock......................... 12,421 1,109 828(11) -- 14,358
Additional paid-in capital........... 75,158,995 1,257,481 8,196,172(11) -- 84,612,648
Deffered compensation................ (408,735) -- -- -- (408,735)
Notes receivable from officer........ -- (175,484) -- -- (175,484)
Accumulated deficit.................. (8,115,194) -- -- -- (8,115,194)
------------ ----------- ------------ ---------- -------------
Total stockholders equity........ 66,647,487 1,083,106 8,197,000 -- 75,927,593
------------ ----------- ------------ ---------- -------------
Total liabilities and stockholders'
equity............................. $116,558,391 $ 3,798,356 $ 8,197,000 $7,581,000 $ 136,134,747
============ =========== ============ ========== =============
</TABLE>

See accompanying notes to unaudited pro forma consolidated financial
information.

F-7
<PAGE> 76

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION

(1) The Company acquired two managed care businesses effective September 1,
1997 and February 1, 1998. The managed care revenue, medical claims, salaries,
wages and benefits and general and administrative expenses for the year ended
December 31, 1997 reflect the pro forma additional amounts that would have been
incurred if the Acquisitions had occurred on January 1, 1997.

<TABLE>
<CAPTION>
1997 1998
ACQUISITIONS ACQUISITIONS
------------ ------------
YEAR ENDED YEAR ENDED
12/31/97 12/31/97
------------ ------------
<S> <C> <C>
Revenues:
Managed care.............................................. $1,461,000 $466,000
Other..................................................... -- --
---------- --------
1,461,000 $466,000
---------- --------
Expenses:
Medical claims............................................ 1,186,000 373,000
Salaries, wages and benefits.............................. 272,000 --
General and administrative................................ 104,000 --
---------- --------
1,562,000 373,000
---------- --------
Net......................................................... $ (101,000) $ 93,000
========== ========
</TABLE>

(2) The practice management fees and practice management expenses for the
year ended December 31, 1997 reflect the pro forma additional practice
management fee revenue that would have been earned through the management of the
related managed professional entities under the Management Agreements if the
Acquisitions had occurred on January 1, 1997. This revenue represents
reimbursement of practice management expenses incurred by the Company, including
depreciation of fixed assets. In addition, the Company receives a percentage
(ranging from 24 to 37 percent) of the related managed professional entities net
earnings before interest, taxes and shareholder physician expenses, as
determined under the related Management Agreements.

The following analysis summarizes the adjustments related to practice
management fees:

<TABLE>
<CAPTION>
1997 1998
ACQUISITIONS ACQUISITIONS
------------ ------------
YEAR ENDED YEAR ENDED
12/31/97 12/31/97
------------ ------------
<S> <C> <C>
Practice management fee summary:
Reimbursement of practice management expenses:
Practice management expenses............................ $11,376,000 $22,713,000
Depreciation............................................ 751,000 359,000
----------- -----------
12,127,000 23,072,000
Share of Managed Professional Associations' net
earnings................................................ 2,370,000 3,912,000
----------- -----------
Practice management fee revenue........................... $14,497,000 $26,984,000
=========== ===========
</TABLE>

F-8
<PAGE> 77

The share of Managed Professional Associations' net earnings was computed
as follows:

<TABLE>
<CAPTION>
1997 1998
ACQUISITIONS ACQUISITIONS
------------ ------------
YEAR ENDED YEAR ENDED
12/31/97 12/31/97
------------ ------------
<S> <C> <C>
Gross practice revenues................................... $20,027,000 $36,112,000
less defined practice expenses including depreciation... 12,127,000 23,072,000
----------- -----------
Managed Professional Associations' net earnings........... $ 7,900,000 13,040,000
Weighted-average management fee percentage................ 30% 30%
----------- -----------
Share of Managed Professional Associations' net
earnings................................................ $ 2,370,000 $ 3,912,000
=========== ===========
</TABLE>

The pro forma adjustments for practice management fees and practice
management expenses are based on the actual results of operations of the
individual practices, as adjusted for the terms of the Management Agreements.
While the Company expects the operations of the practices to improve under its
management, there can be no assurance that operations will not deteriorate.
However, the Company believes this information is the best available objective
information upon which to evaluate the performance of the practices.

(3) Depreciation and amortization reflect depreciation of the related
managed professional entities' fixed assets acquired over their estimated useful
life and amortization of intangible assets over a life of 25 years:

<TABLE>
<CAPTION>
1997 1998
ACQUISITIONS ACQUISITIONS
------------ ------------
YEAR ENDED YEAR ENDED
12/31/97 12/31/97
------------ ------------
<S> <C> <C>
Fixed assets(a)............................................. $ 751,000 $ 359,000
Intangible assets(b)........................................ 452,500 838,000
---------- ----------
$1,203,500 $1,197,000
========== ==========
</TABLE>

(a) Depreciation on fixed assets is calculated on a straight-line method
over the estimated useful lives of the various classes of assets, which range
from three to ten years.

(b) Amortization of intangible assets is calculated on a straight-line
method over a life of 25 years. Included in amortization expense is $153,000 for
the year ended December 31, 1997 for the addition to intangible assets and
corresponding increase in deferred income taxes for the value of the portion of
the Management Agreements acquired in non-taxable transactions as if they had
occurred on January 1, 1997.

(4) The adjustment reduces certain salaries of the management of Block by
$75,000 for the ten month period ended October 31, 1997 to levels that will be
paid by the Company.

(5) The adjustment removes the goodwill amortization previously recorded by
Block of $330,000 for the ten month period ended October 31, 1997, and records
the goodwill amortization of $1,142,000 for the ten month period ended October
31, 1997, related to the acquisition of Block by the Company.

(6) The adjustment removes the goodwill amortization previously recorded by
MEC of $61,000 for the eleven month period ended November 30, 1997, and records
the goodwill amortization of $407,000 for the eleven month period ended November
30, 1997, related to the acquisition of MEC by the Company.

F-9
<PAGE> 78

(7) The adjustment reflects the savings on interest expense due to the
repayment of debt with proceeds from the Initial Public Offering.

<TABLE>
<CAPTION>
YEAR ENDED
12/31/97
------------
<S> <C>
Unsecured notes payable, 8%................................. $275,000
Senior subordinated note, 10%............................... 114,000
Senior subordinated note, 10%............................... 122,000
Certain notes payable and capital lease obligations,
9.25%..................................................... --
Credit facilities, 10%...................................... 189,000
--------
$700,000
========
</TABLE>

(8) The adjustment records the income tax expense (benefit) that would have
been recorded if the 1997 Acquisitions and 1998 Acquisitions had occurred on
January 1, 1997. The expense (benefit) is calculated using an estimated average
income tax rate of 38% on income (loss) before income taxes adjusted for the
amortization of the non-deductible goodwill resulting from the Block
Acquisition.

(9) The adjustment reflects the additional interest expense relating to the
Block acquisition of $468,000 for the ten month period ended October 31, 1997
that would have been incurred from the borrowing of approximately $5.6 million
on the credit facility at an estimated interest rate of 10.0%. The adjustment
reflects the additional interest expense relating to the MEC Acquisition of
$595,000 for the eleven month period ended November 30, 1997 that would have
been incurred from the borrowing of approximately $6.5 million on the credit
facility at an estimated interest rate of 10%. The adjustment reflects the
additional interest expense relating to certain 1998 acquisitions of $280,000
for the year ended December 31, 1997 that would have been incurred from the
borrowing of approximately $2.8 million on the credit facility at an estimated
interest rate of 10.0%.

(10) Net income (loss) excludes the extraordinary charge for early
extinguishment of debt of $323,346.

(11) To reflect the 1998 Acquisitions of Managed Professional Associations,
a Managed Care Company and an Optical Company. The fair value of the net assets
and Management Agreements is expected to approximate $19,676,000. The
Acquisitions were financed through the payment of $11,479,000 in cash and the
issuance of 808,000 shares of the Company's Common Stock, valued at the average
closing prices of the Company's Common Stock five days before and after the
closing dates. The adjustment assume the fair value of the net business assets
is immaterial and, accordingly, allocates the entire fair value of $19,676,000
to intangible assets, principally representing the fair value of the Management
Agreements.

(12) The adjustment reflects the additional interest expense relating to
the 1998 Managed Professional Associations, Managed Care Company & Optical
Company of $758,000 for the year ended December 31, 1997 that would have been
incurred from the borrowing of approximately $7.6 million on the credit facility
at an estimated interest rate of 10.0%.

F-10
<PAGE> 79

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Vision Twenty-One, Inc. and Subsidiaries

We have audited the supplemental consolidated balance sheets of Vision
Twenty-One, Inc. and Subsidiaries (formed as a result of the consolidation of
Vision Twenty-One, Inc. and Subsidiaries, EyeCare One Corp. and Vision Insurance
Plan of America, Inc.) as of December 31, 1996 and 1997, and the related
supplemental consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1997.
The supplemental consolidated financial statements give retroactive effect to
the merger of Vision Twenty-One, Inc. and Subsidiaries, EyeCare One Corp. and
Vision Insurance Plan of America, Inc. on March 31, 1998, which has been
accounted for using the pooling of interests method as described in the notes to
the supplemental consolidated financial statements. These supplemental financial
statements are the responsibility of the management of Vision Twenty-One, Inc.
and Subsidiaries. Our responsibility is to express an opinion on these
supplemental 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 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 supplemental financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Vision Twenty-One, Inc. and Subsidiaries at December 31, 1996 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, after giving retroactive
effect to the merger of Vision Twenty-One, Inc. and Subsidiaries, EyeCare One
Corp. and Vision Insurance Plan of America, Inc., as described in the notes to
the supplemental consolidated financial statements, in conformity with generally
accepted accounting principles.

/s/ Ernst & Young LLP

Tampa, Florida
March 11, 1998

F-11
<PAGE> 80

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 251,832 $ 4,048,358
Accounts receivable due from:
Buying group members, net of allowances for doubtful
accounts of $33,000 at December 31, 1997............... -- 5,427,592
Patients, net of allowances for uncollectible accounts
and contractual adjustments of $685,000 and $3,446,000
at December 31, 1996 and 1997, respectively............ 1,638,703 5,502,110
Managed Professional Associations....................... 424,271 4,950,067
Managed health benefits payors.......................... -- 1,276,790
Other................................................... 199,999 165,292
Notes receivable, officers and shareholders............... 163,489 --
Inventories............................................... 936,739 936,242
Prepaid expenses and other current assets................. 227,370 2,016,036
----------- ------------
Total current assets................................ 3,842,403 24,322,487
Fixed assets, net........................................... 3,737,964 8,626,964
Intangible assets, net of accumulated amortization of
$29,125 and $1,131,501 at December 31, 1996 and 1997,
respectively.............................................. 11,022,396 84,164,341
Cash surrender value of life insurance, net of policy loans
of $558,179 and $624,464 at December 31, 1996 and 1997,
respectively.............................................. 166,822 205,596
Deferred offering costs..................................... 287,792 --
Deferred tax asset.......................................... 1,468,000 1,882,000
Other assets................................................ 50,592 1,155,359
----------- ------------
Total assets........................................ $20,575,969 $120,356,747
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 745,207 $ 5,319,654
Accrued expenses.......................................... 1,595,571 2,708,741
Medical claims payable.................................... 1,793,861 3,555,195
Accrued compensation...................................... 546,740 1,381,497
Accrued acquisition and offering costs.................... 1,362,012 1,045,905
Due to Managed Professional Associations.................. -- 1,938,309
Due to selling shareholders............................... -- 2,811,809
Current portion of deferred leasehold incentive........... 9,568 23,046
Current portion of long-term debt......................... 48,249 104,371
Current portion of obligations under capital leases....... 43,849 566,084
----------- ------------
Total current liabilities........................... 6,145,057 19,454,611
Deferred rent payable....................................... 263,006 261,117
Obligations under capital leases............................ 71,870 632,850
Long-term debt, less current portion ($5,983,098 to related
parties in 1996).......................................... 8,922,974 25,980,253
Deferred leasehold incentive................................ 81,330 186,323
Deferred income taxes....................................... 1,468,000 6,111,000
Stockholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares
authorized; no shares issued............................ -- --
Common stock, $.001 par value; 50,000,000 shares
authorized; 4,825,431 (1996) and 13,529,892 (1997)
shares issued and outstanding........................... 4,825 13,530
Additional paid-in capital................................ 5,987,335 76,416,476
Common stock to be issued (1,491,397 shares in 1996)...... 5,905,965 --
Deferred compensation..................................... (517,035) (408,735)
Notes receivable from officer............................. (164,075) (175,484)
Accumulated deficit....................................... (7,593,283) (8,115,194)
----------- ------------
Total stockholders' equity.......................... 3,623,732 67,730,593
----------- ------------
Total liabilities and stockholders' equity.......... $20,575,969 $120,356,747
=========== ============
</TABLE>

See accompanying supplemental notes.

F-12
<PAGE> 81

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Practice management fees ($423,890, and $479,004 from
a related party in 1995 and 1996, respectively).... $ 423,890 $ 1,942,843 $30,951,922
Managed care.......................................... 3,017,384 7,886,802 18,154,205
Buying group.......................................... -- -- 7,260,797
Sale of optical goods................................. 11,212,385 11,718,979 12,569,321
Other revenue......................................... 211,746 305,654 607,953
----------- ----------- -----------
14,865,405 21,854,278 69,544,198
Operating expenses:
Practice management expenses.......................... -- 1,244,173 25,294,565
Medical claims........................................ 3,349,791 9,475,395 14,090,250
Buying group.......................................... -- -- 6,882,199
Cost of optical goods sold............................ 2,683,633 2,807,621 3,113,851
Salaries, wages and benefits.......................... 5,588,098 6,852,726 10,431,103
Business development.................................. -- 1,926,895 --
General and administrative............................ 3,523,664 4,446,681 5,879,074
Depreciation and amortization......................... 389,527 487,360 2,195,668
----------- ----------- -----------
15,534,713 27,240,851 67,886,710
----------- ----------- -----------
Income (loss) from operations........................... (669,308) (5,386,573) 1,657,488
Amortization of loan fees............................... -- -- 178,677
Interest expense........................................ 146,509 260,597 1,072,589
----------- ----------- -----------
Income (loss) before income taxes....................... (815,817) (5,647,170) 406,222
Income taxes............................................ -- -- --
----------- ----------- -----------
Income (loss) before extraordinary charge............... (815,817) (5,647,170) 406,222
Extraordinary charge -- early extinguishment of debt.... -- -- 323,346
----------- ----------- -----------
Net income (loss)....................................... $ (815,817) $(5,647,170) $ 82,876
=========== =========== ===========
Earnings (loss) per common share:
Income (loss) before extraordinary charge............. $ (0.24) $ (1.42) $ 0.05
Extraordinary charge.................................. -- -- (0.04)
----------- ----------- -----------
Net income (loss) per common share...................... $ (0.24) $ (1.42) $ 0.01
=========== =========== ===========
Earnings (loss) per common share -- assuming dilution:
Income (loss) before extraordinary charge............. $ (0.24) $ (1.42) $ 0.05
Extraordinary charge.................................. -- -- (0.04)
----------- ----------- -----------
Net income (loss) per common share -- assuming
dilution.............................................. $ (0.24) $ (1.42) $ 0.01
=========== =========== ===========
</TABLE>

See accompanying supplemental notes.

F-13
<PAGE> 82

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON NOTES
COMMON STOCK ADDITIONAL STOCK RECEIVABLE
-------------------- PAID-IN TO BE DEFERRED FROM ACCUMULATED
SHARES AMOUNT CAPITAL ISSUED COMPENSATION OFFICERS DEFICIT
---------- ------- ----------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995, as
previously reported.................... 2,324,876 $ 2,325 $ 32,271 $ -- $ -- $ -- $(1,473,646)
Adjustments for EyeCare One Corp. and
Vision Insurance Plan of America,
Inc. pooling of interests............ 1,109,806 1,109 1,304,899 -- -- (164,075) --
---------- ------- ----------- ---------- --------- --------- -----------
Balance at December 31, 1995, as
restated............................... 3,434,682 3,434 1,337,170 -- -- (164,075) (1,473,646)
Sale of common stock................... 360,442 360 999,640 -- -- -- --
Issuance of shares of common stock for
1996 Acquisitions consummated
effective December 1, 1996........... 651,842 652 2,580,645 -- -- -- --
1,491,397 shares of common stock to be
issued in 1997 for 1996 Acquisitions
consummated effective December 1,
1996................................. -- -- -- 5,905,965 -- -- --
Issuance of detachable stock purchase
warrants............................. -- -- 125,000 -- -- -- --
Issuance of shares of common stock for
prior service........................ 144,705 145 401,410 -- -- -- --
Issuance of shares of common stock for
advisory agreement................... 125,627 126 348,488 -- (348,614) -- --
Issuance of shares of common stock for
services agreement................... 108,133 108 299,960 -- (180,041) -- --
Amortization of deferred
compensation......................... -- -- -- -- 11,620 -- --
Net loss............................... -- -- -- -- -- -- (5,647,170)
Reclassify undistributed earnings in S
Corporation to additional paid-in
capital.............................. 472,467 (472,467)
Capital distribution................... -- -- (577,445) -- -- -- --
---------- ------- ----------- ---------- --------- --------- -----------
Balance at December 31, 1996............ 4,825,431 4,825 5,987,335 5,905,965 (517,035) (164,075) (7,593,283)
Initial and second public offering of
common shares........................ 4,400,000 4,400 37,618,793 -- -- -- --
Issuance of shares of common stock for
business combinations................ 4,298,740 4,299 31,826,620 (5,905,965) -- -- --
Issuance of detachable stock purchase
warrants............................. -- -- 301,500 -- -- -- --
Sale of detachable stock purchase
warrants............................. -- -- 548,021 -- -- -- --
Compensatory stock options accounted
for under SFAS 123................... -- -- 124,949 -- -- -- --
Exercise of warrants and options....... 5,721 6 2,751 -- -- -- --
Amortization of deferred
compensation......................... -- -- -- -- 108,300 -- --
Issuance of note receivable............ -- -- -- -- -- (11,409) --
Net income............................. -- -- -- -- -- -- 82,876
Reclassify undistributed earnings in S
Corporation to additional paid-in
capital.............................. 604,787 (604,787)
Capital distribution................... -- -- (598,280) -- -- -- --
---------- ------- ----------- ---------- --------- --------- -----------
Balance at December 31, 1997............ 13,529,892 $13,530 $76,416,476 $ -- $(408,735) $(175,484) $(8,115,194)
========== ======= =========== ========== ========= ========= ===========

TOTAL
STOCKHOLDERS'
EQUITY
-------------
<S> <C>
Balance at December 31, 1995, as
previously reported.................... $(1,439,050)
Adjustments for EyeCare One Corp. and
Vision Insurance Plan of America,
Inc. pooling of interests............ 1,141,933
-----------
Balance at December 31, 1995, as
restated............................... (297,117)
Sale of common stock................... 1,000,000
Issuance of shares of common stock for
1996 Acquisitions consummated
effective December 1, 1996........... 2,581,297
1,491,397 shares of common stock to be
issued in 1997 for 1996 Acquisitions
consummated effective December 1,
1996................................. 5,905,965
Issuance of detachable stock purchase
warrants............................. 125,000
Issuance of shares of common stock for
prior service........................ 401,555
Issuance of shares of common stock for
advisory agreement................... --
Issuance of shares of common stock for
services agreement................... 120,027
Amortization of deferred
compensation......................... 11,620
Net loss............................... (5,647,170)
Reclassify undistributed earnings in S
Corporation to additional paid-in
capital.............................. --
Capital distribution................... (577,445)
-----------
Balance at December 31, 1996............ 3,623,732
Initial and second public offering of
common shares........................ 37,623,193
Issuance of shares of common stock for
business combinations................ 25,924,954
Issuance of detachable stock purchase
warrants............................. 301,500
Sale of detachable stock purchase
warrants............................. 548,021
Compensatory stock options accounted
for under SFAS 123................... 124,949
Exercise of warrants and options....... 2,757
Amortization of deferred
compensation......................... 108,300
Issuance of note receivable............ (11,409)
Net income............................. 82,876
Reclassify undistributed earnings in S
Corporation to additional paid-in
capital.............................. --
Capital distribution................... (598,280)
-----------
Balance at December 31, 1997............ $67,730,593
===========
</TABLE>

See accompanying supplemental notes.

F-14
<PAGE> 83

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1996 1997
--------- ----------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $(815,817) $(5,647,170) $ 82,876
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Extraordinary charge -- early extinguishment of debt...... -- -- 323,346
Depreciation and amortization............................. 389,527 492,144 2,211,975
Amortization of deferred leasehold incentive.............. -- (4,784) (16,307)
Amortization of loan fees................................. -- -- 178,677
Noncash compensation expense.............................. -- 521,582 124,949
Amortization of deferred compensation..................... -- 11,620 --
Interest accretion........................................ -- -- 50,260
Loss on disposal of fixed assets.......................... -- 18,458 --
Changes in operating assets and liabilities, net of
effects from business combinations:
Accounts receivable, net................................ 84,378 (512,811) (5,522,779)
Prepaid expenses and other current assets............... 71,715 (132,865) (173,620)
Other assets............................................ -- (32,984) (521,371)
Accounts payable........................................ 23,320 432,665 (2,651,604)
Accrued expenses........................................ (71,216) 176,659 690,617
Accrued acquisition and offering costs.................. -- 522,963 (522,963)
Accrued compensation.................................... 43,138 48,342 834,759
Deferred rent payable................................... -- -- (1,889)
Medical claims payable.................................. 928,602 737,720 (552,064)
Due to Managed Professional Associations................ 10,184 (27,741) 1,938,309
--------- ----------- ------------
Net cash provided by (used in) operating activities......... 663,831 (3,396,202) (3,526,829)
INVESTING ACTIVITIES
Purchases of furniture and equipment........................ (184,778) (1,221,626) (1,965,105)
Payments for acquisitions, net of cash acquired............. -- -- (35,452,640)
Increase in cash surrender value of life insurance.......... (72,930) (68,979) (74,644)
Payments for capitalized acquisition costs.................. (20,240) (1,138,829) (6,170,767)
Other....................................................... -- (3,800) (396,603)
--------- ----------- ------------
Net cash used in investing activities....................... (277,948) (2,433,234) (44,059,759)
FINANCING ACTIVITIES
Net proceeds from sale of common stock...................... -- 750,000 42,850,000
Payments for offering costs................................. -- -- (4,385,413)
Proceeds from long term debt................................ 310,413 4,950,000 33,094,128
Payments on long term debt.................................. (352,694) (61,695) (19,866,349)
Net proceeds from line of credit............................ -- 184,264 --
Proceeds from credit facility............................... -- -- 4,922,182
Payments on credit facility................................. -- -- (4,874,000)
Payments for financing fees................................. -- -- (717,882)
Proceeds from leaseholds incentives......................... -- 175,000 220,000
Sale of detachable stock purchase warrants and exercise of
options................................................... -- -- 550,778
Additional borrowings on cash surrender value of life
insurance................................................. 44,279 33,585 35,870
(Increase) decrease in notes receivable, officers and
shareholders.............................................. (127,444) 429,430 152,080
Capital distribution........................................ (157,950) (577,445) (598,280)
--------- ----------- ------------
Net cash provided by (used in) financing activities......... (283,396) 5,883,139 51,383,114
--------- ----------- ------------
Increase in cash and cash equivalents....................... 102,487 53,703 3,796,526
Cash and cash equivalents at beginning of year.............. 95,642 198,129 251,832
--------- ----------- ------------
Cash and cash equivalents at end of year.................... $ 198,129 $ 251,832 $ 4,048,358
========= =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest.................... $ 141,069 $ 107,776 $ 1,039,606
========= =========== ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Common stock issued upon conversion of a note payable....... $ -- $ 250,000 $ --
========= =========== ============
Issuance of detachable stock purchase warrants.............. $ -- $ 125,000 $ 301,500
========= =========== ============
Assets purchased under capital leases....................... $ -- $ -- $ 41,000
========= =========== ============
See Note 2 regarding affiliations with practices financed
through the issuance of common stock and notes payable.
</TABLE>

See accompanying supplemental notes.

F-15
<PAGE> 84

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. DESCRIPTION OF BUSINESS

Vision Twenty-One, Inc. and Subsidiaries (Vision Twenty-One or the Company)
is a Florida corporation formed in May 1996 as a holding company. The Company's
principal subsidiaries include Vision 21 Physician Practice Management Company
(MSO) and Vision 21 Managed EyeCare of Tampa Bay, Inc. (MCO). The MSO provides
business management services for eye care professionals and related businesses.
The MCO is a managed care organization which contracts with third-party health
benefits payors to provide eye care services through a network of associated
optometry and ophthalmology practices, retail optical companies and ambulatory
surgical centers. Most of the managed care contracts are for one-year terms
which automatically renew and the contracts are terminable by either party on
sixty days notice. Revenues from one payor constituted approximately 94%, 79%
and 31% of managed care revenues and 75%, 60% and 10% of total revenues for the
years ended December 31, 1995, 1996 and 1997, respectively.

Vision Twenty-One was formed to be a holding company to own the MSO and
MCO. The MSO and MCO were owned in identical proportions by two executive
officers and a member of the Board of Directors of the Company. During 1996, the
Company acquired the MSO and MCO through an exchange of 2,685,318 shares of
Common Stock for all of the outstanding shares of the MSO and MCO. There was no
other consideration paid by the Company. This transaction was accounted for as a
reorganization of companies under common control in a manner similar to that
used in a pooling of interests transaction. As a result, the accompanying
financial statements have been prepared to reflect the accounts of the Company
as if the reorganization had occurred as of the beginning of the earliest period
presented.

In 1997, significant business acquisitions include BBG-COA, Inc., MEC
Health Care, Inc. and LSI Acquisition, Inc., now subsidiaries of the Company
(see Note 4).

EYECARE ONE CORP. AND VISION INSURANCE PLAN OF AMERICA, INC. MERGER

On March 31, 1998, the Company completed a merger with EyeCare One Corp.
(EyeCare One) and Vision Insurance Plan of America, Inc. (VIPA). EyeCare One
Corp. is an optical retailer, selling frames, lenses and contact lenses, with
optometric services by licensed Doctors of Optometry in each of its 16 locations
in the Milwaukee, Wisconsin area. VIPA provides subscriber group member
enrollees with covered vision care services through EyeCare One Corp. and its
provider network under a master provider agreement with began in 1997. The
Company issued 1,109,806 shares of common stock for all of the outstanding
common stock of EyeCare One Corp. and VIPA. The merger was accounted for as a
pooling of interests and accordingly, the Company's financial statements have
been restated as supplemental consolidated financial statements to include the
results of EyeCare One Corp. and VIPA for all periods presented. The
supplemental consolidated financial statements will become the historical
financial statements upon issuance of the Company's financial statements for the
period that includes March 31, 1998.

2. AFFILIATIONS WITH MANAGED PROFESSIONAL ASSOCIATIONS

As part of its business strategy, the Company acquires substantially all of
the assets and assumes certain liabilities of ophthalmology and optometry
practices (Managed Professional Associations). In connection with these
acquisition, the Company enters into business management agreements (Management
Agreements) with the Managed Professional Associations and the Managed
Professional Associations stockholders.

Effective December 1, 1996, the Company acquired substantially all of the
assets and assumed certain liabilities of 10 ophthalmology and optometry
practices located in Minnesota, Arizona and Florida. In conjunction with these
acquisitions, the Company entered into Management Agreements with the Managed
Professional Associations and the Managed Professional Associations'
stockholders (collectively referred to as the 1996 Acquisitions).

F-16
<PAGE> 85
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the 1996 Acquisition, Vision Twenty-One issued 651,842
shares of Common Stock in 1996 and 1,491,397 shares of Common Stock in 1997 and
issued long-term notes payable to stockholders of approximately $1,925,000. The
shares which were issued in 1997 were reported as Common Stock to be issued as
of December 31, 1996. All 2,143,239 shares of Common Stock were valued at $3.96
per share based on an independent valuation.

During 1996, the Company incurred approximately $1,710,000 of acquisition
costs which were capitalized and allocated to the assets acquired and Management
Agreements entered into, including approximately $839,000 which is included in
accrued acquisition and offering costs in the accompanying consolidated balance
sheets at December 31, 1996.

During 1997, the Company acquired substantially all of the assets and
assumed certain liabilities of 11 ophthalmology and optometry practices, a
managed care company, a medical consulting company and an ambulatory surgical
center. In conjunction with these acquisitions, the Company entered into various
Management Agreements with the Managed Professional Associations and the Managed
Professional Associations' stockholders (collectively referred to as the 1997
Acquisitions). In connection with the 1997 Acquisitions, the Company holds in
escrow approximately 196,000 shares of Common Stock valued at approximately
$1,887,000, and $395,000 in cash. Such shares and cash held in escrow, along
with additional contingent consideration of approximately $426,000 in cash and
approximately $244,000 in shares of Common Stock, will be due the owners of
certain of the eye care practices if certain financial goals are met during the
eighteen-month period following the effective date of the transactions
(generally at several dates through February 1999). Such financial goals were
established to resolve certain differences between the Company and the owners of
the eye care practices regarding the purchase price valuations of the respective
practices. The contingent consideration which is ultimately issued by the
Company is such financial goals are met will be treated as an increase in the
purchase price of the assets acquired from the respective practices. Based upon
information to date, management of the Company believes that the ultimate
issuance of any such shares held in escrow will not have a material adverse
effect on the results of operations, financial condition or liquidity of the
Company.

In connection with the 1997 Acquisitions, the Company paid cash of
approximately $4,152,000, issued 1,480,122 shares of Common Stock valued at
approximately $13,151,000 and $2,812,000 due to selling shareholders. The shares
of Common Stock were valued from $8.22 to $13.20 per share.

During 1997, the owners of an ophthalmology practice included within the
1996 Acquisitions met certain financial goals which were established to the
resolve differences between the owners and the Company regarding the purchase
price valuations of the practice. The Company issued to the owners of the
ophthalmology practice 56,356 shares valued at approximately $223,000, which
were previously held in escrow as contingent consideration for this 1996
Acquisition. The Company accounted for the additional consideration issued as an
increase in the purchase price of the assets acquired from this practice.

During 1997, the Company incurred approximately $4,911,000 of acquisition
costs which were capitalized and allocated to the assets acquired and Management
Agreements entered into, including approximately $462,000 which is included in
accrued acquisition and offering costs in the accompanying consolidated balance
sheets at December 31, 1997.

The 1996 and 1997 Acquisitions were accounted for by recording the assets
and liabilities at fair value and allocating the remaining cost to the related
Management Agreements. The Management Agreements are being amortized on a
straight-line method over 25 years. Under the Management Agreements, the Company
provides management, marketing and administrative services to the Managed
Professional Associations in return for a management fee. The Management
Agreements have 40-year terms and are cancelable only for breach of its
provisions or insolvency. The Managed Professional Associations employ
ophthalmologists and optometrists and provide all eye care services to patients.

F-17
<PAGE> 86
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As part of the purchase price allocation, no consideration has been
allocated to employment and noncompete agreements between the Company and the
Managed Professional Associations' stockholders because the Company believes
these agreements have no material value.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The Supplemental Consolidated Financial Statements include the accounts of
the Company and its subsidiaries. All significant intercompany transactions have
been eliminated. The Company does not own any interests in or control the
activities of the Managed Professional Associations. Accordingly, the financial
statements of the Managed Professional Associations are not consolidated with
those of the Company.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information (SFAS 131), which supersedes Statement of
Financial Accounting Standards No. 14. SFAS 131 uses a management approach to
report financial and descriptive information about a Company's operating
segments. Operating segments are revenue-producing components of the enterprise
for which separate financial information is produced internally for the
Company's management. SFAS 131 is effective for fiscal years beginning after
December 15, 1997. Management is currently assessing the impact of this
Standard.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130). SFAS 130 requires that total comprehensive income and comprehensive income
per share be disclosed and be given equal prominence with net income and
earnings per share. Comprehensive income is defined as changes in stockholders'
equity exclusive of transactions with owners such as capital contributions and
dividends. SFAS 130 is effective for fiscal years beginning after December 15,
1997. Management is currently assessing the impact of this Standard.

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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

REVENUE RECOGNITION

Managed Care

Managed care revenues are derived from monthly capitation payments from
health benefits payors which contract with the Company for the delivery of eye
care services. The Company records this revenue at contractually agreed-upon
rates.

Practice Management Fees

Prior to December 1, 1996, practice management fee revenue was earned
through contractual arrangements between the Company and several optometry
practices under common control. This revenue totaled $423,890 and $479,004 for
the years ended December 31, 1995 and 1996, respectively.

F-18
<PAGE> 87
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company generally receives a percentage (ranging from 24% to 37%) of the Managed
Professional Associations' net earnings before interest, taxes, and
shareholder-physician expenses, as determined under the related Management
Agreements. For the years ended December 31, 1996 and 1997, this revenue was as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- -----------
<S> <C> <C>
Medical service revenues of Managed Professional
Associations.............................................. $1,667,025 $36,949,565
Less amounts retained by physician shareholders of Managed
Professional Associations................................. (203,186) (5,997,643)
---------- -----------
Management fees under Management Agreements with Managed
Professional Associations................................. $1,463,839 $30,951,922
========== ===========
</TABLE>

Included in net management fees are amounts representing reimbursement of
expenses for practice management expenses and a portion of depreciation and
amortization. These amounts were $1,275,296 and $25,786,309 for the years ended
December 31, 1996 and 1997, respectively.

Buying Group

The buying group business provides billing and collection services to
suppliers of optical products, whereby providers receive merchandise from
suppliers for direct shipment to the providers. The Company pays the supplier
and likewise bills the providers for such products. The Company receives a
commission of approximately 5% of the total receivables collected. This
commission revenue is included in buying group revenue in the accompanying
consolidated statements of operations and is recognized upon shipment of
merchandise by the suppliers.

Sale of Optical Goods

Revenues from the sale of optical goods are recognized on the accrual basis
in the period that the related sales occur.

Other Revenues

Other revenues consist of fees earned through consulting and other
contractual arrangements.

MEDICAL CLAIMS PAYABLE

In accordance with the capitation contracts entered into with certain
managed health benefits payors, the Company is responsible for payment of
providers' claims. Medical claims payable represent provider claims reported to
the Company and an estimate of provider claims incurred but not reported (IBNR).

The Company and its actuary estimate the amount of IBNR using standard
actuarial methodologies based upon the average interval between the date
services are rendered and the date claims are reported and other factors
considered relevant by the Company.

Prior to December 1, 1996, certain medical claims were paid to several
optometry practices under common control. Expense related to these transactions
totaled approximately $299,000, and $249,000 for the years ended December 31,
1995 and 1996, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents approximates its fair
value.

F-19
<PAGE> 88
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The fair value of long-term debt approximates its carrying amount based on
current rates offered to the Company for debt of similar maturities.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

INVENTORIES

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

FIXED ASSETS

Fixed assets are stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the various classes of
assets, which range from three to ten years. Leasehold improvements are
amortized using the straight-line method over the shorter of the term of lease
or the estimated useful life of the improvements. Routine maintenance and
repairs are charged to expense as incurred, while betterments and renewals are
capitalized.

DEFERRED OFFERING COSTS

Deferred offering costs consist primarily of costs deferred in connection
with the Company's initial public offering. These costs were charged against the
offering proceeds when the initial public offering was completed in August 1997.

TRANSACTIONS AND BUSINESS DEVELOPMENT COSTS

Direct external legal, accounting and other costs associated with
successful acquisitions are capitalized as part of the related purchase price
allocation. External costs associated with unsuccessful acquisitions, including
start-up consulting services (Note 10), are expensed and are shown as business
development expense in the accompanying consolidated statements of operations.
All internal costs associated with acquisitions are expensed as incurred.

INTANGIBLE ASSETS

Intangible assets consist of the excess of the purchase price over the fair
values of the net assets acquired from the business acquisitions, which is being
amortized on a straight-line method over 25 years, and the Management Agreements
with the Managed Professional Associations. The Management Agreements have
40-year terms and are being amortized on a straight-line method over 25 years.
In evaluating the useful life of a Management Agreement, the Company considers
the operating history and other characteristics of each practice. The primary
consideration is the degree to which a practice has demonstrated its ability to
extend its existence indefinitely. In making this determination, the Company
considers (i) the number of physicians recruited into the practice, (ii) the
number of staff members including physicians, (iii) the number of locations, and
(iv) the complexity of the procedures being performed, including disease
treatment and control.

Amortization expense with respect to intangible assets was approximately
$29,000 and $1,098,000 for the year ended December 31, 1996 and 1997,
respectively.

F-20
<PAGE> 89
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

suggest that the intangible assets may be impaired or that the amortization
period needs to be modified. Among the factors the Company considers in making
the evaluation are changes in the acquired companies' or Managed Professional
Associations' market position, reputation, profitability and geographical
penetration. If indicators are present which may indicate impairments, the
Company will prepare a projection of the undiscounted cash flows of the specific
practice and determine if the intangible assets are recoverable based on these
undiscounted cash flows. If impairment is indicated, then an adjustment will be
made to reduce the carrying amount of the intangible assets to fair value.

CONCENTRATIONS OF CREDIT RISK

The Company has accounts receivable from patients of the Managed
Professional Associations. The Company does not believe that there are any
credit risks associated with receivables due from governmental agencies. Any
concentration of credit risk from other payors of the Managed Professional
Associations is limited by the number of patients and payors. The Company and
the Managed Professional Associations do not require any form of collateral from
their patients or third-party payors. The Company does not believe that there
are any substantial credit risks associated with receivables due from buying
group members or from any of the Managed Professional Associations.

The Company places cash and cash equivalents with high-quality financial
institutions. At times, the Company maintains cash balances in excess of amounts
insured by the Federal Deposit Insurance Corporation (FDIC).

NET EARNINGS (LOSS) PER COMMON SHARE

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

CONTINGENT CONSIDERATION

As part of its business strategy, the Company enters into various
transactions to acquire substantially all of the assets of various eye care
practices and enters into business management agreements with the eye care
practices. The Company also enters into strategic business acquisitions with
other companies from time to time. In connection with certain of the
acquisitions, the Company will hold shares of its common stock in escrow as
contingent consideration. Such shares of common stock held in escrow are due to
the owners of the certain eye care practices or other companies if certain
financial goals are met in the future, generally within twelve to eighteen
months of the effective date of the acquisition. The financial goals are
established on an acquisition by acquisition basis and are generally established
to resolve differences between the Company and the applicable eye care practices
or other companies regarding the purchase price valuation.

Depending on the relevant facts and circumstances of each acquisition and
the business reason for issuing contingent consideration, the Company accounts
for the issuance of common stock held in escrow as either additional purchase
consideration or compensation to the owners of the applicable eye care practices
or other companies utilizing the provisions of Emerging Issues Task Force Issue
No. 95-8 (EITF 95-8). Under EITF 95-8, the factors to be considered in making
the aforementioned accounting determination include, but are not limited to,
terms of continuing employment, components of the shareholder group, reasons for
contingent payment provisions, formulas for determining contingent consideration
and other agreements and issues.

F-21
<PAGE> 90
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

COMMON STOCK TO BE ISSUED

Common stock to be issued represents stock to be issued in connection with
certain of the 1996 Acquisitions consummated on December 1, 1996. The stock was
issued in January 1997.

STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation arrangements under the
provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25). In 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation (SFAS 123), which is effective for fiscal years
beginning after December 15, 1995. Under SFAS 123, the Company may elect to
recognize stock-based compensation expense based on the fair value of the awards
or continue to account for stock-based compensation under APB 25, and disclose
in the financial statements the effects of SFAS 123 as if the recognition
provisions were adopted.

The Company accounts for any stock-based compensation arrangements not
specifically addressed by APB 25 under the fair value provisions of SFAS 123,
including options granted to nonemployees and professionals employed by the
Managed Professional Associations. The amounts for 1995 and 1996 are immaterial.
The pro forma disclosures required by SFAS 123 are provided for all stock-based
compensation which are accounted for under APB 25.

INCOME TAXES

Vision Twenty-One has applied the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109), which
requires an asset and liability approach for financial accounting and reporting.
Deferred income tax assets and liabilities are determined based upon differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and lives that will be in effect when the
differences are expected to reverse.

EyeCare One Corp. and Vision Insurance Plan of America, Inc. have elected
to have their income taxed as an S corporation for income tax purposes. As a
result, in lieu of corporate income tax, EyeCare One and VIPA's taxable income
is passed through to the stockholders of EyeCare One and VIPA at the individual
level.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified in order to conform with
the 1997 presentation.

4. BUSINESS COMBINATIONS

BBG-COA, INC. ACQUISITION

F-22
<PAGE> 91
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

operating results of Block Vision are included in the Company's Supplemental
Consolidated Financial Statements since November 1, 1997. In connection with the
Block Vision acquisition, the Company holds in escrow approximately 220,000
shares of Common Stock. Such shares held in escrow will be due the owners of
Block Vision if certain financial goals are met during the twelve-month period
ending December 31, 1998. Such financial goals were established to resolve
certain differences between the Company and the owners of Block Vision regarding
the purchase price valuations of Block Vision. Any shares of Common Stock held
in escrow which are ultimately issued by the Company if such financial goals are
met will be valued at $13.20 per share and will be treated as an increase in the
purchase price of the net assets acquired from Block Vision. Based upon
information to date, management of the Company believes that the ultimate
issuance of any such shares held in escrow will not have a material adverse
effect on the results of operations, financial condition or liquidity of the
Company.

ACQUISITION FROM LASERSIGHT, INCORPORATED

During December 1997, the Company acquired all of the outstanding stock of
MEC Health Care, Inc. (MEC) and LSI Acquisition, Inc. (LSIA) from LaserSight,
Incorporated. MEC provides vision benefit management services to health
maintenance organizations, preferred provider organizations and other managed
care entities. LSIA provides practice management services to an ophthalmology
practice in New Jersey. The purchase price for MEC and LSIA included 812,500
shares of the Company's common stock valued at $6,500,000 and cash of
$6,500,000. The acquisition was accounted for by the purchase method of
accounting, with the purchase price allocated to the fair value of the assets
acquired and liabilities assumed, subject to the final determination of certain
items in connection with the acquisition. The excess of the purchase price over
the fair values of the net assets amounted to approximately $13 million and is
being amortized on a straight-line method over 25 years. The operating results
of MEC and LSIA are included in the Company's Supplemental Consolidated
Financial Statements since December 1, 1997.

The following unaudited pro forma results of operations for the years ended
December 31 assume the acquisitions described above and the affiliations with
Managed Professional Associations described in Note 2 had occurred at the
beginning of the year prior to their acquisition, and do not purport to be
indicative of the results that actually would have occurred if the acquisitions
and affiliations had been made as of those dates or of results which may occur
in the future.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1996 1997
----------- ------------ ------------
<S> <C> <C> <C>
Pro forma information (unaudited):
Total revenues...................................... $30,767,000 $142,760,000 $151,956,000
=========== ============ ============
Income (loss) before extraordinary charge........... $ 1,247,000 $ (2,443,000) $ 976,000
=========== ============ ============
Net income (loss)................................... $ 1,247,000 $ (2,443,000) $ 652,000
=========== ============ ============
Net income (loss) per common share.................. $ 0.22 $ (0.32) $ 0.05
=========== ============ ============
Net income (loss) per common share -- assuming
dilution......................................... $ 0.22 $ (0.32) $ 0.05
=========== ============ ============
</TABLE>

5. NOTES RECEIVABLE

At December 31, 1996 and 1997, the Company had promissory notes with an
officer/shareholder with balances of $164,075 and $175,484, respectively. The
notes mature from December 31, 2001 through April 30, 2002, with interest
payable annually at a rate of 7.5%.

F-23
<PAGE> 92
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

shareholders. The balance outstanding at December 31, 1996 of $163,489 related
to outstanding interest which was collected in 1997.

6. FIXED ASSETS

Fixed assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
DESCRIPTION 1996 1997
- ----------- ----------- -----------
<S> <C> <C>
Office furniture and equipment.............................. $ 4,493,473 $ 8,351,180
Leased equipment............................................ 119,825 1,179,376
Leasehold improvements...................................... 2,160,910 3,047,287
----------- -----------
6,774,208 12,577,843
Less accumulated depreciation and amortization.............. (3,036,244) (3,950,879)
----------- -----------
$ 3,737,964 $ 8,626,964
=========== ===========
</TABLE>

Depreciation and amortization of fixed assets totaled approximately
$390,000, $463,000 and $1,114,000 in 1995, 1996 and 1997, respectively.
Amortization expense related to capital leases is included in depreciation and
amortization in the consolidated statements of operations.

7. DEFERRED LEASEHOLD INCENTIVES

During 1997, EyeCare One Corp. was requested by a lessor to move its
location within a particular mall. The lessor made a payment of $220,000 to
EyeCare One Corp. as an incentive. EyeCare One Corp. offset the remaining
unamortized balance ($85,222) of leasehold improvements at the abandoned
location against the amount received and will amortize the excess ($134,778)
against rent expense over the remaining term of the lease. The amortization in
1997 was $6,739.

During 1996, EyeCare One Corp. was requested by a different lessor to move
its location within a particular mall. The lessor made a payment of $175,000 to
EyeCare One Corp. as an incentive. EyeCare One Corp. offset the remaining
unamortized balance ($79,317) of leasehold improvements at the abandoned
location against the amount received and will amortize the excess ($95,683)
against rent expense over the remaining term of the lease. The amortization in
1996 and 1997 was $4,784 and $9,568, respectively.

8. LONG-TERM DEBT

Long-term debt consists of the following:

F-24
<PAGE> 93
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- -----------
<S> <C> <C>
Unsecured note payable to a stockholder with interest at 8%
per annum. Interest and principal due upon completion of
an initial public offering The note was repaid in 1997.... 3,000,000 --
Unsecured notes payable to stockholders, interest at 8%.
Principal and interest due the earlier of 15 business days
after closing of an initial public offering or March 1,
1998. The notes were repaid in 1997....................... 1,924,959 --
10% senior subordinated note, interest due semiannually at
an effective rate of 13.5%. The note is unsecured and
matures on the earlier of a first liquidity event (initial
public offering) or December 19, 1999. The note was repaid
in 1997................................................... 1,125,000 --
Note payable under a $37 million credit facility, due on the
earlier of May 4, 1998 or upon completion of an offering,
bearing interest at a rate equal to the three-month London
Interbank Offered Rate plus 4.0% (9.8% at December 31,
1997). The note is collateralized by substantially all
assets of the Company. The note was refinanced with a bank
in 1998 (Note 15)......................................... -- $24,422,807
Note payable, due April 1, 2000, with interest due monthly
at prime less .25% (8.25% at December 31, 1996 and 1997).
The note is collateralized by certain assets of the
Company and is guaranteed to the extent of $500,000 by
certain of the Company's shareholders..................... 1,352,000 1,400,182
Notes payable due in monthly installments through 2001, with
interest rates ranging from 8% to 10% per annum. The notes
are collateralized by certain equipment................... 323,878 261,635
---------- -----------
8,971,223 26,084,624
Less current portion........................................ (48,249) (104,371)
---------- -----------
$8,922,974 $25,980,253
========== ===========
</TABLE>

As of December 31, 1997, the aggregate principal maturities of long-term
debt, giving effect to the refinancing on January 30, 1998 (Note 15), are as
follows:

<TABLE>
<S> <C>
1998........................................................ $ 104,371
1999........................................................ 84,771
2000........................................................ 3,888,129
2001........................................................ 2,469,108
2002........................................................ 2,442,281
Thereafter.................................................. 17,095,964
-----------
$26,084,624
===========
</TABLE>

F-25
<PAGE> 94
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. CAPITAL LEASE OBLIGATIONS

The Company leases equipment under noncancelable capital leases (with an
initial or remaining term in excess of one year). Future minimum lease
commitments are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31:
- ------------------------
<S> <C>
1998...................................................... $ 570,855
1999...................................................... 525,871
2000...................................................... 270,694
2001...................................................... 6,830
2002...................................................... --
----------
Total minimum lease payments................................ 1,374,250
Less amount representing interest........................... 175,316
----------
Present value of minimum lease payments (including current
portion of $566,084)...................................... $1,198,934
==========
</TABLE>

10. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

The Company leases its headquarters, store locations and certain office
equipment under noncancelable operating lease arrangements which expire at
various dates, most with options for renewal. Certain locations are leased from
stockholders of the Managed Professional Associations. As of December 31, 1997,
future minimum lease payments under noncancelable operating leases with original
terms of more than one year are as follows:

<TABLE>
<S> <C>
1998........................................................ $ 3,055,000
1999........................................................ 2,885,000
2000........................................................ 2,435,000
2001........................................................ 2,210,000
2002........................................................ 2,074,000
Thereafter.................................................. 10,092,000
-----------
Total............................................. $22,751,000
===========
</TABLE>

Rent expense in 1995, 1996 and 1997 was approximately $984,000, $1,185,000
and $3,343,000, respectively. Rent expense related to locations leased from
stockholders of the Managed Professional Associations was approximately $53,000
and $1,284,000 during 1996 and 1997, respectively. Rent expense paid to an
officer/shareholder by EyeCare One was approximately $291,000, $331,000 and
$276,000 in 1995, 1996 and 1997, respectively.

MALPRACTICE

The Company and the Managed Professional Associations are insured with
respect to medical malpractice risks primarily on a claims-made basis.
Management is not aware of any reported claims pending against the Company or a
Managed Professional Association.

Losses resulting from unreported claims cannot be estimated by management
and, therefore, are not included in the accompanying Supplemental Consolidated
Financial Statements.

F-26
<PAGE> 95
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OTHER

Laws and regulations governing the Medicare, Medicaid and other programs
are complex and subject to interpretation. In the opinion of management, the
Company and its Managed Professional Associations are in compliance with all
applicable laws and regulations. The Company is not aware of any pending or
threatened investigations involving allegations of potential wrongdoing at the
Company or any of its Managed Professional Associations. While no such
regulatory inquiries have been made, compliance with such laws and regulations
can be subject to future government review and interpretation as well as
significant regulatory action including fines, penalties, and exclusion from the
Medicare, Medicaid and other programs.

11. STOCKHOLDERS' EQUITY -- STATUTORY REQUIREMENTS

Dividends paid by VIPA are restricted by regulations of the Officer of the
Commissioner of Insurance (OCI). The payment of cash dividends is limited to
available stockholders' equity derived from realized net profits. Based upon the
regulatory formula, no amount is available for dividends in 1997 without
regulatory approval.

VIPA is subject to regulation by the OCI, which requires, among other
matters, the maintenance of a minimum shareholders' equity. At December 31,
1997, $128,747 of available letters of credit were outstanding to satisfy VIPA's
minimum shareholders' equity requirements.

12. INCOME TAXES

Vision Twenty-One did not have a current or deferred tax provision or
benefit for the years ended December 31, 1995, 1996 and 1997 due to its net
losses.

At December 31, 1996 and 1997, Vision Twenty-One had temporary differences
between amounts of assets and liabilities for financial reporting purposes and
such amounts measured by income tax/reporting purposes. The Company also has net
operating loss (NOL) carryforwards available to offset future taxable income.
Significant components of Vision Twenty-One's deferred tax assets and
liabilities as of December 31 are as follows:

<TABLE>
<CAPTION>
DEFERRED TAX
ASSET (LIABILITY)
------------------------
DECEMBER 31,
------------------------
TEMPORARY DIFFERENCES/CARRYFORWARDS 1996 1997
- ----------------------------------- ---------- -----------
<S> <C> <C>
Net operating losses........................................ $1,736,000 $ 1,586,000
Accrual to cash conversions................................. 470,000 --
Book: tax differences in leases............................. -- 228,000
Other....................................................... 220,000 149,000
Valuation allowance......................................... (958,000) (81,000)
---------- -----------
Total deferred tax assets......................... 1,468,000 1,882,000
---------- -----------
Identifiable intangible assets not deductible for tax
purposes.................................................. (1,190,000) (5,705,000)
Accrual to cash conversions................................. -- (37,000)
Difference in book: tax amortization........................ -- (98,000)
Other deferred tax liabilities.............................. (278,000) (271,000)
---------- -----------
Total deferred tax liabilities.................... 1,468,000 6,111,000
---------- -----------
Net deferred taxes.......................................... $ -- $(4,229,000)
========== ===========
</TABLE>

F-27
<PAGE> 96
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

realized. After consideration of all the evidence, both positive and negative,
management has determined that a $81,000 valuation allowance at December 31,
1997 is necessary to reduce the deferred tax asset to the amount that will more
likely than not be realized. The decrease in the valuation allowance for 1997 is
$877,000.

Income taxes are different from the amount computed by applying the United
States statutory rate to income (loss) before income taxes for the following
reasons:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
--------- ----------- ---------
<S> <C> <C> <C>
Income tax expense (benefit) at the statutory
rate............................................. $(277,377) $(1,920,037) $ 27,166
Permanent differences.............................. 78,078 7,888 101,139
Effect of purchase price allocation................ -- -- 877,000
S-Corporation (income) loss........................ 108,575 763,564 (198,243)
State taxes, net of federal benefit................ (9,686) (122,628) (7,467)
Other.............................................. 77,405
Change in valuation allowance...................... 100,410 1,271,213 (877,000)
--------- ----------- ---------
Income taxes....................................... $ -- $ -- $ --
========= =========== =========
</TABLE>

Vision Twenty-One has net operating loss carryforwards of approximately
$4,215,000 at December 31, 1997 that expire in various amounts from 2009 to
2012. These net operating loss carryforwards will be subject to the "ownership
change" rules of Section 382 of the Internal Revenue Code of 1986 and, as a
result, the future use of these losses may be limited.

No supplemental pro forma provision for income tax expense has been
included in the accompanying supplemental consolidated financial statements
because the amount would not have a material effect on the Company's financial
position at December 31, 1997 or its results of operations for the year ended
December 31, 1997.

13. STOCKHOLDERS' EQUITY

PUBLIC OFFERINGS

During 1997, the Company completed its initial public offering and a second
offering (collectively referred to as the Offerings) of 2,100,000 and 2,300,000
shares of Common Stock, respectively. The Offerings resulted in gross proceeds
of $42,850,000 and net proceeds to the Company, net of underwriters' discounts
and other offering expenses, of approximately $37,623,000. The net proceeds of
the offerings were used to repay outstanding indebtedness, finance the Block
Vision acquisition and for other general corporate uses. In connection with the
early extinguishment of certain indebtedness repaid from the net proceeds of the
initial public offering, the Company incurred an extraordinary charge of
$323,346 during the year ended December 31, 1997.

STOCK OPTION PLANS

In July 1996, the Board of Directors adopted, and the stockholders of the
Company approved, two stock option plans: the Stock Incentive Plan (the
Incentive Plan) and the Affiliated Professionals Stock Plan (the Professionals
Plan and together with the Incentive Plan, the Plans). The purpose of the Plans
is to provide directors, officers, key employees, advisors and professionals
employed by the Managed Professional Associations with additional incentives
increasing their proprietary interest in the Company or tying a portion of their
compensation to increases in the price of the Company's common stock. The
aggregate number of shares of common stock reserved for issuance related to the
Incentive Plan and the Professionals Plan is 1,000,000 shares and 600,000
shares, respectively. Compensation expense under SFAS No. 123 for the options
issued to

F-28
<PAGE> 97
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

nonemployees was immaterial for the year ended December 31, 1996 and
approximately $125,000 for the year ended December 31, 1997. The options vest
over three to four-year periods.

Pro forma information regarding net income is required by SFAS 123, and has
been determined as if the Company had accounted for its employee stock options
under the fair value method of that Statement. The fair value for these options
was estimated at the date of grant using the Black-Scholes option pricing model
with the following weighted-average assumptions for 1996 and 1997, respectively:
risk-free interest rates of 6.00% and 6.06%; a dividend yield of zero;
volatility factors of the expected market price of the Company's common stock
based on industry trends of .645 and .605; and a weighted-average expected life
of the options of 3 years. In addition, for pro forma purposes, the estimated
fair value of the options is amortized to expense over the options' vesting
period. Based on these assumptions, the pro forma net loss and basic and diluted
net loss per common share for the year ended December 31, 1996 and 1997 would be
approximately $(5,762,000) and $(1.45) and $(387,000) and $(0.05), respectively.

A summary of the Company's stock option activity and related information is
as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1996 1997
------------------ ------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE
------- -------- ------- --------
<S> <C> <C> <C> <C>
Outstanding -- beginning of the year.............. -- -- 562,000 $ 4.48
Granted......................................... 562,000 $4.48 381,465 $10.33
Exercised....................................... (888) $ 3.11
Forfeited....................................... (1,778) $ 3.11
------- ----- ------- ------
Outstanding -- end of year........................ 562,000 $4.48 940,779 $ 6.90
======= ===== ======= ======
Exercisable at end of year........................ -- -- 107,999 $ 3.21
======= ===== ======= ======
Weighted-average fair value of options granted
during the year................................. $ 1.91 $ 4.90
======= =======
</TABLE>

Exercise prices for options outstanding as of December 31, 1997 ranged from
$3.11 to $13.20. The weighted-average remaining contractual life of those
options is approximately 9 years.

STOCK COMPENSATION

In May 1996, the Company granted 144,705 shares of common stock to a
consultant as compensation for prior service (the Grant). In October 1996, the
Company entered into advisory and services agreements (the Agreements) with the
consultant and its chief medical officer whereby they would be entitled to
233,760 shares of common stock as compensation over the term of the Agreements.
The Company recorded issuance of the common stock at its fair value on the dates
of the Agreements and Grant. The expense is recognized in 1996 for the Grant and
over the related terms for the Agreements. For the year ended December 31, 1996,
the Company recognized expense of approximately $401,000 and $132,000, related
to the Grant and Agreements, respectively. For the year ended December 31, 1997,
the Company amortized approximately $108,000 of deferred compensation under the
Agreements. Such amount was capitalized and included in acquisition costs.

WARRANTS

From time to time, the Company has issued detachable stock purchase
warrants ("warrants"). Each warrant enables the holder to purchase one share of
the Company's Common Stock. The warrants generally are issued in connection with
debt financings or as advisory fees. Certain of the warrants are sold and others
are issued for no consideration. Warrants issued for no consideration are
recorded at their fair value at the time of issuance. Fair value is determined
by the Company in consultation with its investment bankers based on

F-29
<PAGE> 98
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

certain facts and circumstances at the time of issuance. A summary of warrants
outstanding at December 31, 1997 is as follows:

<TABLE>
<CAPTION>
EXERCISE
NUMBER OF PRICE
WARRANTS GRANT DATE EXPIRATION DATE PER SHARE
- --------- ---------------------- ---------------------- -------------
<C> <S> <C> <C>
200,000 December 1996 December 2003 $6.00
333,333 February 1997 December 2003 $6.00
210,000 August 1997 August 2002 $10.00
35,000 October 1997 October 2002 $13.25-$13.63
50,000 November 1997 November 2002 $11.50
100,722 November-December 1997 November-December 2002 $8.25-$12.38
</TABLE>

OTHER

On June 6, 1997, the Company's Board of Directors approved a l-for-1.5
reverse stock split pursuant to the Company's initial public offering of common
stock. All share and per share amounts in the accompanying Supplemental
Consolidated Financial Statements have been restated to retroactively reflect
the reverse split.

14. EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted loss
per share for income (loss) from continuing operations:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1996 1997
---------- ----------- ----------
<S> <C> <C> <C>
Numerator:
Numerator for basic and diluted earnings (loss)
per share-income (loss) available to common
stockholders.................................... $ (815,817) $(5,647,170) $ 406,222
Denominator:
Denominator for basic earnings (loss) per share-
weighted average shares......................... 3,434,682 3,977,537 7,975,671
---------- ----------- ----------
Effect of dilutive securities:
Stock options................................... -- -- 215,164
Warrants........................................ -- -- 246,551
Nonvested stock................................. -- -- 134,349
---------- ----------- ----------
Dilutive potential common shares.................. -- -- 596,064
---------- ----------- ----------
Denominator for diluted earnings (loss) per share-
adjusted weighted-average shares and assumed
conversions..................................... 3,434,682 3,977,537 8,571,735
========== =========== ==========
Basic earnings (loss) per common share............ $ (0.24) $ (1.42) $ 0.05
========== =========== ==========
Diluted earnings (loss) per common share.......... $ (0.24) $ (1.42) $ 0.05
========== =========== ==========
</TABLE>

Options and warrants to purchase approximately 186,000 shares of common
stock were outstanding at December 31, 1997, but were not included in the
computation of diluted loss per share because the exercise prices were greater
than the average market price of the common shares and, therefore, the effect
would be antidilutive. The Company has issued contingent stock consideration
which would entitle the stockholders of Block Vision and certain Managed
Professional Associations to receive approximately 416,000 of additional

F-30
<PAGE> 99
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

shares of Common Stock. The additional shares were not included in the
computation of basic and diluted earnings per share for 1997 since certain
financial goals were not attained as of December 31, 1997.

15. SUBSEQUENT EVENTS

On January 30, 1998, the Company entered into a $50 million credit facility
with a bank. The interest rate on the credit facility is, at the option of the
Company, either (i) the London Interbank Offered Rate plus an applicable margin
rate, (ii) the greater of (a) the Agent's prime commercial rate or (b) the
"federal funds" rate plus 0.5%, or (iii) a fixed rate loan as determined by the
Agent at each time of borrowing. The loan will be due on January 30, 2003.
Principal repayments will commence March 31, 2000. The loan will be
collateralized by substantially all assets of the Company. The credit facility
contains negative and affirmative covenants and agreements which place
restrictions on the Company regarding disposition of assets, capital
expenditures, additional indebtedness, permitted liens and payment of dividends,
as well as requiring the maintenance of certain financial ratios.

On March 10, 1998, the Company repurchased approximately 168,000 shares of
its Common Stock from LaserSight, Incorporated for approximately $1,548,000.

16. OTHER TRANSACTIONS (UNAUDITED)

Through April 27, 1998, the Company acquired six eye care practices, one
managed care company and one optical company and has also entered into binding
letters of intent to acquire two eye care practices. The fair value of the net
assets and business management agreements associated with these entities is
expected to approximate $19.7 million (subject to certain adjustments), and will
be paid through the issuance of approximately 808,000 shares of the Company's
common stock and approximately $11.5 million in cash from the Company's $50
million credit facility.

F-31
<PAGE> 100

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Vision Twenty-One, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Vision
Twenty-One, Inc. and Subsidiaries as of December 31, 1996 and 1997, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1997. These
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Vision Twenty-One, Inc. and Subsidiaries as of December 31, 1996 and 1997, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Tampa, Florida
March 11, 1998

F-32
<PAGE> 101

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 67,353 $ 3,871,864
Accounts receivable due from:
Buying group members, net of allowances for doubtful
accounts of $33,000 at December 31, 1997.............. -- 5,427,592
Patients, net of allowances for uncollectible accounts
and contractual adjustments of $685,000 and $3,438,000
at December 31, 1996 and 1997, respectively........... 1,544,316 5,387,381
Managed Professional Associations...................... 424,271 4,950,067
Managed health benefits payors......................... -- 1,276,790
Other.................................................. 185,263 146,436
Prepaid expenses and other current assets................. 192,789 1,819,475
----------- ------------
Total current assets.............................. 2,413,992 22,879,605
Fixed assets, net........................................... 1,941,359 6,503,719
Intangible assets, net of accumulated amortization of
$29,125 and $1,127,334 at December 31, 1996 and 1997,
respectively.............................................. 11,022,396 84,143,508
Deferred offering costs..................................... 287,792 --
Deferred tax asset.......................................... 1,468,000 1,882,000
Other assets................................................ 46,792 1,149,559
----------- ------------
Total assets...................................... $17,180,231 $116,558,391
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 529,427 $ 5,015,668
Accrued expenses.......................................... 946,519 1,917,028
Medical claims payable.................................... 1,793,861 3,545,195
Accrued compensation...................................... 546,740 1,381,497
Accrued acquisition and offering costs.................... 1,362,012 1,045,905
Due to Managed Professional Associations.................. -- 1,938,309
Due to selling shareholders............................... -- 2,811,809
Current portion of long-term debt......................... 48,249 104,371
Current portion of obligations under capital leases....... 43,849 566,084
----------- ------------
Total current liabilities......................... 5,270,657 18,325,866
Deferred rent payable....................................... 263,006 261,117
Obligations under capital leases............................ 71,870 632,850
Long-term debt, less current portion ($5,983,098 to related
parties in 1996).......................................... 7,570,974 24,580,071
Deferred income taxes....................................... 1,468,000 6,111,000
Stockholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares
authorized; no shares issued........................... -- --
Common stock, $.001 par value; 50,000,000 shares
authorized; 3,715,625 (1996) and 12,420,086 (1997)
shares issued and outstanding.......................... 3,716 12,421
Additional paid-in capital................................ 4,736,361 75,158,995
Common stock to be issued (1,491,397 shares in 1996)...... 5,905,965 --
Deferred compensation..................................... (517,035) (408,735)
Accumulated deficit....................................... (7,593,283) (8,115,194)
----------- ------------
Total stockholders' equity........................ 2,535,724 66,647,487
----------- ------------
Total liabilities and stockholders' equity........ $17,180,231 $116,558,391
=========== ============
</TABLE>

See accompanying notes.

F-33
<PAGE> 102

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Practice management fees ($423,890, and $479,004 from
a related party in 1995 and 1996, respectively).... $ 423,890 $ 1,942,843 $30,951,922
Managed care.......................................... 2,446,010 7,315,196 17,446,107
Buying group.......................................... -- -- 7,260,797
Other revenue......................................... 211,746 305,654 607,953
----------- ----------- -----------
3,081,646 9,563,693 56,266,779
Operating expenses:
Practice management expenses.......................... -- 1,244,173 25,294,565
Medical claims........................................ 2,934,180 9,128,659 13,831,360
Buying group.......................................... -- -- 6,882,199
Salaries, wages and benefits.......................... 903,966 1,889,395 5,025,105
Business development.................................. -- 1,926,895 --
General and administrative............................ 443,374 1,208,678 2,515,257
Depreciation and amortization......................... 18,005 126,046 1,803,991
----------- ----------- -----------
4,299,525 15,523,846 55,352,477
----------- ----------- -----------
Income (loss) from operations........................... (1,217,879) (5,960,153) 914,302
Amortization of loan fees............................... -- -- 178,677
Interest expense........................................ 8,557 159,484 934,190
----------- ----------- -----------
Loss before income taxes................................ (1,226,436) (6,119,637) (198,565)
Income taxes............................................ -- -- --
----------- ----------- -----------
Loss before extraordinary charge........................ (1,226,436) (6,119,637) (198,565)
Extraordinary charge -- early extinguishment of debt.... -- -- 323,346
----------- ----------- -----------
Net loss................................................ $(1,226,436) $(6,119,637) $ (521,911)
=========== =========== ===========
Basic and diluted loss per common share:
Loss before extraordinary charge...................... $ (0.53) $ (2.13) $ (0.03)
Extraordinary charge.................................. -- -- (0.05)
=========== =========== ===========
Net loss per common share............................... $ (0.53) $ (2.13) $ (0.08)
=========== =========== ===========
</TABLE>

See accompanying notes.

F-34
<PAGE> 103

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON
COMMON STOCK ADDITIONAL STOCK TOTAL
-------------------- PAID-IN TO BE DEFERRED ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL ISSUED COMPENSATION DEFICIT EQUITY
---------- ------- ----------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995...... 2,324,876 $ 2,325 $ 32,271 $ -- $ -- $(1,473,646) $(1,439,050)
Sale of common stock............ 360,442 360 999,640 -- -- -- 1,000,000
Issuance of shares of common
stock for 1996 Acquisitions
consummated effective December
1, 1996....................... 651,842 652 2,580,645 -- -- -- 2,581,297
1,491,397 shares of common stock
to be issued in 1997 for 1996
Acquisitions consummated
effective December 1, 1996.... -- -- -- 5,905,965 -- -- 5,905,965
Issuance of detachable stock
purchase warrants............. -- -- 125,000 -- -- -- 125,000
Issuance of shares of common
stock for prior service....... 144,705 145 401,410 -- -- -- 401,555
Issuance of shares of common
stock for advisory
agreement..................... 125,627 126 348,488 -- (348,614) -- --
Issuance of shares of common
stock for services
agreement..................... 108,133 108 299,960 -- (180,041) -- 120,027
Amortization of deferred
compensation.................. -- -- -- -- 11,620 -- 11,620
Net loss........................ -- -- -- -- -- (6,119,637) (6,119,637)
Capital distribution............ -- -- (51,053) -- -- -- (51,053)
---------- ------- ----------- ----------- --------- ----------- -----------
Balance at December 31, 1996...... 3,715,625 3,716 4,736,361 5,905,965 (517,035) (7,593,283) 2,535,724
Initial and second public
offering of common shares..... 4,400,000 4,400 37,618,793 -- -- -- 37,623,193
Issuance of shares of common
stock for business
combinations.................. 4,298,740 4,299 31,826,620 (5,905,965) -- -- 25,924,954
Issuance of detachable stock
purchase warrants............. -- -- 301,500 -- -- -- 301,500
Sale of detachable stock
purchase warrants............. -- -- 548,021 -- -- -- 548,021
Compensatory stock options
accounted for under SFAS
123........................... -- -- 124,949 -- -- -- 124,949
Exercise of warrants and
options....................... 5,721 6 2,751 -- -- -- 2,757
Amortization of deferred
compensation.................. -- -- -- -- 108,300 -- 108,300
Net loss........................ -- -- -- -- -- (521,911) (521,911)
========== ======= =========== =========== ========= =========== ===========
Balance at December 31, 1997...... 12,420,086 $12,421 $75,158,995 $ -- $(408,735) $(8,115,194) $66,647,487
========== ======= =========== =========== ========= =========== ===========
</TABLE>

See accompanying notes.

F-35
<PAGE> 104

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................... $(1,226,436) $(6,119,637) $ (521,911)
Adjustments to reconcile net loss to net cash used in
operating activities:
Extraordinary charge -- early extinguishment of debt...... -- -- 323,346
Depreciation and amortization............................. 18,005 126,046 1,803,991
Amortization of loan fees................................. -- -- 178,677
Noncash compensation expense.............................. -- 521,582 124,949
Amortization of deferred compensation..................... -- 11,620 --
Interest accretion........................................ -- -- 50,260
Changes in operating assets and liabilities, net of
effects from business combinations:
Accounts receivable, net................................ -- (483,591) (5,497,996)
Prepaid expenses and other current assets............... 516 (22,766) (8,144)
Other assets............................................ -- (32,984) (521,371)
Accounts payable........................................ 87,141 429,496 (2,739,310)
Accrued expenses........................................ 614 119,955 543,963
Accrued acquisition and offering costs.................. -- 522,963 (522,963)
Accrued compensation.................................... 43,138 48,342 834,759
Deferred rent payable................................... -- -- (1,889)
Medical claims payable.................................. 928,602 737,720 (562,064)
Due to Managed Professional Associations................ 10,184 (27,741) 1,938,309
----------- ----------- ------------
Net cash used in operating activities....................... (138,236) (4,168,995) (4,577,394)
INVESTING ACTIVITIES
Purchases of furniture and equipment........................ (68,138) (443,577) (1,145,359)
Payments for acquisitions, net of cash acquired............. -- -- (35,431,807)
Payments for capitalized acquisition costs.................. (20,240) (1,138,829) (6,170,767)
Other....................................................... -- -- (394,603)
----------- ----------- ------------
Net cash used in investing activities....................... (88,378) (1,582,406) (43,142,536)
FINANCING ACTIVITIES
Net proceeds from sale of common stock...................... 750,000 42,850,000
Payments for offering costs................................. -- -- (4,385,413)
Proceeds from long term debt................................ 310,413 4,950,000 33,093,307
Payments on long term debt.................................. (32,694) (56,729) (19,866,349)
Net proceeds from line of credit............................ -- 184,264 --
Proceeds from credit facility............................... -- -- 4,874,000
Payments on credit facility................................. -- -- (4,874,000)
Payments for financing fees................................. -- -- (717,882)
Sale of detachable stock purchase warrants and exercise of
options................................................... -- -- 550,778
Capital distribution........................................ (21,914) (51,053) --
----------- ----------- ------------
Net cash provided by financing activities................... 255,805 5,776,482 51,524,441
----------- ----------- ------------
Increase in cash and cash equivalents....................... 29,191 25,081 3,804,511
Cash and cash equivalents at beginning of year.............. 13,081 42,272 67,353
----------- ----------- ------------
Cash and cash equivalents at end of year.................... $ 42,272 $ 67,353 $ 3,871,864
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest.................... $ 9,000 $ 17,000 $ 903,000
=========== =========== ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Common stock issued upon conversion of a note payable....... $ -- $ 250,000 $ --
=========== =========== ============
Issuance of detachable stock purchase warrants.............. $ -- $ 125,000 $ 301,500
=========== =========== ============
Assets purchased under capital leases....................... $ -- $ -- $ 41,000
=========== =========== ============
</TABLE>

See Note 2 regarding affiliations with practices financed through the
issuance of common stock and notes payable.

See accompanying notes.

F-36
<PAGE> 105

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. DESCRIPTION OF BUSINESS

Vision Twenty-One, Inc. and Subsidiaries (Vision Twenty-One or the Company)
is a Florida corporation formed in May 1996 as a holding company. The Company's
principal subsidiaries include Vision 21 Physician Practice Management Company
(MSO) and Vision 21 Managed Eyecare of Tampa Bay, Inc. (MCO). The MSO provides
business management services for eye care professionals and related businesses.
The MCO is a managed care organization which contracts with third-party health
benefits payors to provide eye care services through a network of associated
optometry and ophthalmology practices, retail optical companies and ambulatory
surgical centers. Most of the managed care contracts are for one-year terms
which automatically renew and the contracts are terminable by either party on
sixty days notice. Revenues from one payor constituted approximately 94%, 79%
and 31% of managed care revenues and 75%, 60% and 10% of total revenues for the
years ended December 31, 1995, 1996 and 1997, respectively.

In 1997, significant business acquisitions include BBG-COA, Inc., MEC
Health Care, Inc. and LSI Acquisition, Inc., now subsidiaries of the Company
(see Note 4).

2. AFFILIATIONS WITH MANAGED PROFESSIONAL ASSOCIATIONS

As part of its business strategy, the Company acquires substantially all of
the assets and assumes certain liabilities of ophthalmology and optometry
practices (Managed Professional Associations). In connection with these
acquisitions, the Company enters into business management agreements (Management
Agreements) with the Managed Professional Associations and the Managed
Professional Associations stockholders.

In connection with the 1996 Acquisitions, Vision Twenty-One issued 651,842
shares of Common Stock in 1996 and 1,491,397 shares of Common Stock in 1997 and
issued long-term notes payable to stockholders of approximately $1,925,000. The
shares which were issued in 1997 were reported as Common Stock to be issued as
of December 31, 1996. All 2,143,239 shares of Common Stock were valued at $3.96
per share based on an independent valuation.

F-37
<PAGE> 106
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Management Agreements with the Managed Professional Associations and the Managed
Professional Associations' stockholders (collectively referred to as the 1997
Acquisitions). In connection with the 1997 Acquisitions, the Company holds in
escrow approximately 196,000 shares of Common Stock valued at approximately
$1,887,000, and $395,000 in cash. Such shares and cash held in escrow, along
with additional contingent consideration of approximately $426,000 in cash and
approximately $244,000 in shares of Common Stock, will be due the owners of
certain of the eye care practices if certain financial goals are met during the
eighteen-month period following the effective date of the transactions
(generally at several dates through February 1999). Such financial goals were
established to resolve certain differences between the Company and the owners of
the eye care practices regarding the purchase price valuations of the respective
practices. The contingent consideration which is ultimately issued by the
Company if such financial goals are met will be treated as an increase in the
purchase price of the assets acquired from the respective practices. Based upon
information to date, management of the Company believes that the ultimate
issuance of any such shares held in escrow will not have a material adverse
effect on the results of operations, financial condition or liquidity of the
Company.

During 1997, the owners of an ophthalmology practice included within the
1996 Acquisitions met certain financial goals which were established to resolve
differences between the owners and the Company regarding the purchase price
valuations of the practice. The Company issued to the owners of the
ophthalmology practice 56,356 shares valued at approximately $223,000, which
were previously held in escrow as contingent consideration for this 1996
Acquisition. The Company accounted for the additional consideration issued as an
increase in the purchase price of the assets acquired from this practice.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany transactions have been
eliminated. The Company does not own any interests in or control the activities
of the Managed Professional Associations. Accordingly, the financial statements
of the Managed Professional Associations are not consolidated with those of the
Company.

F-38
<PAGE> 107
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RECENTLY ISSUED ACCOUNTING STANDARDS

USE OF ESTIMATES

REVENUE RECOGNITION

Managed Care

Managed care revenues are derived from monthly capitation payments from
managed health benefits payors which contract with the Company for the delivery
of eye care services. The Company records this revenue at contractually
agreed-upon rates.

Practice Management Fees

Subsequent to December 1, 1996, practice management fee revenue was earned
through management of the Managed Professional Associations under the Management
Agreements. This revenue represents reimbursement of practice management
expenses incurred by the Company, including depreciation expense of $31,123 and
$491,743 for the years ended December 31, 1996 and 1997, respectively. In
addition, the Company generally receives a percentage (ranging from 24% to 37%)
of the Managed Professional Associations' net earnings before interest, taxes,
and shareholder-physician expenses, as determined under the related Management
Agreements. For the years ended December 31, 1996 and 1997, this revenue was as
follows:

F-39
<PAGE> 108
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Buying Group

Other Revenues

Other revenues consist of fees earned through consulting and other
contractual arrangements.

MEDICAL CLAIMS PAYABLE

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents approximates its fair
value.

The fair value of long-term debt approximates its carrying amount based on
current rates offered to the Company for debt of similar maturities.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

FIXED ASSETS

Fixed assets are stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the various classes of
assets, which range from three to seven years. Leasehold improvements are
amortized using the straight-line method over the shorter of the term of lease
or the estimated useful life of the improvements. Routine maintenance and
repairs are charged to expense as incurred, while betterments and renewals are
capitalized.

F-40
<PAGE> 109
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DEFERRED OFFERING COSTS

TRANSACTIONS AND BUSINESS DEVELOPMENT COSTS

INTANGIBLE ASSETS

Intangible assets consist of the excess of the purchase price over the fair
values of the net assets acquired from the business acquisitions, which is being
amortized on a straight-line method over 25 years, and the Management Agreements
with the Managed Professional Associations. The Management Agreements have
40-year terms and are being amortized on a straight-line method over 25 years.
In evaluating the useful life of a Management Agreement, the Company considers
the operating history and other characteristics of each practice. The primary
consideration is the degree to which a practice has demonstrated its ability to
extend its existence indefinitely. In making this determination, the Company
considers (i) the number of physicians recruited into the practice, (ii) the
number of staff members including physicians, (iii) the number of locations, and
(iv) the complexity of the procedures being performed, including disease
treatment and control.

Amortization expense with respect to intangible assets was approximately
$29,000 and $1,098,000 for the year ended December 31, 1996 and 1997,
respectively.

The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of (SFAS 121). In accordance with SFAS 121, the
Company reviews the carrying value of its intangible assets at least quarterly
on an entity-by-entity basis to determine if facts and circumstances exist which
would suggest that the intangible assets may be impaired or that the
amortization period needs to be modified. Among the factors the Company
considers in making the evaluation are changes in the acquired companies' or
Managed Professional Associations' market position, reputation, profitability
and geographical penetration. If indicators are present which may indicate
impairments, the Company will prepare a projection of the undiscounted cash
flows of the specific practice and determine if the intangible assets are
recoverable based on these undiscounted cash flows. If impairment is indicated,
then an adjustment will be made to reduce the carrying amount of the intangible
assets to fair value.

CONCENTRATIONS OF CREDIT RISK

F-41
<PAGE> 110
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NET LOSS PER COMMON SHARE

CONTINGENT CONSIDERATION

COMMON STOCK TO BE ISSUED

Common stock to be issued represents stock to be issued in connection with
certain of the 1996 Acquisitions consummated on December 1, 1996. The stock was
issued in January 1997.

STOCK-BASED COMPENSATION

F-42
<PAGE> 111
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

immaterial. The pro forma disclosures required by SFAS 123 are provided for all
stock-based compensation which are accounted for under APB 25.

INCOME TAXES

The Company has applied the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS 109), which requires an
asset and liability approach for financial accounting and reporting. Deferred
income tax assets and liabilities are determined based upon differences between
the financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and lives that will be in effect when the
differences are expected to reverse.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified in order to conform with
the 1997 presentation.

4. BUSINESS COMBINATIONS

BBG-COA, INC. ACQUISITION

During November 1997, the Company acquired all of the outstanding stock of
BBG-COA, Inc. and all related subsidiaries and affiliated companies (Block
Vision) from Block Vision stockholders. Block Vision provides billing and
collection services to suppliers of optical products through its buying group
division and provides vision benefit management services to health management
organizations, preferred provider organizations and other managed care entities
through its managed care division. The purchase price for Block Vision included
458,365 shares of the Company's common stock valued at approximately $6,050,000,
cash of approximately $25,651,000 and the assumption of approximately $3,243,000
in long-term debt. The acquisition was accounted for by the purchase method of
accounting, with the purchase price allocated to the fair value of the assets
acquired and liabilities assumed, subject to the final determination of certain
items in connection with the acquisition. The excess of the purchase price over
the fair values of the net assets amounted to approximately $34 million and is
being amortized on a straight-line method over 25 years. The operating results
of Block Vision are included in the Company's consolidated financial statements
since November 1, 1997. In connection with the Block Vision acquisition, the
Company holds in escrow approximately 220,000 shares of Common Stock. Such
shares held in escrow will be due the owners of Block Vision if certain
financial goals are met during the twelve-month period ending December 31, 1998.
Such financial goals were established to resolve certain differences between the
Company and the owners of Block Vision regarding the purchase price valuations
of Block Vision. Any shares of Common Stock held in escrow which are ultimately
issued by the Company if such financial goals are met will be valued at $13.20
per share and will be treated as an increase in the purchase price of the net
assets acquired from Block Vision. Based upon information to date, management of
the Company believes that the ultimate issuance of any such shares held in
escrow will not have a material adverse effect on the results of operations,
financial condition or liquidity of the Company.

ACQUISITION FROM LASERSIGHT, INCORPORATED

F-43
<PAGE> 112
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

purchase price over the fair values of the net assets amounted to approximately
$13 million and is being amortized on a straight-line method over 25 years. The
operating results of MEC and LSIA are included in the Company's consolidated
financial statements since December 1, 1997.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1996 1997
----------- ------------ ------------
<S> <C> <C> <C>
Pro forma information (unaudited):
Total revenues...................................... $18,983,000 $130,469,000 $138,679,000
=========== ============ ============
Income (loss) before extraordinary charge........... $ 836,000 $ (2,915,000) $ 371,000
=========== ============ ============
Net income (loss)................................... $ 836,000 $ (2,915,000) $ 47,000
=========== ============ ============
Basic and diluted net income (loss) per common
share............................................ $ 0.19 $ (0.45) $ 0.01
=========== ============ ============
</TABLE>

5. FIXED ASSETS

Fixed assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
DESCRIPTION 1996 1997
- ----------- ---------- ----------
<S> <C> <C>
Office furniture and equipment.............................. $1,828,855 $5,488,266
Leased equipment............................................ 119,825 1,179,376
Leasehold improvements...................................... 169,335 724,693
---------- ----------
2,118,015 7,392,335
Less accumulated depreciation and amortization.............. (176,756) (888,616)
---------- ----------
$1,941,259 $6,503,719
========== ==========
</TABLE>

Depreciation and amortization of fixed assets totaled approximately
$18,000, $97,000 and $706,000 in 1995, 1996 and 1997, respectively. Amortization
expense related to capital leases is included in depreciation and amortization
in the consolidated statements of operations.

F-44
<PAGE> 113
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- -----------
<S> <C> <C>
Unsecured notes payable to a stockholder, interest and
principal due on January 1, 1998, with interest at 8.5%
per annum. The notes were repaid in 1997.................. $ 700,000 $ --
Notes payable under $300,000 line of credit, due on demand,
bearing interest at prime plus 1% (9.25% at December 31,
1996). Interest due monthly. The notes were collateralized
by accounts receivable and were repaid in 1997............ 252,124 --
Unsecured note payable to a stockholder, due on demand, with
interest at 9% per annum. Interest due monthly. The note
was repaid in 1997........................................ 293,262 --
Unsecured note payable to a stockholder with interest at 8%
per annum. Interest and principal due upon completion of
an initial public offering. The note was repaid in
1997...................................................... 3,000,000 --
Unsecured notes payable to stockholders, interest at 8%.
Principal and interest due the earlier of 15 business days
after closing of an initial public offering or March 1,
1998. The notes were repaid in 1997....................... 1,924,959 --
10% senior subordinated note, interest due semiannually at
an effective rate of 13.5%. The note is unsecured and
matures on the earlier of a first liquidity event (initial
public offering) or December 19, 1999. The note was repaid
in 1997................................................... 1,125,000 --
Note payable under a $37 million credit facility, due on the
earlier of May 4, 1998 or upon completion of an offering,
bearing interest at a rate equal to the three-month London
Interbank Offered Rate plus 4.0% (9.8% at December 31,
1997). The note is collateralized by substantially all
assets of the Company. The note was refinanced with a bank
in 1998 (Note 12)......................................... -- 24,422,807
Notes payable due in monthly installments through 2001, with
interest rates ranging from 8% to 10% per annum. The notes
are collateralized by certain equipment................... 323,878 261,635
---------- -----------
7,619,223 24,684,442
Less current portion........................................ (48,249) (104,371)
---------- -----------
$7,570,974 $24,580,071
========== ===========
</TABLE>

As of December 31, 1997, the aggregate principal maturities of long-term
debt, giving effect to the refinancing on January 30, 1998 (Note 12), are as
follows:

<TABLE>
<S> <C>
1998........................................................ $ 104,371
1999........................................................ 84,771
2000........................................................ 2,487,947
2001........................................................ 2,469,108
2002........................................................ 2,442,281
Thereafter.................................................. 17,095,964
-----------
$24,684,442
===========
</TABLE>

F-45
<PAGE> 114
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. CAPITAL LEASE OBLIGATIONS

The Company leases equipment under noncancelable capital leases (with an
initial or remaining term in excess of one year). Future minimum lease
commitments are as follows:

8. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

<TABLE>
<S> <C>
1998........................................................ $ 2,018,000
1999........................................................ 1,824,000
2000........................................................ 1,650,000
2001........................................................ 1,535,000
2002........................................................ 1,416,000
Thereafter.................................................. 7,592,000
-----------
Total............................................. $16,035,000
===========
</TABLE>

Rent expense in 1995, 1996 and 1997 was approximately $76,000, $280,000 and
$2,442,000, respectively. Rent expense related to locations leased from
stockholders of the Managed Professional Associations was approximately $53,000
and $1,284,000 during 1996 and 1997, respectively.

MALPRACTICE

Losses resulting from unreported claims cannot be estimated by management
and, therefore, are not included in the accompanying consolidated financial
statements.

OTHER

F-46
<PAGE> 115
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

investigations involving allegations of potential wrongdoing at the Company or
any of its Managed Professional Associations. While no such regulatory inquiries
have been made, compliance with such laws and regulations can be subject to
future government review and interpretation as well as significant regulatory
action including fines, penalties, and exclusion from the Medicare, Medicaid and
other programs.

9. INCOME TAXES

The Company did not have a current or deferred tax provision or benefit for
the years ended December 31, 1995, 1996 and 1997 due to its net losses.

At December 31, 1996 and 1997, the Company had temporary differences
between amounts of assets and liabilities for financial reporting purposes and
such amounts measured by income tax reporting purposes. The Company also has net
operating loss (NOL) carryforwards available to offset future taxable income.
Significant components of the Company's deferred tax assets and liabilities as
of December 31 are as follows:

<TABLE>
<CAPTION>
DEFERRED TAX
ASSET (LIABILITY)
-------------------------
DECEMBER 31,
-------------------------
TEMPORARY DIFFERENCES/CARRYFORWARDS 1996 1997
- ----------------------------------- ----------- -----------
<S> <C> <C>
Net operating losses........................................ $ 1,736,000 $ 1,586,000
Accrual to cash conversions................................. 470,000 --
Book: tax differences in leases............................. -- 228,000
Other....................................................... 220,000 149,000
Valuation allowance......................................... (958,000) (81,000)
----------- -----------
Total deferred tax assets......................... 1,468,000 1,882,000
----------- -----------
Identifiable intangible assets not deductible for tax
purposes.................................................. (1,190,000) (5,705,000)
Accrual to cash conversions................................. -- (37,000)
Difference in book: tax amortization........................ -- (98,000)
Other deferred tax liabilities.............................. (278,000) (271,000)
----------- -----------
Total deferred tax liabilities.................... 1,468,000 6,111,000
----------- -----------
Net deferred taxes.......................................... $ -- $(4,229,000)
=========== ===========
</TABLE>

SFAS 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that a $81,000 valuation allowance at December 31, 1997 is necessary
to reduce the deferred tax asset to the amount that will more likely than not be
realized. The decrease in the valuation allowance for 1997 is $877,000.

F-47
<PAGE> 116
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income taxes are different from the amount computed by applying the United
States statutory rate to income before income taxes for the following reasons:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1996 1997
--------- ----------- ---------
<S> <C> <C> <C>
Income tax benefit at the statutory rate........... $(416,987) $(2,080,676) $(171,077)
Permanent differences.............................. 78,078 7,888 101,139
Effect of purchase price allocation................ -- -- 877,000
S-Corporation (income) loss........................ 248,185 924,203 --
State taxes, net of federal benefit................ (9,686) (122,628) (7,467)
Other.............................................. 77,405
Change in valuation allowance...................... 100,410 1,271,213 (877,000)
--------- ----------- ---------
Income taxes....................................... $ -- $ -- $ --
========= =========== =========
</TABLE>

The Company has net operating loss carryforwards of approximately
$4,215,000 at December 31, 1997 that expire in various amounts from 2009 to
2012. These net operating loss carryforwards will be subject to the "ownership
change" rules of Section 382 of the Internal Revenue Code of 1986 and as a
result the future use of these losses may be limited.

10. STOCKHOLDERS' EQUITY

PUBLIC OFFERINGS

STOCK OPTION PLANS

In July 1996, the Board of Directors adopted, and the stockholders of the
Company approved, two stock option plans: the Stock Incentive Plan (the
Incentive Plan) and the Affiliated Professionals Stock Plan (the Professionals
Plan and together with the Incentive Plan, the Plans). The purpose of the Plans
is to provide directors, officers, key employees, advisors and professionals
employed by the Managed Professional Associations with additional incentives, an
increase in their proprietary interest in the Company or tying a portion of
their compensation to increases in the price of the Company's common stock. The
aggregate number of shares of common stock reserved for issuance related to the
Incentive Plan and the Professionals Plan is 1,000,000 shares and 600,000
shares, respectively. Compensation expense under SFAS No. 123 for the options
issued to nonemployees was immaterial for the year ended December 31, 1996 and
approximately $125,000 for the year ended December 31, 1997. The options vest
over three to four-year periods.

Pro forma information regarding net income is required by SFAS 123, and has
been determined as if the Company had accounted for its employee stock options
under the fair value method of that Statement. The fair value for these options
was estimated at the date of grant using the Black-Scholes option pricing model
with the following weighted-average assumptions for 1996 and 1997, respectively:
risk-free interest rates of 6.00% and 6.06%; a dividend yield of zero;
volatility factors of the expected market price of the Company's common stock
based on industry trends of .645 and .605; and a weighted-average expected life
of the options of 3 years. In addition, for pro forma purposes, the estimated
fair value of the options is amortized to expense
F-48
<PAGE> 117
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

over the options' vesting period. Based on these assumptions, the pro forma net
loss and basic and diluted net loss per common share for the year ended December
31, 1996 and 1997 would be approximately $(6,235,000) and $(2.17) and $(992,000)
and $(0.14), respectively.

A summary of the Company's stock option activity and related information is
as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1997
--------------------------- ---------------------------
WEIGHTED WEIGHTED
AVERAGE EXERCISE AVERAGE EXERCISE
OPTIONS PRICE OPTIONS PRICE
-------- ---------------- -------- ----------------
<S> <C> <C> <C> <C>
Outstanding -- beginning of the
year................................ -- -- 562,000 $ 4.48
Granted............................. 562,000 $4.48 381,465 10.33
Exercised........................... (888) 3.11
Forfeited........................... (1,778) 3.11
-------- ----- -------- ------
Outstanding -- end of year............ 562,000 $4.48 940,779 $ 6.90
======== ===== ======== ======
Exercisable at end of year............ -- -- 107,999 $ 3.21
======== ===== ======== ======
Weighted-average fair value of options
granted during the year............. $ 1.91 $ 4.90
======== ========
</TABLE>

Exercise prices for options outstanding as of December 31, 1997 ranged from
$3.11 to $13.20. The weighted-average remaining contractual life of those
options is approximately 9 years.

STOCK COMPENSATION

F-49
<PAGE> 118
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

WARRANTS

<TABLE>
<CAPTION>
EXERCISE
PRICE
NUMBER OF WARRANTS GRANT DATE EXPIRATION DATE PER SHARE
- ------------------ ---------- --------------- ---------
<S> <C> <C> <C>
200,000.............. December 1996 December 2003 $6.00
333,333.............. February 1997 December 2003 $6.00
210,000.............. August 1997 August 2002 $10.00
35,000............... October 1997 October 2002 $13.25-$13.63
50,000............... November 1997 November 2002 $11.50
100,722.............. November-December 1997 November-December 2002 $8.25-$12.38
</TABLE>

OTHER

On June 6, 1997, the Company's Board of Directors approved a l-for-1.5
reverse stock split pursuant to the Company's initial public offering of common
stock. All share and per share amounts in the accompanying consolidated
financial statements have been restated to retroactively reflect the reverse
split.

11. LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss
per share for loss from continuing operations:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1996 1997
----------- ----------- ----------
<S> <C> <C> <C>
Numerator for basic and diluted loss per
share-loss available to common stockholders.... $(1,226,436) $(6,119,637) $ (198,565)
Denominator for basic and diluted loss per share-
weighted-average shares........................ 2,324,876 2,867,731 6,865,865
----------- ----------- ----------
Basic and diluted loss per share....... $ (0.53) $ (2.13) $ (0.03)
=========== =========== ==========
</TABLE>

Options and warrants to purchase approximately 1,870,000 shares of common
stock were outstanding at December 31, 1997, but were not included in the
computation of diluted loss per share because the effect would be antidilutive.
The Company has issued contingent stock consideration which would entitle the
stockholders of Block Vision and certain Managed Professional Associations to
receive approximately 416,000 of additional shares of Common Stock. The
additional shares were not included in the computation of basic and diluted loss
per share for 1997 since certain financial goals were not attained as of
December 31, 1997 and the inclusion of the shares would be antidilutive.

12. SUBSEQUENT EVENTS

F-50
<PAGE> 119
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

rate plus 0.5%, or (iii) a fixed rate loan as determined by the Agent at each
time of borrowing. The loan will be due on January 30, 2003. Principal
repayments will commence March 31, 2000. The loan will be collateralized by
substantially all assets of the Company. The credit facility contains negative
and affirmative covenants and agreements which place restrictions on the Company
regarding disposition of assets, capital expenditures, additional indebtedness,
permitted liens and payment of dividends, as well as requiring the maintenance
of certain financial ratios.

On March 10, 1998, the Company repurchased approximately 168,000 shares of
its Common Stock from LaserSight, Incorporated for approximately $1,548,000.

13. OTHER TRANSACTIONS (UNAUDITED)

On March 31, 1998, the Company completed a merger with EyeCare One Corp.
(EyeCare One) and Vision Insurance Plan of America, Inc. (VIPA). EyeCare One
Corp. is an optical retailer, selling frames, lenses and contact lenses, with
optometric services by licensed Doctors of Optometry in each of its 16 locations
in the Milwaukee, Wisconsin area. VIPA provides subscriber group member
enrollees with covered vision care services through EyeCare One Corp. and it
provider network under a master provider agreement which began in 1997. The
Company issued 1,109,806 shares of common stock for all of the outstanding
common stock of EyeCare One Corp. and VIPA. The merger was accounted for as a
pooling of interests and accordingly, the Company's financial statements have
been restated as supplemental consolidated financial statements to include the
results of EyeCare One Corp. and VIPA for all periods presented. The
supplemental consolidated financial statements will become the historical
financial statements upon issuance of the Company's financial statements for the
period that includes March 31, 1998.

The following unaudited pro forma results of operations for the years ended
December 31 assume the merger described above (excluding the acquisitions and
affiliations described in Notes 2 and 4) had occurred at the beginning of each
year presented, and do not purport to be indicative of the results that actually
would have occurred if the merger had been made as of those dates or of results
which may occur in the future.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Pro forma information (unaudited):
Total revenues........................................ $14,865,000 $21,854,000 $69,544,000
=========== =========== ===========
Income (loss) before extraordinary charge............. $ (816,000) $(5,647,000) $ 406,000
=========== =========== ===========
Net income (loss)..................................... $ (816,000) $(5,647,000) $ 83,000
=========== =========== ===========
Net income (loss) per common share.................... $ (0.24) $ (1.42) $ 0.01
=========== =========== ===========
Net income (loss) per common share -- assuming
dilution........................................... $ (0.24) $ (1.42) $ 0.01
=========== =========== ===========
</TABLE>

F-51
<PAGE> 120

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors and Shareholders
EyeCare One Corp.

We have audited the accompanying balance sheets of EyeCare One Corp. (the
Company) as of December 31, 1996 and 1997, and the related statements of income
and retained earnings and cash flows for each of the three 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 the Company at December 31,
1996 and 1997, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.

Milwaukee, Wisconsin
February 4, 1998

F-52
<PAGE> 121

EYECARE ONE CORP.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1996 1997
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 140,650 $ 134,141
Receivables:
Trade, net of allowance for doubtful accounts of
$7,500................................................ 84,415 109,563
Other.................................................. 14,736 18,856
---------- ----------
99,151 128,419
Notes receivable -- officers and shareholders............. 163,489 --
Inventories............................................... 936,739 936,242
Prepaid expenses.......................................... 34,581 196,561
---------- ----------
Total current assets.............................. 1,374,610 1,395,363
Cash surrender value of life insurance, net of policy
loans of $588,179 in 1996 and $624,464 in 1997............ 166,822 205,596
Noncompete agreement, net of accumulated amortization of
$4,167.................................................... -- 20,833
Other....................................................... 3,800 5,800
Equipment and leasehold improvements, at cost:
Equipment................................................. 73,234 112,978
Computer equipment........................................ 270,701 313,733
Lab equipment............................................. 625,365 683,230
Furniture and fixtures.................................... 1,393,992 1,397,619
Leasehold improvements.................................... 1,991,575 2,322,594
Signs..................................................... 254,187 274,912
---------- ----------
4,609,054 5,105,066
Less accumulated depreciation and amortization............ 2,839,841 3,027,765
---------- ----------
Net equipment and leasehold improvements.......... 1,769,213 2,077,301
---------- ----------
$3,314,445 $3,704,893
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Due to affiliate.......................................... $ -- $ 25,821
Accounts payable.......................................... 209,341 292,089
Current portion of deferred leasehold incentives.......... 9,568 23,046
Accrued liabilities:
Payroll and employee benefits.......................... 463,173 519,288
Taxes other than income................................ 121,333 151,606
Other.................................................. 14,510 73,643
---------- ----------
599,016 744,537
---------- ----------
Total current liabilities......................... 817,925 1,085,493
Bank term note.............................................. 1,352,000 1,400,182
Deferred leasehold incentive................................ 81,330 186,323
Commitments
Shareholders' equity:
Common stock, no par value, 10,000 shares authorized
and 9,996 and 9,772 shares issued in 1996 and 1997,
respectively.......................................... 620,928 602,946
Retained earnings......................................... 624,319 602,933
---------- ----------
1,245,247 1,205,879
Less cost of 224 shares of common stock held in
treasury............................................... (17,982) --
Less note receivable -- officer and shareholder........... (164,075) (172,984)
---------- ----------
Total shareholders' equity........................ 1,063,190 1,032,895
---------- ----------
$3,314,445 $3,704,893
========== ==========
</TABLE>

See accompanying notes.

F-53
<PAGE> 122

EYECARE ONE CORP.

STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net revenue............................................. $11,340,397 $11,863,187 $12,711,514
Cost of sales........................................... 2,683,633 2,807,621 3,113,851
----------- ----------- -----------
Gross profit............................................ 8,656,764 9,055,566 9,597,663
Operating expenses...................................... 6,890,223 7,203,312 7,700,684
Advertising expenses.................................... 492,573 527,800 461,005
----------- ----------- -----------
Store operating profit.................................. 1,273,968 1,324,454 1,435,974
Corporate management expenses........................... 582,749 582,014 669,717
----------- ----------- -----------
Income from operations.................................. 691,219 742,440 766,257
Interest expense........................................ 133,864 100,489 138,399
Other expense........................................... 170,174 224,611 48,464
----------- ----------- -----------
304,038 325,100 186,863
----------- ----------- -----------
Net income.............................................. 387,181 417,340 579,394
Retained earnings:
Beginning of fiscal year.............................. 482,226 733,371 624,319
Distributions to shareholders......................... (136,036) (526,392) (600,780)
----------- ----------- -----------
End of fiscal year.................................... $ 733,371 $ 624,319 $ 602,933
=========== =========== ===========
</TABLE>

See accompanying notes.

F-54
<PAGE> 123

EYECARE ONE CORP.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 387,181 $ 417,340 $ 579,394
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 366,385 357,445 393,133
Amortization of deferred leasehold incentives............. -- (4,784) (16,307)
Loss on disposal of equipment and leasehold
improvements........................................... -- 18,458 --
Changes in:
Receivables............................................ 92,772 (18,642) (29,268)
Inventories............................................ 49,943 (112,712) 497
Prepaid expenses....................................... 9,725 701 (161,980)
Accounts payable....................................... (73,036) 1,530 82,748
Accrued liabilities.................................... (71,830) 46,668 145,521
--------- --------- ---------
373,959 288,664 414,344
--------- --------- ---------
Net cash provided by operating activities................... 761,140 706,004 993,738
INVESTING ACTIVITIES
Additions to intangible assets.............................. -- -- (20,833)
Additions to equipment and leasehold improvements........... (106,464) (757,192) (786,443)
Increase in cash surrender value of life insurance.......... (72,930) (68,979) (74,644)
Investment in First Look LLC................................ -- (3,800) (2,000)
--------- --------- ---------
Net cash used by investing activities....................... (179,394) (829,971) (883,920)
FINANCING ACTIVITIES
Net (payments) borrowings under term note................... (300,000) 25,034 48,182
(Increase) decrease in notes and interest
receivable -- officers and shareholders................... (127,444) 429,430 154,580
Net proceeds from note to affiliate......................... -- -- 25,821
Additional borrowings on cash surrender value of life
insurance................................................. 44,279 33,585 35,870
Proceeds from leasehold incentives.......................... -- 175,000 220,000
Distributions to shareholders............................... (136,036) (526,392) (600,780)
--------- --------- ---------
Net cash (used) provided by financing activities............ (519,201) 136,657 (116,327)
--------- --------- ---------
Increase (decrease) in cash................................. 62,545 12,690 (6,509)
Cash at beginning of year................................... 65,415 127,960 140,650
--------- --------- ---------
Cash at end of year......................................... $ 127,960 $ 140,650 $ 134,141
========= ========= =========
Supplemental disclosure of cash flows information --
Cash paid during the year for interest.................... $ 132,069 $ 90,776 $ 136,606
========= ========= =========
</TABLE>

See accompanying notes.

F-55
<PAGE> 124

EYECARE ONE CORP.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

EyeCare One Corp. (the Company) is a state-of-the-art optical retailer,
selling frames, lenses and contact lenses, with optometric services by licensed
Doctors of Optometry in each of its 16 locations in the Milwaukee area. The
locations are predominantly in high profile, enclosed malls and successful strip
shopping centers. The stores range in size from 1,400 sq. ft. to 5,200 sq. ft. A
central warehouse and distribution center service its entire store network.

The Company began in a traditional optical format (where glasses are
manufactured in a central location and sent back to the store for sale), and
built its business using extensive, effective advertising and excellent value
and service. All of the stores have been converted to "Express" or "Super Store"
format, where glasses are made in one hour on the premises.

USE OF ESTIMATES

INVENTORIES

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

RECLASSIFICATIONS

Certain items in the accompanying 1995 and 1996 financial statements have
been reclassified to conform to the 1997 presentation.

REVENUE RECOGNITION

The Company basically recognizes revenue upon sales of eyewear products and
services.

ADVERTISING

The Company expenses the production costs of advertising as incurred or the
first time the advertising takes place.

INCOME TAXES

No provision for income taxes is recorded in these financial statements
because the Company's shareholders have elected Subchapter S of the Internal
Revenue Code. Accordingly, the Company's taxable income is reported in the
personal tax returns of the shareholders.

F-56
<PAGE> 125
EYECARE ONE CORP.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

DEPRECIATION AND AMORTIZATION

Depreciation and amortization have been provided using the straight-line
method over the estimated useful lives of the assets as follows:

<TABLE>
<CAPTION>
YEARS
------
<S> <C>
Equipment................................................... 3 - 10
Computer equipment.......................................... 3 - 10
Lab equipment............................................... 10
Furniture and fixtures...................................... 10
Leasehold improvements...................................... 10
Signs....................................................... 10
Noncompete agreement........................................ 5
</TABLE>

In substantially all instances, the remaining lives of leasehold
improvements are not in excess of the remaining terms of the leases, including
renewal options.

2. NOTES RECEIVABLE

At December 31, 1996 and 1997, the Company had a promissory note with an
officer/shareholder with balances of $164,075 and $172,984, respectively. The
note matures on December 31, 2001, with interest payable annually at a rate of
7.5%.

The Company had other notes with certain officers and shareholders that
were due on demand and carried interest rates ranging from 6% to 9%. During
1996, the remaining principal was paid by the officers and shareholders. The
balance outstanding at December 31, 1996 of $163,489 related to outstanding
interest which was collected in 1997.

3. BANK TERM NOTE

The Company has a term note payable to a bank with the principal balance
due April 1, 2000. Interest is payable monthly at prime less .25% (8.25% at both
December 31, 1996 and 1997). The note is collateralized by substantially all
assets of the Company and is guaranteed to the extent of $500,000 by each of the
Company's principal shareholders. The agreement also contains certain covenants
which require minimum levels of net worth, operating profit and net profit.

4. DESCRIPTION OF LEASING ARRANGEMENTS

The Company has leasing arrangements for its office and warehouse, optical
store facilities, office and store equipment and automobiles. All lease
agreements are accounted for as operating leases. Certain store leases provide
for additional percentage rents, based on sales. Property taxes, insurance,
utilities and maintenance costs are generally paid by the Company. Original
lease terms on the facilities are 5 - 10 years with certain leases providing for
renewal options for an additional five-year period. Rent expense in 1995, 1996
and 1997 was approximately $908,000, $905,000 and $901,000, respectively. Of the
total rent expense, approximately $291,000, $330,900 and $276,000 in 1995, 1996
and 1997, respectively, was paid to an officer/ shareholder.

F-57
<PAGE> 126
EYECARE ONE CORP.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Future rent commitments follow:

<TABLE>
<CAPTION>
OFFICER/
SHAREHOLDER OTHERS TOTAL
----------- ---------- ----------
<S> <C> <C> <C>
Year ended in:
1998............................................. $ 364,442 $ 672,462 $1,036,904
1999............................................. 374,742 686,354 1,061,096
2000............................................. 345,157 439,672 784,829
2001............................................. 345,157 329,923 675,080
2002............................................. 345,157 312,472 657,629
Thereafter through 2003............................ 1,386,674 1,113,357 2,500,031
---------- ---------- ----------
Total minimum lease payments....................... $3,161,329 $3,554,240 $6,715,569
========== ========== ==========
</TABLE>

5. DEFERRED LEASEHOLD INCENTIVES

During 1997, the Company was requested by a lessor to move its location
within a particular mall. The lessor made a payment of $220,000 to the Company
as an incentive. The Company offset the remaining unamortized balance ($85,222)
of leasehold improvements at the abandoned location against the amount received
and will amortize the excess ($134,778) against rent expense over the remaining
term of the lease. The amortization in 1997 was $6,739.

During 1996, the Company was requested by a different lessor to move its
location within a particular mall. The lessor made a payment of $175,000 to the
Company as an incentive. The Company offset the remaining unamortized balance
($79,317) of leasehold improvements at the abandoned location against the amount
received and will amortize the excess ($95,683) against rent expense over the
remaining term of the lease. The amortization in 1996 and 1997 was $4,784 and
$9,568, respectively.

6. EMPLOYEE BENEFITS

The Company has a 401(k) profit-sharing plan covering substantially all
employees. Participants can make salary reduction contributions of up to 10% of
compensation up to the limit allowable under IRS guidelines. The Company makes
matching contributions equal to 25% of the first 4% of each employee's salary
contributed to the plan. Additional discretionary contributions may also be made
by the Company. The Company's total expense related to the 401(k) plan was
$25,311, $32,101 and $34,438 in 1995, 1996 and 1997, respectively. No additional
discretionary contributions were made. The Company declared a discretionary
bonus of $80,000 in fiscal 1995 and 1996 and $90,000 in fiscal 1997.

7. STOCK REPURCHASE AGREEMENT

In the event of the death of either of the Company's two
officer/shareholders, there is a shareholder agreement which requires the
Company to repurchase the shareholder's common stock at the fair market value of
the common stock to be determined by an appraisal.

F-58
<PAGE> 127
EYECARE ONE CORP.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

8. RELATED COMPANY

The principal officers and shareholders of the Company are also the
principal shareholders of Vision Insurance Plan of America, Inc. (VIPA), a
Limited Health Service Organization (LHSO) in the State of Wisconsin. VIPA
contracts with corporate customers to provide vision care benefits. The Company,
under a capitation agreement with VIPA, provides optical services in its own
stores and through other providers within its network. The capitation received
by the Company during 1997 for professional eye care products and services and
administrative fees was approximately $365,279. Of the cash received by EyeCare
One from VIPA, $128,012, $135,208 and $133,693 are included in revenues in 1995,
1996 and 1997, respectively. The Company also administers payroll for VIPA. At
December 31, 1996 and 1997, the Company had a $9,000 and $8,500 receivable,
respectively, from VIPA relating to previous payroll costs paid by the Company.

During 1997, the Company entered into a term loan agreement with VIPA. The
note bears interest at 7% per annum and is due August 6, 1998.

F-59
<PAGE> 128

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
Vision Insurance Plan of America, Inc.

We have audited the accompanying balance sheets of Vision Insurance Plan of
America, Inc. (the Company) as of December 31, 1996 and 1997, and the related
statements of income, changes in shareholders' equity and cash flows for each of
the three 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 ex-amining, 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 the Company as of December
31, 1996 and 1997, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1997, in conformity with
generally accepted accounting principles.

Milwaukee, Wisconsin
March 3, 1998

F-60
<PAGE> 129

VISION INSURANCE PLAN OF AMERICA, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
1996 1997
------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $43,829 $ 42,353
Accounts receivable....................................... 18,972 13,666
Notes receivable from related party....................... -- 25,821
------- --------
Total current assets.............................. 62,801 81,840
Furniture and equipment, at cost, less accumulated
depreciation ($19,647 -- 1996; $34,498 -- 1997)........... 27,492 45,944
------- --------
Total assets...................................... $90,293 $127,784
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Due to network............................................ $40,000 $ 36,007
Accounts payable.......................................... 15,439 20,397
Advance premiums.......................................... 10,036 11,169
Reserve for designated claims............................. -- 10,000
------- --------
Total current liabilities......................... 65,475 77,573
Shareholders' equity:
Common stock ($.01 par value, 9,000 shares authorized,
5,000 shares issued)................................... 50 50
Additional paid-in capital................................ 24,950 24,950
Retained earnings......................................... 4,818 30,211
------- --------
29,818 55,211
Less (1,000 shares -- 1996; 500 shares -- 1997) treasury
stock, at cost......................................... 5,000 2,500
Less note receivable from officer......................... -- 2,500
------- --------
24,818 50,211
------- --------
Total liabilities and shareholders' equity........ $90,293 $127,784
======= ========
</TABLE>

See accompanying notes.

F-61
<PAGE> 130

VISION INSURANCE PLAN OF AMERICA, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Premiums.................................................. $571,374 $571,606 $708,098
Operating expenses:
Professional services..................................... 415,611 346,736 392,583
-------- -------- --------
Operating profit............................................ 155,763 224,870 315,515
Administrative expenses:
Management fee............................................ -- -- 32,195
Payroll and related expenses.............................. 35,856 52,590 82,813
Depreciation.............................................. 5,137 8,653 14,851
Other..................................................... 87,244 107,876 160,263
-------- -------- --------
Total administrative expenses............................... 128,237 169,119 290,122
-------- -------- --------
Income from operations...................................... 27,526 55,751 25,393
Interest expense............................................ 4,088 624 --
-------- -------- --------
Net income.................................................. $ 23,438 $ 55,127 $ 25,393
======== ======== ========
</TABLE>

See accompanying notes.

F-62
<PAGE> 131

VISION INSURANCE PLAN OF AMERICA, INC.

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
NOTE
ADDITIONAL RETAINED TREASURY RECEIVABLE
COMMON PAID-IN EARNINGS STOCK, FROM
STOCK CAPITAL (DEFICIT) AT COST OFFICER TOTAL
------ ---------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995............ 50 $24,950 $(73,747) $(5,000) $ -- $(53,747)
Net income for 1995................. -- -- 23,438 -- -- 23,438
-- ------- -------- ------- ------- --------
Balance at December 31, 1995.......... 50 24,950 (50,309) (5,000) -- (30,309)
Net income for 1996................. -- -- 55,127 -- -- 55,127
-- ------- -------- ------- ------- --------
Balance at December 31, 1996.......... 50 24,950 4,818 (5,000) -- 24,818
Net income for 1997................. -- -- 25,393 -- -- 25,393
Issuance of treasury common stock... -- -- -- 2,500 -- 2,500
-- ------- -------- ------- ------- --------
50 24,950 30,211 (2,500) -- 52,711
Note receivable from officer (Note
3).................................. -- -- -- -- (2,500) (2,500)
-- ------- -------- ------- ------- --------
Balance at December 31, 1997.......... 50 $24,950 $ 30,211 $(2,500) $(2,500) $ 50,211
== ======= ======== ======= ======= ========
</TABLE>

See accompanying notes.

F-63
<PAGE> 132

VISION INSURANCE PLAN OF AMERICA, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 23,438 $ 55,127 $ 25,393
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation.............................................. 5,137 8,653 14,851
Changes in operating accounts:
Accounts receivable.................................... (8,394) (10,578) 4,485
Due to network......................................... 11,531 1,912 (3,993)
Accounts payable....................................... 9,215 1,639 4,958
Advance premiums....................................... -- 10,036 1,133
Reserve for designated claims.......................... -- -- 10,000
-------- -------- --------
Net cash provided by operating activities................... 40,927 66,789 56,827
INVESTING ACTIVITY
Purchase of furniture and equipment......................... (10,176) (20,857) (33,303)
FINANCING ACTIVITIES
Increase in note receivable from related party.............. -- -- (25,000)
Increase in note receivable from officer.................... -- -- (2,500)
Decrease in note payable.................................... (20,000) (30,000) --
Sale of treasury stock...................................... -- -- 2,500
-------- -------- --------
Net cash used in financing activities....................... (20,000) (30,000) (25,000)
-------- -------- --------
Increase (decrease) in cash and cash equivalents............ 10,751 15,932 (1,476)
Cash and cash equivalents at beginning of year ............. 17,146 27,897 43,829
-------- -------- --------
Cash and cash equivalents at end of year.................... $ 27,897 $ 43,829 $ 42,353
======== ======== ========
</TABLE>

See accompanying notes.

F-64
<PAGE> 133

VISION INSURANCE PLAN OF AMERICA, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. DESCRIPTION OF BUSINESS

Vision Insurance Plan of America, Inc. (VIPA), a for-profit stock
corporation, was licensed in 1992 to operate as a Limited Health Service
Organization (LHSO) in the State of Wisconsin. The principal shareholders of
VIPA are also principal shareholders of EyeCare One Corp. (EyeCare One). VIPA
provides subscriber group member enrollees with covered vision care services
through EyeCare One and its provider network under a master provider agreement
which began in 1997. The EyeCare One network agrees to provide covered vision
care benefits at a contracted rate (capitation).

2. SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include operating cash and short-term investments
with maturities when acquired of three months or less. These amounts are
recorded at cost, which approximates market. Included in cash is $10,000
provided to VIPA in 1997 to begin the "Glasses for Kids" program. This amount
has been earmarked for payment of claims and administrative services related to
this program and is recorded on the balance sheet as a liability in the reserve
for designated claims.

ACCOUNTS RECEIVABLE

Accounts receivable are stated at net realizable value based upon
historical collection trends and management's judgement of the ultimate
collectibility of the accounts. These collection trends are monitored and any
adjustments required are reflected in earnings currently.

PREMIUMS

Premiums are billed monthly for coverage in the following month and are
recognized as revenue in the month for which vision care coverage is provided.

PROFESSIONAL SERVICES

In 1997, EyeCare One is the master service provider under a capitation
agreement with VIPA requiring an agreed-upon percentage of premiums to be
remitted to EyeCare One on a monthly basis. EyeCare One is then responsible for
delivery of and payment for all professional services performed. VIPA also pays
a 5% administrative service fee to EyeCare One for the processing of this
business and other management services. In prior years, VIPA paid claims on a
fee-for-service basis out of a due to network fund.

FURNITURE AND EQUIPMENT

Furniture and equipment are carried at depreciated cost. Furniture and
equipment are being depreciated using the straight-line method over the useful
lives of the assets.

NOTE PAYABLE

VIPA's note payable was satisfied in full during 1996, had a stated
interest rate of prime rate plus 1.5%, and was payable monthly.

F-65
<PAGE> 134
VISION INSURANCE PLAN OF AMERICA, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

RECLASSIFICATIONS

Certain reclassifications have been made to the financial statements for
1995 and 1996 to conform with the 1997 presentation.

ADVERTISING

The Company expenses the production costs of advertising as incurred or the
first time the advertising takes place. Advertising costs were $1,311, $11,928
and $4,122, respectively, for the years ended December 31, 1995, 1996 and 1997.

3. RELATED-PARTY TRANSACTIONS

In 1997 under the master service provider agreement, VIPA paid $365,279 for
professional optical services and management and administrative services to
EyeCare One.

Included in professional services is approximately $128,012 and $135,208
paid to EyeCare One in 1995 and 1996, respectively.

During 1997, the Company entered into a term note agreement with EyeCare
One Corp. The note bears interest at 7% per annum and is due August 6, 1998.

At December 31, 1997, a $2,500 promissory note was outstanding from an
officer/shareholder related to the purchase of VIPA stock. The note matures on
April 30, 2002, with interest payable annually at a rate of 7%.

At December 31, 1996 and 1997, the Company had a $9,000 and $8,500 payable,
respectively, to EyeCare One relating to previous payroll costs paid by EyeCare
One.

4. SHAREHOLDERS' EQUITY -- STATUTORY REQUIREMENTS

Dividends paid by VIPA are restricted by regulations of the Office of the
Commissioner of Insurance (OCI). The payment of cash dividends is limited to
available shareholders' equity derived from realized net profits. Based upon the
regulatory formula, no amount is available for dividends in 1997 without
regulatory approval.

F-66
<PAGE> 135

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
and Shareholders of
BBG-COA, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and accumulated deficit and of
cash flows present fairly, in all material respects, the financial position of
BBG-COA, Inc. and its subsidiaries (the "Company") at April 30, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended April 30, 1997, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP

Fort Lauderdale, Florida
July 1, 1997, except as to Note 10,
which is as of August 19, 1997

F-67
<PAGE> 136

BBG-COA, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
APRIL 30,
-------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash...................................................... $ 653,228 $ 704,312
Accounts receivable:
Receivables from buying group members, less allowance
for doubtful accounts of $35,632 and $56,406.......... 6,031,354 6,441,516
Managed vision care fees receivable.................... 284,529 211,484
Receivables from fee for service plans................. 727,802 18,128
Other.................................................. 237,603 106,862
Prepaid expenses and other current assets................. 81,334 143,510
Prepaid income taxes...................................... 191,971 273,055
Deferred income taxes..................................... 31,810 122,243
----------- -----------
Total current assets.............................. 8,239,631 8,021,110
Restricted cash............................................. 125,000 125,000
Furniture, fixtures and purchased software, net............. 915,913 482,225
Other assets................................................ 50,826 156,083
Goodwill, less accumulated amortization of $2,684,636 and
$2,312,735................................................ 5,144,180 5,516,081
----------- -----------
Total assets...................................... $14,475,550 $14,300,499
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of capital lease obligations.............. $ 33,750 $ 40,000
Accounts payable:
Payables to buying group suppliers..................... 5,726,000 6,126,767
Managed vision care claim reserves..................... 1,507,835 1,018,607
Fee for service plans claims payable................... 719,455 13,458
Accrued liabilities....................................... 306,699 394,311
----------- -----------
Total current liabilities......................... 8,293,739 7,593,143
Line of credit.............................................. 3,302,352 4,446,415
Capital lease obligations................................... 18,414 24,890
----------- -----------
Total liabilities................................. 11,614,505 12,064,448
----------- -----------
Shareholders' equity
Common stock, $0.01 par value, authorized 3,000,000
shares; issued and outstanding 1,363,814 shares........ 13,638 13,638
Additional paid-in capital................................ 3,828,365 3,828,365
Accumulated deficit....................................... (980,958) (1,605,952)
----------- -----------
Total shareholders' equity........................ 2,861,045 2,236,051
----------- -----------
Total liabilities and shareholders' equity........ $14,475,550 $14,300,499
=========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-68
<PAGE> 137

BBG-COA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Buying group sales.................................... $54,589,487 $56,361,820 $63,245,994
Managed vision care division fees..................... 14,386,981 8,283,865 --
----------- ----------- -----------
Total revenues................................ 68,976,468 64,645,685 63,245,994
Expenses:
Cost of product -- buying group....................... 51,816,568 53,448,373 58,287,963
Cost of service -- managed vision care division....... 10,220,761 5,965,721 --
Selling and administrative expenses................... 5,474,972 4,747,000 4,135,986
Provision for relocation costs........................ -- -- 552,000
----------- ----------- -----------
67,512,301 64,161,094 62,975,949
Income from operations.................................. 1,464,167 484,591 270,045
Interest expense........................................ 291,354 364,163 335,956
Other (income) expense, net............................. (14,303) 36,454 31,348
----------- ----------- -----------
Income (loss) before income taxes....................... 1,187,116 83,974 (97,259)
Provision for income taxes.............................. 562,122 166,479 126,188
----------- ----------- -----------
Net income (loss)............................. 624,994 (82,505) (223,447)
Accumulated deficit -- beginning of year................ (1,605,952) (1,523,447) (1,300,000)
----------- ----------- -----------
Accumulated deficit -- end of year...................... $ (980,958) $(1,605,952) $(1,523,447)
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-69
<PAGE> 138

BBG-COA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-------------------------------------
1997 1996 1995
----------- ----------- ---------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss)...................................... $ 624,994 $ (82,505) $(223,447)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization....................... 646,901 478,256 455,220
Changes in assets and liabilities
(Increase) decrease in accounts receivable........ (503,298) (510,244) 426,424
Decrease (increase) in prepaid expenses and other
current assets................................. 62,176 53,292 (119,765)
Decrease (increase) in prepaid income taxes....... 81,084 (215,000) (42,654)
Decrease (increase) in deferred income taxes...... 90,433 187,640 (134,142)
Increase in restricted cash....................... -- (125,000) --
Decrease (increase) in other assets............... 105,257 (78,386) 14,021
Increase (decrease) in accounts payable........... 794,458 1,502,110 (368,754)
(Decrease) increase in accrued liabilities........ (87,612) (1,044,481) 710,756
Other............................................. -- 37,337 --
----------- ----------- ---------
Net cash provided by operating activities...... 1,814,393 203,019 717,659
----------- ----------- ---------
Cash flows from investing activities
Capital expenditures................................... (708,688) (347,175) (51,513)
----------- ----------- ---------
Net cash used in investing activities.......... (708,688) (347,175) (51,513)
----------- ----------- ---------
Cash flows from financing activities
(Repayments of) proceeds from revolving credit loan,
net................................................. (1,144,063) 881,675 (33,220)
Repayments of capital lease obligations................ (12,726) (37,000) (11,304)
Repayments of long-term debt and notes payable --
shareholders........................................ -- (370,000) (666,667)
----------- ----------- ---------
Net cash (used in) provided by financing
activities................................... (1,156,789) 474,675 (711,191)
----------- ----------- ---------
Net (decrease) increase in cash.......................... (51,084) 330,519 (45,045)
Cash -- beginning of year................................ 704,312 373,793 418,838
----------- ----------- ---------
Cash -- end of year...................................... $ 653,228 $ 704,312 $ 373,793
=========== =========== =========
Supplemental cash flow information
Cash paid during the year for:
Interest............................................ $ 291,354 $ 378,000 $ 364,290
=========== =========== =========
Income taxes........................................ $ 652,532 $ 265,000 $ 251,400
=========== =========== =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-70
<PAGE> 139

BBG-COA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SUMMARY OF ACCOUNTING POLICIES

NATURE OF BUSINESS

BBG-COA, Inc. (the "Company") through its wholly-owned subsidiary, Block
Vision, Inc. ("BVI") (formerly Block Buying Group, Inc.), provides billing and
collection services to suppliers of optical products, through its buying group
division ("buying group"). The Company, through its managed care division and
through BVI's wholly-owned subsidiary, Block Vision of Texas, Inc. ("BVT")
provides vision benefit management services to health maintenance organizations,
preferred provider organizations and other managed care entities.

BASIS OF PRESENTATION AND CONSOLIDATION

The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles and reflect management's estimates and
assumptions, such as those regarding managed vision care costs that affect the
recorded amounts. These consolidated financial statements include the accounts
of the Company and its subsidiaries. All material intercompany transactions have
been eliminated. References to 1997, 1996 and 1995 refer to the fiscal years
ended April 30, 1997, 1996 and 1995, respectively.

REVENUE RECOGNITION

The buying group business provides billing and collection services to
suppliers of optical products, whereby providers receive merchandise from
suppliers for direct shipment to the providers. The Company pays the vendors and
likewise bills the providers for such products. The Company receives revenue by
retaining generally 5% of the total receivables collected by the Company. This
commission revenue is included in buying group sales in the accompanying
statements of operations and is recognized upon shipment of merchandise by the
suppliers.

The managed vision care division of the Company provides vision care
administrative services to health maintenance organizations and other groups,
generally based on predetermined monthly fees. The Company reimburses
participating vision care providers for vision care services rendered by such
providers to enrollees of the Company's clients.

CASH AND CASH EQUIVALENTS

Short-term investments with a maturity of three months or less at the time
of purchase are reported as cash equivalents and include a certificate of
deposit.

RESTRICTED CASH

The Company established a Texas subsidiary during 1996 which is subject to
various regulatory restrictions. At April 30, 1997 and 1996, the Company
maintained a minimum required surplus of $125,000, including a statutory deposit
of $50,000.

FURNITURE, FIXTURES AND PURCHASED SOFTWARE

Furniture, fixtures and purchased software are carried at cost less
accumulated depreciation and amortization. Depreciation and amortization expense
is computed using the straight-line method based on estimated useful lives of
the assets ranging from 5 to 7 years.

GOODWILL

The cost of acquired businesses in excess of values assigned to net assets
is amortized over 20 years. Amortization expense for each of the years ended
April 30, 1997, 1996 and 1995 was $371,901, and is included in selling and
administrative expenses. The Company periodically reviews the recoverability of
goodwill from future cash flows, and adjusts the carrying value as required. At
April 30, 1997 and 1996, the Company determined that goodwill, net of
accumulated amortization, was not impaired.

F-71
<PAGE> 140
BBG-COA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MANAGED VISION CARE CLAIM RESERVES

The Company has accrued a liability for unpaid claims of $546,054 and
$328,142 at April 30, 1997 and 1996, respectively, and a liability for claims
incurred but not reported (IBNR) of $961,781 and $690,465 at April 30, 1997 and
1996, respectively. The liability for IBNR claims includes amounts for which
services by a vision care provider have been rendered but are not yet paid and
an estimate of costs incurred but not reported. Accruals are based on
estimations of the Company's incurred claims. The accrued liabilities for unpaid
claims and for claims incurred but not reported are included in accounts
payable.

INCOME TAXES

The Company provides for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109 ("SFAS No. 109"),
"Accounting for Income Taxes." SFAS No. 109 requires the Company to recognize
deferred tax liabilities and assets for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. Under this method, deferred tax assets and liabilities are determined
based on the differences between the financial statement carrying amounts and
the tax bases of assets and liabilities using enacted tax rates in effect in the
year in which the differences are expected to reverse.

CASH FLOW INFORMATION

Certain noncash transactions are excluded from the consolidated statement
of cash flows as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------- ---- --------
<S> <C> <C> <C>
Noncash investing and financing activities
Fixed assets acquired under capital leases................ $29,181 $ -- $113,194
</TABLE>

STOCK BASED COMPENSATION

The Company's employee stock option plan is accounted for using the
intrinsic value method as prescribed by Accounting Principles Board Opinion No.
25 ("APB 25"). Effective May 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock Based
Compensation". SFAS No. 123 establishes a fair value based accounting method of
accounting for stock based compensation plans. As permitted under the Statement,
the Company has elected to continue to apply the provisions of APB 25 and to
comply with the disclosure requirements of SFAS No. 123. There was no effect on
the Company's results of operations or financial position upon adoption of the
Statement (see Note 7).

2. FURNITURE, FIXTURES AND PURCHASED SOFTWARE

Furniture, fixtures and purchased software consist of the following:

<TABLE>
<CAPTION>
APRIL 30,
-----------------------
1997 1996
---------- ----------
<S> <C> <C>
Furniture and fixtures...................................... $ 442,088 $ 368,354
Computer equipment.......................................... 432,603 383,147
Purchased software.......................................... 933,735 348,237
Leasehold improvements...................................... 16,001 16,001
---------- ----------
1,824,427 1,115,739
Less: Accumulated depreciation and amortization............. 908,514 633,514
---------- ----------
$ 915,913 $ 482,225
========== ==========
</TABLE>

F-72
<PAGE> 141
BBG-COA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Included in selling and administrative expenses is depreciation and
amortization expense for the years ended April 30, 1997, 1996 and 1995 of
$275,000, $106,355 and $83,319, respectively. The Company leases certain
computer equipment under capital leases with an aggregate cost of $142,375 and
$113,058 at April 30, 1997 and 1996, respectively.

3. DEBT AND CREDIT AGREEMENTS

<TABLE>
<CAPTION>
APRIL 30,
-----------------------
1997 1996
---------- ----------
<S> <C> <C>
Line of credit.............................................. $3,302,352 $4,446,415
Capital lease obligations................................... 52,164 64,890
---------- ----------
3,354,516 4,511,305
Less: Current portion....................................... 33,750 40,000
---------- ----------
$3,320,766 $4,471,305
========== ==========
</TABLE>

At April 30, 1997 and 1996, the Company had $3,302,352 and $4,446,415,
respectively, outstanding under a financing agreement (the "Agreement") with
NationsBank. The Agreement expires on September 30, 1997. Under the Agreement,
borrowings under a line of credit facility are limited to the lesser of
$6,500,000 or approximately 85% of accounts receivable (maximum line of
approximately $6,189,095 at April 30, 1997). The Agreement also contains a
letter of credit facility which is limited to $2,200,000. The exposure under the
letters of credit, calculated from time to time, reduces the amount available
under the line of credit. As of April 30, 1997 and 1996, the Company had caused
letters of credit to be issued to suppliers to guarantee future payments for up
to $1,425,000 and $1,770,000, respectively. The outstanding borrowings under the
line of credit bear interest at the prime interest rate plus 1%. Additionally,
the Company is required to pay a commitment fee of .5% annually on the unused
portion of the commitment. Borrowings under the Agreement are secured by
substantially all assets of the Company. The Agreement, as amended, contains
certain financial covenants including the maintenance of minimum levels of
profitability and maximum debt to equity leverage ratios.

4. INCOME TAXES

A summary of the provision (benefit) for income taxes follows:

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Current
Federal.............................................. $402,748 $(33,654) $188,305
State................................................ 68,942 13,493 72,337
-------- -------- --------
471,690 (20,161) 260,642
-------- -------- --------
Deferred
Federal.............................................. 76,728 136,166 (98,027)
State................................................ 13,704 51,474 (36,545)
-------- -------- --------
90,432 187,640 (134,572)
-------- -------- --------
$562,122 $167,479 $126,070
======== ======== ========
</TABLE>

At April 30, 1997, 1996 and 1995, the Company has net operating loss
carryforwards of approximately $0, $95,000 and $0, respectively, for both
financial reporting and federal income tax purposes. Differences between book
and taxable income primarily relate to non-deductible amortization of goodwill.

F-73
<PAGE> 142
BBG-COA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The tax effect of temporary differences which give rise to deferred income
tax assets as of April 30, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
1997 1996
------- --------
<S> <C> <C>
Allowance for doubtful accounts............................. $13,408 $ 20,037
Returns and allowance reserve............................... -- 30,400
Net operating loss carryforwards............................ -- 32,020
Deferred gains.............................................. 6,593 11,850
Other....................................................... 11,809 27,936
------- --------
Deferred tax asset.......................................... $31,810 $122,243
======= ========
</TABLE>

5. CREDIT AND CONCENTRATION RISK

Financial instruments which subject the Company to concentrations of credit
risk consist principally of buying group accounts receivables. The Company
provides credit, in the normal course of business, to a large number of
optometrists.

Revenues generated from sales of products from one vendor constituted
approximately 15%, 16% and 19% of the Company's buying group sales revenue
during the years ended April 30, 1997, 1996 and 1995, respectively. Revenues
generated from sales of products from a second vendor constituted 14%, 13% and
12% of the Company's buying group sales revenue during the years ended April 30,
1997, 1996 and 1995, respectively.

Capitation payments generated from three managed care customers comprised
12%, 11% and 7% of total capitation payments during the year ended April 30,
1997.

6. EMPLOYEE BENEFIT PLANS

The Company sponsors a 401(k) plan to which employees can contribute 1%
- -15% of their pretax salary. The Company makes a discretionary match of this
amount. During the years ended April 30, 1997 and 1996, the Company's expense
for this plan was $57,364 and $33,478, respectively.

During the year ended April 30, 1995, the Company sponsored defined benefit
and contribution plans. The Company's pension expense under these plans in 1995
was $75,323.

7. STOCK OPTIONS

In May 1993, the Company adopted an incentive stock option plan ("Plan"),
which authorized the granting of options to purchase 100,000 shares of the
Company's common stock. On June 15, 1993, the Company granted 67,500 options to
key employees at an option price of $4.33 per share which was determined to be
the fair market value on the date of grant. In fiscal year 1995, 6,250 options
lapsed due to the resignation of an employee. On May 18, 1995, the Company
authorized the grant of 23,750 options at an option price of $7.00 per share
which was determined to be the fair market value on the date of grant. Of the
23,750 options authorized for grant in May 1995, only 21,250 were issued. On
December 26, 1995, the Company granted the remaining 17,500 options to key
employees at an option price of $7.00 per share which was determined to be the
fair market value on the date of grant. These options vest over 36 to 48 months
and can be exercised over a 10-year period beginning with the respective date of
grant. At April 30, 1997, there were no options available for issuance under the
Plan and no options had been exercised as of April 30, 1997.

The fair value of each option grant is estimated on the date of grant using
the Black Scholes option-pricing model with the following weighted-average
assumptions used for grants in fiscal year 1996: dividend yield of 0%; risk-free
interest rate of 6.76%; and expected lives of 7.5 years.

F-74
<PAGE> 143
BBG-COA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of the Company's stock option plan as of and for each of the
three years ended April 30, 1997 is as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------ -----------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- -------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year.......... 100,000 $5.36 61,250 $4.33 67,500 $4.33
Granted................................. -- -- 41,250 7.00 -- --
Exercised............................... -- -- -- -- -- --
Forfeited............................... -- -- (2,500) 7.00 (6,250) 4.33
------- ----- ------- ----- ------ -----
Outstanding at end of year................ 100,000 $5.36 100,000 $5.36 61,250 $4.33
======= ===== ======= ===== ====== =====
Weighted-average fair value of options
granted during the year................. $ -- $7.00 $ --
===== ===== =====
</TABLE>

The following table summarizes information about stock options outstanding
at April 30, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------
WEIGHTED
AVERAGE WEIGHTED
RANGE OF CONTRACTUAL AVERAGE
EXERCISE REMAINING EXERCISE
PRICES NUMBER LIFE PRICE
-------- ------- ----------- --------
<S> <C> <C> <C>
$4.33.................................................... 61,250 6 years $4.33
$7.00.................................................... 38,750 8 years 7.00
- ------------- ------- --------- -------
$4.33 - $7.00............................................ 100,000 7 years $5.36
============= ======= ========= =======
</TABLE>

8. RELOCATION COSTS

In January 1995, the Company's Board of Directors approved the relocation
of the Company's operations to Florida. In 1995, the Company recorded a $552,000
charge for the costs associated with the move. These charges cover office moving
costs, severance payments to approximately 15 employees not relocating, and
moving costs for employees relocating including closing costs and real estate
commissions on new homes.

9. COMMITMENTS

OPERATING LEASES

The Company leases its office facilities and various equipment. Total
rental expense for the years ended April 30, 1997, 1996 and 1995 was $256,648,
$227,662 and $149,316, respectively. Approximate minimum annual rental
commitments under non-cancelable operating leases at April 30, 1997 are as
follows:

<TABLE>
<S> <C>
1998........................................................ $224,731
1999........................................................ 199,926
2000........................................................ 205,055
2001........................................................ 210,804
2002........................................................ 17,637
Thereafter.................................................. --
--------
$858,153
========
</TABLE>

F-75
<PAGE> 144
BBG-COA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CUSTOMER CONTRACTS

The Company has entered into several contracts with health maintenance
organizations ("HMO's"). These contracts define a business relationship whereby
the Company, through its network of providers, arranges vision care services to
members of the HMO's pursuant to a predetermined reimbursement schedule. The HMO
contracts generally have a term of one to two years, but generally may be
terminated by either party without cause on 60-90 days notice.

10. SUBSEQUENT EVENT

On August 19, 1997, the Company and NationsBank entered into a verbal
agreement to renew the Company's line of credit facility through September 30,
1998.

* * * * *

F-76
<PAGE> 145

BBG-COA, INC.

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
JULY 31,
1997
-----------
(UNAUDITED)
<S> <C>
ASSETS
Current assets
Cash...................................................... $ 338,845
Accounts receivable:
Receivables from buying group members, less allowance
for doubtful accounts of $41,632..................... 5,058,177
Managed vision care fee receivables.................... 718,420
Receivables from fee for service plans................. 785,701
Prepaid expenses and other current assets................. 41,848
Prepaid income taxes...................................... (9,163)
Deferred income taxes..................................... 24,173
-----------
Total current assets.............................. 6,958,001
Restricted cash............................................. 125,000
Furniture, fixtures and purchased software, net............. 977,787
Other assets................................................ 133,513
Goodwill, less accumulated amortization of $2,777,612....... 5,051,204
-----------
Total assets...................................... $13,245,505
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of capital lease obligations.............. $ 27,511
Accounts payable:
Payables to buying group suppliers..................... 4,830,741
Managed vision care claim reserves..................... 1,207,326
Fee for service plans claims payable................... 563,568
Accrued liabilities....................................... 193,956
-----------
Total current liabilities......................... 6,823,102
Line of credit.............................................. 3,124,134
Other long-term liabilities................................. 40,211
-----------
Total liabilities................................. 9,987,447
-----------
Shareholders' equity
Common stock, $0.01 par value, authorized 3,000,000
shares;
issued and outstanding 1,363,814 shares................ 13,638
Additional paid-in capital................................ 3,828,365
Accumulated deficit....................................... (583,945)
-----------
Total shareholders' equity........................ 3,258,058
-----------
Total liabilities and shareholders' equity........ $13,245,505
===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-77
<PAGE> 146

BBG-COA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED
JULY 31,
--------------------------
1997 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Revenues:
Buying group sales........................................ $13,921,435 $14,021,144
Managed vision care division fees......................... 3,913,145 2,883,234
----------- -----------
Total revenues.................................... 17,834,580 16,904,378
Expenses:
Cost of product -- buying group........................... 13,233,812 13,322,123
Cost of service -- managed vision care division........... 2,418,131 1,973,292
Selling and administrative expenses....................... 1,428,039 1,257,195
----------- -----------
17,079,982 16,552,610
Income from operations............................ 754,598 351,768
Interest expense............................................ 60,228 92,968
Other income, net........................................... (8,596) (8,363)
----------- -----------
Income before income taxes.................................. 702,966 267,163
Provision for income taxes.................................. 305,953 210,259
----------- -----------
Net income........................................ 397,013 56,904
Accumulated deficit -- beginning of period.................. (980,958) (1,605,952)
----------- -----------
Accumulated deficit -- end of period........................ $ (583,945) $(1,549,048)
=========== ===========
</TABLE>

The accompanying notes are an integral part of these financial
statements.

F-78
<PAGE> 147

BBG-COA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED
JULY 31,
--------------------------
1997 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities
Net income................................................ $ 397,013 $ 56,904
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization.......................... 164,975 140,975
Changes in assets and liabilities
Decrease in accounts receivable...................... 718,990 1,179,937
Decrease in prepaid expenses and other current
assets.............................................. 39,486 30,963
Decrease in prepaid income taxes..................... 201,134 109,064
Decrease in deferred income taxes.................... 7,637 41,734
Increase in other assets............................. (82,687) (41,875)
Decrease in accounts payable......................... (1,351,655) (1,186,636)
Decrease in accrued liabilities...................... (112,743) (220,019)
Other................................................ 40,211 115,502
----------- -----------
Net cash provided by operating activities......... 22,361 226,549
----------- -----------
Cash flows from investing activities
Capital expenditures...................................... (133,874) (143,380)
----------- -----------
Net cash used in investing activities............. (133,874) (143,380)
----------- -----------
Cash flows from financing activities
Repayments of revolving credit loan, net.................. (178,217) (436,518)
Repayments of capital lease obligations................... (24,653) (13,015)
----------- -----------
Net cash used in financing activities............. (202,870) (449,533)
----------- -----------
Net decrease in cash........................................ (314,383) (366,364)
Cash -- beginning of period................................. 653,228 704,312
----------- -----------
Cash -- end of period....................................... $ 338,845 $ 337,948
=========== ===========
Supplemental cash flow information
Cash paid during the period for:
Interest............................................... $ 60,227 $ 92,968
=========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-79
<PAGE> 148

BBG-COA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

The consolidated financial statements of BBG-COA, Inc. and its subsidiaries
(the "Company") have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and note disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. The interim
financial data is unaudited; however, in the opinion of the Company, the interim
data includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for interim periods.

These consolidated financial statements should be read in conjunction with
the audited financial statements and the notes thereto contained in the
prospectus.

The Company believes that the maturation of the Company's managed vision
care business and the Company's termination of certain unprofitable managed
vision care contracts has resulted in lower participant utilization and higher
gross profits on the Company's managed vision care business during the quarter
ended July 31, 1997. However, the results of operations for the three month
period ended July 31, 1997 are not necessarily indicative of the results to be
expected for the full year.

2. AMENDMENT OF FINANCING AGREEMENT

On October 1, 1997, the Company and NationsBank executed an amendment to
the Company's financing agreement to extend the maturity date of the agreement
to September 30, 1998 and to amend various covenants specified in the agreement.

3. SALE OF COMPANY

On October 13, 1997, BBG-COA's Board of Directors approved the terms of a
letter of intent for the acquisition by Vision Twenty-One, Inc. of 100% of the
issued and outstanding shares of BBG-COA's common stock for $35.0 million
consideration consisting of cash and the common stock of Vision Twenty-One, Inc.
plus the assumption of certain indebtedness. Additional shares of common stock
will be held in escrow as contingent consideration, deliverable upon the
attainment of certain operating results.

F-80
<PAGE> 149

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Swagel-Wootton Eye Center, Ltd.
and Aztec Optical Limited Partnership

We have audited the accompanying combined balance sheet of Swagel-Wootton
Eye Center, Ltd. and Aztec Optical Limited Partnership (collectively referred to
as the Company), as of December 31, 1996, and the related combined statements of
operations, stockholders' (partners') equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position at December 31, 1996
of Swagel-Wootton Eye Center, Ltd. and Aztec Optical Limited Partnership, and
the combined results of their operations and their cash flows for the year then
ended in conformity with generally accepted accounting principles.

ERNST & YOUNG LLP

Tampa, Florida
October 12, 1997

F-81
<PAGE> 150

SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MAY 31,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 202,973 $ 191,441
Patient accounts receivable, net.......................... 418,488 317,368
Inventories............................................... 48,786 53,742
Note receivable from stockholder.......................... 20,000 --
Prepaid expenses and other current assets................. 68,600 43,756
---------- ----------
Total current assets.............................. 758,847 606,307
Property, equipment and improvements, net................... 2,378,940 2,254,568
Notes receivable from stockholder........................... 100,000 100,000
Other assets................................................ 47,032 79,907
---------- ----------
Total assets...................................... $3,284,819 $3,040,782
========== ==========
LIABILITIES AND STOCKHOLDERS' (PARTNERS') EQUITY
Current liabilities:
Accounts payable.......................................... $ 90,552 $ 111,447
Accrued compensation...................................... 191,551 176,758
Accrued pension contribution.............................. 106,207 149,096
Current portion of long-term debt ($38,620 and $39,600 to
a related party at December 31, 1996 and May 31, 1997,
respectively).......................................... 636,921 381,421
Current portion of obligations under capital leases....... 16,321 18,750
---------- ----------
Total current liabilities......................... 1,041,552 837,472
Long-term debt, less current portion ($470,273 and $453,630
to a related party at December 31, 1996 and May 31, 1997,
respectively)............................................. 1,687,536 1,554,417
Obligations under capital leases, net of current portion.... 45,595 36,793
Stockholders' (Partners') equity:
Common stock, $1 par value: 1,000 shares authorized, 800
shares issued and outstanding.......................... 800 800
Retained earnings......................................... 359,867 494,516
Partners' capital......................................... 149,469 116,784
---------- ----------
Total stockholders' (partners') equity............ 510,136 612,100
---------- ----------
Total liabilities and stockholders' (partners')
equity.......................................... $3,284,819 $3,040,782
========== ==========
</TABLE>

See accompanying notes.

F-82
<PAGE> 151

SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FIVE-MONTH
PERIOD ENDED
YEAR ENDED MAY 31,
DECEMBER 31, -----------------------
1996 1996 1997
------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Net patient service revenues............................ $4,776,952 $2,366,202 $2,283,341
Sale of optical goods................................... 1,074,633 483,056 469,742
Other income............................................ 17,261 3,268 14,638
---------- ---------- ----------
Total revenues.................................. 5,868,846 2,852,526 2,767,721
Expenses:
Compensation to physician stockholders.................. 843,140 301,046 500,342
Salaries, wages and benefits............................ 2,196,575 987,640 938,631
Cost of optical goods sold.............................. 412,197 180,722 192,170
Medical supplies........................................ 530,618 251,777 228,397
Advertising............................................. 309,626 148,074 149,112
General and administrative.............................. 440,729 204,556 164,832
Utilities............................................... 83,011 36,299 39,132
Insurance............................................... 51,267 14,390 30,390
Building and equipment rent............................. 53,266 31,467 36,605
Professional fees....................................... 47,654 19,869 35,800
Depreciation and amortization........................... 254,681 110,238 103,423
---------- ---------- ----------
Total expenses.................................. 5,222,764 2,286,078 2,418,834
---------- ---------- ----------
Income from operations.................................... 646,082 566,448 348,887
Interest expense.......................................... 222,695 97,662 83,465
---------- ---------- ----------
Net income...................................... $ 423,387 $ 468,786 $ 265,422
========== ========== ==========
</TABLE>

See accompanying notes.

F-83
<PAGE> 152

SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

COMBINED STATEMENTS OF STOCKHOLDERS' (PARTNERS') EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON STOCK STOCKHOLDERS'
--------------- RETAINED PARTNERS' (PARTNERS')
NUMBER AMOUNT EARNINGS CAPITAL EQUITY
------ ------ -------- --------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996..................... 800 $800 $279,516 $ 136,731 $ 417,047
Cash distributions......................... (7,699) (322,599) (330,298)
Net income................................. -- -- 88,050 335,337 423,387
--- ---- -------- --------- ---------
BALANCE, DECEMBER 31, 1996................... 800 800 359,867 149,469 510,136
Net income (Unaudited)..................... -- -- 134,649 130,773 265,422
Cash distributions (Unaudited)............. -- -- -- (163,458) (163,458)
--- ---- -------- --------- ---------
BALANCE, MAY 31, 1997 (UNAUDITED)............ 800 $800 $494,516 $ 116,784 $ 612,100
=== ==== ======== ========= =========
</TABLE>

See accompanying notes.

F-84
<PAGE> 153

SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FIVE-MONTH
PERIOD ENDED
YEAR ENDED MAY 31,
DECEMBER 31, ---------------------
1996 1996 1997
------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................. $ 423,387 $ 468,786 $ 265,422
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................ 254,681 110,238 103,423
(Gain) loss on disposal of equipment..................... 3,787 (1,050) (13,426)
Changes in operating assets and liabilities:
Patient accounts receivable, net...................... 46,811 26,793 101,120
Inventories........................................... (8,607) (4,390) (4,956)
Prepaid expenses and other current assets............. (10,561) 6,075 24,844
Accounts payable...................................... (103,174) (81,977) 20,895
Accrued compensation.................................. 17,704 596 (14,793)
Accrued pension contribution.......................... 653 38,088 42,889
--------- --------- ---------
Net cash provided by operating activities........ 624,681 563,159 525,418
INVESTING ACTIVITIES
Payment to stockholder..................................... (20,000) -- --
Collections from stockholders.............................. 52,918 -- 20,000
Proceeds on disposal of equipment.......................... 4,050 1,050 1,500
Purchases of property and equipment........................ (52,568) (25,045) --
--------- --------- ---------
Net cash (used in) provided by investing
activities..................................... (15,600) (23,995) 21,500
FINANCING ACTIVITIES
Proceeds from long-term debt............................... 528,989 169,520 --
Payments on long-term debt................................. (784,498) (550,530) (388,619)
Cash distributions......................................... (330,298) (125,167) (163,458)
Payments on obligations under capital leases............... (27,027) (7,173) (6,373)
--------- --------- ---------
Net cash used in financing activities............ (612,834) (513,350) (558,450)
--------- --------- ---------
Increase (decrease) in cash................................ (3,753) 25,814 (11,532)
Cash at beginning of period................................ 206,726 206,726 202,973
--------- --------- ---------
Cash at end of period...................................... $ 202,973 $ 232,540 $ 191,441
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest................... $ 219,865 $ 97,662 $ 83,465
========= ========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Capital lease obligations incurred to acquire equipment.... $ 59,390 -- --
========= ========= =========
</TABLE>

See accompanying notes.

F-85
<PAGE> 154

SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Swagel-Wootton Eye Center, Ltd. (SWEC), an Arizona corporation, operates a
professional medical practice, specializing in general ophthalmology, surgery
and optometry. Aztec Optical Limited Partnership (Aztec), an Arizona limited
partnership with common ownership, operates a retail store which sells
sunglasses and eyeglass frames and lenses. Both entities operate in the greater
Phoenix area, and are hereinafter collectively referred to as the Company. All
significant intercompany transactions have been eliminated.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The interim financial statements as of May 31, 1997 and for the five-month
periods ended May 31, 1996 and 1997 do not provide all disclosures included in
the annual financial statements. These interim statements should be read in
conjunction with the annual audited financial statements and the footnotes
thereto. Results for the 1997 interim period are not necessarily indicative of
the results for the year ending December 31, 1997. However, the accompanying
interim financial statements reflect all adjustments which are, in the opinion
of management, of a normal and recurring nature necessary for a fair
presentation of the financial position and results of operations of the Company.

INVENTORIES

Inventories consist primarily of sunglasses and eyeglass frames and lenses
(collectively, optical goods). Inventories are stated at the lower of cost or
market, with cost determined on an average cost basis.

PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements are carried at cost. Depreciation is
computed using the straight-line method, with the assets' useful lives estimated
at five to thirty-one years. Routine maintenance and repairs are charged to
expense as incurred, while costs of betterments and renewals are capitalized.

ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of all current assets and current liabilities
approximates their fair value because of their short-term nature. The fair value
of long-term debt approximates its carrying value based on current rates offered
to the Company for debt of similar maturities.

NET PATIENT SERVICE REVENUES

Net patient service revenues are based on established billing rates, less
allowances for contractual adjustments for patients covered by Medicare, the
Arizona Health Care Cost Containment System (AHCCS) and various other discount
arrangements. Payments received under these programs and arrangements, which are
based on predetermined rates, are generally less than the Company's established
billing rates and the differences are recorded as contractual adjustments at the
time the related service is rendered.

The Company does not believe that there are any credit risks associated
with receivables due from governmental agencies. Concentration of credit risk
from other payors is limited by the number of patients and payors. The Company
does not require any form of collateral from its patients or third-party payors.

F-86
<PAGE> 155
SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

such regulatory inquires have been made, compliance with such laws and
regulations can be subject to future government review and interpretation as
well as significant regulatory action including fines, penalties and exclusion
from the Medicare and AHCCS programs.

ADVERTISING COSTS

The Company expenses advertising costs as incurred.

INCOME TAXES

SWEC has elected to have its income taxed as an S corporation for income
tax purposes. As a result, in lieu of corporate income tax, SWEC's taxable
income is passed through to the stockholders of SWEC and taxed at the individual
level.

Aztec is taxed as a partnership for income tax purposes. As a result, in
lieu of corporate income tax, Aztec's taxable income is passed through to the
partners of Aztec and taxed at the individual level.

Accordingly, no provision or liability for federal or state income tax has
been reflected in the combined financial statements of the Company.

USE OF ESTIMATES

The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amount reported in the combined financial
statements and accompanying notes. Actual results could differ from those
estimates.

2. NOTES RECEIVABLE

The Company has notes receivable from a stockholder of $100,000 and $20,000
at December 31, 1996, with interest at prime plus 1% (9.25% at December 31,
1996). Interest is payable annually. The $20,000 note was repaid in 1997 and the
$100,000 note will be repaid in 1998.

3. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MAY 31,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Note payable to an insurance company due in monthly
installments through June 2006, with interest at 10%...... $1,098,633 $1,068,694
Note payable to a stockholder of SWEC due in monthly
installments through November 2005, with interest at
9.21%..................................................... 508,893 493,230
Note payable to a bank under a $400,000 credit facility: due
in October 1997, with interest at prime plus .5% (8.75% at
December 31, 1996). The note is guaranteed by the
stockholders of SWEC...................................... 353,000 100,000
Note payable to a vendor due in monthly installments through
November 1999, with interest at 9.07%. The note is
guaranteed by a stockholder of SWEC....................... 249,550 196,647
</TABLE>

F-87
<PAGE> 156
SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
DECEMBER 31, MAY 31,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Notes payable to a bank due in monthly principal
installments plus interest at prime plus .5% (8.75% at
December 31, 1996) through 1999. The notes are guaranteed
by the stockholders of SWEC............................... 84,049 54,853
Note payable to a finance company due in monthly
installments through December 1997, with interest at
6.9%...................................................... 6,757 3,736
Unsecured note payable to a bank under a $50,000 credit
facility: due in October 1997, with interest at prime plus
.5% (8.75% at December 31, 1996). The note is guaranteed
by a partner of Aztec..................................... 19,000 16,500
Note payable to a vendor due in monthly installments through
June 1997, with interest at 9.25%......................... 4,575 2,178
---------- ----------
2,324,457 1,935,838
Less current portion........................................ (636,921) (381,421)
---------- ----------
$1,687,536 $1,554,417
========== ==========
</TABLE>

Long-term debt is collateralized by substantially all assets of the
Company.

As of December 31, 1996, the aggregate amounts of annual principal
maturities of long-term debt are as follows:

<TABLE>
<S> <C>
Year ending December 31:
1997................................................... $ 636,921
1998................................................... 227,309
1999................................................... 226,046
2000................................................... 150,597
2001................................................... 165,927
Thereafter............................................. 917,657
----------
$2,324,457
==========
</TABLE>

4. LEASE COMMITMENTS

Future minimum lease commitments under noncancelable operating and capital
leases (with an initial or remaining term in excess of one year) at December 31,
1996 are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ---------
<S> <C> <C>
Year ending December 31:
1997...................................................... $ 21,856 $ 62,124
1998...................................................... 15,336 62,124
1999...................................................... 15,336 54,994
2000...................................................... 15,336 12,758
2001...................................................... 7,668 --
-------- --------
Total minimum lease payments...................... 75,532 $192,000
========
Less amount representing interest........................... (13,616)
--------
Present value of minimum lease payments (including current
portion of $16,321)....................................... $ 61,916
========
</TABLE>

F-88
<PAGE> 157
SWAGEL-WOOTTON EYE CENTER, LTD. AND
AZTEC OPTICAL LIMITED PARTNERSHIP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements consist of the following at December
31, 1996:

<TABLE>
<S> <C>
Land........................................................ $ 634,378
Buildings................................................... 2,172,424
Medical equipment........................................... 798,319
Office furniture and equipment.............................. 313,072
Automobiles................................................. 78,754
Leasehold improvements...................................... 15,184
-----------
4,012,131
Less accumulated depreciation and amortization.............. (1,633,191)
-----------
$ 2,378,940
===========
</TABLE>

Included in medical equipment as of December 31, 1996 are assets acquired
through capital leases with original costs of approximately $147,000.
Amortization expense related to capital leases is included in depreciation and
amortization in the combined statements of operations.

6. MALPRACTICE INSURANCE

The Company carries malpractice insurance for each of its physicians and
optometrists. The insurance for the physicians provides coverage of $3,000,000
per incident, with a $5,000,000 annual limit. The two optometrists both have
coverages of $1,000,000 per incident, with one optometrist having a $1,000,000
annual limit and the other optometrist having a $3,000,000 annual limit.
Coverage for the physicians and optometrists is on a claims-made basis, with the
exception of one optometrist who has occurrence basis coverage. Management is
not aware of any reported claims pending against the Company. Losses resulting
from unreported claims cannot be estimated by management and, therefore, are not
included in the accompanying combined financial statements.

7. RETIREMENT PLAN

The Company maintains an employees savings and profit sharing plan under
Section 401(k) of the Internal Revenue Code which covers substantially all
employees. The Company has elected to not make matching or discretionary
contributions to this plan.

The Company maintains a money purchase pension plan which covers
substantially all employees. The Company makes annual contributions on behalf of
eligible employees based on 7.5% of the employee's compensation as defined in
the plan. Total expense related to the money purchase pension plan was
approximately $106,000 for the year ended December 31, 1996.

8. SUBSEQUENT EVENT

On June 1, 1997, substantially all assets and liabilities were acquired by
Vision Twenty-One, Inc. (Vision) in exchange for 320,000 shares of Vision common
stock. In connection therewith, the Company entered in to a 40-year service
agreement with Vision, whereby Vision will provide substantially all nonmedical
services to the practice.

The combined financial statements of the Company have been prepared as
supplemental information about the association to which Vision will provide
management services following consummation of the acquisition. The Company
previously operated as a separate independent association. The historical
financial position, results of operations and cash flows do not reflect any
adjustments relating to the acquisition.

F-89
<PAGE> 158

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Richard L. Short, D.O., P.A.
d/b/a Eye Associates of Pinellas

We have audited the accompanying balance sheet of Richard L. Short, D.O.,
P.A. d/b/a Eye Associates of Pinellas (the Company) as of December 31, 1996, and
the related statements of income, stockholder's equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Richard L. Short, D.O., P.A.
d/b/a Eye Associates of Pinellas at December 31, 1996, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

ERNST & YOUNG LLP

Tampa, Florida
March 14, 1997,
except for Note 12, as to which the date is
March 28, 1997

F-90
<PAGE> 159

RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
ASSETS
Current assets:
Patient accounts receivable, net of allowance for
uncollectible accounts of approximately $57,000........ $332,220
Inventory................................................. 40,728
Prepaid expenses.......................................... 19,074
Prepaid rent-related party................................ 97,593
--------
Total current assets.............................. 489,615
Available-for-sale securities............................... 61,076
Property and equipment, net................................. 71,544
Deferred tax assets......................................... 7,208
--------
Total assets...................................... $629,443
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 52,266
Bank overdraft............................................ 46,415
Accrued compensation...................................... 128,237
Pension plan payable...................................... 60,000
Deferred tax liability.................................... 86,248
Current portion of long-term debt obligation.............. 21,936
--------
Total current liabilities......................... 395,102
Long-term debt obligation, net of current portion........... 80,451
Note payable and accrued interest to related party.......... 37,781
Deferred compensation....................................... 14,826
Stockholder's equity:
Common stock, $1 par value: 5,000 shares authorized; 500
shares issued and outstanding.......................... 500
Additional paid-in capital................................ 4,500
Unrealized gain on available-for-sale securities.......... 14,972
Retained earnings......................................... 81,311
--------
Total stockholder's equity........................ 101,283
--------
Total liabilities and stockholder's equity........ $629,443
========
</TABLE>

See accompanying notes.

F-91
<PAGE> 160

RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

STATEMENT OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Revenues:
Net patient service revenues.............................. $2,472,423
Other..................................................... 12,168
----------
Total revenues.................................... 2,484,591
Expenses:
Compensation -- physician stockholder..................... 509,614
Salaries, wages and benefits -- physicians................ 712,243
Salaries, wages and benefits -- other..................... 513,027
General and administrative................................ 307,772
Medical supplies.......................................... 193,203
Rent -- related party..................................... 183,000
Depreciation.............................................. 41,786
Interest.................................................. 15,764
----------
Total expenses.................................... 2,476,409
----------
Income before income taxes.................................. 8,182
Income tax expense.......................................... 4,740
----------
Net income........................................ $ 3,442
==========
</TABLE>

See accompanying notes.

F-92
<PAGE> 161

RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

STATEMENT OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
UNREALIZED
COMMON STOCK ADDITIONAL GAIN ON TOTAL
--------------- PAID-IN AVAILABLE-FOR- RETAINED STOCKHOLDER'S
NUMBER AMOUNT CAPITAL SALE SECURITIES EARNINGS EQUITY
------ ------ ---------- --------------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995....... 500 $500 $4,500 $ 8,713 $ 77,869 $ 91,582
Net income....................... -- -- -- -- 3,442 3,442
Unrealized gain on
available-for-sale
securities.................... -- -- -- 6,259 -- 6,259
--- ---- ------ ------- -------- --------
BALANCE AT DECEMBER 31, 1996....... 500 $500 $4,500 $14,972 $ 81,311 $101,283
=== ==== ====== ======= ======== ========
</TABLE>

See accompanying notes.

F-93
<PAGE> 162

RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 3,442
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 41,786
Accrued interest on note payable to related party......... 3,434
Income tax expense........................................ 4,740
Changes in operating assets and liabilities:
Patient accounts receivable............................ 28,527
Inventory.............................................. (13,367)
Prepaid expenses....................................... (3,330)
Prepaid rent -- related party.......................... (18,141)
Accounts payable and accrued expenses and bank
overdraft............................................. 42,128
Accrued and deferred compensation...................... 6,345
---------
Net cash provided by operating activities......... 95,564
INVESTING ACTIVITIES
Purchases of property and equipment......................... (11,022)
Purchases of available-for-sale securities.................. (7,462)
---------
Net cash used in investing activities....................... (18,484)
FINANCING ACTIVITIES
Borrowings on long-term debt................................ 109,700
Repayment of long-term debt................................. (56,780)
Repayments to related party................................. (30,000)
Repayment of line of credit................................. (100,000)
---------
Net cash used in financing activities....................... (77,080)
---------
Increase in cash and cash equivalents....................... --
Cash and cash equivalents, beginning of year................ --
---------
Cash and cash equivalents, end of year...................... $ --
=========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest...................................... $ 15,571
=========
Cash paid for income taxes.................................. $ 850
=========
</TABLE>

See accompanying notes.

F-94
<PAGE> 163

RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Richard L. Short, D.O., P.A., a Florida professional corporation (the
Company), operates a professional medical practice in Pinellas Park, Florida,
specializing in ophthalmology.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with a maturity of
three months or less at date of purchase to be cash equivalents.

INVESTMENTS IN DEBT AND EQUITY SECURITIES

The Company accounts for investments in debt and equity securities in
accordance with Statement of Financial Accounting Standards No. 115, Accounting
for Certain Investments in Debt and Equity Securities. The Company has evaluated
its investment policies and determined that all of its securities are classified
as available-for-sale. Management determines the appropriate classification of
securities at the time of purchase and reevaluates such designation as of each
balance sheet date. Available-for-sale securities are carried at fair value,
with the unrealized gains and losses, net of tax, reported as a separate
component of stockholder's equity. Realized gains and losses, and losses in
value judged to be other than temporary on available-for-sale investments, are
included in other revenue. The cost of securities sold is based on the specific
identification method.

INVENTORY

Inventory, consisting of eyeglass frames, contact lenses and optical
supplies, is stated at cost using the first-in, first-out method.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method, with useful lives generally ranging from 5 to 31
years. Routine maintenance and repairs are charged to expense as incurred, while
costs of betterments and renewals are capitalized.

NET PATIENT SERVICE REVENUES

Net Patient service revenues are based on established billing rates less
allowances for contractual adjustments for patients covered by Medicare,
Medicaid and various other discount arrangements. Payments received under these
programs and arrangements, which generally are based on predetermined rates, are
generally less than the Company's customary charges, and the differences are
recorded as contractual adjustments at the time the related service is rendered.

The following table summarizes the percentage of net patient service
revenues by payor class for the year ended December 31, 1996:

<TABLE>
<S> <C>
Medicare.................................................... 31%
Managed care plans.......................................... 31
Medicaid.................................................... 2
Other (including self-pay).................................. 36
---
100%
===
</TABLE>

F-95
<PAGE> 164
RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Laws and regulations governing the Medicare and Medicaid programs are
complex and subject to interpretation. The Company believes that it is in
compliance with all applicable laws and regulations and is not aware of any
pending or threatened investigations involving allegations of potential wrong
doing. While no such regulatory inquires have been made, compliance with such
laws and regulations can be subject to future government review and
interpretation as well as significant regulatory action including fines,
penalties and exclusion from the Medicare and Medicaid programs.

ADVERTISING COSTS

The Company expenses all advertising costs as they are incurred.
Advertising costs for the year ended December 31, 1996 was $15,178 and is
included in general and administrative expenses in the accompanying financial
statements.

INCOME TAXES

Income taxes have been provided using the liability method in accordance
with Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of short-term borrowings reported in the financial
statements reflects its fair value because of the short-term maturity of that
financial instrument. It is not practicable to estimate the fair value of the
Company's long-term debt because the Company's incremental borrowing rate cannot
reasonably be determined.

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 amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

2. RELATED PARTY TRANSACTIONS

The Company leases certain real property from R&R Seminole, Ltd., (the
Partnership) under a month-to-month arrangement for which no formal lease
agreement has been executed. The Company is the general partner and has a 1%
interest in the Partnership and the sole physician stockholder of the Company
and his wife are the limited partners. The Company is the guarantor of the
Partnership's mortgage note dated June 25, 1991 bearing interest at 8.875% with
an outstanding principal balance of $742,446 at December 31, 1996. Rent expense,
recorded by the Company, was approximately $183,000 in 1996 for property owned
by the Partnership. Rental payments are based on monthly principal and interest
payments due on the mortgage note payable on the property. Payments made by the
Company to the Partnership totaled $201,141 in 1996. Prepaid rent to the
Partnership totaled $97,593 at December 31, 1996.

F-96
<PAGE> 165
RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

3. AVAILABLE-FOR-SALE SECURITIES

All available-for-sale securities are comprised of mutual funds. The
following is a summary of available-for-sale securities:

<TABLE>
<CAPTION>
GROSS UNREALIZED
----------------- ESTIMATED
COST GAINS LOSSES FAIR VALUE
------- ------- ------- ----------
<S> <C> <C> <C> <C>
1996............................................. $46,104 $14,972 $ -- $61,076
</TABLE>

There were no realized gains or losses on available-for-sale securities
during the year ended December 31, 1996.

4. PROPERTY, PLANT, AND EQUIPMENT

Property and equipment consist of the following at December 31, 1996:

<TABLE>
<S> <C>
Medical equipment........................................... $ 250,198
Office equipment and furniture.............................. 100,301
Automobile.................................................. 27,685
Leasehold improvements...................................... 17,989
---------
396,173
Accumulated depreciation.................................... (324,629)
---------
$ 71,544
=========
</TABLE>

5. LINE OF CREDIT

At December 31, 1995, the Company had $100,000 outstanding on a line of
credit with a bank. Interest on the outstanding principal amount was payable
monthly at prime (8.5% at December 31, 1995) plus 2%. The line of credit matured
in May 1996 and was repaid.

6. NOTE PAYABLE TO RELATED PARTY

In 1993, the Company issued a note payable for $40,000 to an employee
physician to purchase the assets of his optometry practice. As part of the asset
purchase agreement, the employee physician entered into an employment agreement
(the Employment Agreement) with the Company. (See Employment Agreements below
for additional information.) The outstanding principal balance on the note due
to the employee physician was $27,080 at December 31, 1996. Accrued interest on
the note payable was $10,701 at December 31, 1996. The note is payable in five
annual installments of $10,548 per year including interest at 10% per annum,
commencing July 1998.

Under the terms of the Employment Agreement, the Company is to pay the
employee physician deferred compensation of $9,551 per year for five years
beginning August 1, 1998. The payments are to be reduced by certain amounts if
the employee physician does not complete five years of service for the Company
beginning July 1, 1993. In addition, deferred compensation payments may be
reduced if the dollar value of the employee physician's practice production
averaged less than $200,000 per year during the two-year period ended July 31,
1995. The accrued liability for deferred compensation payable to the employee
physician, discounted at 8.25%, was $14,826 at December 31, 1996.

F-97
<PAGE> 166
RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

7. LONG-TERM DEBT

Long-term debt at December 31, 1996 consists of the following:

<TABLE>
<S> <C>
Note payable to bank, interest at prime (8.25% at December
31, 1996) plus .75%, principal of $1,828 plus interest
payable monthly, collateralized by accounts receivable,
inventories, furniture and equipment, due August 2001..... $102,387
Less current maturities..................................... (21,936)
--------
Long-term debt.............................................. $ 80,451
========
</TABLE>

Aggregate maturities required on long-term debt at December 31, 1996, are
as follows:

<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- --------
<S> <C>
1997........................................................ $ 21,936
1998........................................................ 21,936
1999........................................................ 21,936
2000........................................................ 21,936
2001........................................................ 14,643
--------
$102,387
========
</TABLE>

8. INCOME TAXES

Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:

<TABLE>
<S> <C>
Noncurrent
Depreciation.............................................. $ 7,102
Contribution carryover.................................... 106
-------
Total deferred tax assets................................... 7,208
-------
Current accrual to cash..................................... 86,248
Total deferred tax liabilities.............................. 86,248
-------
Net deferred tax liabilities................................ $79,040
=======
</TABLE>

Components of the income tax provision (benefit) consists of the following
for the year ended December 31, 1996:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- ------
<S> <C> <C> <C>
Federal.................................................. $-- $4,064 $4,064
State.................................................... -- 676 676
--- ------ ------
$-- $4,740 $4,740
=== ====== ======
</TABLE>

F-98
<PAGE> 167
RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income taxes are different from the amount computed by applying the United
States Statutory Rate to income before income taxes for the following reasons:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
------------
<S> <C>
Income taxes at statutory rate.............................. $2,782
Permanent differences....................................... 1,396
State taxes, net of federal benefit......................... 446
Personal service corporation status......................... 116
------
$4,740
======
</TABLE>

SFAS 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that no valuation allowance at December 31, 1996 is necessary to
reduce the deferred tax assets to the amount that will more likely than not be
realized. There was no change in the valuation allowance in 1996. At December
31, 1996, the Company did not have available any net operating loss
carryforwards.

9. MALPRACTICE INSURANCE

The Company carries claims-made malpractice insurance for each of its
physicians. This insurance provides coverage of $1 million per incident, with a
$3 million annual limit. Management is not aware of any reported claims pending
against the Company. Losses resulting from unreported claims cannot be estimated
by management and, therefore, are not included in the accompanying financial
statements.

10. RETIREMENT PLAN

The Company maintains a profit-sharing plan covering all employees with two
years of service. The amount of contribution to the plan is determined annually
by the Board of Directors and may vary from zero to fifteen percent of covered
compensation.

The Company restated its profit sharing plan effective October 1, 1996 to
comply with Section 401(k) of the Federal Internal Revenue Code. The plan allows
employees with one year of service to defer up to fifteen percent of their
salary with a discretionary matching Company contribution. Total Company expense
related to the plan was $61,815 for the year ended December 31, 1996.

11. EMPLOYMENT AGREEMENTS

The Company employs several physicians through various employment
agreements. Compensation is calculated as a percentage of the dollar value of
practice production collected which is attributable to the employee physician.
The compensation percentage ranges from 40% to 70%. The employment agreements
are one year in duration and may be canceled with 90 days written notice by
either party.

In addition, if the sole stockholder of the Company should die during the
term of a certain physician employment agreement, the physician employee shall
have 15 days to match any offer received to purchase all or a portion of the
stock or assets of the Company.

12. SUBSEQUENT EVENT

On March 28, 1997, substantially all assets and liabilities of the Company
were acquired by Vision Twenty-One, Inc. (Vision) in exchange for approximately
129,000 shares of Vision common stock. In connection therewith, the Company
entered into a 40-year business management agreement with Vision, whereby Vision
will provide substantially all nonmedical services to the practice.
F-99
<PAGE> 168
RICHARD L. SHORT, D.O., P.A.
D/B/A EYE ASSOCIATES OF PINELLAS

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The financial statements of the Company have been prepared as supplemental
information about the association to which Vision will provide management
services following consummation of the acquisition. The Company previously
operated as a separate independent association. The historical financial
position, results of operations and cash flows do not reflect any adjustments
relating to the acquisition.

F-100
<PAGE> 169

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Cochise Eye & Laser, P.C.

We have audited the accompanying balance sheet of Cochise Eye & Laser, P.C.
as of July 31, 1996, and the related statements of income, stockholders' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cochise Eye & Laser, P.C. at
July 31, 1996, and the results of its operations and its cash flows for the year
then ended in conformity with generally accepted accounting principles.

ERNST & YOUNG LLP

Tampa, Florida
March 28, 1997
except for Note 6, as to which the date is
May 1, 1997

F-101
<PAGE> 170

COCHISE EYE & LASER, P.C.

BALANCE SHEETS

<TABLE>
<CAPTION>
JULY 31, APRIL 30,
1996 1997
-------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $155,798 $256,567
Patient accounts receivable, net.......................... 333,877 262,543
Inventories............................................... 102,715 87,564
Due from related party.................................... 1,087 32,054
Prepaid expenses.......................................... 60,288 22,756
-------- --------
Total current assets.............................. 653,765 661,484
Due from related party...................................... 6,952 6,952
Property, equipment and improvements, net................... 333,273 329,528
-------- --------
Total assets...................................... $993,990 $997,964
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft............................................ $139,105 $ --
Accounts payable.......................................... 42,595 37,634
Accrued pension contribution.............................. 126,629 60,489
Accrued compensation...................................... 28,619 42,650
-------- --------
Total current liabilities......................... 336,948 140,773
Deferred tax liability.................................... 245,710 321,710
Stockholders' equity:
Common stock, $1 par value: 50,000 shares authorized;
1,225 (1996) and 1,247 (1997) shares issued and
outstanding............................................ 1,225 1,247
Additional paid-in capital................................ 95,625 104,197
Due from stockholder......................................
Retained earnings......................................... 314,482 430,037
-------- --------
Total stockholders' equity........................ 411,332 535,481
-------- --------
Total liabilities and stockholders' equity........ $993,990 $997,964
======== ========
</TABLE>

See accompanying notes.

F-102
<PAGE> 171

COCHISE EYE & LASER, P.C.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE-MONTH
PERIOD ENDED
YEAR ENDED APRIL 30,
JULY 31, -----------------------
1996 1996 1997
---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Net patient service revenues............................. $2,096,246 $1,679,545 $1,627,918
Sale of optical supplies................................. 599,944 448,461 558,530
Other.................................................... 7,102 6,546 35,832
---------- ---------- ----------
Total revenues................................... 2,703,292 2,134,552 2,222,280
Expenses:
Compensation to physician stockholders................... 740,324 450,872 432,456
Salaries, wages and benefits............................. 837,029 610,318 711,509
Cost of optical supplies sold............................ 313,644 228,819 300,265
Optical, clinical and surgical supplies.................. 254,328 220,812 175,516
General and administrative............................... 156,191 101,663 174,035
Advertising.............................................. 40,285 16,234 42,236
Contract services........................................ 31,090 17,170 17,309
Insurance................................................ 23,422 4,657 27,399
Building and equipment rent.............................. 109,292 74,724 93,003
Depreciation and amortization............................ 72,927 55,452 56,997
Interest................................................. 1,415 2,183 --
---------- ---------- ----------
Total expenses................................... 2,579,897 1,782,904 2,030,725
---------- ---------- ----------
Income before income taxes....................... 123,345 351,648 191,555
---------- ---------- ----------
Income taxes............................................... 53,852 40,000 76,000
---------- ---------- ----------
Net income................................................. $ 69,493 $ 311,648 $ 115,555
========== ========== ==========
</TABLE>

See accompanying notes.

F-103
<PAGE> 172

COCHISE EYE & LASER, P.C.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
--------------- PAID-IN RETAINED STOCKHOLDERS'
NUMBER AMOUNT CAPITAL EARNINGS EQUITY
------ ------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT AUGUST 1, 1995..................... 1,113 $1,113 $ 52,762 $262,989 $316,864
Issuance of common stock.................... 112 112 42,863 -- 42,975
Net income.................................. -- -- -- 69,493 69,493
Distributions to stockholders............... -- -- -- (18,000) (18,000)
----- ------ -------- -------- --------
BALANCE AT JULY 31, 1996...................... 1,225 1,225 95,625 314,482 411,332
Issuance of common stock.................... 22 22 8,572 -- 8,594
Net income.................................. -- -- -- 115,555 115,555
----- ------ -------- -------- --------
BALANCE AT APRIL 30, 1997 (UNAUDITED)......... 1,247 $1,247 $104,197 $430,037 $535,481
===== ====== ======== ======== ========
</TABLE>

See accompanying notes.

F-104
<PAGE> 173

COCHISE EYE & LASER, P.C.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE-MONTH
PERIOD ENDED
YEAR ENDED APRIL 30,
JULY 31, ---------------------
1996 1996 1997
---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 69,493 $ 311,648 $ 115,555
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 72,927 55,452 56,997
Income taxes.............................................. 53,852 40,000 76,000
Changes in operating assets and liabilities:
Patient accounts receivable, net....................... (73,990) (69,606) 71,334
Inventories............................................ -- 8,793 15,151
Prepaid expenses....................................... (39,908) -- 37,532
Due from related party................................. 12,858 2,897 (30,967)
Accounts payable and accrued expenses.................. 122,797 (36,381) (196,175)
--------- --------- ---------
Net cash provided by operating activities......... 218,029 312,803 145,427
INVESTING ACTIVITIES
Purchases of property, equipment and improvements........... (107,954) (98,471) (53,252)
--------- --------- ---------
Net cash used in investing activities....................... (107,954) (98,471) (53,252)
FINANCING ACTIVITIES
Payment of capital lease obligation......................... (31,513) (8,964) --
Issuance of common stock.................................... 42,975 22,538 8,594
Distributions to stockholders............................... (18,000) -- --
--------- --------- ---------
Net cash provided by (used in) financing
activities...................................... (6,538) 13,574 8,594
--------- --------- ---------
Net increase in cash equivalents............................ 103,537 227,906 100,769
Cash equivalents at beginning of period..................... 52,261 52,261 155,798
--------- --------- ---------
Cash equivalents at end of period................. $ 155,798 $ 280,167 $ 256,567
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest.................... $ 1,415 $ 1,313 $ --
========= ========= =========
</TABLE>

See accompanying notes.

F-105
<PAGE> 174

COCHISE EYE & LASER, P.C.

NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Cochise Eye & Laser, P.C. (the Company), an Arizona corporation, operates a
professional medical practice, specializing in general ophthalmology, surgery,
and optometry. The Company has three offices located in Sierra Vista, Benson and
Douglas, Arizona.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The interim financial statements as of April 30, 1997 and for the
nine-month periods ended April 30, 1996 and 1997 do not provide all disclosures
included in the annual financial statements. These interim statements should be
read in conjunction with the annual audited financial statements and the
footnotes thereto. Results for the 1997 interim period are not necessarily
indicative of the results for the year ending July 31, 1997. However, the
accompanying interim financial statements reflect all adjustments which are, in
the opinion of management, of a normal and recurring nature necessary for a fair
presentation of the financial position and results of operations of the Company.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original
maturity of three months or less when purchased to be cash equivalents.

INVENTORIES

Inventories consist primarily of optical lenses, contact lenses and
eyeglass frames. Inventories are stated at the lower of cost or market, with
cost determined on a specific-identification basis.

PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements are carried at cost. Depreciation and
amortization, including amortization of assets held under capital lease
agreements are computed using the straight-line method, with useful lives
generally ranging from 5 to 20 years. Routine maintenance and repairs are
charged to expense as incurred, while costs of betterments and renewals are
capitalized.

Property, equipment and improvements consist of the following at July 31,
1996:

<TABLE>
<S> <C>
Land........................................................ $ 42,710
Medical, optical and surgical equipment..................... 511,837
Office equipment and furniture.............................. 260,274
Vehicles.................................................... 20,753
Leasehold improvements...................................... 103,783
--------
939,357
Less accumulated depreciation and amortization.............. (606,084)
--------
$333,273
========
</TABLE>

Included in medical equipment as of July 31, 1996 are assets acquired
through capital leases with original costs of approximately $42,000.

Amortization expense related to capital leases was approximately $8,000 for
the year ended July 31, 1996, and is included in depreciation in the statement
of income.

F-106
<PAGE> 175
COCHISE EYE & LASER, P.C.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of all current assets and current liabilities
approximates their fair value because of their short-term nature.

NET PATIENT SERVICE REVENUES

Net patient service revenues are based on established billing rates, less
allowances for contractual adjustments for patients covered by Medicare and the
Arizona Health Care Cost Containment System (AHCCS), and various other discount
arrangements. Payments received under these programs and arrangements, which
generally are based on predetermined rates, are generally less than the
Company's customary charges, and the differences are recorded as contractual
adjustments at the time the related service is rendered.

For the year ended July 31, 1996, approximately 27% of the Company's net
patient service revenues were derived from the Medicare and AHCCS programs. The
Company does not believe that there are any credit risks associated with
receivables due from governmental agencies. Concentration of credit risk from
other payors is limited by the number of patients and payors. The Company does
not require any form of collateral from its patients or third-party payors.

Laws and regulations governing the Medicare and AHCCS programs are complex
and subject to interpretation. The Company believes that it is in compliance
with all applicable laws and regulations and is not aware of any pending or
threatened investigations involving allegations of potential wrong doing. While
no such regulatory inquiries have been made, compliance with such laws and
regulations can be subject to future government review and interpretation as
well as significant regulatory action including fines, penalties and exclusion
from the Medicare and AHCCS programs.

ADVERTISING COSTS

The Company expenses advertising costs as incurred.

INCOME TAXES

Income taxes have been provided using the liability method in accordance
with Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes (SFAS 109). Under this method, deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.

USE OF ESTIMATES

F-107
<PAGE> 176
COCHISE EYE & LASER, P.C.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

2. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows at July 31,
1996:

<TABLE>
<S> <C>
DEFERRED TAX ASSETS
Noncurrent:
NOL carryforward.......................................... $ 10,722
Other..................................................... 2,664
---------
Total deferred tax assets......................... 13,386
---------
DEFERRED TAX LIABILITIES
Noncurrent:
Depreciation................................................ 43,620
Accrual to cash............................................. 215,476
---------
Total deferred tax liabilities.................... (259,096)
---------
Net deferred liability...................................... $(245,710)
=========
</TABLE>

Components of the income tax provision consist of the following for the
year ended July 31, 1996:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- --------
<S> <C> <C> <C>
Federal.................................................. $ -- $ 41,987 $ 41,987
State.................................................... -- 11,865 11,865
------ -------- --------
$ -- $ 53,852 $ 53,852
====== ======== ========
</TABLE>

Income taxes are different from the amount computed by applying the United
States statutory rate to income before income taxes for the following reasons
for the year ended July 31, 1996:

<TABLE>
<S> <C>
Income taxes at the statutory rate.......................... $41,937
Permanent differences....................................... 7,712
State taxes, net of federal benefit......................... 2,969
Personal service corporation status......................... 1,234
-------
$53,852
=======
</TABLE>

SFAS 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that no valuation allowance at July 31, 1996 is necessary to reduce
the deferred tax assets to the amount that will more likely than not be
realized. At July 31, 1996, the Company has net operating loss carryforwards of
approximately $26,000 which expire in the years 2010 and 2011.

3. MALPRACTICE INSURANCE

The Company carries malpractice insurance for its physicians and
optometrists. This insurance provides coverage of $1,000,000 per incident with a
$3,000,000 annual limit, with the exception of one optometrist who has coverage
of $2,000,000 per incident and a $4,000,000 annual limit. Coverage for the
physicians is on a claims-made basis, while coverage for the optometrists is on
an occurrence basis. In addition, the Company has an umbrella policy which
provides coverage of $1,000,000 per incident and $3,000,000 per annum.
Management is not aware of any reported claims pending against the Company.
Losses resulting from unreported claims cannot be estimated by management and,
therefore, are not included in the accompanying financial statements.

F-108
<PAGE> 177
COCHISE EYE & LASER, P.C.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

4. RETIREMENT PLAN

The Company maintains a profit sharing plan under Section 401(k) of the
Internal Revenue Code which covers substantially all employees. The Company
makes discretionary contributions on behalf of eligible employees which are
subject to various limits. Total expense related to the profit sharing plan for
the year ended July 31, 1996 was approximately $75,000.

The Company maintains a money purchase pension plan which covers
substantially all employees. The Company makes annual contributions on behalf of
eligible employees based on 5.7% of the employee's compensation, plus 5.7% of
the employee's compensation in excess of the taxable wage base as defined in the
plan. Total expense related to the money purchase pension plan for the year
ended July 31, 1996 was approximately $52,000.

5. RELATED PARTY TRANSACTIONS

The physician stockholders of the Company provide virtually all
ophthalmology services and their related salaries and benefits are reported as
compensation to physician stockholders in the accompanying statement of income.

The Company rents the Sierra Vista building from one of its stockholders.
Total rent paid to the stockholder for the year ended July 31, 1996 approximated
$83,000, and is included in building and equipment rent in the accompanying
statement of income.

Included as a reduction to stockholders' equity is a note receivable for
$900 from a stockholder related to the purchase of common stock.

As of July 31, 1996, the Company had an amount due from an employee of
$8,039, bearing interest at 8% and payable through 2010.

6. SUBSEQUENT EVENTS

On May 1, 1997, substantially all assets and liabilities were acquired by
Vision Twenty-One, Inc. (Vision) in exchange for 169,150 shares of Vision common
stock. In connection therewith, the Company entered into a 40-year service
agreement with Vision, whereby Vision will provide substantially all nonmedical
services to the practice.

The financial statements of the Company have been prepared as supplemental
information about the Association to which Vision will provide management
services following consummation of the acquisition. The Company previously
operated as a separate independent association. The historical financial
position, results of operations and cash flows do not reflect any adjustments
relating to the acquisition.

F-109
<PAGE> 178

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Retina Associates, Southwest, P.C. and
DGL Properties, Inc.

We have audited the accompanying combined balance sheet of Retina
Associates, Southwest, P.C. and DGL Properties, Inc. (collectively referred to
as the Company), as of July 31, 1997, and the related combined statements of
operations, stockholders' equity, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position at July 31, 1997 of
Retina Associates, Southwest, P.C. and DGL Properties, Inc. and the combined
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.

Tampa, Florida
October 31, 1997

F-110
<PAGE> 179

RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC.

COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
JULY 31,
1997
--------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 18,806
Patient accounts receivable, net of allowance for
uncollectible accounts of approximately $163,000....... 303,774
Prepaid expenses.......................................... 13,710
--------
Total current assets.............................. 336,290
Property, equipment and improvements, net................... 107,289
Deposits and other assets................................... 22,489
--------
Total assets...................................... $466,068
========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 18,864
Accrued compensation...................................... 13,949
Accrued pension contribution.............................. 7,310
Deferred rent............................................. 20,929
Deferred tax liability.................................... 111,286
--------
Total current liabilities......................... 172,338
Deferred tax liability...................................... 654
Stockholders' equity:
Common stock, $1 par value: 2,000,000 shares authorized,
17,250 shares issued and outstanding................... 17,250
Retained earnings......................................... 275,826
--------
Total stockholders' equity........................ 293,076
--------
Total liabilities and stockholders' equity........ $466,068
========
</TABLE>

See accompanying notes.

F-111
<PAGE> 180

RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC.

COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1997
----------
<S> <C>
Revenues:
Net patient service revenues.............................. $2,980,662
Other income.............................................. 53,444
----------
Total revenues.................................... 3,034,106
Expenses:
Compensation to physician stockholders.................... 1,731,361
Salaries, wages and benefits.............................. 563,052
General and administrative................................ 193,312
Building rent............................................. 169,218
Professional fees......................................... 159,742
Insurance................................................. 58,579
Medical supplies.......................................... 17,267
Advertising............................................... 14,261
Depreciation and amortization............................. 32,766
----------
Total expenses.................................... 2,939,558
----------
Income before income taxes........................ 94,548
Income tax benefit.......................................... 13,091
----------
Net income.................................................. $ 107,639
==========
</TABLE>

See accompanying notes.

F-112
<PAGE> 181

RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC.

COMBINED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK TOTAL
---------------- RETAINED STOCKHOLDERS'
NUMBER AMOUNT EARNINGS EQUITY
------ ------- --------- -------------
<S> <C> <C> <C> <C>
BALANCE, AUGUST 1, 1996............................... 17,250 $17,250 $ 327,787 $ 345,037
Net income.......................................... -- -- 107,639 107,639
Distributions to stockholders....................... -- -- (159,600) (159,600)
------ ------- --------- ---------
BALANCE, JULY 31, 1997................................ 17,250 $17,250 $ 275,826 $ 293,076
====== ======= ========= =========
</TABLE>

See accompanying notes.

F-113
<PAGE> 182

RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC.

COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED JULY 31, 1997

<TABLE>
<CAPTION>
YEAR ENDED
JULY 31,
1997
----------
<S> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 107,639
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 32,766
Amortization of deferred rent............................. (23,952)
Income tax benefit........................................ (13,091)
Changes in operating assets and liabilities:
Patient accounts receivable, net....................... 54,148
Prepaid expenses....................................... (2,208)
Accounts payable....................................... 10,993
Accrued compensation................................... (7,016)
Accrued pension contribution........................... 7,032
---------
Net cash provided by operating activities......... 166,311
INVESTING ACTIVITIES
Purchases of property and equipment......................... (14,735)
Decrease in deposits and other assets....................... 7,212
---------
Net cash used in investing activities............. (7,523)
FINANCING ACTIVITIES
Distributions to stockholders............................... (159,600)
---------
Net cash used in financing activities............. (159,600)
Decrease in cash and cash equivalents....................... (812)
Cash and cash equivalents at beginning of year.............. 19,618
---------
Cash and cash equivalents at end of year.......... $ 18,806
=========
</TABLE>

See accompanying notes.

F-114
<PAGE> 183

RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
JULY 31, 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Retina Associates, Southwest, P.C. (RAS), an Arizona corporation, operates
a professional medical practice, specializing in general ophthalmology and
surgery. DGL Properties, Inc. (DGL), an Arizona corporation with common
ownership, invests in commercial property. Both corporations operate in Tucson,
Arizona, and surrounding communities in Pima County, and are hereinafter
collectively referred to as the Company. All significant intercompany
transactions have been eliminated.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements are carried at cost. Depreciation is
computed using the straight-line method, with the assets' useful lives estimated
at five to fifteen years. Routine maintenance and repairs are charged to expense
as incurred, while costs of betterments and renewals are capitalized.

ADVERTISING COSTS

The Company expenses advertising costs as incurred.

NET PATIENT SERVICE REVENUES

For the year ended July 31, 1997, approximately 33% of the Company's net
patient service revenues were derived from the Medicare and AHCCS programs. The
Company does not believe that there are any credit risks associated with
receivables due from governmental agencies. Concentration of credit risk from
other payors is limited by the number of patients and payors. The Company does
not require any form of collateral from its patients or third-party payors.

Laws and regulations governing the Medicare and AHCCS programs are complex
and subject to interpretation. The Company believes that it is in compliance
with all applicable laws and regulations and is not aware of any pending or
threatened investigations involving allegations of potential wrongdoing. While
no such regulatory inquires have been made, compliance with such laws and
regulations can be subject to future government review and interpretation as
well as significant regulatory action including fines, penalties and exclusion
from the Medicare and AHCCS programs.

INCOME TAXES

Income taxes for RAS have been provided using the liability method in
accordance with Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.

F-115
<PAGE> 184
RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

DGL is taxed under the provisions of Subchapter S of the Internal Revenue
Code, which generally provides that in lieu of corporate taxes, the stockholders
shall be taxed on DGL's taxable income in accordance with their ownership
interests. As a result, the accompanying combined financial statements include
no provision for income taxes for DGL.

USE OF ESTIMATES

The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the combined financial
statements and accompanying footnotes. Actual results could differ from those
estimates.

2. PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements consist of the following at July 31,
1997:

<TABLE>
<S> <C>
Medical equipment........................................... $ 482,771
Office furniture and equipment.............................. 365,039
Leasehold improvements...................................... 18,019
Computer software........................................... 21,480
---------
887,309
(780,020)
---------
Less accumulated depreciation and amortization.............. $ 107,289
=========
</TABLE>

3. LEASE COMMITMENTS

Future minimum lease commitments under noncancelable operating leases (with
an initial or remaining term in excess of one year) at July 31, 1997 are as
follows:

<TABLE>
<S> <C>
Year ending July 31:
1998........................................................ $174,654
1999........................................................ 160,720
2000........................................................ 156,682
2001........................................................ 162,952
2002........................................................ 169,474
Thereafter.................................................. 28,428
--------
Total minimum lease payments...................... $852,910
========
</TABLE>

4. INCOME TAXES

F-116
<PAGE> 185
RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of RAS's deferred tax assets and liabilities are as
follows on July 31, 1997:

<TABLE>
<S> <C>
DEFERRED TAX ASSETS
Noncurrent:
Deferred rent............................................. $ 8,549
NOL carryforward.......................................... 2,453
Other..................................................... 250
---------
Total deferred tax assets......................... 11,252
---------
DEFERRED TAX LIABILITIES
Current:
Accrual to cash........................................... 111,286
Noncurrent:
Depreciation.............................................. 11,906
---------
Total deferred tax liabilities.................... 123,192
---------
Net deferred tax liability.................................. $(111,940)
=========
</TABLE>

Components of the income tax benefit consist of the following for the year
ended July 31, 1997:

<TABLE>
<S> <C>
Current:
Federal................................................... $ --
State..................................................... --
Deferred:
Federal................................................... (10,206)
State..................................................... (2,885)
--------
$(13,091)
========
</TABLE>

Income taxes are different from the amount computed by applying the United
States statutory rate to income before income taxes for the following reasons
for the year ended July 31, 1997:

<TABLE>
<S> <C>
Income taxes at the statutory rate.......................... $ 32,146
Permanent differences....................................... 2,767
S-corporation income........................................ (45,809)
State taxes, net of federal benefit......................... (1,903)
Personal service corporation status......................... (292)
--------
$(13,091)
========
</TABLE>

SFAS 109 requires a valuation allowance to reduce the deferred tax assets
reported if, based on the weight of the evidence, it is more likely than not
that some portion or all of the deferred tax assets will not be realized. After
consideration of all the evidence, both positive and negative, management has
determined that no valuation allowance at July 31, 1997 is necessary to reduce
the deferred tax assets to the amount that will, more likely than not, be
realized. At July 31, 1997, RAS has available net operating loss carryforwards
of $5,383, which expire in the year 2010.

5. MALPRACTICE INSURANCE

The Company carries claims-made medical malpractice insurance for each of
its physicians. This insurance provides coverage of $2,000,000 per incident,
with a $4,000,000 aggregate annual limit. In addition, the Company has an
umbrella policy which provides coverage of $5,000,000 per claim, with a
$5,000,000 annual limit. Management is not aware of any reported claims pending
against the Company. Losses resulting

F-117
<PAGE> 186
RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

from unreported claims cannot be estimated by management and, therefore, are not
included in the accompanying financial statements.

6. RETIREMENT PLAN

The Company maintains a profit sharing plan under Section 401(k) of the
Internal Revenue Code. The plan allows employees with one year of service to
defer up to ten percent of their compensation with a matching Company
contribution equal to twenty-five percent of the employees eligible
contributions as defined in the plan document. The Company may also elect to
contribute a discretionary amount on behalf of all eligible employees. Total
Company expense related to the plan was approximately $93,500 for the year ended
July 31, 1997.

7. COMMITMENTS

The Company has an employment agreement with a physician-stockholder which
provides for, among other things, base pay and various insurance coverages.
Additionally, the Company has a deferred compensation agreement with a
physician-stockholder which provides for compensation in the event of voluntary
or involuntary termination. DGL has a stockholder's agreement which requires the
Company to purchase any shares of the Company's stock held by deceased
stockholders from their estate at a purchase price based upon the value of such
stock as set at the last regular meeting of the stockholders prior to the death
of the stockholder.

8. SUBSEQUENT EVENT

On September 15, 1997, substantially all assets and liabilities of the
Company were acquired by Vision Twenty-One, Inc. (Vision) in exchange for
approximately 219,000 shares of Vision common stock and cash of $1,800,000. In
connection therewith, the Company entered into a 40-year service agreement with
Vision, whereby Vision will provide substantially all nonmedical services to the
Company.

F-118
<PAGE> 187

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Managed Health Service, Inc.

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

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

Tampa, Florida
November 21, 1997

F-119
<PAGE> 188

MANAGED HEALTH SERVICE, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, AUGUST 31,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ -- $441,764
-------- --------
Total current assets.............................. -- 441,764
Property and equipment, net................................. 10,873 12,097
Other assets................................................ 5,447 4,925
-------- --------
Total assets...................................... $ 16,320 $458,786
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank overdraft............................................ $ 11,120 $ --
Medical claims payable.................................... 263,661 454,538
Due to related parties.................................... 8,712 2,554
-------- --------
Total current liabilities......................... 283,493 457,092
Stockholders' equity (deficit):
Common stock, $1.00 par value: 7,500 shares authorized,
100 shares issued and outstanding...................... 100 100
Retained earnings (accumulated deficit)................... (267,273) 1,594
-------- --------
Total stockholders' equity (deficit).............. (267,173) 1,694
-------- --------
Total liabilities and stockholders' equity
(deficit)....................................... $ 16,320 $458,786
======== ========
</TABLE>

See accompanying notes.

F-120
<PAGE> 189

MANAGED HEALTH SERVICE, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
EIGHT-MONTH
PERIOD ENDED
YEAR ENDED AUGUST 31,
DECEMBER 31, -----------------------
1996 1996 1997
------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
Revenues:
Managed care revenues................................... $1,688,070 $1,082,327 $1,978,988
Other income............................................ 6,661 3,965 3,634
---------- ---------- ----------
Total revenues.................................. 1,694,731 1,086,292 1,982,622
Expenses:
Medical claims.......................................... 1,178,866 721,778 1,462,132
Management fees to a related party...................... 509,665 161,899 237,529
General and administrative.............................. 25,940 7,209 12,422
Depreciation and amortization........................... 6,826 3,688 1,672
---------- ---------- ----------
Total expenses.................................. 1,721,297 894,574 1,713,755
---------- ---------- ----------
Net income (loss)......................................... $ (26,566) $ 191,718 $ 268,867
========== ========== ==========
</TABLE>

See accompanying notes.

F-121
<PAGE> 190

MANAGED HEALTH SERVICE, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
RETAINED TOTAL
COMMON STOCK EARNINGS STOCKHOLDERS'
--------------- (ACCUMULATED) EQUITY
NUMBER AMOUNT DEFICIT) (DEFICIT)
------ ------ ------------- -------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996............................. 100 $100 $(240,707) $(240,607)
Net loss........................................... (26,566) (26,566)
---- ---- --------- ---------
BALANCE, DECEMBER 31, 1996........................... 100 100 (267,273) (267,173)
Net income (Unaudited)............................. 268,867 268,867
---- ---- --------- ---------
BALANCE, AUGUST 31, 1997 (UNAUDITED)................. 100 $100 $ 1,594 $ 1,694
==== ==== ========= =========
</TABLE>

See accompanying notes.

F-122
<PAGE> 191

MANAGED HEALTH SERVICE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
EIGHT-MONTH
PERIOD ENDED
YEAR ENDED AUGUST 31,
DECEMBER 31, -------------------
1996 1996 1997
------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $(26,566) $191,718 $268,867
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization............................. 6,826 3,688 1,672
Changes in operating assets and liabilities:
Accounts receivable.................................... 106,146 106,146
Bank overdraft......................................... 11,120 (11,120)
Medical claims payable................................. (66,826) (51,917) 190,877
Due to related parties................................. (37,736) 2,502 (6,158)
-------- -------- --------
Net cash provided by (used in) operating
activities...................................... (7,036) 252,137 444,138
INVESTING ACTIVITIES
Purchases of property and equipment......................... (6,613) -- (2,374)
-------- -------- --------
Net cash used in investing activities............. (6,613) -- (2,374)
Increase (decrease) in cash................................. (13,649) 252,137 441,764
Cash at beginning of period................................. 13,649 13,649 --
-------- -------- --------
Cash at end of period............................. $ -- $265,786 $441,764
======== ======== ========
</TABLE>

See accompanying notes.

F-123
<PAGE> 192

MANAGED HEALTH SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Managed Health Service, Inc. (the Company), a Florida corporation, is a
managed care organization which contracts with third-party health benefits
payors in the Tampa, Florida area to provide eye care services through a network
of associated optometry and ophthalmology practices and ambulatory surgical
centers. The managed care contracts are for one year terms which automatically
renew and the contracts are terminable by either party on sixty days notice.
Revenues from one payor (Note 3) constituted approximately 70%, 75% and 40% of
managed care revenues for the year ended December 31, 1996 and the eight-month
periods ended August 31, 1996 and 1997 (unaudited), respectively.

UNAUDITED INTERIM FINANCIAL STATEMENTS

The interim financial statements as of August 31, 1997 and for the
eight-month periods ended August 31, 1996 and 1997 do not provide all
disclosures included in the annual financial statements. These interim
statements should be read in conjunction with the annual audited financial
statements and the footnotes thereto. Results for the 1997 interim period are
not necessarily indicative of the results for the year ending December 31, 1997.
However, the accompanying interim financial statements reflect all adjustments
which are, in the opinion of management, of a normal and recurring nature
necessary for a fair presentation of the financial position and results of
operations of the Company.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Depreciation is computed using
the straight-line method, with the assets' useful lives estimated at three to
five years. Routine maintenance and repairs are charged to expense as incurred,
while costs of betterments and renewals are capitalized.

MANAGED CARE REVENUES

INCOME TAXES

Effective January 1, 1996, the Company has elected to have its income taxed
as an S corporation for income tax purposes. As a result, in lieu of corporate
income tax, the Company's taxable income is passed through to the stockholders
of the Company and taxed at the individual level. Accordingly, no provision or
liability for income tax has been reflected in the financial statements.

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 amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

MANAGEMENT FEES TO A RELATED PARTY

Management fees to a related party were incurred through contractual
arrangements between the Company and an ophthalmology practice under common
control.

F-124
<PAGE> 193
MANAGED HEALTH SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

MEDICAL CLAIMS PAYABLE

In accordance with the capitation contracts entered into with certain
health benefits payors, the Company is responsible for payment of providers'
claims. Medical claims payable represent provider claims reported to the Company
and an estimate of provider claims incurred but not reported (IBNR).

The Company estimates the amount of IBNR using methodologies based upon the
average interval between the date services are rendered and the date claims are
reported and other factors considered relevant by the Company.

Certain medical claims were paid to an ophthalmology practice under common
control. The expense related to these transactions totaled approximately
$148,000, $72,000 and $87,000 for the year ended December 31, 1996 and the
eight-month periods ended August 31, 1996 and 1997 (unaudited), respectively.

2. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 1996:

<TABLE>
<S> <C>
Computer equipment and software............................. $18,312
Less accumulated depreciation and amortization.............. (7,439)
-------
$10,873
=======
</TABLE>

3. SUBSEQUENT EVENTS

On September 17, 1997, substantially all assets and liabilities of the
Company were acquired by Vision Twenty-One, Inc. (Vision) in exchange for
$435,000 in cash and contingent consideration of 76,622 shares of Vision common
stock and $395,000 in cash if certain post-acquisition performance targets are
met. In connection therewith, the Company entered into a 40-year service
agreement with Vision, whereby Vision will provide substantially all nonmedical
services to the Company.

A managed care contract with a third-party health benefits payor was
terminated effective January 1, 1998 (Note 1).

F-125
<PAGE> 194

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
MEC Health Care, Inc. and LSI Acquisition, Inc.

We have audited the accompanying combined balance sheet of MEC Health Care,
Inc. and LSI Acquisition, Inc. (collectively referred to as the Company), as of
November 30, 1997, and the related combined statements of operations,
stockholder's equity, and cash flows for the eleven-month period ended November
30, 1997. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position at November
30, 1997 of MEC Health Care, Inc. and LSI Acquisition, Inc. and the combined
results of their operations and their cash flows for the eleven-month period
then ended in conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Tampa, Florida
March 5, 1998

F-126
<PAGE> 195

MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

COMBINED BALANCE SHEET

<TABLE>
<CAPTION>
NOVEMBER 30,
1997
------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 260,248
Due from NNJEI............................................ 491,047
Due from health benefits payors........................... 111,266
Prepaid expenses.......................................... 21,228
----------
Total current assets.............................. 883,789
Property, equipment and improvements, net................... 829,727
Intangible assets, net of accumulated amortization of
approximately $86,000..................................... 1,515,724
Other assets................................................ 165,793
Deferred tax asset.......................................... 5,000
----------
Total assets...................................... $3,400,033
==========

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses..................... $ 87,417
Accrued compensation...................................... 144,780
Due to NNJEI.............................................. 52,490
Note payable.............................................. 26,500
Medical claims payable.................................... 1,104,662
Income taxes payable...................................... 313,000
Current portion of obligations under capital leases....... 232,095
----------
Total current liabilities......................... 1,960,944
Obligations under capital leases, net of current portion.... 463,434
Stockholder's equity :
Common stock, $.001 par value; 51,000 shares authorized;
6,000 shares issued and outstanding....................... 6
Retained earnings......................................... 975,649
----------
Total stockholder's equity........................ 975,655
----------
Total liabilities and stockholder's equity........ $3,400,033
==========
</TABLE>

See accompanying notes.

F-127
<PAGE> 196

MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

COMBINED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
ELEVEN-MONTH
PERIOD ENDED
NOVEMBER 30,
1997
------------
<S> <C>
Revenues:
Managed care.............................................. $ 7,952,150
Practice management fees.................................. 2,920,873
Other revenue............................................. 119,954
-----------
10,992,977
Operating expenses:
Practice management expenses.............................. 2,169,444
Medical claims............................................ 6,011,152
Salaries, wages and benefits.............................. 953,048
General and administrative................................ 429,176
Management fee paid to Stockholder........................ 292,989
Depreciation and amortization............................. 341,882
-----------
10,197,691
-----------
Income from operations...................................... 795,286
Interest expense............................................ 76,600
-----------
Income before income taxes.................................. 718,686
Income taxes................................................ 308,000
-----------
Net income.................................................. $ 410,686
===========
</TABLE>

See accompanying notes.

F-128
<PAGE> 197

MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

COMBINED STATEMENT OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
--------------- PAID-IN RETAINED STOCKHOLDER'S
SHARES AMOUNT CAPITAL EARNINGS EQUITY
------ ------ ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996............... 6,000 $6 $ 2,552,765 $ 740,203 $ 3,292,974
Net income............................... 410,686 410,686
Capital distribution..................... (2,552,765) (175,240) (2,728,005)
----- -- ----------- --------- -----------
BALANCE AT NOVEMBER 30, 1997............... 6,000 $6 $ -- $ 975,649 $ 975,655
===== == =========== ========= ===========
</TABLE>

See accompanying notes.

F-129
<PAGE> 198

MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

COMBINED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
ELEVEN-MONTH
PERIOD ENDED
NOVEMBER 30,
1997
------------
<S> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 410,686
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 341,882
Deferred income tax benefit............................... (5,000)
Changes in operating assets and liabilities:
Due from NNJEI......................................... (121,210)
Due from health benefits payors........................ (111,266)
Prepaid expenses....................................... (14,628)
Other assets........................................... (150,000)
Accounts payable and accrued expenses.................. 34,105
Accrued compensation................................... 50,193
Medical claims payable................................. 509,951
Due from Stockholder................................... 1,022,165
Due to NNJEI........................................... 52,490
Income taxes payable................................... 313,000
-----------
Net cash provided by operating activities......... 2,332,368
INVESTING ACTIVITIES
Purchases of property, equipment and improvements........... (54,375)
-----------
Net cash used in investing activities....................... (54,375)
FINANCING ACTIVITIES
Payments on note payable.................................... (100,000)
Payments on obligations under capital leases................ (172,889)
Capital distribution........................................ (2,728,005)
-----------
Net cash used in financing activities............. (3,000,894)
-----------
Decrease in cash and cash equivalents....................... (722,901)
Cash and cash equivalents at beginning of period............ 983,149
===========
Cash and cash equivalents at end of period........ 260,248
===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest.................... $ 78,000
===========
</TABLE>

See accompanying notes.

F-130
<PAGE> 199

MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 30, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

MEC Health Care, Inc. (MEC), a Maryland corporation, is a managed care
organization which contracts with third-party health benefits payors in Maryland
and Virginia to provide eye care services through a network of associated
optometry and ophthalmology practices. The managed care contracts range from one
to five years and are terminable by either party generally on sixty to ninety
days notice. The contracts generally are automatically renewable for a one-year
period. Revenues from two payors constituted approximately 63% of managed care
revenues for the eleven-month period ended November 30, 1997. LSI Acquisition,
Inc. (LSIA), a New Jersey corporation, is a physician practice management
company which provides business management services for Northern New Jersey Eye
Institute, P.A. (NNJEI), a group of eye care professionals. Both MEC and LSIA
operate under common ownership and are hereinafter collectively referred to as
the Company. All significant intercompany transactions have been eliminated. MEC
and LSIA are wholly-owned subsidiaries of LaserSight, Incorporated
(Stockholder).

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements are carried at cost. Depreciation is
computed using the straight-line method, with the assets' useful lives estimated
at four to thirty-one years. Routine maintenance and repairs are charged to
expense as incurred, while costs of betterments and renewals are capitalized.

INTANGIBLE ASSETS

Intangible assets consists of the Services Agreement with NNJEI, which is
being amortized on a straight-line method over 25 years.

Amortization expense with respect to intangible assets was approximately
$59,000 for the eleven-month period ended November 30, 1997.

OTHER ASSETS

The Company purchased certain patient records and a managed care contract
in 1996 and 1997, respectively, for which costs of approximately $166,000 (net
of accumulated amortization of approximately $28,000) are included in other
assets in the combined balance sheet as of November 30, 1997. The costs are
being amortized on a straight-line method over four years. Amortization expense
with respect to other assets was approximately $27,000 for the eleven-month
period ended November 30, 1997.

MEDICAL CLAIMS PAYABLE

In accordance with the capitation contracts entered into with certain
health benefits payors, MEC is responsible for payment of providers' claims.
Medical claims payable represent provider claims reported to MEC and an estimate
of provider claims incurred but not reported (IBNR).

MEC estimates the amount of IBNR using methodologies based upon the average
interval between the date services are rendered and the date claims are reported
and other factors considered relevant by MEC.

F-131
<PAGE> 200
MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Certain medical claims were paid to an officer of MEC. The expense related
to these transactions totaled approximately $285,000 for the eleven-month period
ended November 30, 1997.

REVENUE RECOGNITION

Managed Care

Managed care revenues are derived from monthly capitation payments from
health benefits payors which contract with MEC for the delivery of eye care
services. MEC records this revenue on the accrual basis at contractually
agreed-upon rates.

Practice Management Fees

Practice management fees are earned through management of NNJEI under the
Services Agreement. This revenue represents reimbursement of practice management
expenses incurred by LSIA, including depreciation and amortization expense of
approximately $244,000 for the eleven-month period ended November 30, 1997. In
addition, LSIA receives 5% of NNJEI's net practice revenues and 40% of the net
practice earnings before physician related expenses, as determined under the
Services Agreement.

USE OF ESTIMATES

The preparation of combined financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the combined financial
statements and accompanying notes. Actual results could differ from those
estimates.

CONCENTRATIONS OF CREDIT RISK

INCOME TAXES

The Company has applied the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS 109), which requires an
asset and liability approach for financial accounting and reporting. Deferred
income tax assets and liabilities are determined based upon differences between
the financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.

2. AFFILIATION WITH NNJEI

Effective July 1, 1996, LSIA acquired substantially all of the assets and
assumed certain liabilities of NNJEI, an ophthalmology practice located in New
Jersey. The acquisition was accounted for by recording the assets and
liabilities at fair value and allocating the remaining cost to the related
Services Agreement. Under the Services Agreement, LSIA provides management,
marketing and administrative services to NNJEI in return for a management fee.
The Services Agreement has a 25-year life and is cancelable only for breach of
its provisions or insolvency. NNJEI employs ophthalmologists and provides all
eye care services to patients.

F-132
<PAGE> 201
MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

3. PROPERTY, EQUIPMENT AND IMPROVEMENTS

Property, equipment and improvements consist of the following at November
30, 1997:

<TABLE>
<CAPTION>
DESCRIPTION
-----------
<S> <C>
Equipment held under capital leases......................... $ 979,170
Office furniture and equipment.............................. 250,971
Leasehold improvements...................................... 60,908
Vehicles.................................................... 20,500
----------
1,311,549
Less accumulated depreciation and amortization.............. (481,822)
----------
$ 829,727
==========
</TABLE>

Depreciation and amortization of property, equipment and improvements
totaled approximately $256,000 for the eleven-month period ended November 30,
1997. Amortization expense related to capital leases is included in depreciation
and amortization in the combined statement of operations.

4. NOTE PAYABLE

Note payable consists of the following as of November 30, 1997:

<TABLE>
<S> <C>
Non-interest bearing note payable to an individual, due
October 15, 1998. The note is secured by certain equipment
of LSIA................................................... $26,500
=======
</TABLE>

5. CAPITAL LEASE OBLIGATIONS

The Company leases equipment under noncancelable capital leases (with an
initial or remaining term in excess of one year). Future minimum lease
commitments are as follows:

<TABLE>
<S> <C>
Month ending December 31, 1997.............................. $ 25,507
Year ending December 31:
1998...................................................... 306,083
1999...................................................... 306,083
2000...................................................... 181,163
2001...................................................... 4,706
---------
Total minimum lease payments................................ 823,542
Less amount representing interest........................... (128,013)
---------
Present value of minimum lease payments (including current
portion of $232,095)...................................... $ 695,529
=========
</TABLE>

F-133
<PAGE> 202
MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. COMMITMENTS AND CONTINGENCIES

COMMITMENTS

The Company leases its facilities and certain office equipment under
noncancelable operating lease arrangements which expire at various dates, most
with options for renewal. Certain facilities are leased from stockholders of
NNJEI on a year-to-year basis and an officer of MEC through September 2002. As
of November 30, 1997, future minimum lease payments under noncancelable
operating leases with original terms of more than one year are as follows:

<TABLE>
<S> <C>
Month ending December 31, 1997.............................. $ 10,347
Year ending December 31:
1998...................................................... 222,964
1999...................................................... 222,964
2000...................................................... 214,562
2001...................................................... 204,316
2002...................................................... 79,137
--------
Total....................................................... $954,290
========
</TABLE>

Rent expense for the eleven-month period ended November 30,1997 was
approximately $332,000. Rent expense related to locations leased from
stockholders of NNJEI and an officer of MEC was approximately $241,000 during
the eleven-month period ended November 30, 1997.

CONTINGENCY

In October 1997, the Stockholder received a request for
mediation/arbitration from NNJEI which relates to the services agreement between
LSIA and NNJEI. This services agreement was entered into as part of LSIA's July
1996 acquisition of the assets of NNJEI. The request for mediation alleges
breach of contract and fraud which the Stockholder denies and intends to
vigorously defend. The mediation began in mid-November and is continuing. Under
the terms of the services agreement, it will be followed by binding arbitration
if a resolution cannot be reached. The physicians employed by NNJEI have
threatened to discontinue providing professional services effective March 31,
1998. In the opinion of management of LSIA, the resolution of this matter will
not have a material effect on the financial position or results of operations of
LSIA or the Company.

MALPRACTICE

LSIA and NNJEI are insured with respect to medical malpractice risks
primarily on a claims-made basis. Management is not aware of any claims against
LSIA or NNJEI which might have a material impact on LSIA's financial position.
Losses resulting from unreported claims cannot be estimated by management and
therefore, an accrual has not been included in the accompanying combined
financial statements.

7. INCOME TAXES

The Company accounts for income taxes under FASB Statement No. 109,
"Accounting for Income Taxes (SFAS 109)". Deferred income tax assets and
liabilities are determined based upon differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.

F-134
<PAGE> 203
MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The components of the income tax provision (benefit) are as follows:

<TABLE>
<CAPTION>
ELEVEN-MONTH
PERIOD ENDED
NOVEMBER 30,
1997
------------
<S> <C>
Current
Federal................................................... $253,000
State..................................................... 60,000
Deferred
Federal................................................... (4,000)
State..................................................... (1,000)
--------
Total............................................. $308,000
========
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's net deferred income taxes are as follows:

<TABLE>
<CAPTION>
DEFERRED TAX
ASSET (LIABILITY)
NOVEMBER 30,
TEMPORARY DIFFERENCES/CARRYFORWARDS 1997
- ----------------------------------- -----------------
<S> <C>
Difference between book and tax amortization................ $5,000
------
Total deferred tax assets......................... 5,000
Other deferred tax liabilities.............................. --
Valuation allowance......................................... --
------
Net deferred taxes.......................................... $5,000
======
</TABLE>

Income taxes are different from the amount computed by applying the United
States statutory rate to income before income taxes for the following reasons:

<TABLE>
<CAPTION>
ELEVEN-MONTH
PERIOD ENDED
NOVEMBER 30,
1997
------------
<S> <C>
Income tax expense at the statutory rate.................... $244,000
Permanent differences....................................... 25,000
State taxes, net of federal benefit......................... 39,000
--------
Income taxes................................................ $308,000
========
</TABLE>

8. SUBSEQUENT EVENT

Effective December 1, 1997, Vision Twenty-One, Inc. (Vision) acquired all
of the outstanding stock of MEC and LSIA for $13.0 million, comprised of cash
and common stock of Vision. The historical combined financial position, results
of operations and cash flows of the Company do not reflect any adjustments
relating to the acquisition.

F-135
<PAGE> 204

======================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY
OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF
COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 5
The Company........................... 17
The Acquisitions...................... 17
Use of Proceeds....................... 19
Selling Stockholders.................. 20
Price Range of Common Stock........... 21
Dividend Policy....................... 21
Capitalization........................ 22
Selected Pro Forma Financial Data..... 23
Selected Financial Data............... 24
Supplemental Selected Financial Data.. 25
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 26
Business.............................. 42
Management............................ 48
Certain Transactions.................. 55
Principal Stockholders................ 58
Description of Capital Stock.......... 59
Shares Eligible for Future Sale....... 63
Plan of Distribution.................. 64
Legal Matters......................... 65
Experts............................... 65
Additional Information................ 65
Index to Financial Statements......... F-1
</TABLE>

======================================================
======================================================
1,206,718 SHARES

VISION TWENTY-ONE
COMMON STOCK
------------------------
PROSPECTUS
------------------------

MAY 12, 1998

======================================================
<PAGE> 205

PART II.

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The Company estimates that expenses payable by it in connection with the
Offering described in this registration statement (other than underwriting
discounts and commissions) will be as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 3,426
Printing expenses........................................... 5,000
Accounting fees and expenses................................ 15,000
Legal fees and expenses..................................... 20,000
Fees and expenses (including legal fees) for qualifications
under state securities laws............................... 2,000
Miscellaneous............................................... 10,000
-------
Total............................................. $55,426
=======
</TABLE>

All amounts except the Securities and Exchange Commission registration fee,
are estimated. The Company intends to pay all expenses of registration with
respect to shares being sold by the Selling Shareholders hereunder, with the
exception of underwriting discounts and commissions.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 607.0831 of the Florida Business Corporation Act ("FBCA") limits
the liability of directors of Florida corporations. Section 607.0831 provides as
follows:

1. A director is not personally liable for monetary damages to the
corporation or any other person for any statement, vote, decision, or
failure to act, regarding corporate management or policy, by a director,
unless:

a. The director breached or failed to perform his duties as a
director; and

b. The director's breach of, or failure to perform, those duties
constitutes:

(1) A violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful. A judgment or
other final adjudication against a director in any criminal
proceeding for a violation of the criminal law estops that director
from contesting the fact that his breach, or failure to perform,
constitutes a violation of the criminal law; but does not estop the
director from establishing that he had reasonable cause to believe
that his conduct was lawful or had no reasonable cause to believe
that his conduct was unlawful;

(2) A transaction from which the director derived an improper
personal benefit, either directly or indirectly;

(3) A circumstance under which the liability provisions of
Florida Statutes sec.607.0834 (liability for unlawful distributions)
are applicable;

(4) In a proceeding by or in the right of the corporation to
procure a judgment in its favor or by or in the right of a
shareholder, conscious disregard for the best interest of the
corporation, or willful misconduct; or

(5) In a proceeding by or in the right of someone other than the
corporation or a shareholder, recklessness or an act or omission
which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights,
safety, or property.

II-1
<PAGE> 206

2. For the purposes of this section, the term "recklessness" means the
action, or omission to act, in conscious disregard of a risk;

a. Known, or so obvious that it should have been known to the
director; and

b. Known to the director, or so obvious that it should have been
known, to be so great as to make it highly probable that harm would
follow from such action or omission.

3. A director is deemed not to have derived an improper personal
benefit from any transaction if the transaction and the nature of any
personal benefit derived by the director are not prohibited by state or
federal law or regulation and, without further limitation:

a. In an action other than a derivative suit regarding a decision
by the director to approve, reject, or otherwise affect the outcome of
an offer to purchase the stock of, or to effect a merger of, the
corporation, the transaction and the nature of any personal benefits
derived by a director are disclosed or known to all directors voting on
the matter, and the transaction was authorized, approved or ratified by
at least two directors who comprise a majority of the disinterested
directors (whether or not such disinterested directors constitute a
quorum);

b. The transaction and the nature of any personal benefits derived
by a director are disclosed or known to the shareholders entitled to
vote, and the transaction was authorized, approved, or ratified by the
affirmative vote or written consent of such shareholders who hold a
majority of the shares, the voting of which is not controlled by
directors who derived a personal benefit from or otherwise had a
personal interest in the transaction; or

c. The transaction was fair and reasonable to the corporation at
the time it was authorized by the board, a committee, or the
shareholders, notwithstanding that a director received a personal
benefit.

4. The circumstances set forth in subsection 3 are not exclusive and
do not preclude the existence of other circumstances under which a director
will be deemed not to have derived an improper benefit.

Section 607.0850 of the FBCA empowers a Florida corporation, subject to
certain limitations, to indemnify its directors and officers against expenses
(including attorneys' fees, judgments, fines and certain settlements) actually
and reasonably incurred by them in connection with any suit or proceeding to
which they are a party so long as they acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to a criminal action or proceeding, so long as
they had no reasonable cause to believe their conduct to have been unlawful.

The Articles of Incorporation of the Company provide that the Company shall
indemnify any person who is or was a director or officer of the Company to the
full extent permitted by Florida law. In addition, the Board of Directors of the
Company has approved the execution by the Company of indemnification agreements
with the Directors and certain officers of the Company, the form of which has
been filed as an exhibit to the Registration Statement.

The Company maintains director and officer liability insurance.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

The Company issued equity securities during 1997 in the following private
transactions which were exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) unless otherwise specifically set forth
in the description of the issuance.

In November 1996, the Company issued an aggregate of 2,685,318 shares of
Common Stock to Theodore Gillette, Richard Sanchez and Peter Fontaine in
connection with a reorganization of the Company.

In May 1996 and October 1996, the Company issued an aggregate of 270,331
shares of Common Stock to Bruce S. Maller, a Director of the Company, as
compensation for consulting and advisory services. These transactions were
exempt from the registration requirements of the Securities Act pursuant to Rule
701.

II-2
<PAGE> 207

In September 1996, the Company issued 108,132 shares of Common Stock to Dr.
Richard L. Lindstrom, a Director of the Company, as compensation for consulting
and advisory services. See "Certain Transactions." This transaction was exempt
from the registration requirements of the Securities Act pursuant to Rule 701.

In December 1996, the Company sold an aggregate principal amount of
$1,250,000 of its 10% Senior Subordinated Notes, Due December 19, 1999 (the
"Notes"), to certain unrelated parties in a private placement. Each Note has a
detachable Warrant exchangeable into 7,036 shares of Common Stock of the Company
at an exchange price ranging from $6.00 to $7.11 per share, or in a cashless
exchange for a reduced number of shares pursuant to a formula.

In February 1997, the Company sold a 10% Senior Subordinated Series 1997
Note, Due December 19, 1999, in the principal amount of $2,000,000 (the "Note"),
to Piper Jaffray Healthcare Fund II Limited Partnership in a private placement.
The Note has a detachable Warrant exchangeable into a maximum of 333,333 shares
of Common Stock at an exchange price ranging from $6.00 to $7.11 per share, or
in a cashless exchange for a reduced number of shares pursuant to a formula.

In an April 1997 private placement, which was amended in June 1997, the
Company issued a promissory note to Prudential Securities Group in the maximum
aggregate amount of $4.7 and warrants exchangeable into a maximum of 210,000
shares of Common Stock at an exchange price equal to the initial public offering
price of the Company's Common Stock.

In connection with the 1996 Acquisitions, the Company issued non-negotiable
promissory notes, as part of the purchase price, totaling approximately
$2,000,000 and issued an aggregate of 2,223,053 shares of Common Stock.

In 1996 and 1997, the Company granted options to purchase 682,677 shares of
Common Stock under the Plans to certain employees, executive officers and
affiliated professionals. These transactions were exempt from the registration
requirements of the Securities Act pursuant to Rule 701.

In April 1997, the Company issued 128,541 shares of Common Stock in
connection with the acquisition of certain assets of Richard L. Short, D.O.,
P.A.

In May 1997, the Company issued 11,411 shares of Common Stock, $19,000 in a
non-negotiable promissory note and $26,000 in cash in connection with the
acquisition of certain assets of Drs. Smith, Porter & Associates, P.A.

In May 1997, the Company issued 169,150 shares of Common Stock in
connection with the Merger Agreement with Cochise Eye & Laser, P.C.

In June 1997, the Company issued 109,084 shares of Common Stock and
$245,440 in non-negotiable promissory notes in connection with the acquisition
agreements with Craig R. Cassidy, D.O., P.C., Sanford L. Moretsky, D.O., P.C.,
and Valley Outpatient Surgical Center, Inc.

In June 1997, the Company issued 320,000 shares of Common Stock in
connection with the acquisition of certain assets of Swagel-Wooten Eye Care
Center, Ltd. and Aztec Optical.

Effective July 1997, the Company issued 138,338 shares of Common Stock into
escrow pending final closing upon the professional corporation obtaining a
license in connection with the Merger Agreement with Eye Institute of Southern
Arizona, P.C.

In September 1997, the Company issued 219,057 shares of Common Stock in
connection with the acquisition of Retina Associates Southwest, P.C.

In September 1997, the Company issued 155,702 shares of Common Stock in
connection with the acquisition of Florida Eye Care Center, Sever & Ramseur,
M.D., P.A., Thomas J. Pusateri, M.D., P.A., and Leonard E. Cortelli, M.D., P.A.,
Center Optical, Inc.

In September 1997, the Company issued 22,453 shares of Common Stock in
connection with the acquisition of Eye Q Corporation.

II-3
<PAGE> 208

In October 1997, the Company issued 70,659 shares of Common Stock in
connection with the acquisition of Lawrence C. Taylor, Jr., M.D., P.A. and
Leslie A. Tavares, M.D., P.A.

In October 1997, the Company issued 56,636 shares of Common Stock with the
acquisition of Lindstrom, Samuelson and Hardten Ophthalmology Associates, P.A.

In an October 1997 private placement, the Company issued a promissory note
to Prudential Securities Credit Corporation in the aggregate amount of $37.0
million and as a part of a commitment fee therefor, the Company issued warrants
to purchase up to an aggregate of 50,000 shares of Common Stock at an exercise
price of $11.50 per share. As a result of borrowings by the Company, Prudential
Securities Credit Corporation received additional warrants to purchase an
aggregate of approximately 107,000 shares of Common Stock as of January 30,
1998, as part of a funding fee calculated on a pro rata basis with respect to
the actual amount borrowed by the Company, at exercise prices between $8.25 and
$12.50 per share.

In October 1997, the Company issued warrants to purchase up to 25,000
shares of Common Stock at an exercise price of $13.25 per share to Prudential
Securities Incorporated as compensation for advisory services in connection with
the Block Acquisition.

In October 1997, the Company issued warrants to purchase up to 10,000
shares of Common Stock at an exercise price of $13.625 per share to Prudential
Securities Incorporated as a retainer in connection with the location of a bank
credit facility and upon closing of such bank credit facility in January the
Company issued warrants to purchase an additional 40,000 shares at an exercise
price of $8.75 per share.

Effective October 31, 1997, the Company issued 677,998 shares of Common
Stock in connection with the acquisition of the stock of BBG-COA, Inc. of which
219,633 shares are contingent upon certain future events.

Effective December 1, 1997, the Company issued 57,604 shares of Common
Stock in connection with the acquisition of First Eye Care, P.C.

In December, 1997 the Company issued 4,833 shares of Common Stock to Mr.
William Balz in connection with the cashless conversion of his warrants. The
warrant entitled Mr. Balz to purchase 8,333 shares of Common Stock at a
conversion price of $6.00 per share or in lieu of paying the conversion price to
receive a reduced amount of shares of Common Stock in a cashless conversion.

In December 1997, the Company issued 812,500 shares of Common Stock and in
January 1998, issued an additional 7,585 shares of Common Stock in connection
with the acquisition of the stock of LSI Acquisition, Inc. and MEC Health Care,
Inc.

In December 1997, the Company issued 90,100 shares of Common Stock in
connection with the acquisition of Desert Eye Associates, Ltd.

In January 1998, the Company issued 6,733 shares of Common Stock in
connection with the acquisition of James W. Dyson, O.D., P.C.

In February 1998, the Company issued 16,799 shares of Common Stock in
connection with the acquisition of Dr. Byron A. Teska, P.A.

In March 1998, the Company issued an aggregate of 522,600 shares of Common
Stock in connection with the acquisitions of Eye DRx and The Complete Optical
Laboratory, Ltd., Corp.

In March 1998, the Company issued an aggregate of 1,109,806 shares in
connection with the acquisition of Vision Insurance Plan of America, Inc. and
the merger of Eye Care One Corp.

In April 1998, the Company issued 73,519 shares of Common Stock in
connection with the acquisition of Robert L. Garrett, O.D., P.C.

In April 1998, the Company issued 126,183 shares of Common Stock in
connection with the acquisition of Master Eye Consultants, P.C.

In April 1998, the Company issued 28,058 shares of Common Stock in
connection with the acquisition of Dr. Freed & Associates, P.A.
II-4
<PAGE> 209

In April 1998, the Company issued 13,080 shares of Common Stock in
connection with the acquisition of Mitchell F. Goldstein, O.D., P.A.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <C> <S>

2.1* -- Agreement and Plan of Reorganization effective as of
September 1, 1997 among Florida Eye Center, Sever & Ramseur,
M.D., P.A., Raymond J. Sever, M.D. and Henry M. Ramseur,
M.D., and the Registrant.(5)
2.2* -- Asset Purchase Agreement effective as of September 1, 1997
among Thomas J. Pusateri, M.D., P.A., Thomas J. Pusateri,
M.D., and the Registrant.(5)
2.3* -- Asset Purchase Agreement effective as of September 1, 1997
among Leonard E. Cortelli, M.D., P.A., Leonard E. Cortelli,
M.D., and the Registrant.(5)
2.4* -- Optical Asset Purchase Agreement effective as of September
1, 1997 among Center Optical, Inc., Sever, Pusateri &
Cortelli, M.D., P.A., Henry M. Ramseur, M.D., Raymond J.
Sever, M.D., and the Registrant.(5)
2.5* -- Managed Care Organization Asset Purchase Agreement effective
as of September 1, 1997, among Managed Health Services,
Inc., Leonard E. Cortelli, M.D., Thomas J. Pusateri, M.D.,
Henry M. Ramseur, M.D., Raymond J. Sever, M.D., the
Registrant and Vision 21 Management Services, Inc.(5)
2.6* -- Agreement and Plan of Reorganization effective as of
September 1, 1997, among Retina Associates Southwest, P.C.,
Denis Carroll, M.D., Leonard Joffe, M.D., Reid Schindler,
M.D., and the Registrant.(5)
2.7* -- Agreement and Plan of Reorganization dated May 1, 1997 by
and among Cochise Eye & Laser, P.C., Jeffrey S. Felter,
M.D., Thomas Rodcay, M.D., Vision 21 of Sierra Vista, Inc.
and Vision Twenty-One, Inc.(9)
2.8* -- Asset Purchase Agreement dated June 1, 1997 among
Swagel-Wootton Eye Center, Ltd., Wendy Wootton, M.D., James
C. Wootton, M.D., Lorin Swagel, M.D., Daniel T. McGehee,
O.D. and Vision Twenty-One, Inc.(9)
2.9* -- Optical Asset Purchase Agreement dated June 1, 1997 among
Aztec Optical Limited Partnership, Swagel-Wootton Eye
Center, Ltd., Wendy Wootton, M.D., James C. Wootton, M.D.,
Lorin Swagel, M.D., Daniel T. McGehee, O.D. and Vision
Twenty-One, Inc.(9)
2.10* -- Stock Purchase Agreement dated as of October 31, 1997 by and
among Vision Twenty-One, Inc., BBG-COA, Inc., MarketCorp
Venture Associates, L.P., New York State Business Venture
Partnership, Chase Venture Capital Associates, Michael P.
Block, Saree Block and James T. Roberto.(8)
2.11* -- Stock Purchase Agreement effective December 1, 1997 among
Vision Twenty-One, Inc., MEC Health Care, Inc., LSI
Acquisition, Inc. and LaserSight Incorporated.(10)
2.12* -- Asset Purchase Agreement dated as of December 1, 1997 by and
among Desert Eye Associates, L.T.D., Jack A. Aaron, M.D.,
Richard Marcello, M.D., and Vision Twenty-One, Inc.(13)
2.13* -- Agreement and Plan of Reorganization dated March 31, 1998 by
and between Vision Twenty-One, Inc., Eye Care One Corp.,
Martin F. Stein, Robert C. Sowinski, Eugene H. Edson,
Stephen L. Charnof, John C. Colman, not individually but
solely as trustee of the John C. Colman Trust, u/t/a dated
August 5, 1994, and Stephen L. Charnof and Daniel J. Stein,
not individually but solely in their capacities as Trustees
of the Daniel J. Stein Irrevocable Trust u/a/d April 3,
1996.(12)
</TABLE>

II-5
<PAGE> 210

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <C> <S>
2.14* -- Stock Purchase Agreement effective March 31, 1998 by and
among Vision Twenty-One, Inc., Vision Twenty-One of
Wisconsin, Inc., Vision Insurance Plan of America, Inc.,
Martin F. Stein, Robert C. Sowinski, Eugene H. Edson,
Stephen L. Charnof, Thomas W. Witter, and John C. Colman,
not individually but solely as Trustee of the John C. Colman
Trust u/t/a dated August 5, 1994.(13)
2.15* -- Asset Purchase Agreement dated as of April 1, 1998 by and
among Robert L. Garrett, O.D., P.C., Robert L. Garrett,
O.D., Optometric Associates of Arizona, P.L.C., and Vision
Twenty-One, Inc.(13)
2.16* -- Asset Purchase Agreement dated as of April 1, 1998 by and
among Master Eye Consultants, P.C., Optometric Associates of
Texas, P.C., Vision Twenty-One, Inc., and J.R. Cacy,
O.D.(13)
2.17 -- Asset Purchase Agreement dated as of May 1, 1998 by and
among Johnson Eye Institute, P.A., Sever, Pusateri &
Cortelli, M.D., P.A., Optometric Associates of Florida,
P.A., Vision Twenty-One, Inc. and David A. Johnson, M.D.
2.18* -- Asset Purchase Agreement effective January 1, 1998, by and
among Elliot L. Shack, O.D., P.A., Charles M. Cummins, O.D.
and Elliott L. Shack, O.D., P.A., and Vision Twenty-One,
Inc.(13)
2.19* -- Stock Purchase Agreement effective as of January 1, 1998 by
and between Vision Twenty-One, Inc., The Complete Optical
Laboratory, Inc., Elliot L. Shack, and Charles M.
Cummins.(13)
2.20 -- Asset Purchase Agreement dated as of May 1, 1998 by and
among Johnson Eye Institute Surgery Center, Inc., Vision
Twenty-One Surgery Center, Ltd. and David A. Johnson, M.D.
and Debra Pazo Johnson.
(Schedules (or similar attachments) have been omitted and
the Registrant agrees to furnish supplementally a copy of
any omitted schedule to the Securities and Exchange
Commission upon request.)
3.1* -- Amended and Restated Articles of Incorporation of Vision
Twenty-One, Inc.(1)
3.2* -- Bylaws of Vision Twenty-One, Inc.(1)
4.1* -- Specimen of Vision Twenty-One, Inc. Common Stock
Certificate.(1)
4.2* -- Promissory Note dated June 1996 from Vision Twenty-One, Inc.
to Peter Fontaine.(1)
4.3* -- Promissory Note dated November 1996 from Vision Twenty-One,
Inc. to Peter Fontaine.(1)
4.4* -- Promissory Note dated December 1996 from Vision Twenty-One,
Inc. to Peter Fontaine.(1)
4.5* -- Note Purchase Agreement for 10% Senior Subordinated Notes
Due December 19, 1999(Detachable Warrants Exchangeable Into
Common Stock) dated December 20, 1996, by and between Vision
Twenty-One, Inc. and certain purchasers.(1)
4.6* -- Amendment No. 1 dated April 18, 1997, to that certain Note
Purchase Agreement dated December 20, 1996, by and between
Vision Twenty-One, Inc. and certain purchasers.(1)
4.7* -- Note Purchase Agreement for 10% Senior Subordinated Series
1997 Notes Due December 19, 1999 (Detachable Warrants
Exchangeable Into Common Stock) dated February 28, 1997
between Vision Twenty-One, Inc. and Piper Jaffray Healthcare
Fund II Limited Partnership.(1)
4.8* -- Amended and Restated Note and Warrant Purchase Agreement
dated June 1997 and First Amendment to Amended and Restated
Note and Warrant Purchase Agreement dated August 1997
between Vision Twenty-One, Inc. and Prudential Securities
Group.(4)
4.9* -- Credit facility commitment letter dated October 10, 1997
between Prudential Securities Credit Corporation and Vision
Twenty-One, Inc.(5)
</TABLE>

II-6
<PAGE> 211

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <C> <S>
4.10* -- Note Purchase Agreement dated October 1997 between Vision
Twenty-One, Inc. and Prudential Securities Credit
Corporation.(9)
4.11* -- Letter Amendment dated December 30, 1997 to the Note and
Warrant Purchase Agreement between Vision Twenty-One, Inc.
and Prudential Securities Credit Corporation.(10)
4.12* -- Stock Distribution Agreement dated December 30, 1997 by and
between Vision Twenty-One, Inc. and LaserSight
Incorporated.(10)
4.13* -- Credit Agreement dated as of January 30, 1998 among Vision
Twenty-One, Inc. the Banks Party Hereto and Bank of Montreal
as Agent.(11)
(The Company is not filing any instrument with respect to
long-term debt that does not exceed 10% of the total assets
of the Company and the Company agrees to furnish a copy of
such instrument to the Commission upon request.)
5.1 -- Opinion of Shumaker, Loop & Kendrick, LLP as to the Common
Stock being registered.
10.1* -- Employment Agreement dated October 1, 1996 between Vision
Twenty-One, Inc. and Theodore N. Gillette.(1)
10.2* -- Employment Agreement dated October 1, 1996 between Vision
Twenty-One, Inc. and Richard Sanchez.(1)
10.3* -- Employment Agreement dated September 1, 1996 between Vision
Twenty One, Inc. and Richard T. Welch.(1)
10.4* -- Services Agreement dated September 9, 1996 between Vision
Twenty-One, Inc. and Dr. Richard L. Lindstrom, M.D.(1)
10.5* -- Vision Twenty-One, Inc. 1996 Stock Incentive Plan.(1)
10.6* -- Vision Twenty-One, Inc. Affiliated Professionals Stock
Plan.(1)
10.7* -- Agreement dated May 10, 1996 between Vision Twenty-One, Inc.
and Bruce S. Maller.(1)
10.8* -- Advisory Agreement dated October 20, 1996 between Vision
Twenty-One, Inc. and Bruce S. Maller.(1)
10.9* -- Services Agreement dated March 10, 1996 between Vision
Twenty-One, Inc. and The BSM Consulting Group.(1)
10.10* -- Subscription Agreement dated June 4, 1996 between Vision
Twenty-One, Inc. and Peter Fontaine.(1)
10.11* -- Promissory Note dated June 1996 from Vision Twenty-One, Inc.
to Peter Fontaine, filed as Exhibit 4.2 to this Report and
incorporated herein by reference.
10.12* -- Promissory Note dated November 1996 from Vision Twenty-One,
Inc. to Peter Fontaine, filed as Exhibit 4.3 to this Report
and incorporated herein by reference.
10.13* -- Promissory Note dated December 1996 from Vision Twenty-One,
Inc. to Peter Fontaine filed as Exhibit 4.4 to this Report
and incorporated herein by reference.
10.14* -- Note Purchase Agreement for 10% Senior Subordinated Notes
Due December 19, 1999 (Detachable Warrants Exchangeable Into
Common Stock), dated December 20, 1996, by and between
Vision Twenty-One, Inc. and certain purchasers filed as
Exhibit 4.5 to this Report and incorporated herein by
reference.(2)
10.15* -- Amendment No. 1 dated April 18, 1997, to that certain Note
Purchase Agreement dated December 20, 1996, by and between
Vision Twenty-One, Inc. and certain purchasers filed as
Exhibit 4.6 to this Report and incorporated herein by
reference.(1)
10.16* -- Note Purchase Agreement for 10% Senior Subordinated Series
1997 Notes Due December 19, 1999 (Detachable Warrants
Exchangeable Into Common Stock), by and between Vision
Twenty-One, Inc. and Piper Jaffray Healthcare Fund II
Limited Partnership, filed as Exhibit 4.7 to this Report and
incorporated herein by reference.(1)
</TABLE>

II-7
<PAGE> 212

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <C> <S>
10.17* -- Amended and Restated Note and Warrant Purchase Agreement
dated June 1997 and First Amendment to Amended and Restated
Note and Warrant Purchase Agreement dated August 1997
between Vision Twenty-One, Inc. and Prudential Securities
Group, Inc. filed as Exhibit 4.8 to this Report and
incorporated herein by reference.(4)
10.18* -- Form of Indemnification Agreement.(1)
10.19+* -- Ancillary Provider Participation Agreement and Provider
Amendment among Humana Medical Plan, Inc., Humana Health
Plan of Florida, Inc., Humana Health Insurance of Florida,
Inc., Humana Insurance Company and Vision 21.(2)
10.20+* -- Asset Purchase Agreement dated December 1, 1996, by and
among Gillette & Associates, #6965, P.A., Theodore N.
Gillette, O.D., Mark Sarno, O.D. and Mark Beiler, O.D. and
Vision Twenty-One, Inc.(2)
10.21* -- Subordinated Promissory Note dated December 1, 1996, from
Vision Twenty-One, Inc. to Gillette & Associates, #6965,
P.A.(1)
10.22* -- Business Management Agreement dated December 1, 1996,
between Vision Twenty-One, Inc. and Gillette & Associates,
#6965, P.A.(2)
10.23+* -- Agreement and Plan of Reorganization dated December 1, 1996,
by and among Eye Institute of Southern Arizona, P.C.,
Jeffrey I. Katz, M.D. and Barry Kusman, M.D., Vision Twenty-
One, Inc. and Vision 21 of Southern Arizona, Inc.(3)
10.24* -- Business Management Agreement dated December 1, 1996,
between Eye Institute of Southern Arizona, P.C. and
ExcelCare, P.C. (as assigned to Vision Twenty-One, Inc.)(1)
10.25+* -- Asset Purchase Agreement dated December 1, 1996, by and
among Lindstrom, Samuelson & Hardten Ophthalmology
Associates, P.A., Richard L. Lindstrom, M.D., Thomas W.
Samuelson, M.D. and David R. Hardten, M.D. and Vision
Twenty-One, Inc.(9)
10.26* -- Subordinated Promissory Note dated December 1, 1996, from
Vision Twenty-One, Inc. to Lindstrom, Samuelson & Hardten
Ophthalmology Associates, P.A.(1)
10.27* -- Business Management Agreement dated December 1, 1996,
between Vision Twenty-One, Inc. and Lindstrom, Samuelson &
Hardten Ophthalmology Associates, P.A.(1)
10.42* -- Stock Purchase Agreement dated May 1997, between David R.
Hardten, M.D., Robert B. Kennedy, O.D., Thomas A. Knox,
Gregory W. Kraupa, O.D., John W. Lahr, O.D., Richard L.
Lindstrom, M.D., Jack W. Moore, Thomas W. Samuelson, M.D.,
and Bradley Dr. Richter, O.D. and Vision Twenty-One, Inc.(1)
10.43* -- Regional Services Agreement dated May 1997, between Vision
Twenty-One, Inc. and Richard L. Lindstrom, M.D.(1)
10.47* -- Form of Contract Provider agreement(2)
10.48+* -- Joint Venture Agreement dated May 1, 1996 by and between For
Eyes Managed Care, Inc. and Vision 21 Managed Eye Care of
Tampa Bay, Inc.(3)
10.49* -- Amendment to Agreement and Plan of Reorganization dated July
31, 1997 by and among Kuscat Investments, L.L.C.,
Ocusite-ASC, Inc., Jeffrey I. Katz, M.D. and Barry Kusman,
M.D., Vital Site, P.C., Vision Twenty-One, Inc. Vision 21 of
Southern Arizona, Inc. and the escrow agent.(9)
10.50* -- Employment Agreement dated October 31, 1997 between Vision
Twenty-One, Inc. and Michael P. Block.(9)
10.51* -- Letter of Intent dated October 15, 1997 by and among Vision
Twenty-One, Inc., BBG-COA, Inc. MarketCorp Venture
Associates, L.P., New York State Business Venture
Partnership, Chase Venture Capital Associates, Michael P.
Block, Saree Block and James T. Roberto.(6)
</TABLE>

II-8
<PAGE> 213

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <C> <S>
10.52* -- Credit facility commitment letter dated October 10, 1997
between Prudential Securities Credit Corporation and Vision
Twenty-One, Inc. filed as Exhibit 4.9 to this Report and
incorporated herein by reference.(6)
10.53* -- Note Purchase Agreement dated October 1997 between Vision
Twenty-One, Inc. and Prudential Securities Credit
Corporation, filed as Exhibit 4.10 to this Report and
incorporated herein by reference.(9)
10.54* -- Stock Purchase Agreement effective October 31, 1997 by and
among Vision Twenty-One, Inc., BBG-COA, Inc. Market Corp
Venture Associates, L.P., New York state Business Venture
Partnership, Chase Venture Capital Associates, Michael P.
Block, Saree Block and James T. Roberto, filed as Exhibit
2.10 to this Report and incorporated herein by reference.(7)
10.55* -- Letter Agreement of October 2, 1997 by and between
Prudential Securities Incorporated as exclusive agent for
obtaining $50.0 million credit facility, and Vision
Twenty-One, Inc.(9)
10.56* -- Letter Agreement of October 14, 1997 by and between
Prudential Securities Incorporated, as exclusive financial
adviser in the Block Acquisition, and Vision Twenty-One,
Inc.(9)
10.57* -- Letter Amendment dated December 30, 1997 to the Note and
Warrant Purchase Agreement between Vision Twenty-One, Inc.
and Prudential Securities Credit Corporation, filed as
Exhibit 4.11 to this Report and incorporated herein by
reference.(10)
10.58* -- Stock Distribution Agreement Dated December 30, 1997 by and
between Vision Twenty-One, Inc. and LaserSight,
Incorporated, filed as Exhibit 4.12 to this Report and
incorporated herein by reference.(10)
10.59* -- Credit Agreement dated as of January 30, 1998 among Vision
Twenty-One, Inc. the Banks Party Hereto and Bank of Montreal
as Agent filed as Exhibit 4.13 to this Report and
incorporated herein by reference.(11)
21 -- List of the subsidiaries of Vision Twenty-One, Inc.
23.1 -- Consent of Ernst & Young, LLP, independent certified public
accountants.
23.2 -- Consent of Ernst & Young, LLP, independent certified public
accountants.
23.3* -- Consent of Price Waterhouse LLP, independent certified
public accountants.(13)
23.4 -- Consent of Shumaker, Loop & Kendrick, LLP (included in their
opinion filed as Exhibit 5.1).
24* -- Power of Attorney.(13)
27.1* -- Restated Financial Data Schedule for year ended December 31,
1996 (for SEC use only).(13)
27.2* -- Restated Financial Data Schedule for year ended December 31,
1997 (for SEC use only).(13)
</TABLE>

- ---------------

* Previously filed as an Exhibit in the Company filing identified in the
footnote following the Exhibit Description and incorporated herein by
reference.
(1) Registration Statement on Form S-1 filed on June 13, 1997 (File No.
333-29213).
(2) Amendment No. 1 to Registration Statement on Form S-1 filed on July 23,
1997.
(3) Amendment No. 3 to Registration Statement on Form S-1 filed on August 14,
1997.
(4) Amendment No. 4 to Registration Statement on Form S-1 filed on August 15,
1997.
(5) Form 8-K filed September 30, 1997.
(6) Registration Statement on Form S-1 filed on October 30, 1997 (333-39031).
(7) Amendment No. 1 to Registration Statement on Form S-1 filed on November 3,
1997.
(8) Form 10-Q filed on November 14, 1997.
(9) Amendment No. 2 to Registration Statement on Form S-1 filed November 19,
1997.
(10) Form 8-K filed January 13, 1998.

II-9
<PAGE> 214

(11) Form 8-K filed February 10, 1998.
(12) Form 8-K filed April 14, 1998.

(13) Previously filed in Registration Statement on Form S-1 filed on April 30,
1998 (File No. 333-51437).

+ Certain information contained in this exhibit has been granted confidential
treatment pursuant to Rule 406 promulgated under the Securities Act of
1933, as amended, and such confidential information has been omitted
herefrom.

II-10
<PAGE> 215

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have audited the consolidated financial statements of Vision Twenty-One,
Inc. and Subsidiaries as of December 31, 1996 and 1997, and for each of the
three years in the period ended December 31, 1997, and have issued our report
thereon dated March 11, 1998 (included elsewhere in this Form S-1). Our audits
also included the financial statement schedule listed in Item 16(b) of the Form
S-1. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

/s/ ERNST & YOUNG

Tampa, Florida
March 11, 1998

II-11
<PAGE> 216

SCHEDULE -- VALUATION AND QUALIFYING ACCOUNTS

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT END
BEGINNING OF COSTS AND OTHER DEDUCTIONS -- OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DESCRIBE PERIOD
- ----------- ------------ ---------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
For the year ended December 31,
1995:
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ -- $ -- $ -- $ -- $ --
======== ======== ========== ====== ==========
For the year ended December 31,
1996:
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ -- $ -- $ 685,000(1) $ -- $ 685,000
======== ======== ========== ====== ==========
For the year ended December 31,
1997:
Deducted from asset accounts:
Allowance for doubtful
accounts................... $685,000 $254,000 $2,532,000(2) $ -- $3,471,000
======== ======== ========== ====== ==========
</TABLE>

- ---------------

(1) Amount represents allowance for doubtful accounts acquired in connection
with the December 1, 1996 acquisition of substantially all of the assets and
certain liabilities in 10 ophthalmology and optometry practices.
(2) Amount represents allowance for doubtful accounts acquired in connection
with the 1997 purchases of substantially all of the assets and certain
liabilities of 11 ophthalmology and optometry practices, 3 managed care
companies, a medical consulting company, and an ambulatory surgical center.

II-12
<PAGE> 217

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have audited the supplemental consolidated financial statements of
Vision Twenty-One Inc. and Subsidiaries (formed as a result of the consolidation
of Vision Twenty-One, Inc. and Subsidiaries, EyeCare One Corp. and Vision
Insurance Plan of America, Inc.) as of December 31, 1996 and 1997, and for each
of the three years in the period ended December 31, 1997, and have issued our
report thereon dated March 11, 1998 (included elsewhere in this Form S-1). Our
audits also included the financial statement schedule listed in Item 16(b) of
the Form S-1. This schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.

In our opinion, the supplemental financial statement schedule referred to
above, when considered in relation to the basic supplemental consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein, after giving retroactive effect to the merger
of Vision Twenty-One, Inc. and Subsidiaries, EyeCare One Corp. and Vision
Insurance Plan of America, Inc., as described in the notes to the supplemental
consolidated financial statements.

/s/ ERNST & YOUNG

Tampa, Florida
March 11, 1998

II-13
<PAGE> 218

SCHEDULE -- SUPPLEMENTAL VALUATION AND QUALIFYING ACCOUNTS

VISION TWENTY-ONE, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT END
BEGINNING OF COSTS AND OTHER DEDUCTIONS -- OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DESCRIBE PERIOD
- ----------- ------------ ---------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
For the year ended December 31,
1995:
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ -- $ -- $ -- $ -- $ --
======== ======== ========== ====== ==========
For the year ended December 31,
1996:
Deducted from asset accounts:
Allowance for doubtful
accounts................... $ -- $ -- $ 685,000(1) $ -- $ 685,000
======== ======== ========== ====== ==========
For the year ended December 31,
1997:
Deducted from asset accounts:
Allowance for doubtful
accounts................... $685,000 $262,000 $2,532,000(2) $ -- $3,479,000
======== ======== ========== ====== ==========
</TABLE>

- ---------------

II-14
<PAGE> 219

All other schedules are omitted because the required information is not
present or is not present in amounts sufficient to require submission of the
schedule or because the information required is included in the financial
statements or notes thereto or the schedule is not required or inapplicable
under the related instructions.

ITEM 17. UNDERTAKINGS.

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(b) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-15
<PAGE> 220

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Amended Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Largo, State of
Florida on May 12, 1998.

VISION TWENTY-ONE, INC.

By: /s/ THEODORE N. GILLETTE
------------------------------------
Theodore N. Gillette
Chief Executive Officer
(The Principal Executive Officer)

By: /s/ RICHARD T. WELCH
------------------------------------
Richard T. Welch
Chief Financial Officer
(The Principal Financial and
Accounting Officer)

Pursuant to the requirements of the Securities Act of 1933, this Amended
Registration Statement has been signed by the following persons in the
capacities indicated on May 12, 1998.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>

/s/ THEODORE N. GILLETTE Chief Executive Officer and Director
- -----------------------------------------------------
Theodore N. Gillette

/s/ RICHARD T. WELCH Chief Financial Officer and Director
- -----------------------------------------------------
Richard T. Welch

* Director
- -----------------------------------------------------
Richard L. Sanchez

* Director
- -----------------------------------------------------
Peter Fontaine

* Director
- -----------------------------------------------------
Herbert U. Pegues II, M.D.

* Director
- -----------------------------------------------------
Bruce S. Maller

* Director
- -----------------------------------------------------
Richard L. Lindstrom, M.D.

* Director
- -----------------------------------------------------
Jeffrey Katz, M.D.
</TABLE>

II-16
<PAGE> 221

<TABLE>
<C> <S>
*By: /s/ THEODORE N. GILLETTE
---------------------------------------------- as attorneys in fact pursuant to the
Theodore N. Gillette power of attorney included in the
Registration Statement as originally
*By: /s/ RICHARD T. WELCH filed on April 30, 1998
----------------------------------------------
Richard T. Welch
</TABLE>

II-17
<PAGE> 222

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
<C> <C> <S>
2.1* -- Agreement and Plan of Reorganization effective as of
September 1, 1997 among Florida Eye Center, Sever & Ramseur,
M.D., P.A., Raymond J. Sever, M.D. and Henry M. Ramseur,
M.D., and the Registrant.(5)
2.2* -- Asset Purchase Agreement effective as of September 1, 1997
among Thomas J. Pusateri, M.D., P.A., Thomas J. Pusateri,
M.D., and the Registrant.(5)
2.3* -- Asset Purchase Agreement effective as of September 1, 1997
among Leonard E. Cortelli, M.D., P.A., Leonard E. Cortelli,
M.D., and the Registrant.(5)
2.4* -- Optical Asset Purchase Agreement effective as of September
1, 1997 among Center Optical, Inc., Sever, Pusateri &
Cortelli, M.D., P.A., Henry M. Ramseur, M.D., Raymond J.
Sever, M.D., and the Registrant.(5)
2.5* -- Managed Care Organization Asset Purchase Agreement effective
as of September 1, 1997, among Managed Health Services,
Inc., Leonard E. Cortelli, M.D., Thomas J. Pusateri, M.D.,
Henry M. Ramseur, M.D., Raymond J. Sever, M.D., the
Registrant and Vision 21 Management Services, Inc.(5)
2.6* -- Agreement and Plan of Reorganization effective as of
September 1, 1997, among Retina Associates Southwest, P.C.,
Denis Carroll, M.D., Leonard Joffe, M.D., Reid Schindler,
M.D., and the Registrant.(5)
2.7* -- Agreement and Plan of Reorganization dated May 1, 1997 by
and among Cochise Eye & Laser, P.C., Jeffrey S. Felter,
M.D., Thomas Rodcay, M.D., Vision 21 of Sierra Vista, Inc.
and Vision Twenty-One, Inc.(9)
2.8* -- Asset Purchase Agreement dated June 1, 1997 among
Swagel-Wootton Eye Center, Ltd., Wendy Wootton, M.D., James
C. Wootton, M.D., Lorin Swagel, M.D., Daniel T. McGehee,
O.D. and Vision Twenty-One, Inc.(9)
2.9* -- Optical Asset Purchase Agreement dated June 1, 1997 among
Aztec Optical Limited Partnership, Swagel-Wootton Eye
Center, Ltd., Wendy Wootton, M.D., James C. Wootton, M.D.,
Lorin Swagel, M.D., Daniel T. McGehee, O.D. and Vision
Twenty-One, Inc.(9)
2.10* -- Stock Purchase Agreement dated as of October 31, 1997 by and
among Vision Twenty-One, Inc., BBG-COA, Inc., MarketCorp
Venture Associates, L.P., New York State Business Venture
Partnership, Chase Venture Capital Associates, Michael P.
Block, Saree Block and James T. Roberto.(8)
2.11* -- Stock Purchase Agreement effective December 1, 1997 among
Vision Twenty-One, Inc., MEC Health Care, Inc., LSI
Acquisition, Inc. and LaserSight Incorporated.(10)
2.12* -- Asset Purchase Agreement dated as of December 1, 1997 by and
among Desert Eye Associates, L.T.D., Jack A. Aaron, M.D.,
Richard Marcello, M.D., and Vision Twenty-One, Inc.(13)
2.13* -- Agreement and Plan of Reorganization dated March 31, 1998 by
and between Vision Twenty-One, Inc., Eye Care One Corp.,
Martin F. Stein, Robert C. Sowinski, Eugene H. Edson,
Stephen L. Charnof, John C. Colman, not individually but
solely as trustee of the John C. Colman Trust, u/t/a dated
August 5, 1994, and Stephen L. Charnof and Daniel J. Stein,
not individually but solely in their capacities as Trustees
of the Daniel J. Stein Irrevocable Trust u/a/d April 3,
1996.(12)
</TABLE>

<PAGE> 223

<PAGE> 224

<PAGE> 225

- ---------------

(11) Form 8-K filed February 10, 1998.
(12) Form 8-K filed April 14, 1998.

(13) Previously filed in Registration Statement on Form S-1 filed on April 30,
1998 (File No. 333-51437).

<PAGE> 1
EXHIBIT 2.17

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of the 1st
day of May, 1998, by and among JOHNSON EYE INSTITUTE, P.A. a Florida
professional association ("Seller"), SEVER, PUSATERI & CORTELLI, M.D., P.A., a
Florida professional association (the "Managed Medical Practice"), OPTOMETRIC
ASSOCIATES OF FLORIDA, P.A., a Florida professional association (the "Managed
Optometric Practice"; the Managed Medical Practice and the Managed Optometric
Practice are together referred to as the "Managed Practices"), VISION
TWENTY-ONE, INC., a Florida corporation ("Vision 21"), and DAVID A. JOHNSON,
M.D. (the "Physician").

W I T N E S S E T H:

WHEREAS, the Physician owns all of the issued and outstanding shares of
capital stock of the Seller;

WHEREAS, the Physician is an ophthalmologist who is licensed to
practice ophthalmology in the State of Florida, and who currently conducts an
ophthalmology and optometry practice through the Seller located in Zephyrhills,
Florida, and Dade City, Florida (collectively, the "Practice");

WHEREAS, Vision 21 provides business management services and facilities
for eye care professionals and related businesses, including the Managed
Practices;

WHEREAS, the Managed Medical Practice is a medical professional
association with its principal place of business at 13602 North 46th Street,
Tampa, Florida 33613;

WHEREAS, the Managed Optometric Practice is an optometric professional
association with its principal place of business at 7209 Bryan Dairy Road,
Largo, Florida 34777; and

WHEREAS, Seller desires to sell, assign and transfer all of its Medical
Assets (as defined herein) to the Managed Medical Practice, all of its
Optometric Assets (as defined herein) to the Managed Optometric Practice and all
of its Non-Medical Assets (as defined herein) to the extent permitted by law to
Vision 21, and Vision 21 and the Managed Practices desire to purchase, assume
and acquire such assets and assume certain liabilities of the Seller in exchange
for the consideration provided herein.

NOW, THEREFORE, in consideration of the respective covenants,
representations, warranties and agreements herein contained, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:

ARTICLE I - PURCHASE AND SALE

1.1. Purchase and Sale of Non-Medical Assets. Subject to the terms and
conditions herein set forth, and in reliance upon the representations and
warranties set forth herein, Seller agrees to sell, convey, assign, transfer and
deliver to Vision 21, and Vision 21 agrees to purchase,

<PAGE> 2

assume, accept and acquire, all of Seller's right, title and interest in and to
the assets of Seller relating to the Practice consisting of all the assets
(other than the Medical Assets specified in Section 1.2(a) hereof, the
Optometric Assets specified in Section 1.2(b) hereof and the Excluded Assets
specified in Section 1.3 hereof) as set forth on SCHEDULE 1.1, of every kind,
character and description, whether tangible, real, personal, or mixed, and
wheresoever located, whether carried on the books of Seller or not carried on
the books of Seller due to having been expended, fully depreciated, or otherwise
(collectively, the "Non-Medical Assets"), and including without limitation the
following (except to the extent that any of the following are specifically
enumerated as Excluded Assets in Section 1.3 hereof) to the extent permitted by
applicable law:

(a) all machinery, equipment, tools, furniture, furnishings,
goods, and other tangible personal property;

(b) all supplies (but not the medical, optometric or optical
supplies described as "Medical Assets" or "Optometric Assets" in Section 1.2(a)
or (b) hereof);

(c) all leases of instruments, equipment, furniture, machinery
and other items of tangible personal property (including rights to any security
deposits with respect to such leases);

(d) all prepaid items, notes and unbilled costs and fees
(excluding intercompany and related party debts);

(e) to the extent permitted by applicable law, all rights
under any written or oral contract, agreement, plan, instrument, registration,
license, certificate of occupancy, other permit or approval of any nature, or
other document, commitment, arrangement, undertaking, practice or authorization
(but not the third party payor contracts, licenses, certificates or
authorizations described as "Medical Assets" or "Optometric Assets" in Section
1.2(a) or (b) hereof);

(f) all rights under any patents, trademarks, service marks,
trade names or copyrights, whether registered or unregistered, and any
applications therefor, except for the names "Johnson Eye Institute" and
"NewLight Eye Laser Surgery Center";

(g) all data bases used in the Practice or under development;

(h) all rights arising out of occurrences before or after the
Closing, including without limitation, all representations, warranties,
covenants and guaranties made or provided by third parties to or for the benefit
of Seller with respect to any of the Non-Medical Assets;

(i) all books and records of Seller, including, without
limitation, all credit records, payroll records, computer records, computer
programs, contracts, agreements, operating manuals, schedules of assets,
correspondence, books of account, files, papers, books and all other public and
confidential business records, whether such records are in hard copy form or are
electronically or magnetically stored; provided, however, that all financial
records necessary for the preparation of tax returns or to support previously
filed tax returns shall be retained by Seller, which shall maintain

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such records for seven (7) years after the Closing Date and permit Vision 21 to
review or obtain copies of such records, at Vision 21's cost, subsequent to the
Closing Date;

(j) all information, files, records, data, plans, contracts
and recorded knowledge, including supplier lists and employee records related to
the foregoing and the operation of the Practice;

(k) accounts receivable of Seller existing as of the effective
date of this Agreement; and

(l) all cash in registers or petty cash drawers (which shall
on the Closing Date be at least ninety percent (90%) of the average daily cash
balance held in such locations in the twelve (12) month period preceding the
Closing Date).

1.2. (a) Purchase and Sale of Medical Assets. Subject to the terms and
conditions herein set forth, and in reliance upon the representations and
warranties set forth herein, Seller agrees to sell, convey, assign, transfer and
deliver to the Managed Medical Practice, and the Managed Medical Practice agrees
to purchase, assume, accept and acquire all of Seller's right, title and
interest in and to the assets of Seller consisting of all the assets (other than
the Non-Medical Assets specified in Section 1.1 hereof, the Optometric Assets
specified in Section 1.2(b) hereof and the Excluded Assets specified in Section
1.3 hereof), of every kind, character and description, whether tangible, or
intangible, and wheresoever located, whether carried on the books of Seller due
to having been expended, fully depreciated or otherwise (the "Medical Assets"),
including, without limitation, the following (except to the extent that any of
the following are specifically enumerated as Excluded Assets in Section 1.3
hereof) to the extent permitted by applicable law:

(i) medical patient lists, including names, addresses
and telephone numbers;

(ii) medical records;

(iii) all rights in employment contracts with
physicians employed by Seller (except for the Employment
Agreement between Physician and Seller in effect immediately
prior to the effective date of this Agreement);

(iv) medical supplies, (excluding optometric and
optical supplies), drugs, pharmaceuticals, products,
substances and items;

(v) third party payor contracts (except for rights to
purchased accounts receivable) with respect to the provision
of medical eye care services;

(vi) licenses, certificates of need,
Medicare/Medicaid certifications and other governmental
authorizations necessary to provide medical services and to be
paid therefor by applicable third party payors; and

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<PAGE> 4

(vi) any other asset that legally cannot be owned by
a party that is not a physician.

(b) Purchase and Sale of Optometric Assets. Subject to the
terms and conditions herein set forth, and in reliance upon the representations
and warranties set forth herein, Seller agrees to sell, convey, assign, transfer
and deliver to the Managed Optometric Practice, and the Managed Optometric
Practice agrees to purchase, assume, accept and acquire all of Seller's right,
title and interest in and to the assets of Seller consisting of all the assets
(other than the Non-Medical Assets specified in Section 1.1 hereof, the Medical
Assets specified in Section 1.2(a) hereof and the Excluded Assets specified in
Section 1.3 hereof), of every kind, character and description, whether tangible,
or intangible, and wheresoever located, whether carried on the books of Seller
due to having been expended, fully depreciated or otherwise (the "Medical
Assets;" the Non-Medical Assets, the Optometric Assets and the Medical Assets
are collectively referred to as the "Assets"), including, without limitation,
the following (except to the extent that any of the following are specifically
enumerated as Excluded Assets in Section 1.3 hereof) to the extent permitted by
applicable law:

(i) all inventory;

(ii) optometric patient lists, including names,
addresses and telephone numbers;

(iii) optometric records;

(iv) all rights in employment contracts with
optometrists employed by Seller;

(v) optometric supplies, including optical
supplies, drugs, pharmaceuticals, products, substances and
items;

(vi) third party payor contracts (except for rights
to purchased accounts receivable) with respect to the
provision of optometric services;

(vii) licenses, certificates of need,
Medicare/Medicaid certifications and other governmental
authorizations necessary to provide optometric services and to
be paid therefor by applicable third party payors;

(viii) eyeglasses, lenses and other eye wear; and

(ix) any other asset that legally cannot be owned
by a party that is not optometrist-owned.

1.3. Excluded Assets. Notwithstanding the foregoing, none of the
Medical Assets, the Optometric Assets or the Non-Medical Assets shall include
any of the following (collectively, the "Excluded Assets"):

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<PAGE> 5

(a) life insurance policies covering the life of the Physician
or any employee of Seller;

(b) personal effects listed on SCHEDULE 1.3;

(c) cash and cash equivalents in banks, certificates of
deposit, commercial paper and securities owned by Seller (but excluding
cash held in registers or petty cash drawers on the Closing Date which
shall be transferred to Vision 21);

(d) all assets presently located at or used exclusively for
the conduct of Seller's medical practice located at 2119 Brandon
Boulevard West, Brandon, Florida 33511 (the "Brandon Practice") and
which are listed and described on SCHEDULE 1.3; provided, however, that
such Excluded Assets shall not include any assets moved to the Brandon
Practice from other locations of the Practice within the last six (6)
months, and any such assets moved in the last six (6) months shall be
included among the Assets transferred pursuant to this Agreement;

(e) the names "Johnson Eye Institute" and "NewLight Eye Laser
Surgery Center";

(f) the leases of real property located at 38038 North Avenue,
Zephyrhills, Florida 33540, and 13940 South 7th Street, Dade City,
Florida 33525, which leases have been terminated as of the effective
date of this Agreement, and which locations shall be leased to Vision
21 pursuant to the Lease Agreements described in Section 2.2(a)(v);

(g) the Employment Agreement between Physician and Seller in
effect immediately prior to the effective date of this Agreement;

(h) the three (3) minivans owned by Seller.

1.4. The Purchase Price. Vision 21 agrees that, subject to the terms
and conditions of this Agreement, and in full consideration for the aforesaid
sale, transfer, conveyance, assignment and delivery of the Non-Medical Assets of
Seller to Vision 21, and the acceptance by Vision 21 of such Non-Medical Assets
and the assumption by Vision 21 of those liabilities listed on SCHEDULE 1.6
hereto, Vision 21 shall deliver to Seller at the Closing the consideration (the
"Non-Medical Assets Purchase Price") set forth in SCHEDULE 1.4 hereto. The
Managed Medical Practice agrees that, subject to the terms and conditions of
this Agreement, and in full consideration for the aforesaid sale, transfer,
conveyance, assignment and delivery of the Medical Assets of Seller to the
Managed Medical Practice, and the acceptance by the Managed Medical Practice of
such Medical Assets, the Managed Medical Practice shall deliver to Seller at the
Closing the consideration (the "Medical Assets Purchase Price") set forth in
SCHEDULE 1.4 hereto. The Managed Optometric Practice agrees that, subject to the
terms and conditions of this Agreement, and in full consideration for the
aforesaid sale, transfer, conveyance, assignment and delivery of the Optometric
Assets of

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<PAGE> 6

Seller to the Managed Optometric Practice, and the acceptance by the Managed
Optometric Practice of such Optometric Assets, the Managed Optometric Practice
shall deliver to Seller at the Closing the consideration (the "Optometric Assets
Purchase Price") set forth in SCHEDULE 1.4 hereto. The Non-Medical Assets
Purchase Price, the Medical Assets Purchase Price and the Optometric Assets
Purchase Price are collectively referred to as the "Purchase Price."

1.5. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth on SCHEDULE 1.5 annexed hereto and made
a part hereof. Each of the Seller, Physician, Vision 21 and the Managed
Practices hereby covenants and agrees that he or it will not take a position
that is in any way inconsistent with the terms of this Section 1.5 on any income
tax return, before any governmental agency charged with the collection of any
income tax or in any judicial proceeding.

1.6. Assumption of Certain Obligations and Liabilities. From and after
the Closing Date, Vision 21 shall assume and agree to pay or perform, promptly
as they become due, only those obligations and liabilities of the Seller
expressly set forth on SCHEDULE 1.6 (the "Assumed Obligations"). Except for the
Assumed Obligations, none of Vision 21 or the Managed Practices shall assume or
be deemed to have assumed or shall be responsible for any other obligation or
liability of Company, direct or indirect, known or unknown, absolute or
contingent.

ARTICLE II - CLOSING, ITEMS TO BE DELIVERED,
THIRD PARTY CONSENTS AND FURTHER ASSURANCES

2.1. Closing. The closing of the transactions contemplated in this
Agreement (the "Closing") shall take place at or prior to May 8, 1998 (the date
that the Closing takes place is referred to herein as the "Closing Date") at the
office of Shumaker, Loop & Kendrick, LLP located at 101 East Kennedy Boulevard,
Suite 2800, Tampa, Florida 33602, or at such other location or date as the
parties hereto shall mutually agree. Notwithstanding the foregoing language to
the contrary, the effective date of Closing shall be deemed to be May 1, 1998.

2.2. Deliveries of the Seller, Physician, Vision 21 and the Managed
Practices at the Closing.

(a) Seller and Physician shall deliver to Vision 21 the following
at or prior to the Closing:

(i) such bills of sale with warranties as to title,
assignments, endorsements and other good and sufficient instruments and
documents of conveyance and transfer as shall be necessary and effective to
transfer and assign to and vest in Vision 21 all of Seller's right, title and
interest in and to the Non-Medical Assets, including without limitation (A) good
and valid title in and to all of the Non-Medical Assets owned by Seller, (B)
good and valid leasehold interests in and to all of the Non-Medical Assets
leased by Seller as lessee, and (C) all of Seller's rights under all agreements,
contracts, commitments, instruments and other documents included in the
Non-Medical Assets to which Seller is a party or by which it has rights on the
Closing Date; the aforedescribed instruments shall include, without limitation,
the Non-Medical Assets Bill of Sale

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<PAGE> 7

and Assignment (the "Non-Medical Assets Bill of Sale") in the form annexed
hereto and made a part hereof as EXHIBIT 2.2(a)(i);

(ii) original instruments of consent or waiver duly executed
by third parties with respect to any contracts, agreements, leases or other
rights or obligations being transferred to Vision 21 hereunder and requiring a
consent or waiver therefor;

(iii) duly executed UCC-3 termination statements evidencing
the release of any and all liens upon any of the Non-Medical Assets held by any
person or entity;

(iv) a copy of resolutions of the Board of Directors of
Seller authorizing the execution, delivery and performance of this Agreement and
all related documents and agreements and the consummation of the transactions
contemplated in this Agreement;

(v) duly executed Lease Agreements for the real property
described in SCHEDULE 3.1(q) (the "Lease Agreements") in the forms annexed
hereto and made a part hereof as EXHIBITS 2.2(a)(v)(1) and 2.2(a)(v)(2);

(vi) an integration fee in the amount of One Hundred Fifty
Thousand Dollars ($150,000) to offset the cost of the initial startup efforts of
Vision 21, including the cost of due diligence, financial analysis and the
integration of the Practice into Vision 21's eye care delivery system, which
such services were rendered prior to March 31, 1998, and which integration fee
will be set off by Vision 21 from the Non-Medical Assets Purchase Price (the
Purchase Price Schedule reflects such set-off having already occurred);

(vii) a License Agreement by and among Seller, Vision 21 and
the Managed Practices for the use of the name "Johnson Eye Institute" in the
form annexed hereto and made a part hereof as EXHIBIT 2.2(a)(vii) (the "License
Agreement"); and

(viii) such other certificates and documents as Vision 21 or
its counsel may reasonably request.

(b) Seller and Physician shall deliver to the Managed Practices
the following:

(i) such bills of sale with warranties as to title,
assignments, endorsements and other good and sufficient instruments and
documents of conveyance and transfer as shall be necessary and effective to
transfer and assign to and vest in the Managed Practices all of Seller's right,
title and interest in and to the Medical Assets and the Optometric Assets,
including without limitation (A) good and valid title in and to all of the
Medical Assets and the Optometric Assets owned by Seller, (B) good and valid
leasehold interests in and to all of the Medical Assets and the Optometric
Assets leased by Seller as lessee, and (C) all of Seller's rights under all
agreements, contracts, commitments, instruments and other documents included in
the Medical Assets or the Optometric Assets to which Seller is a party or by
which it has rights on the Closing Date; the aforedescribed instruments shall
include, without limitation, the Medical Assets Bill of Sale and Assignment (the
"Medical Assets Bill of Sale") in the form annexed hereto and made a

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part hereof as EXHIBIT 2.2(b)(i)(1), and the Optometric Assets Bill of Sale and
Assignment (the "Optometric Assets Bill of Sale") in the form annexed hereto and
made a part hereof as EXHIBIT 2.2(b)(i)(2)

(ii) original instruments of consent or waiver duly executed
by third parties with respect to any contracts, agreements, leases or other
rights or obligations being transferred to the Managed Practices hereunder and
requiring a consent or waiver therefor;

(iii) duly executed UCC-3 termination statements evidencing
the release of any and all liens upon any of the Medical Assets or the
Optometric Assets held by any person or entity;

(iv) a Shareholder Physician Employment Agreement by and
between Physician and the Managed Medical Practice in the form annexed hereto
and made a part hereof as EXHIBIT 2.2(b)(iv) (the "Shareholder Physician
Employment Agreement"); and

(v) a duly executed Employment Agreement between Ahad
Mahootchi, M.D. and the Managed Medical Practice in the form annexed hereto and
made a part hereof as EXHIBIT 2.2(b)(v) (the "Non-Shareholder Physician
Employment Agreement"); provided, however, that Seller and the Physician shall
only be obligated to cooperate with the Managed Medical Practice in causing Dr.
Mahootchi to execute and deliver the Non-Shareholder Physician Employment
Agreement, and if the parties are unable to cause Dr. Mahootchi to enter into
the Non-Shareholder Physician Employment Agreement, Dr. Mahootchi's existing
employment agreement will be assigned from Seller to the Managed Medical
Practice in accordance with its terms effective July 1, 1998;

(vi) duly executed Employment Agreements between Alan O.
Maramara, O.D. and Bradley J. Smurr, O.D., on the one hand, and the Managed
Optometric Practice, on the other hand, in the forms annexed hereto and made a
part hereof as EXHIBIT 2.2(b)(vi)(1) and EXHIBIT 2.2(b)(vi)(2), together (the
"Optometrist Employment Agreements"); provided, however, that Seller and the
Physician shall only be obligated to cooperate with the Managed Optometric
Practice in causing Drs. Maramara and Smurr to execute and deliver the
Optometrist Employment Agreements, and if the parties are unable to cause Drs.
Maramara and Smurr to enter into the Optometrist Employment Agreements, Drs.
Maramara's and Smurr's existing employment agreements will be assigned from
Seller to the Managed Optometric Practice in accordance with their respective
terms;

(vii) the License Agreement; and

(viii) such other certificates and documents as the Managed
Practices or their counsel may reasonably request.

Simultaneously with delivery of the items set forth in subsection (a) and (b) of
this Section 2.2, Seller shall take all such steps as may be required to put
Vision 21 in actual possession and

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operating control of the Non-Medical Assets and the Managed Practices in actual
possession and operating control of the Medical Assets and the Optometric
Assets.

(i) the Non-Medical Assets Purchase Price;

(ii) the Non-Medical Assets Bill of Sale;

(iii) a copy of the resolutions of the Board of Directors of
Vision 21 authorizing the execution, delivery and performance of this Agreement
and all related documents and agreements and the consummation of the
transactions contemplated in this Agreement;

(iv) duly executed Lease Agreements;

(v) the License Agreement; and

(vi) such other certificates and documents as Seller or its
counsel may reasonably request.

(d) The Managed Practices shall deliver to Seller and the
Physician the following:

(i) the Medical Assets Purchase Price;

(ii) the Medical Assets Bill of Sale;

(iii) the Optometric Assets Purchase Price;

(iv) the Optometric Assets Bill of Sale;

(v) the License Agreement;

(vi) the Shareholder Physician Employment Agreement; and

(vii) such other certificates and documents as Seller or its
counsel may reasonably request.

(e) The Managed Medical Practice shall deliver to Vision 21 and
Vision 21 shall deliver to the Managed Medical Practice a duly executed
Amendment to Business Management Agreement in the form of EXHIBIT 2.2(e) by and
between the Managed Medical Practice and Vision 21 (the "Amendment"), which
shall amend that certain Business Management Agreement between the Managed
Medical Practice and Vision 21 dated as of September 1, 1997 (the "Business
Management Agreement").

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2.3. Further Assurances. Seller, from time to time after the Closing
and at the request of Vision 21 and the Managed Practices, will execute,
acknowledge and deliver to Vision 21 and the Managed Practices such other
instruments of conveyance and transfer and will take such other actions as
Vision 21 or the Managed Practices may reasonably require in order to vest more
effectively in Vision 21, or the Managed Practices, or to put Vision 21 or the
Managed Practices more fully in possession of, any of the Assets. Each of the
parties hereto will cooperate with the other and execute and deliver to the
other parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other party
hereto as necessary to carry out, evidence and confirm the intended purposes of
this Agreement.

ARTICLE III - REPRESENTATIONS AND WARRANTIES

3.1. Representations and Warranties of Seller and Physician. Seller and
Physician hereby jointly and severally represent and warrant to Vision 21 and
the Managed Practices that the following are true and correct as of the date
hereof, and shall be true and correct as of the Closing Date as if made on that
date, except as set forth on the Schedules attached hereto and made a part
hereof, each of which exceptions shall specifically identify and be limited to
the relevant subsection hereof to which it relates and shall be deemed to be a
representation and warranty as if made hereunder:

(a) Organization. Seller is a professional association duly
organized, validly existing and in good standing under the laws of the State of
Florida, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
Seller is not duly qualified and licensed to do business in any other
jurisdiction. Seller does not have any assets, employees or offices in any state
other than the State of Florida.

(b) Legal Power and Enforceable Obligations. Seller has the power,
authority and legal right to own, lease and operate the Assets, to conduct the
Practice as currently conducted, and to execute, deliver and perform this
Agreement. This Agreement and all the other documents and instruments required
to be delivered by Seller and/or Physician in accordance with the provisions
hereof have been, or upon their execution and delivery will have been, duly
executed and delivered on behalf of Seller and Physician and constitute, or will
constitute, the legal, valid and binding obligation of Seller and Physician,
enforceable against Seller and Physician in accordance with their respective
terms.

(c) No Violation. The execution, delivery and performance of this
Agreement by Seller and Physician do not and will not violate, conflict with or
result in the breach of any term, condition or provision of, or require the
consent of any other person under (i) any existing law, ordinance, or
governmental rule or regulation to which Seller or Physician is subject, (ii)
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority which is applicable to
either Seller or Physician, (iii) Seller's Articles or Certificate of
Incorporation or Bylaws, or (iv) any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or understanding, oral or
written, to which either Seller or Physician is a party, by which either Seller
or Physician may have rights, or

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by which any of the Assets may be bound or affected, or give any party with
rights thereunder the right to terminate, modify, accelerate or otherwise change
the existing rights or obligations of Seller or Physician thereunder. No
authorization, approval or consent of, and no filing with, any governmental or
regulatory official, body or authority is required in connection with the
execution, delivery or performance of this Agreement by Seller or Physician or
the sale to Vision 21 and the Managed Practices of the Assets.

(d) No Third Party Options. There are no existing agreements with,
options or commitments to or rights of any person to acquire any of the Assets
or any interest therein.

(e) Condition of Tangible Assets. All buildings, structures,
facilities, equipment and other material items of tangible property and assets
included in the Assets are in good operating condition and repair, subject to
normal wear and maintenance, are usable in the regular and ordinary course of
business and conform to all applicable laws, ordinances, codes, rules and
regulations relating to their construction, use and operation.

(f) Title to Assets; Required Approvals. Seller has and shall
transfer to Vision 21 and the Managed Practices at the Closing good, valid and
marketable title to all of the Assets being sold and transferred hereunder, free
and clear of all mortgages, liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever, except as set forth in SCHEDULE 3.1(f). Except as set forth in
SCHEDULE 3.1(f), no consent, approval, waiver or authorization is required to be
obtained by Seller from any third party with respect to the assignment to Vision
21 and the Managed Practices of any contract, agreement, lease, or other right
or obligation of Seller other than pursuant to those leases the failure of which
to obtain would not, individually or in the aggregate, have a material adverse
effect upon the conduct of the Practice. Seller shall use its best efforts to
obtain all such consents, approvals, waivers and authorizations with respect to
those items disclosed on SCHEDULE 3.1(f) before and after the Closing.

(g) Taxes. Seller has filed all tax returns and forms required to
be filed with respect to the Practice, and has paid in full all taxes, estimated
taxes, interest, penalties, assessments and deficiencies which have become due
with respect to the Practice, or will do so prior to the Closing Date. Such
returns and forms are true and correct in all material respects, and Seller is
not required to pay any other tax except as shown on such returns. Seller is not
a party to any pending action or proceeding and, to Seller's knowledge, there is
no action or proceeding threatened by any government or authority against Seller
for the assessment or collection of any tax and no resolved claim for assessment
or collection of any tax has been asserted against Seller. The Physician is not
a "foreign person" as described in Section 1445 of the Internal Revenue Code of
1986, as amended. There is no pending proceeding to reduce the assessed
valuation of any portion of the Assets. Seller has delivered to Vision 21 and
the Managed Practices a true and complete copy of its federal and state tax
returns for the years ended December 31, 1995, December 31, 1996, and December
31, 1997, which tax returns are or shall be accompanied by all notes and
schedules filed therewith. Such tax returns fairly present the financial
position of Seller for the periods covered thereby.

(h) Absence of Changes. Since December 31, 1997, Seller has not:

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(i) incurred any liabilities, other than liabilities
incurred in the ordinary course of business consistent with past practice, or
discharged or satisfied any lien or encumbrance, or paid any liabilities, other
than in the ordinary course of business consistent with past practice, or failed
to pay or discharge when due any liabilities of which the failure to pay or
discharge has caused or will cause any material damage or risk of material loss
to Seller or any of its Assets or properties;

(ii) sold, encumbered, assigned or transferred any of its
Assets or properties;

(iii) created, incurred, assumed or guaranteed any
indebtedness for money borrowed, or mortgaged, pledged or subjected any of the
Assets to any mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever;

(iv) made or suffered any amendment or termination of any
material agreement, contract, commitment, lease or plan to which it is a party
or by which it is bound, or canceled, modified or waived any substantial debts
or claims held by it or waived any rights of substantial value, whether or not
in the ordinary course of business;

(v) suffered any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting the Practice and
its related operations, assets, properties, prospects or condition (financial or
otherwise) or suffered any repeated, recurring or prolonged shortage, cessation
or interruption of supplies or utility or other services required to conduct the
Practice;

(vi) suffered any material adverse change in the Practice
and its related operations, assets, properties, prospects or condition
(financial or otherwise);

(vii) received notice or had knowledge of any actual or
threatened labor trouble, strike or other occurrence, event or condition of any
similar character which has had or might have an adverse effect on the Practice
or its related operations, Assets, properties, prospects or condition (financial
or otherwise);

(viii) increased or decreased the salaries or other
compensation of, or made any advance (excluding advances for ordinary and
necessary business expenses) or loan to, any of its employees or made any
increase in, or any addition to, other benefits to which any of its employees
may be entitled other than in the ordinary course of business consistent with
past practice; provided, however, that the parties acknowledge and consent to
the change in Debra Pazo Johnson's salary which occurred during such period;

(ix) changed any of the accounting principles followed by it
or the methods of applying such principles; or

(x) entered into any transaction other than in the ordinary
course of business consistent with past practice.

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<PAGE> 13

(i) Financial Statements; Consistent Treatment of Expenses. Seller
has delivered to Vision 21 and the Managed Practices Seller's unaudited balance
sheets and unaudited statements of income and cash flows for the fiscal years
ended December 31, 1995, December 31, 1996, and December 31, 1997, and Seller's
unaudited balance sheet and unaudited statements of income and cash flows for
the four (4) month period ended April 30, 1998, (collectively, the "Financial
Statements"). Except as set forth on SCHEDULE 3.1(i), the Financial Statements,
including the notes thereto, have been prepared utilizing generally accepted
accounting principals ("GAAP") consistently applied by Seller in accordance with
past practice throughout the periods indicated. The Financial Statements fairly
present the financial condition and results of operation of Seller as at the
respective dates and for the periods indicated. Except as set forth on SCHEDULE
3.1(i), the Financial Statements reflect all liabilities and obligations of the
Seller, accrued, contingent or otherwise that would be required to be reflected
thereon, or in the notes thereto, prepared in accordance with GAAP, except for
liabilities and obligations incurred in the ordinary course of business since
April 30, 1998. For purposes of this Agreement, the term "liabilities" shall
include, without limitation, any direct or indirect indebtedness, guaranty,
endorsement, claim, loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, asserted or unasserted,
choate or inchoate, liquidated or unliquidated, secured or unsecured. Seller
has, in presenting information concerning Seller's expenses to Vision 21 for the
purpose of determining the Seller's value, separated out those expenses which
shall be borne by the Managed Practices following the acquisition contemplated
in this Agreement in a manner which is consistent with the treatment of expenses
which shall be the responsibility of the Managed Practices pursuant to the
business management agreements in effect with each of such Managed Practices.

(j) Compliance with Law; Authorizations. Seller has complied in
all material respects with, and is not in any material violation of, any law,
ordinance or governmental or regulatory rules or regulations, whether federal,
state, local or foreign, to which Seller and the Practice and its related
operations, Assets or properties are subject ("Regulations"). Seller owns,
holds, possesses or lawfully uses in the operation of the Practice all
franchises, licenses, permits, easements, rights, applications, filings,
registrations and other authorizations ("Authorizations") which are material for
Seller to conduct the Practice as currently conducted or for the ownership and
use of the assets owned or used by Seller in the conduct of the Practice, free
and clear of all liens, charges, restrictions and encumbrances and in compliance
with all Regulations. Seller is not in default, nor has Seller received any
notice of any claim of default, with respect to any such Authorization. All such
Authorizations are renewable by their terms or in the ordinary course of
business without the need to comply with any special qualification procedures or
to pay any amounts other than routine filing fees. None of such Authorizations
will be adversely affected by the consummation of the transactions contemplated
hereby.

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<PAGE> 14

or the transactions contemplated hereby or thereby. Neither Seller nor Physician
is a party to or subject to the provisions of any judgment, order, writ,
injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which may adversely affect Seller,
Physician, the Assets or the transactions contemplated hereby.

(l) Labor Matters. Seller has not suffered any strike, slowdown,
picketing or work stoppage by any union or other group of employees affecting
the Practice. Seller is not a party to any collective bargaining agreement, no
such agreement determines the terms and conditions of employment of any employee
of Seller, no collective bargaining agent has been certified as a representative
of any of the employees of Seller, and no representation campaign or election is
now in progress with respect to any of the employees of Seller. Seller has
complied and is in compliance in all material respects with all laws and
regulations relating to the employment of labor, including, without limitation,
provisions relating to wages, hours, collective bargaining, occupational safety
and health, equal employment opportunity and the withholding of income taxes and
social security contributions. Seller has paid its employees all wages,
commissions and accruals for earned vacation, personal days and sick leave owing
through the Closing Date. Except as described in SCHEDULE 3.1(l), the
consummation of the transactions contemplated hereby will not cause Vision 21 or
the Managed Practices to incur or suffer any liability relating to, or
obligation to pay, any severance, termination or other payment to any person or
entity and any such claim made against Vision 21 or the Managed Practices for
reason of any termination or separation of any employee on or before Closing, or
otherwise resulting from the sale of the Assets pursuant to this Agreement,
shall be the sole responsibility of Seller. No employee of Seller has any
contractual right to continued employment by Seller following the consummation
of the sale of the Assets pursuant to this Agreement and Vision 21 and the
Managed Practices shall be free to offer employment to such employees of Seller
as Vision 21 and the Managed Practices may determine and on such terms and
conditions as Vision 21 and the Managed Practices may determine; provided,
however, that the parties acknowledge that the non-shareholder professionals of
the Practice have a contractual right to one month's severance pay if they are
involuntarily terminated. Set forth in SCHEDULE 3.1(l) is an accurate and
complete list of all employees employed by Seller in the Practice showing as to
each the nature of the employee's job, years of service, the amount or rate of
compensation, all accruals of vacation, personal days, sick leave, and any other
benefits due the employee and other matters which may be reasonably required by
Vision 21 and the Managed Practices.

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<PAGE> 15

and the regulations promulgated thereunder as presently applied, and have so
complied during all prior periods during which such provisions were applicable.
Seller has complied in all material respects with the provisions of ERISA
applicable to it as employer, plan sponsor, plan administrator or fiduciary of
any such employee benefit plans with respect to any such employee benefit plans
maintained by Seller or to which Seller was obligated to contribute funds (or
any other plan or individual arrangement which may not be subject to ERISA).
Seller has (i) made all contributions required of it by law (including, without
limitation, ERISA) or contract; and (ii) is and has been in compliance with the
material terms and provisions of all such employee benefit plans. Seller has no
accrued but unpaid obligations with respect to any of such employee benefit
plans except as set forth in the Financial Statements or SCHEDULE 3.1(i).

(n) Necessary Assets; Location of Brandon Practice Assets. The
Assets include all rights and property necessary to the conduct of the Practice
in the manner it is presently conducted by Seller and no property excluded from
the Assets hereof constitutes property or rights material to the Practice. None
of the Assets which are currently located at the Brandon Practice have been
moved to the Brandon Practice from other Practice locations within the six (6)
months immediately preceding the Closing Date.

(o) Availability of Documents; Compliance with Due Diligence
Requests. Seller has made available to Vision 21 and the Managed Practices
copies of all documents including, without limitation, all agreements,
contracts, commitments, insurance policies, leases, plans, instruments,
undertakings, authorizations, permits, licenses, trademarks, trade names,
service marks and applications therefor listed in this Agreement or in the
Schedules to this Agreement. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently in effect
thereunder. Prior to the Closing Date, the Seller and Physician shall have
provided true and correct copies to Vision 21 and the Managed Practices or
answered truthfully in writing all items described in Vision 21's written due
diligence list which has been provided to the Seller by Vision 21 prior to the
date first above written.

(p) Conditions Affecting Seller. There is no fact, development or
threatened development with respect to the markets, products, services, clients,
patients, facilities, personnel, vendors, suppliers, operations, Assets or
prospects of the Practice which are known to Seller which would materially
adversely affect the Practice or the operations, prospects or condition
(financial or otherwise) of Seller considered as a whole, other than such
conditions as may affect as a whole the economy or the practice of medicine
generally. Seller and Physician have used their respective best efforts to keep
available for Vision 21 and the Managed Practices the services of the employees,
agents, patients and suppliers of Seller active in the conduct of the Practice.
Seller does not have any reason to believe that any loss of any employee, agent,
patient or supplier or other advantageous arrangement will result because of the
consummation of the transactions contemplated hereby.

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<PAGE> 16

other applicable local, state and federal laws and regulations, including,
without limitation, those laws and regulations relating to the generation,
transportation, storage and disposal of medical waste. No portion of the Real
Property is the subject of, or affected by, any condemnation or eminent domain
proceeding or any covenant or other restriction preventing or limiting Seller's
right to convey right, title and interest in the Real Property or to use the
Real Property for the various purposes for which the Real Property is currently
being used. Each lease with respect to the Real Property is in full force and
effect and has not been assigned, modified, supplemented or amended. Neither
Seller nor the landlord under any lease is in material default of the terms of
any such lease and, to Seller's knowledge, no circumstances or state of facts
currently exist which, with the giving of notice or the passage of time or both
would permit the landlord under any lease to terminate such lease.

(r) Medicare and Medicaid Programs. Physician and each
professional employee of the Seller are qualified for participation in the
Medicare and Medicaid programs, and the Seller is party to provider agreements
for such programs which are in full force and effect with no events of default
having occurred thereunder. Seller, Physician and each professional employee of
the Seller have timely filed all claims or other reports required to be filed
prior to the Closing Date with respect to the purchase of services by
third-party payors ("Payors"), including but not limited to Medicare and
Medicaid programs. All such claims or reports are complete and accurate in all
material respects. Seller has paid or has properly recorded on the Financial
Statements all actually known and undisputed refunds, discounts or adjustments
which have become due pursuant to such claims, and Seller does not have any
material liability to any Payor with respect thereto, except as has been
reserved for in the Seller's Financial Statements or set forth on SCHEDULE
3.1(i). There are no pending appeals, overpayment determinations, adjustments,
challenges, audits, litigation, or notices of intent to reopen Medicare and/or
Medicaid claims determinations or other reports required to be filed by Seller,
Physician or a professional employee of Seller in order to be paid by a Payor
for services rendered. None of the Seller, Physician or any professional
employee of Seller has been convicted of, or pled guilty or nolo contendere to,
patient abuse or neglect, or any other Medicare or Medicaid program-related
offense. None of the Seller, Physician or any professional employee of the
Seller has committed any offense which may serve as the basis for suspension or
exclusion from the Medicare and Medicaid programs, including but not limited to,
defrauding a government program, loss of a license to provide health services,
and failure to provide quality care.

(s) Fraud and Abuse. None of the Seller, Physician or any
professional employee of the Seller has engaged in any activities which are
prohibited under 42 U.S.C. ss.ss. 1320-7, 7a or 7b or 42 U.S.C. ss.1395nn
(subject to the exceptions set forth in such legislation), or the regulations
promulgated thereunder or pursuant to similar state or local statutes or
regulations, or which are prohibited by rules of professional conduct, including
but not limited to the following:

(i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment;

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<PAGE> 17

(ii) knowingly and willfully making or causing to be made a
false statement or representation of a material fact for use in determining
rights to any benefit or payment;

(iii) failure to disclose knowledge by a Medicare or Medicaid
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment on the claimant's behalf or on behalf of another, with
intent to fraudulently secure such benefit or payment;

(iv) knowingly and willfully offering, paying, soliciting or
receiving any remuneration (including any kickback, bribe, or rebate), directly
or indirectly, in cash or in kind (1) in return for referring an individual to a
person for the furnishing or arranging for the furnishing of any item or service
for which payment may be made in whole or in part by Medicare or Medicaid, or
(2) in return for purchasing, leasing, or ordering, or arranging for or
recommending purchasing, leasing, or ordering any good, facility, service, or
item for which payment may be made in whole or in part by Medicare or Medicaid;
and

(v) referring a patient for designated health services (as
defined in 42 U.S.C. ss.1395nn) or providing designated health services to a
patient upon a referral from an entity or person with which Seller or an
immediate family member has a financial relationship, and to which no exception
under 42 U.S.C. ss.1395nn applies.

(t) Ownership of Competitors. Except for Seller's ownership of the
Brandon Practice, neither Seller nor the Physician owns, directly or indirectly,
any of the capital stock of any other corporation or any equity, profit sharing,
participation or other interest in any corporation, partnership, joint venture
or other entity that is engaged in a business that is a competitor of Vision 21
or the Seller.

(u) Prohibitions on the Corporate Practice of Medicine and
Optometry. To the best of the Seller's and Physician's knowledge, the actions,
transactions or relationships arising from, and contemplated by this Agreement,
do not violate any law, rule or regulation relating to the corporate practice of
medicine or optometry. Seller and Physician accordingly agree that neither
Seller nor Physician will, in an attempt to void or nullify any document
contemplated herein or any relationship involving Vision 21, the Managed
Practices, Seller or Physician, sue, claim or assert that any such document
contemplated herein or any such relationship violates any law, rule or
regulation relating to the corporate practice of medicine or optometry and
expressly warrant that this Section is valid and enforceable by Vision 21, and
recognizes that Vision 21 has relied upon the statements herein in closing this
acquisition.

(v) Commitments. Except as set forth on SCHEDULE 3.1(v) or as
otherwise disclosed pursuant to this Agreement, neither Seller nor Physician
(with respect to the Practice) is a party to nor bound by, nor are the Assets
bound by, whether or not in writing, any of the following (collectively,
"Commitments"):

(i) partnership or joint venture agreement;

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<PAGE> 18

(ii) guaranty or suretyship, indemnification or contribution
agreement or performance bond;

(iii) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money lent or to be lent to
another;

(iv) contract to purchase real property;

(v) agreement relating to any material matter or
transaction in which an interest is held by a person or entity that is an
affiliate of Seller;

(vi) agreement for the acquisition of services, supplies,
equipment, inventory, fixtures or other property, or agreements with public
relations or advertising agencies, accountants or attorneys (other than in
connection with this Agreement and the transactions contemplated hereby)
involving more than $2,000 in the aggregate;

(vii) powers of attorney;

(viii) contracts containing non-competition covenants;

(ix) agreements with Payors and contracts to provide medical
or health care services; or

(x) any other agreement or commitment not made in the
ordinary course of business or that is material to the business, operations,
condition (financial or otherwise) or results of operations of Seller.

Except as set forth on SCHEDULE 3.1(v) and to Seller's and Physician's best
knowledge, there are no existing or asserted defaults, events of default or
events, occurrences, acts or omissions that, with the giving of notice or lapse
of time or both, would constitute defaults by Seller or Physician or, to the
best knowledge of Seller and Physician, any other party to a Commitment, and no
penalties have been incurred nor are amendments pending, with respect to the
Commitments. The Commitments are in full force and effect and are valid and
enforceable obligations of Seller and Physician, and to the best knowledge of
Seller and Physician, are valid and enforceable obligations of the other parties
thereto, in accordance with their respective terms, and no defenses, off-sets or
counterclaims have been asserted or, to the best knowledge of Seller and
Physician, may be made by any party thereto (other than Seller and Physician),
nor has Seller or Physician waived any rights thereunder. Except as set forth on
SCHEDULE 3.1(v), no consents or approvals are required under the terms of any
agreement listed on SCHEDULE 3.1(v) in connection with the transactions
contemplated herein, including, without limitation, the transfer of any such
agreement pursuant to this Agreement. Except as set forth on SCHEDULE 3.1(v),
neither Seller nor Physician has received notice of any plan or intention of any
other party to any Commitment to exercise any right to cancel or terminate any
Commitment, and neither Seller nor Physician knows of any fact that would
justify the exercise of such a right.

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<PAGE> 19

(w) Insurance. Seller, Physician and each professional employee of
Seller carries property, liability, malpractice and such other types of
insurance pursuant to the insurance policies listed and briefly described on
SCHEDULE 3.1(w) (the "Insurance Policies"). The Insurance Policies are all of
the insurance policies of the Seller, Physician and each professional employee
of Seller relating to the business of Seller and the Assets. All of the
Insurance Policies are issued by insurers of recognized responsibility, and, to
the best knowledge of the Seller and Physician, are valid and enforceable
policies, except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability of
equitable remedies. Except as set forth in SCHEDULE 3.1(w), no consent or
approval is required for, and no other impediment or restriction exists that
will prohibit or limit, the transfer of any such Insurance Policies included
within the Assets in accordance with the terms of this Agreement. All Insurance
Policies shall be maintained in force without interruption up to and including
the Closing Date. Neither Seller nor Physician has received any notice or other
communication from any issuer of any Insurance Policy cancelling such policy,
materially increasing any deductibles or retained amounts thereunder, and to the
actual knowledge of Seller and Physician, no such cancellation or increase of
deductibles, retainages or premiums is threatened. Neither Seller nor Physician
has any outstanding claims, settlements or premiums owed against any Insurance
Policy, and Seller and Physician have given all notices or have presented all
potential or actual claims under any Insurance Policy in due and timely fashion.
In the three (3) years before the effective date of this Agreement, neither
Seller nor Physician has filed a written application for any professional
liability insurance coverage which has been denied by an insurance agency or
carrier, and the Seller, Physician and each professional employee employed by
Seller have been continuously insured for professional malpractice claims for at
least the past seven (7) years (or the period of Physician's or such
professional employee's employment by Seller, if shorter). SCHEDULE 3.1(w) also
sets forth a list of all claims under any Insurance Policy in excess of $10,000
per occurrence filed by Seller, Physician or any professional employee employed
by the Seller in the three years before the effective date of this Agreement.

(x) Intentions. The Physician intends to continue practicing
medicine on a part-time basis for at least the next two (2) months with the
Seller in accordance with the terms of the Shareholder Physician Employment
Agreement and does not know of any fact or condition that materially adversely
affects, or in the future is reasonably likely to materially adversely affect,
his ability or intention to practice medicine on a part-time basis for the next
two (2) months with the Seller in accordance with the terms of the Shareholder
Physician Employment Agreement.

(y) Accounts Receivable/Payable. The accounts receivable of Seller
relating to the Practice reflected on the Seller's Financial Statements (the
"Accounts Receivable"), to the extent uncollected on the date hereof, are, and
the accounts receivable of Seller relating to the ownership and operation of the
Practice to be reflected on the books of Seller on the Closing Date will be,
valid, existing and collectible within six (6) months from the Closing Date
(taking into consideration the allowance for doubtful accounts set forth in the
Financial Statements) using reasonably diligent collection methods taking into
account the size and nature of the receivable, and represent amounts due for
goods sold and delivered or services performed. There are not, and on the date
of Closing there will not be, any refunds, discounts, set-offs, defenses,
counterclaims or other adjustments payable or assessable with respect to the
Accounts Receivable. Seller has collected Accounts Receivable only in the
ordinary course and has not changed collection

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<PAGE> 20

procedures or methods nor accelerated the pace of such collection efforts in
anticipation of the transactions contemplated in this Agreement. Seller has paid
accounts payable in the ordinary course and has not changed payment procedures
or methods nor delayed the timing of such payments in anticipation of the
transactions contemplated in this Agreement.

(z) Completeness of Disclosure. Neither this Agreement, nor any
Schedule, Exhibit, list, certificate or other instrument or document furnished
by Seller or Physician to Vision 21 and the Managed Practices pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact required to be stated herein or therein or necessary to make
the statements and information contained herein or therein not misleading.
Neither Seller nor Physician has failed to disclose to Vision 21 or the Managed
Practices any event, condition or fact which Seller or Physician knows, or has
reasonable grounds to know, may materially adversely affect the Assets or the
operations, prospects or condition (financial or otherwise) of the Practice.

3.2. Representations and Warranties of Vision 21. Vision 21 hereby
represents and warrants to Seller, the Physician and the Managed Practices that
the following are true and correct as of the date hereof and shall be true and
correct as of the Closing Date as if made on that date:

(a) Corporate Existence. Vision 21 is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.

(b) Corporate Power and Authorization. Vision 21 has the power,
authority and legal right to execute, deliver and perform this Agreement, and
this Agreement constitutes the legal, valid and binding obligation of Vision 21
enforceable against Vision 21 in accordance with its terms.

(c) Validity of Contemplated Transactions. The execution, delivery
and performance of this Agreement by Vision 21 do not and will not violate,
conflict with or result in the breach of any term, condition or provision of, or
require the consent of any other party under (i) any existing law, ordinance, or
governmental rule or regulation to which Vision 21 is subject, (ii) any
judgment, order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable to
Vision 21, (iii) the Articles of Incorporation or By-Laws of Vision 21, or (iv)
any mortgage, indenture, agreement, contract, commitment, lease, plan or other
instrument, document or understanding, oral or written, to which Vision 21 is a
party or by which Vision 21 is otherwise bound. No authorization, approval or
consent of, and no registration or filing with, any governmental or regulatory
official, body or authority is required in connection with the execution,
delivery and performance of this Agreement by Vision 21.

(d) Completeness of Disclosure. Neither this Agreement nor any
other instrument or document furnished by Vision 21 to Seller, the Physician or
the Managed Practices pursuant to this Agreement, contains any untrue statement
of a material fact or omits to state any material fact required to be stated
herein or therein or necessary to make the statements and information contained
herein or therein not misleading.

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<PAGE> 21

(e) Employment of Seller's Employees. Vision 21 does not currently
intend to change the existing composition or employment terms of any of the
non-professional personnel which have employment arrangements with Seller on the
effective date of this Agreement (except as is necessary for Vision 21 to employ
such individuals pursuant to the Business Management Agreement). Vision 21
reserves the right, however, to change the number, composition or employment
terms of such non-professional personnel in the future.

3.3 Representations and Warranties of Managed Medical Practice. The
Managed Medical Practice hereby represents and warrants to Seller, the
Physician, the Managed Optometric Practice and Vision 21 that the following are
true and correct as of the date hereof and shall be true and correct as of the
Closing Date as if made on that date:

(a) Corporate Existence. The Managed Medical Practice is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida.

(b) Corporate Power and Authorization. The Managed Medical
Practice has the power, authority and legal right to execute, deliver and
perform this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of the Managed Medical Practice enforceable against the
Managed Medical Practice in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies, or the Florida or federal
laws and regulations related to the practice of medicine.

(c) Validity of Contemplated Transactions. The execution, delivery
and performance of this Agreement by the Managed Medical Practice do not and
will not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other party under (i) any
existing law, ordinance, or governmental rule or regulation to which the Managed
Medical Practice is subject, (ii) any judgment, order, writ, injunction, decree
or award of any court, arbitrator or governmental or regulatory official, body
or authority which is applicable to the Managed Medical Practice, (iii) the
Articles of Incorporation or By-Laws of the Managed Medical Practice, or (iv)
any mortgage, indenture, agreement, contract, commitment, lease, plan or other
instrument, document or understanding, oral or written, to which the Managed
Medical Practice is a party or by which the Managed Medical Practice is
otherwise bound. No authorization, approval or consent of, and no registration
or filing with, any governmental or regulatory official, body or authority is
required in connection with the execution, delivery and performance of this
Agreement by the Managed Medical Practice.

(d) Completeness of Disclosure. Neither this Agreement nor any
other instrument or document furnished by the Managed Medical Practice to
Seller, the Physician, the Managed Optometric Practice or Vision 21 pursuant to
this Agreement, contains any untrue statement of a material fact or omits to
state any material fact required to be stated herein or therein or necessary to
make the statements and information contained herein or therein not misleading.

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<PAGE> 22

(e) Patient Notifications. The Managed Medical Practice shall
promptly and with due diligence notify the medical patients of the Seller of the
sale of Seller's medical practice and the disposition of medical records through
letters to patients and/or advertisements in a local newspaper (as set forth in
Section 455.667(11), Florida Statutes), at the Managed Medical Practice's sole
cost.

3.4 Representations and Warranties of Managed Optometric Practice. The
Managed Optometric Practice hereby represents and warrants to Seller, the
Physician, the Managed Medical Practice and Vision 21 that the following are
true and correct as of the date hereof and shall be true and correct as of the
Closing Date as if made on that date:

(a) Corporate Existence. The Managed Optometric Practice is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida.

(b) Corporate Power and Authorization. The Managed Optometric
Practice has the power, authority and legal right to execute, deliver and
perform this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of the Managed Optometric Practice enforceable against the
Managed Optometric Practice in accordance with its terms.

(c) Validity of Contemplated Transactions. The execution, delivery
and performance of this Agreement by the Managed Optometric Practice do not and
will not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other party under (i) any
existing law, ordinance, or governmental rule or regulation to which the Managed
Optometric Practice is subject, (ii) any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory official,
body or authority which is applicable to the Managed Optometric Practice, (iii)
the Articles of Incorporation or By-Laws of the Managed Optometric Practice, or
(iv) any mortgage, indenture, agreement, contract, commitment, lease, plan or
other instrument, document or understanding, oral or written, to which the
Managed Optometric Practice is a party or by which the Managed Optometric
Practice is otherwise bound. No authorization, approval or consent of, and no
registration or filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery and performance
of this Agreement by the Managed Optometric Practice.

(d) Completeness of Disclosure. Neither this Agreement nor any
other instrument or document furnished by the Managed Optometric Practice to
Seller, the Physician, the Managed Medical Practice or Vision 21 pursuant to
this Agreement, contains any untrue statement of a material fact or omits to
state any material fact required to be stated herein or therein or necessary to
make the statements and information contained herein or therein not misleading.

ARTICLE IV - CONDITIONS PRECEDENT TO THE CLOSING

4.1. Conditions Precedent to Obligations of Vision 21 and the Managed
Practices. All obligations of Vision 21 and the Managed Practices under this
Agreement are subject to the fulfillment or satisfaction, prior to or at the
Closing, of each of the following conditions precedent:

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<PAGE> 23

(a) Compliance with this Agreement. Seller and Physician shall
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to the Closing.

(b) Due Diligence. Vision 21 and the Managed Practices shall have
completed to their satisfaction a due diligence review of Seller, Physician, the
Practice and the Assets, which shall include verification that the Practice has
been run in the ordinary course since December 31, 1997, and that the Assets,
liabilities, obligations, revenues, vendor relations and patient relations of
Seller are as represented to and anticipated by Vision 21 and the Managed
Practices. Seller agrees to cooperate and make available to Vision 21, the
Managed Practices and their employees and accountants, all of Seller's books and
records and to make available Seller's officers, employees and agents in
assisting Vision 21 and the Managed Practices to complete their due diligence
investigations. Vision 21 and the Managed Practices may conduct their due
diligence investigations from the date first above written to, and including,
the Closing Date.

(c) No Adverse Changes. No change other than as contemplated or
permitted by this Agreement, or other than in the ordinary course, shall have
occurred with respect to the business, operations, prospects or condition
(financial or otherwise) of the Practice or any of the Assets, which shall have
been material and adverse to Seller.

(d) Consents and Approvals. Vision 21 and the Managed Practices
shall have received those written consents and approvals necessary or desirable
for the transfer of the Assets to Vision 21 and the Managed Practices.

(e) Removal of Liens. Seller shall have obtained valid, binding
and enforceable releases, satisfactions and discharges of all liens, charges and
encumbrances affecting the Assets.

(f) Amendment to Business Management Agreement. Vision 21 and the
Managed Medical Practice shall have entered into the Amendment.

(g) Lease Agreements. Physician and his spouse shall have entered
into the Lease Agreements.

(h) Shareholder Physician Employment Agreement. The Managed
Medical Practice and the Physician shall have entered into the Shareholder
Physician Employment Agreement.

4.2. Conditions Precedent to Seller's and Physician's Obligations. All
obligations of Seller and Physician under this Agreement are subject to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:

(a) Compliance with this Agreement. Vision 21 and the Managed
Practices shall have performed and complied with all agreements and conditions
required by this Agreement to be performed or complied with by them prior to or
at the Closing.

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<PAGE> 24

(b) Lease Agreements. Vision 21 shall have entered into the Lease
Agreements.

(c) Shareholder Physician Employment Agreement. The Managed
Medical Practice shall have entered into the Shareholder Physician Employment
Agreement.

4.3. Risk of Loss Prior to Closing. The risk of any loss, destruction
or other damage to the Assets, other than ordinary wear and tear, prior to the
completion of the Closing, shall be solely that of Seller.

ARTICLE V - [RESERVED]

ARTICLE VI - INDEMNIFICATION AND REMEDIES

6.1. Indemnification Obligation of Seller and Physician. From and after
the Closing, Seller and Physician, jointly and severally, shall reimburse,
indemnify and hold harmless Vision 21, and the Managed Practices, and their
successors and assigns (an "Indemnified Buyer Party") against and in respect of:

(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Buyer Party that result
from, relate to or arise out of:

(i) any and all liabilities and obligations of Seller of any
nature whatsoever not disclosed in this Agreement and expressly assumed by
Vision 21 or the Managed Practices;

(ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or investigations
against any Indemnified Buyer Party that relate to Seller or the Practice in
which the principal event giving rise thereto occurred prior to the Closing Date
or which result from or arise out of any action or inaction of Seller or any
employee, agent, representative or subcontractor of Seller prior to the Closing
Date; or

(iii) any misrepresentation, breach of warranty or
nonfulfillment of any agreement or covenant on the part of Seller under this
Agreement or from any misrepresentation in or omission from any certificate,
schedule, exhibit, statement, document or instrument furnished to Vision 21 or
the Managed Practices pursuant hereto or in connection with the negotiation,
execution or performance hereof; and

(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses and
court costs) incident to any of the foregoing or to the enforcement of this
Section 6.1.

6.2. Indemnification Obligation Of Vision 21 and the Managed Practices.
From and after the Closing, Vision 21 and the Managed Practices shall reimburse,
indemnify and hold

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<PAGE> 25

harmless Seller, Physician and their respective successors and assigns (an
"Indemnified Seller Party") and Vision 21 and the Managed Practices shall
reimburse, indemnify and hold harmless each other (and each other's successor
and assigns), against and in respect of:

(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Seller Party (or Vision 21
or the Managed Practices, as the case may be) that result from, relate to or
arise out of any misrepresentation, breach of warranty or non-fulfillment of any
agreement or covenant on the part of Vision 21 or the Managed Practices under
this Agreement (unless the parties have waived the same) or from any
misrepresentation in or omission from any certificate, schedule, exhibit,
statement, document or instrument furnished to Seller (or Vision 21 or the
Managed Practices, as the case may be) pursuant hereto or in connection with the
negotiation, execution or performance hereof; and

(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 6.2.

6.3. Procedure for Indemnification Claims. If at any time a claim shall
be made or threatened, or an action or proceeding shall be commenced or
threatened, against a party hereto (the "Aggrieved Party") which could result in
liability of the other party (the "Indemnifying Party") under its
indemnification obligations hereunder, the Aggrieved Party shall give to the
Indemnifying Party prompt notice of such claim, action or proceeding. Such
notice shall state the basis for the claim, action or proceeding and the amount
thereof (to the extent such amount is determinable at the time when such notice
is given) and shall permit the Indemnifying Party to assume the defense of any
such claim, action or proceeding (including any action or proceeding resulting
from any such claim). Failure by the Indemnifying Party to notify the Aggrieved
Party of its election to defend any such claim, action or proceeding within a
reasonable time shall be deemed a waiver by the Indemnifying Party of its right
to defend such claim, action or proceeding; provided, however, that the
Indemnifying Party shall not be deemed to have waived its right to contest and
defend against any claim of the Aggrieved Party for indemnification hereunder
based upon or arising out of such claim, action or proceeding.

If the Indemnifying Party assumes the defense of any such claim, action
or proceeding, the obligation of the Indemnifying Party as to such claim, action
or proceeding shall be limited to taking all steps necessary in the defense or
settlement thereof and, to the extent the Indemnifying Party is liable for
indemnification hereunder, to holding the Aggrieved Party harmless from and
against any and all losses, damages and liabilities caused by or arising out of
any settlement approved by the Indemnifying Party or any judgment or award
rendered in connection with such claim, action or proceeding. The Aggrieved
Party agrees to cooperate and make available to the Indemnifying Party all books
and records and such officers, employees and agents as are reasonably necessary
and useful in connection with the defense. The Aggrieved Party may participate,
at its expense, in the defense of such claim, action or proceeding provided that
the Indemnifying Party shall direct and control the defense of such claim,
action or proceeding; provided, however, if in the reasonable opinion of the
Aggrieved Party any such claim, action or proceeding involves an issue or matter

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<PAGE> 26

which, if adversely determined, would have a materially adverse effect on the
Aggrieved Party, then the Aggrieved Party shall have the right to control the
defense or settlement of any such claim, action or proceeding and its reasonable
costs and expenses shall be included as a part of the indemnification obligation
of the Indemnifying Party. The Indemnifying Party shall not, with respect to any
such claim, action or proceeding, consent to the entry of any judgment or award,
or enter into any settlement, except with the prior written consent of the
Aggrieved Party, which consent shall not be unreasonably withheld; provided,
however, in the case of any such judgment, award or settlement for money, it
shall be a condition thereto that the Indemnifying Party shall acknowledge its
obligation to indemnify the Aggrieved Party pursuant to this Article VI; and
provided, further, that any such judgment, award or settlement include, as an
unconditional term thereof, the release of the Aggrieved Party from all
liability by the third party claimant or plaintiff.

6.4. [RESERVED].

6.5. Indemnification Limitations. Notwithstanding the provisions of
Sections 6.1 and 6.2, no party shall be required to indemnify another party with
respect to a breach of a representation, warranty or covenant unless the claim
for indemnification is brought within one (1) year after the Closing Date,
except that a claim for indemnification for a breach of the representations and
warranties contained in Sections 3.1(a), 3.1(b), 3.1(d), 3.1(f), 3.2(a), 3.2(b),
3.3(a) and 3.3(b) may be made at any time, and a claim for indemnification for a
breach of the representations and warranties contained in Sections 3.1(g),
3.1(k), 3.1(m), 3.1(r), 3.1(s) and 8.13 may be made at any time within the
applicable statute of limitations.

6.6. Other Rights and Remedies Not Affected. The indemnification rights
of the parties under this Article VI are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including, without
limitation the right to seek an injunction against the violation of any of the
terms hereof or in aid of the exercise of any power granted hereby or by law,
the right to seek specific performance, recision or restitution, none of which
rights or remedies shall be affected or diminished hereby. All rights, powers,
options or remedies afforded to the parties hereunder or by law shall be
cumulative and not alternative and the exercise of a party's right, power,
option or remedy shall not bar other rights, powers, options or remedies allowed
herein or by law. The indemnification obligations hereunder shall survive the
consummation of the transactions described herein. Should either party employ an
attorney or attorneys to enforce any of the provisions hereof, or to protect its
interest in any matter arising hereunder, or to recover damages for the breach
hereof, the party prevailing shall be entitled to recover from the other party
all reasonable costs, charges and expenses, including attorney's fees, the value
of time charged by paralegals and/or other staff members operating under the
supervision of an attorney, and other legal costs, expended or incurred in
connection therewith, before, during and subsequent to any litigation, including
arbitration and appellate proceedings, bankruptcy or similar debtor/creditor
proceedings, and proceedings to enforce any indemnity agreement herein
contained.

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<PAGE> 27

ARTICLE VII- POST CLOSING MATTERS

7.1. Survival of Representations and Warranties. All representations,
warranties, agreements and obligations made by the parties in this Agreement or
in any certificate, schedule, document or instrument furnished hereunder or in
connection with the negotiation, execution and performance of this Agreement
shall survive the Closing. Notwithstanding any investigation or audit conducted
before or after the Closing Date or the decision of any party to complete the
Closing, each party shall be entitled to rely upon the representations and
warranties set forth herein and therein and each such representation and
warranty shall be deemed to be material.

7.2. Maintenance of Books and Records. Each of Seller, Physician,
Vision 21 and the Managed Practices shall preserve until the fifth anniversary
of the Closing Date all records possessed or to be possessed by such party
relating to any of the Assets, liabilities or business of the Practice prior to
the Closing Date. After the Closing Date, Seller and Physician shall provide
Vision 21 and the Managed Practices with access, upon prior reasonable written
request specifying the need therefor, during regular business hours, to (a)
Seller and the employees of Seller and (b) the books of account and records of
Seller, and Vision 21 and the Managed Practices and their representatives shall
have the right to make copies of such books and records.

7.3. Discharge of Business Obligations. From and after the Closing
Date, Seller shall pay and discharge, in accordance with past practice but not
less than on a timely basis, all obligations and liabilities incurred prior to
the Closing Date in respect of the Practice which are not assumed by Vision 21
pursuant to Section 1.6.

7.4. Payments Received. Seller, Physician, Vision 21 and the Managed
Practices each agree that after the Closing they will hold and will promptly
transfer and deliver to the other, from time to time as and when received by
them, any cash, checks with appropriate endorsements (using their best efforts
not to convert such checks into cash) or other property that they may receive on
or after the Closing Date which properly belongs to the other party, and will
account to the other for all such receipts. From and after the Closing, Vision
21 and the Managed Practices shall have the right and authority to endorse
without recourse the name of Seller on any check or any other evidences of
indebtedness received by Vision 21 or the Managed Practices on account of the
Practice and the Assets transferred to Vision 21 and the Managed Practices,
hereunder.

7.5. Audit. Vision 21 or the Managed Practices may cause an audit of
the Financial Statements to be conducted by Ernst & Young LLP or such other
auditor of Vision 21's selection, the cost of which shall be borne by Vision 21
whether or not the Closing takes place. Except as otherwise provided in this
Section, all items prepared by Ernst & Young LLP in connection with the audit
(the "Prepared Audit Materials") shall be for use solely by Vision 21. The
Prepared Audit Materials shall not be deemed to include those items that
customarily remain the property of the auditors such as their working papers and
internal memos. Seller and Physician represent and warrant to Vision 21 that the
preparation of audited financial statements will not take an unreasonable amount
of time or be of unreasonable cost and that the audited financial statements
will not materially differ from the unaudited financial statements. Seller and
Physician agree to fully cooperate with any such audit and provide any
documentation reasonably requested by the auditor in order to complete such
audit. Should the Seller reimburse Vision 21 for one-half (1/2) of the expenses
set forth herein with respect to the audit and pay any remaining balance owed to
Ernst

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<PAGE> 28

& Young LLP, if any, it shall be entitled to copies of the Prepared Audit
Materials. Seller agrees to submit to and fully cooperate with a Medicare audit
to be conducted by Corcoran Consulting, the cost of which shall be paid for or
reimbursed by Vision 21 whether or not the Closing takes place. All information
obtained in connection with the Medicare audit shall be made available to Vision
21.

7.6. Non-Compete. As part of the consideration hereof, neither Seller
nor Physician shall for a period of five (5) years from the Closing Date
directly or indirectly (a) engage in any medical or optometric practice
management business (except for Seller's and/or Physician's management of their
own medical practice) within the State of Florida, (b) solicit the employees of
Vision 21 to become employed by Seller or Physician or otherwise terminate their
employment relationship with Vision 21, or (c) render advice or assistance, or
have any interest in, or provide any services to any competitor of Vision 21;
provided, however, that (i) ownership of no more than five percent (5%) of the
stock of a publicly traded corporation engaged in a competitive business shall
not be deemed to be engaging in a competing business, (ii) Seller's ownership of
a medical practice outside of Pasco County, Florida, including the Brandon
Practice (and Physician's and Seller's managing of, and consulting with and
operating on patients at, a medical practice outside of Pasco County, Florida,
including the Brandon Practice) shall not be deemed to be engaging in a
competing business, provided that neither Seller nor the Physician shall solicit
patients of the Practice to terminate their relationship with the Practice
and/or be treated at a medical practice outside of Pasco County, Florida,
including the Brandon Practice, and (iii) Seller shall be entitled to hire the
individuals specified on SCHEDULE 7.6 without violating this Section. Seller and
Physician acknowledge that violation of such covenant not to compete would cause
irreparable harm to Vision 21 which cannot be fully redressed by payment of
damages by Seller and/or Physician. Accordingly, Vision 21 shall be entitled in
addition to any other right or remedy it may have, at law or in equity, to an
injunction, enjoining or restraining Seller and/or Physician from any violation
or threatened violation of this Section. If any of the rights or restrictions
contained herein shall be deemed by a court of competent jurisdiction to be
unenforceable by reason of the extent, duration or geographical scope thereof or
any other provision of this Agreement, the parties hereto contemplate that the
court shall reduce such extent, duration, geographical scope or other provision
and enforce this Section in its reduced form for all purposes in the manner
contemplated hereby. The restrictive covenants contained within this Section
shall not be enforceable by Vision 21 or the Managed Practices if Vision 21
fails to pay Seller the Purchase Price or fails to discharge the liabilities and
obligations identified on SCHEDULE 1.6 when due. The foregoing provisions shall
not be construed to prohibit advertisements in broadcast or print media
initiated outside of and targeting patients outside of Pasco County, Florida,
which incidentally can be viewed, heard or read within Pasco County, Florida.

7.7. Seller and Physician Confidentiality Covenant. From the date
hereof, the Seller and Physician shall not, directly or indirectly, use for any
purpose, other than in the performance of Physician's duties under the
Employment Agreement, or disclose to any third party, any information of Vision
21 (whether written or oral), including any business management or economic
studies, patient lists, proprietary forms, proprietary business or management
methods, marketing data, fee schedules, or trade secrets of Vision 21, and
including the terms and provisions of this

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<PAGE> 29

Agreement and any transaction or document executed by the parties pursuant to
this Agreement. Notwithstanding the foregoing, the Seller and Physician may
disclose information that the Seller or Physician can establish (a) is or
becomes generally available to and known by the public or medical community
(other than as a result of an unpermitted disclosure directly or indirectly by
Seller or Physician or their respective affiliates, advisors, or
representatives); (b) is or becomes available to the Seller or Physician on a
nonconfidential basis from a source other than Vision 21 or its affiliates,
advisors or representatives, provided that such source is not and was not bound
by a confidentiality agreement with or other obligation of secrecy to Vision 21
or its affiliates, advisors or representatives of which the Seller or Physician
has knowledge; or (c) has already been or is hereafter independently acquired or
developed by the Seller or Physician without violating any confidentiality
agreement with or other obligation of secrecy to Vision 21, or its affiliates,
advisors or representatives. Without limiting the other possible remedies to
Vision 21 for the breach of this covenant, Seller and Physician agree that
injunctive or other equitable relief shall be available to enforce this
covenant, such relief to be without the necessity of posting a bond, cash or
otherwise. The Seller and Physician further agree that if any restriction
contained in this Section 7.7 is held by any court to be unenforceable or
unreasonable, a lesser restriction shall be enforced in its place and the
remaining restrictions contained herein shall be enforced independently of each
other.

7.8. Release of Physician From Practice Liabilities. Vision 21 shall
use its best efforts to obtain from third party creditors the release of
Physician from any personal liabilities relating to the Practice which are
identified on SCHEDULE 1.6 and assumed by Vision 21 pursuant to the terms of
this Agreement. If Vision 21 has not obtained the release of Physician from such
personal liabilities within thirty (30) days of the Closing Date, Vision 21
shall pay such personal liabilities in full within five (5) days after the
expiration of such thirty (30) day period.

7.9. Employment Agreements of Non-Shareholder Professionals. Seller and
Physician shall use their best efforts to cause all non-shareholder
ophthalmologists and optometrists employed by Seller to terminate their existing
employment agreements effective as of the Closing Date and to enter into the
Non-Shareholder Physician Employment Agreement and the Optometrist Employment
Agreements, as applicable.

7.10. Additional Actions and Documents. From and after the Closing
Date, Seller and Physician will take or cause to be taken such further actions,
and execute, deliver and file such further documents and instruments as Vision
21 or the Managed Practices may request from time to time to evidence the
transfer of the Assets to Vision 21 and the Managed Practices and to fully
effectuate the purposes and terms of this Agreement.

ARTICLE VIII - MISCELLANEOUS

8.1. Taxes. Vision 21 shall pay all state and local sales, documentary
and other transfer taxes, if any, due under Florida law as a result of the
purchase, sale or transfer of the Assets in accordance therewith whether imposed
by law on Seller, Physician, Vision 21 or the Managed Practices, and Vision 21
shall indemnify, reimburse and hold harmless Seller in respect of the liability
for payment of or failure to pay any such taxes or the filing of or failure to
file any reports required in connection therewith.

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<PAGE> 30

8.2. Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions hereof and the consummation of the
transactions contemplated hereby.

8.3. Contents of Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof.
It shall not be amended or modified, and no provision hereof shall be waived,
except by written instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement.

8.4. Assignment and Binding Effect. This Agreement may not be assigned
by any party hereto without the prior written consent of the other parties.
Subject to the foregoing, all of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
permitted successors and assigns of the parties.

8.5. Waiver. No delay or failure on the part of either party in
exercising any right hereunder, and no partial or single exercise hereof, will
constitute a waiver of such right or of any other right hereunder.

8.6. Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by overnight,
registered or certified mail, postage prepaid, as follows:

If to Vision 21, to:

Vision Twenty-One, Inc.
7209 Bryan Dairy Road
Largo, Florida 34777
Attention: Richard T. Welch, Chief Financial Officer

With a copy to:

Darrell C. Smith, Esquire
Shumaker, Loop & Kendrick
Suite 2800, Barnett Plaza
101 East Kennedy Blvd.
Tampa, Florida 33602

If to Seller or Physician, to:

David A. Johnson, M.D.
1807 Richardson Place
Tampa, Florida 33606

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<PAGE> 31

With a copy to:

John B. Neukamm, Esq.
Ketchey Horan, P.A.
100 North Tampa Street, Suite 1900
Tampa, Florida 33601-0500

If to the Managed Medical Practice, to:

Sever, Pusateri & Cortelli, M.D., P.A.
13602 North 46th Street
Tampa, Florida 33613
Attention: Raymond J. Sever, M.D., President

With a copy to:

Barbara R. Pankau, Esquire
Shumaker, Loop & Kendrick, LLP
Suite 2800, Barnett Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602

If to the Managed Optometric Practice, to:

Optometric Associates of Florida, P.A.
7209 Bryan Dairy Road
Largo, Florida 34777
Attention: Theodore N. Gillette, President

With a copy to:

Darrell C. Smith, Esquire
Shumaker, Loop & Kendrick, LLP
Suite 2800, Barnett Plaza
101 East Kennedy Boulevard
Tampa, Florida 33602

or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as of
the date of delivery, in the case of personal delivery, or the delivery or
refusal date, as specified on the return receipt, in the case of overnight,
registered or certified mail.

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<PAGE> 32

8.7. Governing Law, Venue; Attorneys' Fees. This Agreement shall be
governed by and interpreted and enforced in accordance with the laws of the
State of Florida. Any judicial proceeding brought against any of the parties to
this Agreement based upon any dispute arising out of this Agreement or any
matter related hereto shall be brought in the appropriate court of Hillsborough
County in the State of Florida or the United States District Court for the
Middle District of Florida. By execution and delivery of the Agreement, each of
the parties to this Agreement consents to the exclusive jurisdiction of the
aforesaid courts and waives any objection to venue therein. The prevailing party
in any such proceeding shall be entitled to an award of its attorneys' fees,
paralegal fees, costs and expenses incurred at the trial and any and all
appellate levels and in any proceedings in Bankruptcy Court.

8.8. No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto and, in the case of Article VI hereof, the other Indemnified
Parties, and their heirs, executors, administrators, legal representatives,
successors and assigns, and they shall not be construed as conferring any rights
on any other persons.

8.9. Headings, Gender and "Person". All section headings contained in
this Agreement are for convenience of reference only, do not form a part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement. Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires. Any reference to a "person" herein shall include an individual, firm,
corporation, partnership, trust, governmental authority or body, association,
unincorporated organization or any other entity.

8.10. Schedules and Exhibits. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.

8.11. Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

8.12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which counterparts when taken together shall constitute but
one and the same instrument.

8.13. Brokerage. Each of the parties hereto represents and warrants to
the others that no broker is entitled to any commission or similar fee in
connection with the making and carrying out of this Agreement.

8.14. Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement or any document contemplated in this
Agreement is intended to be exclusive of any

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<PAGE> 33

other remedy so conferred, and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or at equity or by statute or otherwise. The election of one or
more remedies hereunder by any party hereto shall not constitute a waiver of the
right to pursue other available remedies hereunder.

8.15. Announcements and Press Releases. Any press releases or any other
public announcements by any party hereto concerning this Agreement or the
transactions contemplated hereunder shall be approved in advance by the other
parties hereto; provided, however, that Vision 21 may make such disclosures as
are required under federal and state securities laws in the opinion of counsel
for Vision 21.

8.16. Time of Essence. Time is of the essence of this Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

"SELLER"

JOHNSON EYE INSTITUTE, P.A.

By: /s/ David A. Johnson, M.D.
---------------------------------------
David A. Johnson, M.D., its President

"VISION 21"

VISION TWENTY-ONE, INC.

By: /s/ Richard T. Welch
---------------------------------------
Richard T. Welch, Chief Financial Officer

"MANAGED PRACTICES"

SEVER, PUSATERI & CORTELLI, M.D.,P.A.

By: /s/ Raymond J. Sever, M.D.
---------------------------------------
Raymond J. Sever, M.D., President

OPTOMETRIC ASSOCIATES OF FLORIDA, P.A.

By: /s/ Theodore N. Gillette
----------------------------------------
Theodore N. Gillette, President

"PHYSICIAN"

/s/ David A. Johnson, M.D.
------------------------------------------
David A. Johnson, M.D.

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<PAGE> 1
EXHIBIT 2.20

AMBULATORY SURGICAL CENTER ASSET PURCHASE AGREEMENT

THIS AMBULATORY SURGICAL CENTER ASSET PURCHASE AGREEMENT (this
"Agreement") is dated as of the 1st day of May, 1998, by and among JOHNSON EYE
INSTITUTE SURGERY CENTER, INC., a Florida corporation ("Seller"), VISION
TWENTY-ONE SURGERY CENTER, LTD., a Florida limited partnership ("Purchaser"),
and DAVID A. JOHNSON, M.D. and DEBRA PAZO JOHNSON ( together, the
"Shareholder").

W I T N E S S E T H:

WHEREAS, the Seller currently conducts an "ASC Business," defined as
the medical and administrative services rendered at a facility which provides
medically necessary and elective eye surgical care in which patients are
admitted to and discharged from such facility within the same working day and
are not permitted to stay overnight, and which facility is not part of a
hospital;

WHEREAS, the Seller currently conducts such ASC Business at its
facility located at 5923 7th Street, Zephyrhills, Florida 33540;

WHEREAS, the Shareholder owns all of the issued and outstanding shares
of capital stock of the Seller;

WHEREAS, Purchaser is a corporation with its principal place of
business at 7209 Bryan Dairy Road, Largo, Florida 34777; and

WHEREAS, Seller desires to sell, assign and transfer all of its Assets
(as defined herein) to Purchaser and Purchaser desires to purchase, assume and
acquire such assets and assume certain liabilities of the Seller in exchange for
the consideration provided herein.

ARTICLE I - PURCHASE AND SALE

1.1. Purchase and Sale of Assets. Subject to the terms and conditions
herein set forth, and in reliance upon the representations and warranties set
forth herein, Seller agrees to sell, convey, assign, transfer and deliver to
Purchaser, and Purchaser agrees to purchase, assume, accept and acquire, all of
Seller's right, title and interest in and to the assets of Seller relating to
the Seller's ASC Business consisting of all the assets (other than the Excluded
Assets specified in Section 1.2 hereof) as set forth on SCHEDULE 1.1, of every
kind, character and description, whether tangible, real, personal, or mixed, and
wheresoever located, whether carried on the books of Seller or not carried on
the books of Seller due to having been expended, fully depreciated, or otherwise
(collectively, the "Assets"), and including without limitation the following
(except to the extent that any of the following are specifically enumerated as
Excluded Assets in Section 1.2 hereof) to the extent permitted by applicable
law:

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(a) all machinery, equipment, tools, furniture, furnishings,
goods, and other tangible personal property;

(b) all supplies;

(c) all leases of instruments, equipment, furniture, machinery and
other items of tangible personal property (including rights to any security
deposits with respect to such leases);

(d) all prepaid items, notes and unbilled costs and fees
(excluding intercompany and related party debts);

(f) all rights under any patents, trademarks, service marks, trade
names or copyrights, whether registered or unregistered, and any applications
therefor, except for the names "Johnson Eye Institute" and "NewLight Eye Laser
Surgery Center";

(g) all data bases used in the Seller's ASC Business or under
development;

(j) all information, files, records, data, plans, contracts and
recorded knowledge, including supplier lists and employee records related to the
foregoing and the operation of the Seller's ASC Business; and

(k) all cash in registers or petty cash drawers (which shall on
the Closing Date be at least ninety percent (90%) of the average daily cash
balance held in such locations in the twelve (12) month period preceding the
Closing Date)

(l) all inventory

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(m) patient lists, including names, addresses and telephone
numbers;

(n) medical records;

(o) licenses (including, without limitation, Seller's license to
conduct its ASC Business issued by the State of Florida), certificates of need,
Medicare/Medicaid certifications and other governmental authorizations necessary
to provide medical or medical services and to be paid therefor by applicable
third party payors;

(p) eyeglasses, lenses and other eye wear;

(q) all accounts receivable of Seller existing as of the effective
date of this Agreement; and

(r) any other asset that legally can be owned by a party that is
not physician or optometrist-owned.

1.3. Excluded Assets. Notwithstanding the foregoing, the Assets shall
not include any of the following (collectively, the "Excluded Assets"):

(a) life insurance policies covering the life of the Shareholder
or any employee of Seller;

(b) personal effects listed on SCHEDULE 1.3;

(d) the lease of real property located at 5923 7th Street,
Zephyrhills, Florida 33540, which location shall be leased to Purchaser
pursuant to the Lease Agreement described in Section 2.2(a)(v), and
which lease has been terminated as of the effective date of this
Agreement; and

(e) cash and cash equivalents in banks, certificates of deposit,
commercial paper and securities owned by Seller (but excluding cash
held in registers or petty cash drawers on the Closing Date which shall
be transferred to Purchaser).

1.3. The Purchase Price. Purchaser agrees that, subject to the terms
and conditions of this Agreement, and in full consideration for the aforesaid
sale, transfer, conveyance, assignment and delivery of the Assets of Seller to
Purchaser, and the acceptance by Purchaser of such Assets and the assumption by
Purchaser of those liabilities listed on SCHEDULE 1.5 hereto, Purchaser shall
deliver to Seller at the Closing the consideration (the "Purchase Price") set
forth in SCHEDULE 1.3 hereto.

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1.4. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth on SCHEDULE 1.4 annexed hereto and made
a part hereof. Each of the Seller, Shareholder and Purchaser hereby covenants
and agrees that he, she, or it will not take a position that is in any way
inconsistent with the terms of this Section 1.4 on any income tax return, before
any governmental agency charged with the collection of any income tax or in any
judicial proceeding.

1.5. Assumption of Certain Obligations and Liabilities. From and after
the Closing Date, Purchaser shall assume and agree to pay or perform, promptly
as they become due, only those obligations and liabilities of the Seller
expressly set forth on SCHEDULE 1.5 (the "Assumed Obligations"). Except for the
Assumed Obligations, the Purchaser shall not assume or be deemed to have assumed
and shall not be responsible for any other obligation or liability of Seller,
direct or indirect, known or unknown, absolute or contingent.

ARTICLE II - CLOSING, ITEMS TO BE DELIVERED,
THIRD PARTY CONSENTS AND FURTHER ASSURANCES

2.2. Deliveries of the Seller, Shareholder and Purchaser at the
Closing.

(a) Seller and Shareholder shall deliver to Purchaser the
following at or prior to the Closing:

(i) such bills of sale with warranties as to title,
assignments, endorsements and other good and sufficient instruments and
documents of conveyance and transfer as shall be necessary and effective to
transfer and assign to and vest in Purchaser all of Seller's right, title and
interest in and to the Assets, including without limitation (A) good and valid
title in and to all of the Assets owned by Seller, (B) good and valid leasehold
interests in and to all of the Assets leased by Seller as lessee, and (C) all of
Seller's rights under all agreements, contracts, commitments, instruments and
other documents included in the Assets to which Seller is a party or by which it
has rights on the Closing Date; the aforedescribed instruments shall include,
without limitation, the Bill of Sale and Assignment (the "Bill of Sale") in the
form annexed hereto and made a part hereof as EXHIBIT 2.2(A)(I);

(ii) original instruments of consent or waiver duly executed
by third parties with respect to any contracts, agreements, leases or other
rights or obligations being transferred to Purchaser hereunder and requiring a
consent or waiver therefor;

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(iii) duly executed UCC-3 termination statements evidencing
the release of any and all liens upon any of the Assets held by any person or
entity;

(v) a duly executed Lease Agreement for the lease of the
real property described in SCHEDULE 3.1(q) (the "Lease Agreement"), in the form
annexed hereto and made a part hereof as EXHIBIT 2.2(a)(v) (the "Lease
Agreement"); and

(vi) such other certificates and documents as Purchaser or
its counsel may reasonably request.

Simultaneously with delivery of the items set forth in this Section 2.2(a),
Seller shall take all such steps as may be required to put Purchaser in actual
possession and operating control of the Assets.

(b) Purchaser shall deliver to Seller the following at or prior to
the Closing:

(i) the Purchase Price;

(ii) the Bill of Sale;

(iii) a copy of the resolutions of the Board of Directors of
the general partner of the Purchaser on behalf of the Purchaser authorizing the
execution, delivery and performance of this Agreement and all related documents
and agreements and the consummation of the transactions contemplated in this
Agreement;

(iv) a duly executed Lease Agreement; and

(v) such other certificates and documents as Seller or its
counsel may reasonably request.

2.3. Further Assurances. Seller, from time to time after the Closing
and at the request of Purchaser, will execute, acknowledge and deliver to
Purchaser such other instruments of conveyance and transfer and will take such
other actions as Purchaser may reasonably require in order to vest more
effectively in Purchaser, or to put Purchaser more fully in possession of, any
of the Assets. Each of the parties hereto will cooperate with the other and
execute and deliver to the other parties hereto such other instruments and
documents and take such other actions as may be reasonably requested from time
to time by any other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.

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ARTICLE III - REPRESENTATIONS AND WARRANTIES

3.1. Representations and Warranties of Seller and Shareholder. Seller
and Shareholder hereby jointly and severally represent and warrant to Purchaser
that the following are true and correct as of the date hereof, and shall be true
and correct as of the Closing Date as if made on that date, except as set forth
on the Schedules attached hereto and made a part hereof, each of which
exceptions shall specifically identify and be limited to the relevant subsection
hereof to which it relates and shall be deemed to be a representation and
warranty as if made hereunder:

(a) Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida, with all
requisite corporate power and authority to carry on the business in which it is
engaged, to own the properties it owns, to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Seller is not duly
qualified and licensed to do business in any other jurisdiction. Seller does not
have any assets, employees or offices in any state other than the State of
Florida.

(b) Legal Power and Enforceable Obligations. Seller has the power,
authority and legal right to own, lease and operate the Assets, to conduct the
Practice as currently conducted, and to execute, deliver and perform this
Agreement. This Agreement and all the other documents and instruments required
to be delivered by Seller and/or Shareholder in accordance with the provisions
hereof have been, or upon their execution and delivery will have been, duly
executed and delivered on behalf of Seller and Shareholder and constitute, or
will constitute, the legal, valid and binding obligation of Seller and
Shareholder, enforceable against Seller and Shareholder in accordance with their
respective terms.

(c) No Violation. The execution, delivery and performance of this
Agreement by Seller and Shareholder do not and will not violate, conflict with
or result in the breach of any term, condition or provision of, or require the
consent of any other person under (i) any existing law, ordinance, or
governmental rule or regulation to which Seller or Shareholder is subject, (ii)
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or governmental or regulatory official, body or authority which is applicable to
either Seller or Shareholder, (iii) Seller's Articles or Certificate of
Incorporation or Bylaws, or (iv) any mortgage, indenture, agreement, contract,
commitment, lease, plan or other instrument, document or understanding, oral or
written, to which either Seller or Shareholder is a party, by which either
Seller or Shareholder may have rights, or by which any of the Assets may be
bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of Seller or Shareholder thereunder. No authorization, approval or
consent of, and no filing with, any governmental or regulatory official, body or
authority is required in connection with the execution, delivery or performance
of this Agreement by Seller or Shareholder or the sale to Purchaser of the
Assets.

(d) No Third Party Options. There are no existing agreements with,
options or commitments to or rights of any person to acquire any of the Assets
or any interest therein.

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(f) Title to Assets; Required Approvals. Seller has and shall
transfer to Purchaser at the Closing good, valid and marketable title to all of
the Assets being sold and transferred hereunder, free and clear of all
mortgages, liens, pledges, security interests, charges, claims, restrictions and
other encumbrances and defects of title of any nature whatsoever, except as set
forth in SCHEDULE 3.1(f). Except as set forth in SCHEDULE 3.1(f), no consent,
approval, waiver or authorization is required to be obtained by Seller from any
third party with respect to the assignment to Purchaser of any contract,
agreement, lease, or other right or obligation of Seller other than pursuant to
those leases the failure of which to obtain would not, individually or in the
aggregate, have a material adverse effect upon the conduct of the Seller's ASC
Business. Seller shall use its best efforts to obtain all such consents,
approvals, waivers and authorizations with respect to those items disclosed on
SCHEDULE 3.1(f) before and after the Closing.

(g) Taxes. Seller has filed all tax returns and forms required to
be filed with respect to its ASC Business, and has paid in full all taxes,
estimated taxes, interest, penalties, assessments and deficiencies which have
become due with respect to the Seller's ASC Business, or will do so prior to the
Closing Date. Such returns and forms are true and correct in all material
respects, and Seller is not required to pay any other tax except as shown on
such returns. Seller is not a party to any pending action or proceeding and, to
Seller's knowledge, there is no action or proceeding threatened by any
government or authority against Seller for the assessment or collection of any
tax and no resolved claim for assessment or collection of any tax has been
asserted against Seller. The Shareholder is not a "foreign person" as described
in Section 1445 of the Internal Revenue Code of 1986, as amended. There is no
pending proceeding to reduce the assessed valuation of any portion of the
Assets. Seller has delivered to Purchaser a true and complete copy of its
federal and state tax returns for the years ended December 31, 1995, December
31, 1996, and December 31, 1997, which tax returns are or shall be accompanied
by all notes and schedules filed therewith. Such tax returns fairly present the
financial position of Seller for the periods covered thereby.

(h) Absence of Changes. Since December 31, 1997, Seller has not:

(i) incurred any liabilities, other than liabilities incurred
in the ordinary course of business consistent with past practice, or discharged
or satisfied any lien or encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice, or failed to pay or
discharge when due any liabilities of which the failure to pay or discharge has
caused or will cause any material damage or risk of material loss to Seller or
any of its Assets or properties;

(ii) sold, encumbered, assigned or transferred any of its
Assets or properties;

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(v) suffered any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting the Seller's ASC
Business and its related operations, assets, properties, prospects or condition
(financial or otherwise) or suffered any repeated, recurring or prolonged
shortage, cessation or interruption of supplies or utility or other services
required to conduct its ASC Business;

(vi) suffered any material adverse change in the Seller's
ASC Business and its related operations, assets, properties, prospects or
condition (financial or otherwise);

(vii) received notice or had knowledge of any actual or
threatened labor trouble, strike or other occurrence, event or condition of any
similar character which has had or might have an adverse effect on the Seller's
ASC Business or its related operations, Assets, properties, prospects or
condition (financial or otherwise);

(ix) changed any of the accounting principles followed by it
or the methods of applying such principles; or

(x) entered into any transaction other than in the ordinary
course of business consistent with past practice.

(i) Financial Statements; Consistent Treatment of Expenses. Seller
has delivered to Purchaser Seller's unaudited balance sheets and unaudited
statements of income and cash flows for the fiscal years ended December 31,
1995, December 31, 1996, and December 31, 1997, and Seller's unaudited balance
sheet and unaudited statements of income and cash flows for the four (4) month
period ended April 30, 1998, (collectively, the "Financial Statements"). Except
as set forth on SCHEDULE 3.1(i), the Financial Statements, including the notes
thereto, have been prepared utilizing generally accepted accounting principals
("GAAP") consistently applied by Seller in accordance with past practice
throughout the periods indicated. The Financial Statements fairly present the
financial condition and results of operation of Seller as at the respective
dates and for the

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periods indicated. Except as set forth on SCHEDULE 3.1(i), the Financial
Statements reflect all liabilities and obligations of the Seller, accrued,
contingent or otherwise that would be required to be reflected thereon, or in
the notes thereto, prepared in accordance with GAAP, except for liabilities and
obligations incurred in the ordinary course of business since April 30, 1998.
For purposes of this Agreement, the term "liabilities" shall include, without
limitation, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, choate or inchoate,
liquidated or unliquidated, secured or unsecured.

(j) Compliance with Law; Authorizations. Seller has complied in
all material respects with, and is not in any material violation of, any law,
ordinance or governmental or regulatory rules or regulations, whether federal,
state, local or foreign, to which Seller and its ASC Business and related
operations, assets or properties are subject ("Regulations"). Seller owns,
holds, possesses or lawfully uses in the operation of the its ASC Business all
franchises, licenses, permits, easements, rights, applications, filings,
registrations and other authorizations ("Authorizations") which are material for
Seller to conduct its ASC Business as currently conducted or for the ownership
and use of the assets owned or used by Seller in the conduct of the ASC
Business, free and clear of all liens, charges, restrictions and encumbrances
and in compliance with all Regulations. Seller is not in default, nor has Seller
received any notice of any claim of default, with respect to any such
Authorization. All such Authorizations are renewable by their terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees.
None of such Authorizations will be adversely affected by the consummation of
the transactions contemplated hereby.

(k) Litigation. No litigation, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority is pending or, to the
best knowledge of Seller and Shareholder, threatened against Seller or
Shareholder or relates to the Assets or the transactions contemplated by this
Agreement, nor does Seller or Shareholder know of any reasonably likely basis
for any such litigation, arbitration, investigation or proceeding, the result of
which could adversely affect Seller, Shareholder, the Assets or the transactions
contemplated hereby or thereby. Neither Seller nor Shareholder is a party to or
subject to the provisions of any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory official, body or
authority which may adversely affect Seller, the Shareholder, the Assets or the
transactions contemplated hereby.

(l) Labor Matters. Seller has not suffered any strike, slowdown,
picketing or work stoppage by any union or other group of employees affecting
its ASC Business. Seller is not a party to any collective bargaining agreement,
no such agreement determines the terms and conditions of employment of any
employee of Seller, no collective bargaining agent has been certified as a
representative of any of the employees of Seller, and no representation campaign
or election is now in progress with respect to any of the employees of Seller.
Seller has complied and is in compliance in all material respects with all laws
and regulations relating to the employment of labor, including, without
limitation, provisions relating to wages, hours, collective bargaining,
occupational safety and health, equal employment opportunity and the withholding
of income taxes and social security contributions. Seller has paid its employees
all wages, commissions and

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accruals for earned vacation, personal days and sick leave owing through the
Closing Date. Except as described in SCHEDULE 3.1(l), the consummation of the
transactions contemplated hereby will not cause Purchaser to incur or suffer any
liability relating to, or obligation to pay, any severance, termination or other
payment to any person or entity and any such claim made against Purchaser for
reason of any termination or separation of any employee on or before Closing, or
otherwise resulting from the sale of the Assets pursuant to this Agreement,
shall be the sole responsibility of Seller. No employee of Seller has any
contractual right to continued employment by Seller following the consummation
of the sale of the Assets pursuant to this Agreement and Purchaser shall be free
to offer employment to such employees of Seller as Purchaser may determine and
on such terms and conditions as Purchaser may determine. Set forth in SCHEDULE
3.1(l) is an accurate and complete list of all employees employed by Seller in
its ASC Business showing as to each the nature of the employee's job, years of
service, the amount or rate of compensation, all accruals of vacation, personal
days, sick leave, and any other benefits due the employee and other matters
which may be reasonably required by Purchaser.

(m) Employee Benefit Plans. Seller neither sponsors nor maintains
any employee benefit plans except as described in SCHEDULE 3.1(m). The Seller is
not a contributing employer under any multiemployer plan (as such term is
defined in Section 3(37) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) nor has it withdrawn from participation in any such plan
after 1979. The Seller has not entered into any agreement to provide, nor does
it otherwise have any obligation to provide, any individual and/or his
designated beneficiary with any medical, life insurance or other fringe
benefits, following his retirement or other termination of employment, other
than pension benefits payable pursuant to its employee pension benefit plans (as
such term is defined in Section 3(2) of ERISA) described in SCHEDULE 3.1(m). Any
employee benefit plans (as such term is defined in Section 3(3) of ERISA)
maintained or sponsored by Seller for the benefit of Seller's employees and
described in SCHEDULE 3.1(m) are in compliance in all material respects with the
applicable provisions of ERISA and the regulations promulgated thereunder as
presently applied, and have so complied during all prior periods during which
such provisions were applicable. Seller has complied in all material respects
with the provisions of ERISA applicable to it as employer, plan sponsor, plan
administrator or fiduciary of any such employee benefit plans with respect to
any such employee benefit plans maintained by Seller or to which Seller was
obligated to contribute funds (or any other plan or individual arrangement which
may not be subject to ERISA). Seller has (i) made all contributions required of
it by law (including, without limitation, ERISA) or contract; and (ii) is and
has been in compliance with the material terms and provisions of all such
employee benefit plans. Seller has no accrued but unpaid obligations with
respect to any of such employee benefit plans except as set forth in the
Financial Statements or SCHEDULE 3.1(i).

(n) Necessary Assets. The Assets include all rights and property
necessary to the conduct of the Seller's ASC Business in the manner it is
presently conducted by Seller and no property excluded from the Assets hereof
constitutes property or rights material to such ASC Business.

(o) Availability of Documents; Compliance with Due Diligence
Requests. Seller has made available to Purchaser copies of all documents
including, without limitation, all

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agreements, contracts, commitments, insurance policies, leases, plans,
instruments, undertakings, authorizations, permits, licenses, trademarks, trade
names, service marks and applications therefor listed in this Agreement or in
the Schedules to this Agreement. Such copies are true and complete and include
all amendments, supplements and modifications thereto or waivers currently in
effect thereunder. Prior to the Closing Date, the Seller and Shareholder shall
have provided true and correct copies to Purchaser or answered truthfully in
writing all items described in Purchaser's written due diligence list which has
been provided to the Seller by Purchaser prior to the date first above written.

(p) Conditions Affecting Seller. There is no fact, development or
threatened development with respect to the markets, products, services, clients,
patients, facilities, personnel, vendors, suppliers, operations, Assets or
prospects of the Seller's ASC Business, which are known to Seller which would
materially adversely affect the such ASC Business or the operations, prospects
or condition (financial or otherwise) of Seller considered as a whole, other
than such conditions as may affect as a whole the economy or the ambulatory
surgical center industry generally. Seller and Shareholder have used their
respective best efforts to keep available for Purchaser the services of the
employees, agents, patients and suppliers of Seller active in the conduct of the
Seller's ASC Business. Seller does not have any reason to believe that any loss
of any employee, agent, patient or supplier or other advantageous arrangement
will result because of the consummation of the transactions contemplated hereby.

(q) Real Property. All real property (including, without
limitation, all interests in and rights to real property) and improvements
located thereon which are owned or leased by Seller and used in connection with
the Seller's ASC Business or included in the Assets (the "Real Property") is
listed on SCHEDULE 3.1(q). The use and operation of the Real Property is in
compliance in all material respects with all applicable building code,
environmental, zoning and land use laws, and other applicable local, state and
federal laws and regulations, including, without limitation, those laws and
regulations relating to the generation, transportation, storage and disposal of
medical waste. No portion of the Real Property is the subject of, or affected
by, any condemnation or eminent domain proceeding or any covenant or other
restriction preventing or limiting Seller's right to convey right, title and
interest in the Real Property or to use the Real Property for the various
purposes for which the Real Property is currently being used. Each lease with
respect to the Real Property is in full force and effect and has not been
assigned, modified, supplemented or amended. Neither Seller nor the landlord
under any lease is in material default of the terms of any such lease and, to
Seller's knowledge, no circumstances or state of facts currently exist which,
with the giving of notice or the passage of time or both would permit the
landlord under any lease to terminate such lease.

(r) Medicare and Medicaid Programs. The Seller is qualified for
participation in the Medicare and Medicaid programs, and Seller is party to
provider agreements for such programs which are in full force and effect with no
events of default having occurred thereunder. Seller, has timely filed all
claims or other reports required to be filed prior to the Closing Date with
respect to the purchase of services by third-party payors ("Payors"), including
but not limited to Medicare and Medicaid programs. All such claims or reports
are complete and accurate in all material respects. Seller has paid or has
properly recorded on the Financial Statements all actually known and

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undisputed refunds, discounts or adjustments which have become due pursuant to
such claims, and Seller does not have any material liability to any Payor with
respect thereto, except as has been reserved for in the Seller's Financial
Statements or set forth on SCHEDULE 3.1(i). There are no pending appeals,
overpayment determinations, adjustments, challenges, audits, litigation, or
notices of intent to reopen Medicare and/or Medicaid claims determinations or
other reports required to be filed by Seller in order to be paid by a Payor for
services rendered. None of the Seller, Shareholder or any employee, director,
officer or consultant of Seller has been convicted of, or pled guilty or nolo
contendere to, patient abuse or neglect, or any other Medicare or Medicaid
program-related offense. None of the Seller, Shareholder or any employee,
director, officer or consultant of the Seller has committed any offense which
may serve as the basis for suspension or exclusion from the Medicare and
Medicaid programs, including but not limited to, defrauding a government
program, loss of the Seller's ambulatory surgical center license issued by the
State of Florida, and failure to provide quality care.

(s) Fraud and Abuse. None of the Seller, Shareholder or any
employee, director, officer or consultant of the Seller has engaged in any
activities which are prohibited under 42 U.S.C. ss.ss. 1320-7, 7a or 7b or 42
U.S.C. ss.1395nn (subject to the exceptions set forth in such legislation), or
the regulations promulgated thereunder or pursuant to similar state or local
statutes or regulations, or which are prohibited by rules of professional
conduct, including but not limited to the following:

(i) knowingly and willfully making or causing to be made a
false statement or representation of a material fact in any application for any
benefit or payment;

(ii) knowingly and willfully making or causing to be made a
false statement or representation of a material fact for use in determining
rights to any benefit or payment;

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(t) Ownership of Competitors. Except as set forth in SCHEDULE
3.1(t), neither Seller nor the Shareholder owns, directly or indirectly, any of
the capital stock of any other corporation or any equity, profit sharing,
participation or other interest in any corporation, partnership, joint venture
or other entity that is engaged in a business that is a competitor of Purchaser
or the Seller.

(u) Commitments. Except as set forth on SCHEDULE 3.1(u) or as
otherwise disclosed pursuant to this Agreement, neither Seller nor Shareholder
(with respect to the Seller's ASC Business) is a party to nor bound by, nor are
the Assets bound by, whether or not in writing, any of the following
(collectively, "Commitments"):

(i) partnership or joint venture agreement;

(ii) guaranty or suretyship, indemnification or contribution
agreement or performance bond;

(iii) debt instrument, loan agreement or other obligation
relating to indebtedness for borrowed money or money lent or to be lent to
another;

(iv) contract to purchase real property;

(v) agreement relating to any material matter or
transaction in which an interest is held by a person or entity that is an
affiliate of Seller;

(vii) powers of attorney;

(viii) contracts containing non-competition covenants;

(ix) agreements with Payors and contracts to provide medical
or health care services; or

Except as set forth on SCHEDULE 3.1(u) and to Seller's and Shareholder's best
knowledge, there are no existing or asserted defaults, events of default or
events, occurrences, acts or omissions that, with the giving of notice or lapse
of time or both, would constitute defaults by Seller or Shareholder or, to the
best knowledge of Seller and Shareholder, any other party to a Commitment, and
no penalties have been incurred nor are amendments pending, with respect to the
Commitments. The

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Commitments are in full force and effect and are valid and enforceable
obligations of Seller and Shareholder, and to the best knowledge of Seller and
Shareholder, are valid and enforceable obligations of the other parties thereto,
in accordance with their respective terms, and no defenses, off-sets or
counterclaims have been asserted or, to the best knowledge of Seller and
Shareholder, may be made by any party thereto (other than Seller and
Shareholder), nor has Seller or Shareholder waived any rights thereunder. Except
as set forth on SCHEDULE 3.1(u), no consents or approvals are required under the
terms of any agreement listed on SCHEDULE 3.1(u) in connection with the
transactions contemplated herein, including, without limitation, the transfer of
any such agreement pursuant to this Agreement. Except as set forth on SCHEDULE
3.1(u), neither Seller nor Shareholder has received notice of any plan or
intention of any other party to any Commitment to exercise any right to cancel
or terminate any Commitment, and neither Seller nor Shareholder knows of any
fact that would justify the exercise of such a right.

(v) Insurance. Seller carries property, liability, malpractice and
such other types of insurance pursuant to the insurance policies listed and
briefly described on SCHEDULE 3.1(v) (the "Insurance Policies"). The Insurance
Policies are all of the insurance policies of the Seller relating to the ASC
Business of Seller and the Assets. All of the Insurance Policies are issued by
insurers of recognized responsibility, and, to the best knowledge of the Seller
and Shareholder, are valid and enforceable policies, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies. Except as set forth in
SCHEDULE 3.1(v), no consent or approval is required for, and no other impediment
or restriction exists that will prohibit or limit, the transfer of any such
Insurance Policies included within the Assets in accordance with the terms of
this Agreement. All Insurance Policies shall be maintained in force without
interruption up to and including the Closing Date. Neither Seller nor
Shareholder has received any notice or other communication from any issuer of
any Insurance Policy cancelling such policy, materially increasing any
deductibles or retained amounts thereunder, and to the actual knowledge of
Seller and Shareholder, no such cancellation or increase of deductibles,
retainages or premiums is threatened. Neither Seller nor Shareholder has any
outstanding claims, settlements or premiums owed against any Insurance Policy,
and Seller and Shareholder have given all notices or have presented all
potential or actual claims under any Insurance Policy in due and timely fashion.
In the three (3) years before the effective date of this Agreement, Seller has
not filed a written application for any professional liability insurance
coverage which has been denied by an insurance agency or carrier, and the Seller
has been continuously insured for professional malpractice claims for at least
the past seven (7) years. SCHEDULE 3.1(v) also sets forth a list of all claims
under any Insurance Policy in excess of $10,000 per occurrence filed by Seller
in the three (3) years before the effective date of this Agreement.

(w) Accounts Receivable/Payable. The accounts receivable of Seller
relating to its ASC Business reflected on the Seller's Financial Statements (the
"Accounts Receivable"), to the extent uncollected on the date hereof, are, and
the accounts receivable of Seller relating to the ownership and operation of its
ASC Business to be reflected on the books of Seller on the Closing Date will be,
valid, existing and collectible within six (6) months from the Closing Date
(taking into consideration the allowance for doubtful accounts set forth in the
Financial Statements) using reasonably diligent collection methods taking into
account the size and nature of the receivable, and represent amounts due for
goods sold and delivered or services performed. There are not, and on

-14-
<PAGE> 15

the date of Closing there will not be, any refunds, discounts, set-offs,
defenses, counterclaims or other adjustments payable or assessable with respect
to the Accounts Receivable. Seller has collected Accounts Receivable only in the
ordinary course and has not changed collection procedures or methods nor
accelerated the pace of such collection efforts in anticipation of the
transactions contemplated in this Agreement. Seller has paid accounts payable in
the ordinary course and has not changed payment procedures or methods nor
delayed the timing of such payments in anticipation of the transactions
contemplated in this Agreement.

(x) Completeness of Disclosure. Neither this Agreement, nor any
Schedule, Exhibit, list, certificate or other instrument or document furnished
by Seller or Shareholder to Purchaser pursuant to this Agreement, contains any
untrue statement of a material fact or omits to state any material fact required
to be stated herein or therein or necessary to make the statements and
information contained herein or therein not misleading. Neither Seller nor
Shareholder has failed to disclose to Purchaser any event, condition or fact
which Seller or Shareholder knows, or has reasonable grounds to know, may
materially adversely affect the Assets or the operations, prospects or condition
(financial or otherwise) of the Seller's ASC Business.

3.2. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller and the Shareholder that the following are
true and correct as of the date hereof and shall be true and correct as of the
Closing Date as if made on that date:

(a) Organization and Good Standing. Purchaser is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Florida.

(b) Authorization and Validity. Purchaser has the power, authority
and legal right to execute, deliver and perform this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.

(c) Validity of Contemplated Transactions. The execution, delivery
and performance of this Agreement by Purchaser do not and will not violate,
conflict with or result in the breach of any term, condition or provision of, or
require the consent of any other party under (i) any existing law, ordinance, or
governmental rule or regulation to which Purchaser is subject, (ii) any
judgment, order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable to
Purchaser, (iii) the Certificate of Limited Partnership or Partnership Agreement
of Purchaser, or (iv) any mortgage, indenture, agreement, contract, commitment,
lease, plan or other instrument, document or understanding, oral or written, to
which Purchaser is a party or by which Purchaser is otherwise bound. No
authorization, approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in connection
with the execution, delivery and performance of this Agreement by Purchaser.

(d) Completeness of Disclosure. Neither this Agreement nor any
other instrument or document furnished by Purchaser to Seller or Shareholder
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state any material fact required to be

-15-
<PAGE> 16

stated herein or therein or necessary to make the statements and information
contained herein or therein not misleading.

(e) Employment of Seller's Employees. Purchaser does not currently
intend to change the existing composition or employment terms of any of the
which have employment arrangements with Seller on the effective date of this
Agreement. Purchaser reserves the right, however, to change the number,
composition or employment terms of such personnel in the future.

(f) Patient Notifications. Purchaser shall be solely responsible
for complying with the requirements of Florida Statutes Section 455.667 and
other applicable requirements with respect to notifications of patients of the
sale of Seller's ASC Business and the disposition of medical records, at
Purchaser's sole cost.

ARTICLE IV - CONDITIONS PRECEDENT TO THE CLOSING

4.1. Conditions Precedent to Obligations of Purchaser. All obligations
of Purchaser under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:

(a) Compliance with this Agreement. Seller and Shareholder shall
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to the Closing.

(b) Due Diligence. Purchaser shall have completed to its
satisfaction a due diligence review of Seller, Shareholder, the Seller's ASC
Business and the Assets, which shall include verification that the Seller's ASC
Business has been run in the ordinary course since December 31, 1997, and that
the Assets, liabilities, obligations, revenues, vendor relations and patient
relations of Seller are as represented to and anticipated by Purchaser. Seller
agrees to cooperate and make available to Purchaser and its employees and
accountants, all of Seller's books and records and to make available Seller's
officers, employees and agents in assisting Purchaser to complete its due
diligence investigation. Purchaser may conduct its due diligence investigation
from the date first above written to, and including, the Closing Date.

(c) No Adverse Changes. No change other than as contemplated or
permitted by this Agreement, or other than in the ordinary course, shall have
occurred with respect to the operations, prospects or condition (financial or
otherwise) of the Seller's ASC Business or any of the Assets, which shall have
been material and adverse to Seller.

(d) Consents and Approvals. Purchaser shall have received those
written consents and approvals necessary or desirable for the transfer of the
Assets to Purchaser.

(e) Removal of Liens. Seller shall have obtained valid, binding
and enforceable releases, satisfactions and discharges of all liens, charges and
encumbrances affecting the Assets.

(f) Lease Agreement. Seller shall have entered into the Lease
Agreement.

-16-
<PAGE> 17

(g) Certification. Seller shall not have received notice of or
been made a party to any judicial or administrative proceeding, or threatened to
so be made a party, in any action or proceeding that seeks to deny the continued
use or receipt of any necessary permit, license, authorization, certification or
approval under the Medicare or Medicaid programs to conduct an ASC Business.

4.2. Conditions Precedent to Seller's and Shareholder's Obligations.
All obligations of Seller and Shareholder under this Agreement are subject to
the fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:

(a) Compliance with this Agreement. Purchaser shall have performed
and complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.

(b) Lease Agreement. Purchaser shall have entered into the Lease
Agreement.

ARTICLE V - [RESERVED]

ARTICLE VI - INDEMNIFICATION AND REMEDIES

6.1. Indemnification Obligation of Seller and Shareholder. From and
after the Closing, Seller and Shareholder, jointly and severally, shall
reimburse, indemnify and hold harmless Purchaser, and its successors and assigns
(an "Indemnified Buyer Party") against and in respect of:

(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Buyer Party that result
from, relate to or arise out of:

(i) any and all liabilities and obligations of Seller of any
nature whatsoever not disclosed in this Agreement and expressly assumed by
Purchaser;

(ii) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or investigations
against any Indemnified Buyer Party that relate to Seller or its ASC Business in
which the principal event giving rise thereto occurred prior to the Closing Date
or which result from or arise out of any action or inaction of Seller or any
employee, agent, representative or subcontractor of Seller prior to the Closing
Date; or

-17-
<PAGE> 18

Purchaser pursuant hereto or in connection with the negotiation, execution or
performance hereof; and

6.2. Indemnification Obligation Of Purchaser. From and after the
Closing, Purchaser shall reimburse, indemnify and hold harmless Seller,
Shareholder and their respective successors and assigns (an "Indemnified Seller
Party") against and in respect of:

(a) any and all damages, losses, deficiencies, liabilities, costs
and expenses incurred or suffered by any Indemnified Seller Party that result
from, relate to or arise out of any misrepresentation, breach of warranty or
non-fulfillment of any agreement or covenant on the part of Purchaser under this
Agreement or from any misrepresentation in or omission from any certificate,
schedule, exhibit, statement, document or instrument furnished to Seller
pursuant hereto or in connection with the negotiation, execution or performance
hereof; and

(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments, costs and other
expenses (including, without limitation, reasonable legal fees and expenses)
incident to any of the foregoing or to the enforcement of this Section 6.2.

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<PAGE> 19

proceeding. The Aggrieved Party agrees to cooperate and make available to the
Indemnifying Party all books and records and such officers, employees and agents
as are reasonably necessary and useful in connection with the defense. The
Aggrieved Party may participate, at its expense, in the defense of such claim,
action or proceeding provided that the Indemnifying Party shall direct and
control the defense of such claim, action or proceeding; provided, however, if
in the reasonable opinion of the Aggrieved Party any such claim, action or
proceeding involves an issue or matter which, if adversely determined, would
have a materially adverse effect on the Aggrieved Party, then the Aggrieved
Party shall have the right to control the defense or settlement of any such
claim, action or proceeding and its reasonable costs and expenses shall be
included as a part of the indemnification obligation of the Indemnifying Party.
The Indemnifying Party shall not, with respect to any such claim, action or
proceeding, consent to the entry of any judgment or award, or enter into any
settlement, except with the prior written consent of the Aggrieved Party, which
consent shall not be unreasonably withheld; provided, however, in the case of
any such judgment, award or settlement for money, it shall be a condition
thereto that the Indemnifying Party shall acknowledge its obligation to
indemnify the Aggrieved Party pursuant to this Article VI; and provided,
further, that any such judgment, award or settlement include, as an
unconditional term thereof, the release of the Aggrieved Party from all
liability by the third party claimant or plaintiff.

6.4. [RESERVED].

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<PAGE> 20

and subsequent to any litigation, including arbitration and appellate
proceedings, bankruptcy or similar debtor/creditor proceedings, and proceedings
to enforce any indemnity agreement herein contained.

ARTICLE VII- POST CLOSING MATTERS

7.2. Maintenance of Books and Records. Each of Seller, Shareholder and
Purchaser shall preserve until the fifth anniversary of the Closing Date all
records possessed or to be possessed by such party relating to any of the
Assets, liabilities or the ASC Business of the Seller prior to the Closing Date.
After the Closing Date, Seller and Shareholder shall provide Purchaser with
access, upon prior reasonable written request specifying the need therefor,
during regular business hours, to (a) Seller and the employees of Seller and (b)
the books of account and records of Seller, and Purchaser and its
representatives shall have the right to make copies of such books and records.

7.3. Discharge of Business Obligations. From and after the Closing
Date, Seller shall pay and discharge, in accordance with past practice but not
less than on a timely basis, all obligations and liabilities incurred prior to
the Closing Date in respect of the Seller's ASC Business which are not assumed
by Purchaser pursuant to Section 1.6.

7.4. Payments Received. Seller, Shareholder and Purchaser each agree
that after the Closing they will hold and will promptly transfer and deliver to
the other, from time to time as and when received by them, any cash, checks with
appropriate endorsements (using their best efforts not to convert such checks
into cash) or other property that they may receive on or after the Closing Date
which properly belongs to the other party, and will account to the other for all
such receipts. From and after the Closing, Purchaser shall have the right and
authority to endorse without recourse the name of Seller on any check or any
other evidences of indebtedness received by Purchaser on account of the Seller's
ASC Business and the Assets transferred to Purchaser, hereunder.

7.5. Audit. Purchaser may cause an audit of the Financial Statements to
be conducted by Ernst & Young LLP or such other auditor of Purchaser's
selection, the cost of which shall be borne by Purchaser whether or not the
Closing takes place. Except as otherwise provided in this Section, all items
prepared by Ernst & Young LLP in connection with the audit (the "Prepared Audit
Materials") shall be for use solely by Purchaser. The Prepared Audit Materials
shall not be deemed to include those items that customarily remain the property
of the auditors such as their working papers and internal memos. Seller and
Shareholder represent and warrant to Purchaser that the preparation of audited
financial statements will not take an unreasonable amount of time or be of
unreasonable cost and that the audited financial statements will not materially
differ from the

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<PAGE> 21

unaudited financial statements. Seller and Shareholder agree to fully cooperate
with any such audit and provide any documentation reasonably requested by the
auditor in order to complete such audit. Should the Seller reimburse Purchaser
for one-half (1/2) of the expenses set forth herein with respect to the audit
and pay any remaining balance owed to Ernst & Young LLP, if any, it shall be
entitled to copies of the Prepared Audit Materials. Seller agrees to submit to
and fully cooperate with a Medicare audit to be conducted by Corcoran
Consulting, the cost of which shall be paid for or reimbursed by Purchaser
whether or not the Closing takes place. All information obtained in connection
with the Medicare audit shall be made available to Purchaser.

7.6. Non-Compete. As part of the consideration hereof, neither Seller
nor Shareholder shall for a period of five (5) years from the Closing Date
directly or indirectly (a) engage in any ASC Business or medical or optometric
practice management business (except for Physician's management of his own
medical practice) within the State of Florida; (b) solicit the employees of
Purchaser or Vision Twenty-One, Inc., the parent company of Purchaser's general
partner ("Vision 21") to become employed by Seller or Shareholder or otherwise
terminate their employment relationship with Purchaser or Vision 21, or (c)
render advice or assistance, or have any interest in, or provide any services to
any competitor of Purchaser or Vision 21; provided, however, that (i) ownership
of no more than five percent (5%) of the stock of a publicly traded corporation
engaged in a competitive business shall not be deemed to be engaging in a
competing business, (ii) Shareholder's relationship(s) described on SCHEDULE
3.1(t) hereto shall not be deemed to be engaging in a competing business, and
(iii) Seller shall be entitled to hire the individuals specified on SCHEDULE 7.6
without violating this Section. Seller and Shareholder acknowledge that
violation of such covenant not to compete would cause irreparable harm to
Purchaser and Vision 21 which cannot be fully redressed by payment of damages by
Seller and/or Shareholder. Accordingly, Purchaser and Vision 21 shall be
entitled in addition to any other right or remedy it may have, at law or in
equity, to an injunction, enjoining or restraining Seller and/or Shareholder
from any violation or threatened violation of this Section. If any of the rights
or restrictions contained herein shall be deemed by a court of competent
jurisdiction to be unenforceable by reason of the extent, duration or
geographical scope thereof or any other provision of this Agreement, the parties
hereto contemplate that the court shall reduce such extent, duration,
geographical scope or other provision and enforce this Section in its reduced
form for all purposes in the manner contemplated hereby. The restrictive
covenants contained within this Section shall not be enforceable by Purchaser or
Vision 21 if Purchaser fails to pay Seller the Purchase Price or fails to
discharge the liabilities and obligations identified on SCHEDULE 1.5 when due.
The foregoing provisions shall not be construed to prohibit advertisements in
broadcast or print media initiated outside of and targeting patients outside of
Pasco County, Florida, which incidentally can be viewed, heard or read within
Pasco County, Florida. Seller, Shareholder and Purchaser acknowledge that Vision
21 is a third-party beneficiary of this Section 7.6 and the restrictive
covenants contained in this Section 7.6 are intended for the benefit of Vision
21.

7.7. Seller and Shareholder Confidentiality Covenant. From the date
hereof, the Seller and Shareholder shall not, directly or indirectly, use for
any purpose, other than in the performance of Shareholder's duties under the
Employment Agreement, or disclose to any third party, any information of
Purchaser (whether written or oral), including any business management or
economic studies, patient lists, proprietary forms, proprietary business or
management methods,

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<PAGE> 22

marketing data, fee schedules, or trade secrets of Purchaser, and including the
terms and provisions of this Agreement and any transaction or document executed
by the parties pursuant to this Agreement. Notwithstanding the foregoing, the
Seller and Shareholder may disclose information that the Seller or Shareholder
can establish (a) is or becomes generally available to and known by the public
or medical community (other than as a result of an unpermitted disclosure
directly or indirectly by Seller or Shareholder or their respective affiliates,
advisors, or representatives); (b) is or becomes available to the Seller or
Shareholder on a nonconfidential basis from a source other than Purchaser or its
affiliates, advisors or representatives, provided that such source is not and
was not bound by a confidentiality agreement with or other obligation of secrecy
to Purchaser or its affiliates, advisors or representatives of which the Seller
or Shareholder has knowledge; or (c) has already been or is hereafter
independently acquired or developed by the Seller or Shareholder without
violating any confidentiality agreement with or other obligation of secrecy to
Purchaser, or its affiliates, advisors or representatives. Without limiting the
other possible remedies to Purchaser for the breach of this covenant, Seller and
Shareholder agree that injunctive or other equitable relief shall be available
to enforce this covenant, such relief to be without the necessity of posting a
bond, cash or otherwise. The Seller and Shareholder further agree that if any
restriction contained in this Section 7.7 is held by any court to be
unenforceable or unreasonable, a lesser restriction shall be enforced in its
place and the remaining restrictions contained herein shall be enforced
independently of each other.

7.8. Acquisition of Ambulatory Surgical Center License. Seller and
Shareholder shall use their best efforts to assist Purchaser in obtaining a
transfer of the Seller's ambulatory surgical center license or obtaining a new
ambulatory surgical center license. The parties agree to execute all documents
reasonably requested by any party hereto to effectuate the transaction
contemplated in this Section 7.8.

7.9. Release of Shareholder From ASC Business Liabilities. Purchaser
shall use its best efforts to obtain from third party creditors the release of
Shareholder from any personal liabilities relating to the Seller's ASC Business
which are identified on SCHEDULE 1.5 and assumed by Purchaser pursuant to the
terms of this Agreement. If Purchaser has not obtained the release of Physician
from such personal liabilities within thirty (30) days of the Closing Date,
Purchaser shall pay such personal liabilities in full within five (5) days after
the expiration of such thirty (30) day period.

7.10. Additional Actions and Documents. From and after the Closing
Date, Seller and Shareholder will take or cause to be taken such further
actions, and execute, deliver and file such further documents and instruments as
Purchaser may request from time to time to evidence the transfer of the Assets
to Purchaser and to fully effectuate the purposes and terms of this Agreement.

ARTICLE VIII - MISCELLANEOUS

8.1. Taxes. Purchaser shall pay all state and local sales, documentary
and other transfer taxes, if any, due under Florida law as a result of the
purchase, sale or transfer of the Assets in accordance therewith whether imposed
by law on Seller, Shareholder or Purchaser and Purchaser shall indemnify,
reimburse and hold harmless the Seller in respect of the liability for payment
of or

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<PAGE> 23
failure to pay any such taxes or the filing of or failure to file any reports
required in connection therewith.

If to Purchaser, to:

Vision Twenty-One Eye Surgery Centers, Inc.
7209 Bryan Dairy Road
Largo, Florida 34777
Attention: Richard T. Welch, Treasurer

With a copy to:

Darrell C. Smith, Esquire
Shumaker, Loop & Kendrick
Suite 2800, Barnett Plaza
101 East Kennedy Blvd.
Tampa, Florida 33602

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<PAGE> 24

If to Seller or Shareholder, to:

David A. Johnson, M.D.
1807 Richardson Place
Tampa, Florida 33606

With a copy to:

John B. Neukamm, Esq.
Ketchey Horan, P.A.
100 North Tampa Street, Suite 1900
Tampa, Florida 33601-0500

8.7. Governing Law, Venue, Attorneys' Fees. This Agreement shall be
governed by and interpreted and enforced in accordance with the laws of the
State of Florida. Any judicial proceeding brought against any of the parties to
this Agreement based upon any dispute arising out of this Agreement or any
matter related hereto shall be brought in the appropriate court of Hillsborough
County in the State of Florida or the United States District Court for the
Middle District of Florida. By execution and delivery of the Agreement, each of
the parties to this Agreement consents to the exclusive jurisdiction of the
aforesaid courts and waives any objection to venue therein. The prevailing party
in any such proceeding shall be entitled to an award of its attorneys' fees,
paralegal fees, costs and expenses incurred at the trial and any and all
appellate levels and in any proceedings in Bankruptcy court.

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<PAGE> 25

8.10. Schedules and Exhibits. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.

8.14. Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement or any document contemplated in this
Agreement is intended to be exclusive of any other remedy so conferred, and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or at equity or by
statute or otherwise. The election of one or more remedies hereunder by any
party hereto shall not constitute a waiver of the right to pursue other
available remedies hereunder.

8.15. Announcements and Press Releases. Any press releases or any other
public announcements by any party hereto concerning this Agreement or the
transactions contemplated hereunder shall be approved in advance by the other
parties hereto; provided, however, that Purchaser may make such disclosures as
are required under federal and state securities laws in the opinion of counsel
for Purchaser.

8.16. Time of Essence. Time is of the essence of this Agreement.

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<PAGE> 26

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

"SELLER"

JOHNSON EYE INSTITUTE SURGERY
CENTER, INC.

By: /s/ David A. Johnson, M.D.
---------------------------------------
David A. Johnson, M.D., its President

"PURCHASER"

VISION TWENTY-ONE SURGERY CENTER,
LTD.

By: VISION TWENTY-ONE EYE SURGERY
CENTERS, INC., its general partner

By: /s/ Richard T. Welch
-----------------------------------
Richard T. Welch,Treasurer

"SHAREHOLDER"

/s/ David A. Johnson, M.D.
---------------------------------------------
David A. Johnson, M.D.

/s/ Debra Pazo Johnson, M.D.
---------------------------------------------
Debra Pazo Johnson, M.D.

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<PAGE> 1
EXHIBIT 5.1

[SHUMAKER, LOOP & KENDRICK, LLP LETTERHEAD]

May 11, 1998

Vision Twenty-One, Inc.
7209 Bryan Dairy Road
Largo, Florida 33777

Attn: Theodore N. Gillette, CEO

Re: Vision Twenty-One, Inc. Securities and Exchange Commission
Registration Statement on Form S-1 (Registration No. 333-51437)
1,206,718 Shares of Common Stock, Par Value $.001

Ladies and Gentlemen:

We are legal counsel to Vision Twenty-One, Inc. a Florida corporation (the
"Company"), and have acted as such in the preparation and filing of its
Registration Statement on Form S-1 (Registration No. 333-51437) with the
Securities and Exchange Commission (the "SEC") pursuant to the requirement of
the Securities Act of 1933, as amended, and the General Rules and Regulations
of the SEC promulgated thereunder of the registration of 1,206,718 shares (the
"Shares") of the Common Stock, par value $.001 (the "Common Stock"), of the
Company. All of these Shares are to be issued and sold by the Selling
Stockholders. In connection with the following opinion, we have examined and
have relied upon such documents, records, certificates, statements and
instruments as we have deemed necessary and appropriate to render the opinion
herein set forth.

Based on the foregoing, it is our opinion that the Shares, when and if
issued and sold in the manner set forth in the Registration Statement, will be
legally and validly issued, fully paid and non-assessable.

<PAGE> 2
Vision Twenty-One, Inc.
May 11, 1998
Page 2

The undersigned hereby consents to (i) filing this opinion as Exhibit 5.1
to the Registration Statement, and (ii) using its name in the Registration
Statement under the following caption of the Prospectus: "LEGAL MATTERS."

Very truly yours,

/s/ Shumaker, Loop & Kendrick, LLP

SHUMAKER, LOOP & KENDRICK, LLP

<PAGE> 1
EXHIBIT 21

LIST OF SUBSIDIARIES OF VISION TWENTY-ONE, INC.
<TABLE>
<CAPTION>
JURISDICTION
SUBSIDIARY OF INCORPORATION
- ---------- ----------------
<S> <C>
Vision 21 Managed Eye Care of Tampa, Bay, Inc. Florida
Vision 21 Management Services, Inc. Florida
Vision 21 of Southern Arizona, Inc. Florida
Vision 21 of Sierra Vista, Inc. Florida
Vision Twenty-One Eye Surgery Center, Inc. Florida
Vision Twenty-One Surgery Center, Ltd. Florida LP
Vision Twenty-One Managed Eye Care, IPA, Inc. New York
LSI Acquisition, Inc. New Jersey
MEC Health Care, Inc. Maryland
Vision Twenty-One Physician
Practice Management Company Florida
Vision Twenty-One Eye Laser Centers, Inc. Florida
BBG-COA, Inc. Delaware
BVC Administrators, Inc. New Jersey
Block Vision, Inc. New Jersey
UVC Independent Practice Association, Inc. New York
CHVC Independent Practice Association, Inc. New York
MVC Independent Practice Association, Inc. New York
WVC Independent Practice Association, Inc. New York
FVC Independent Practice Association, Inc. New York
BHVC Independent Practice Association, Inc. New York
The Block Group of New York, Inc. New York
BBG Independent Practice Association, Inc. New York
VCA Independent Practice Association, Inc. New York
Block Vision of Texas, Inc. Texas
Vision Twenty-One of Wisconsin, Inc. Wisconsin
</TABLE>

<PAGE> 1
EXHIBIT 23.1

Consent of Independent Certified Public Accountants

We consent to the reference to our firm under the captions "Experts", "Selected
Financial Data" and "Supplemental Selected Financial Data" and to the use of our
reports as follows in the Registration Statement (Form S-1) and the related
Prospectus of Vision Twenty-One, Inc. dated May 12, 1998.

<TABLE>
<S> <C>
VISION TWENTY-ONE, INC. AND SUBSIDIARIES MARCH 11, 1998

SUPPLEMENTAL VISION TWENTY-ONE, INC. AND SUBSIDIARIES MARCH 11, 1998

SWAGEL-WOOTTON EYE CENTER, LTD. AND AZTEC OPTICAL
LIMITED PARTNERSHIP OCTOBER 12, 1997

RICHARD L. SHORT, D.O., P.A. d/b/a EYE ASSOCIATES
OF PINELLAS MARCH 14, 1997, EXCEPT FOR NOTE 12, AS TO
WHICH THE DATE IS MARCH 28, 1997

COCHISE EYE & LASER, P.C. MARCH 28, 1997, EXCEPT FOR NOTE 6, AS TO
WHICH THE DATE IS MAY 1, 1997

RETINA ASSOCIATES, SOUTHWEST, P.C. AND DGL PROPERTIES, INC. OCTOBER 31, 1997

MANAGED HEALTH SERVICE, INC. NOVEMBER 21, 1997

MEC HEALTH CARE, INC. AND LSI ACQUISITION, INC. MARCH 5, 1998
</TABLE>

/s/ Ernst & Young LLP

Tampa, Florida
May 11, 1998

<PAGE> 1
EXHIBIT 23.2

Consent of Independent Certified Public Accountants

We consent to the reference to our firm under the captions "Experts", "Selected
Financial Data" and "Supplemental Selected Financial Data" and to the use of
our reports as follows in the Registration Statement (Form S-1) and the related
Prospectus of Vision Twenty-One, Inc. dated May 12, 1998.

EyeCare One Corp. February 4, 1998
Vision Insurance Plan of America, Inc. March 3, 1998

/s/ Ernst & Young LLP

Milwaukee, Wisconsin
May 11, 1998