PLASTIC SURGERY CO, S-1/A, 1999-07-23

PLASTIC SURGERY CO
S-1/A, 1999-07-23
MANAGEMENT SERVICES

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 23, 1999

REGISTRATION NO. 333-78565
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
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PRE-EFFECTIVE

AMENDMENT NO. 3

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE PLASTIC SURGERY COMPANY
(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
GEORGIA 8741 58-2317410
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>

104 WEST ANAPAMU STREET, SUITE G
SANTA BARBARA, CALIFORNIA 93101
TELEPHONE: (805) 963-0400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

DENNIS E. CONDON
CHIEF EXECUTIVE OFFICER
104 WEST ANAPAMU STREET, SUITE G
SANTA BARBARA, CALIFORNIA 93101
TELEPHONE: (805) 963-0400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

COPIES TO:

<TABLE>
<S> <C>
PAUL A. QUIROS, ESQ. JAMES WALKER IV, ESQ.
LYNN S. SCOTT, ESQ. TERRESA R. TARPLEY, ESQ.
KING & SPALDING NELSON MULLINS RILEY &
191 PEACHTREE STREET SCARBOROUGH, L.L.P.
ATLANTA, GEORGIA 30303 999 PEACHTREE STREET, SUITE 1400
TELEPHONE: (404) 572-4600 ATLANTA, GEORGIA 30309
TELEPHONE: (404) 817-6000
</TABLE>

CALCULATION OF REGISTRATION FEE

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PROPOSED
MAXIMUM AMOUNT OF
TITLE OF CLASS OF SECURITIES AGGREGATE REGISTRATION
TO BE REGISTERED OFFERING PRICE(1) FEE(1)
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<S> <C> <C>
Common Stock, no par value per share...... $38,640,000 $10,742
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</TABLE>

(1) $8,812.60 previously paid.

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the Registration Statement.
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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. [ ]

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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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,
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2

[ARTWORK DEPICTED IN PROSPECTUS]

1. Inside front page includes the following text:

IDEALME.COM
Title bar at top of page states:
cosmetic surgery decisions made in
the privacy of your own home

Title bar preceding screen shots states: (Except for Image No. 6, persons
depicted are not actual patients)

On the left two-thirds portion of the page are eight screen shots depicting
pages described on the Idealme.com website, and described by the following
text which appears on the right one-third of the page:

2/3 IDEALME.COM offers the visitor an immediate opportunity to tour two
different communities, one designed to educate women about procedures and
one aimed at those procedures specific to men.

4 PROCEDURE EDUCATION
Over twenty-five different cosmetic surgery procedures will be described.

5 ONLINE PATIENT FINANCING
Once a visitor has made a decision that he or she desires a cosmetic
surgery procedure, the visitor may, from the privacy of his or her home,
apply and qualify for one of the online procedure financing plans.

6. ONLINE COMPUTER IMAGING OF DESIRED RESULTS
Idealme.com offers visitors a comprehensive at-home exploration for their
cosmetic procedure research. A digital or scanned photo can be e-mailed to
computer imaging artists along with a description of the desired change.

7. NEW TECHNOLOGY AND CLINICAL TRIALS
Technology breakthroughs, clinical trial information and new cosmetic
surgery procedures will be detailed in a dedicated site.

8. DOCTOR DIRECTORY
Once a patient has researched the information on a given procedure,
considered how he or she might look with those cosmetic changes and
determined that he or she can afford the surgery through financing, a
directory of Board certified plastic surgeons can be accessed.

In the bottom center portion of the page, the following text appears:

THE PLASTIC SURGERY COMPANY
104 West Anapamu Street, Suite G - Santa Barbara, CA - 93101
Toll Free: 888-729-8060 - 805-963-0400 - Fax: 805-965-8230

2. Inside back cover page portrays the following: graphics portray a map of
the continental United States and Hawaii with points representing the
locations of allied practices.

Title bar at top of page states: The Plastic Surgery Company
30 Allied Practices Serving 22
Metropolitan Areas through 39 Offices.

<PAGE> 3

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED JULY 23, 1999

2,400,000 SHARES OF COMMON STOCK

THE PLASTIC SURGERY COMPANY

The Plastic Surgery Company is offering 2,400,000 shares of common stock in
an initial public offering. We anticipate that the public offering price will be
between $12.00 and $14.00 per share.

We have applied for approval for quotation on the Nasdaq National Market
under the symbol "NUYU" for the shares we are offering.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR RISKS THAT YOU SHOULD CONSIDER
BEFORE INVESTING IN SHARES OF OUR COMMON STOCK.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PER SHARE TOTAL
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<S> <C> <C>
Public offering price....................................... $ $
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Underwriting discounts and commissions...................... $ $
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Proceeds to The Plastic Surgery Company..................... $ $
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</TABLE>

We and certain selling shareholders have granted the underwriters an option
for 45 days to purchase up to an additional 360,000 shares at the same price
indicated above solely to cover overallotments.

(Cruttenden Roth Logo)

The date of this prospectus is , 1999.
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YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN
THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE SALE OF COMMON
STOCK MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE
DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION
OF AN OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH
THE OFFER OR SOLICITATION IS UNLAWFUL.
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TABLE OF CONTENTS

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PAGE
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Prospectus Summary.......................................... 3
Risk Factors................................................ 7
Forward-Looking Statements.................................. 16
Use of Proceeds............................................. 17
Dividend Policy............................................. 17
Dilution.................................................... 18
Capitalization.............................................. 19
Selected Financial Data..................................... 20
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 21
Business.................................................... 28
Management.................................................. 37
Principal and Selling Shareholders.......................... 44
Certain Transactions........................................ 45
Description of Capital Stock................................ 47
Shares Eligible for Future Sale............................. 50
Underwriting................................................ 52
Legal Matters............................................... 54
Experts..................................................... 54
Additional Information...................................... 54
Index to Financial Statements............................... F-1
</TABLE>

2
<PAGE> 5

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
Because this is only a summary, it does not contain all of the information that
may be important to you. You should read the entire prospectus carefully, and
you should consider the information set forth under "Risk Factors" and in our
financial statements and notes, before deciding to invest in shares of our
common stock.

THE PLASTIC SURGERY COMPANY

At the closing of this offering, we will provide business development
services and Internet solutions to our alliance of 36 surgeons certified by the
American Board of Plastic Surgery, the Board, or Board eligible plastic
surgeons, and one surgeon certified by the Canadian Board of Plastic Surgery,
located in 22 metropolitan markets throughout the United States. Our consumer
website, Idealme.com, allows consumers to research available procedures, submit
inquiries regarding cosmetic surgery procedures, view possible cosmetic changes
through online imaging technology, obtain financing for procedures and be
directed to Board certified cosmetic surgeons. We provide our web-based services
free of charge to consumers, except for a fee for online imaging. Our surgeon
website, ThePlasticSurgeryCo.com, will provide allied surgeons online access to
our national buying program and facilitate "best practices" study groups among
our allied surgeons. Our business development services include the
implementation of strategic business plans, practice-specific consumer awareness
programs, patient financing plans, patient education strategies and materials
and related services and products. We have not conducted any significant
operations or earned any revenue to date, and we believe that we will generate
substantially all of our future revenues from service fees earned under our
business service agreements with allied surgeons.

OUR MARKET

The market for plastic surgery, which includes both cosmetic and
reconstructive procedures, exceeds $15 billion per year according to Form and
Figure magazine. We estimate that cosmetic surgery procedures represent
approximately $10 billion of industry revenues and remain 100% private pay
without the expense containment pressures associated with third party
reimbursement. The market for cosmetic surgery procedures has grown rapidly over
the last several years. From 1992 to 1998, facelifts, liposuction and breast
augmentations have increased approximately 75%, 260% and 300%, respectively and
approximately 2.8 million cosmetic surgery procedures were performed in 1998,
according to a survey by the American Society of Aesthetic Plastic Surgery.
During this period, the Internet has emerged as a global communications medium,
enabling millions of people worldwide to communicate, share information and
conduct business electronically. According to International Data Corporation,
the number of Internet users worldwide will grow from an estimated 97 million in
1998 to an estimated 319 million by 2002. We believe that cosmetic surgeons can
use the Internet to improve the quality of patient education and increase the
efficiency of their practices.

OUR SOLUTION

Our business development services and Internet solutions are designed to
increase the number of procedures performed by our allied surgeons, improve the
quality of patient education and increase practice efficiency. We have a
consumer website and are developing a surgeon website to facilitate the exchange
of information between surgeons and prospective or existing patients and the
exchange of information among surgeons, via the Internet. Content on our
consumer website, Idealme.com, is a combination of informational and interactive
pages that provides consumers with information about procedures, outcomes and
surgeon qualifications. Idealme.com allows us to influence purchase decisions at
the consumer level and leverage the clinical expertise and reputation of our
allied surgeons. Our surgeon website, ThePlasticSurgeryCo.com, will provide our
allied surgeons online access to our national buying programs and will
facilitate "best practices" study groups among our allied surgeons, while
highlighting the benefits of becoming affiliated with us.

3
<PAGE> 6

We believe our solution provides the following benefits to our consumers
and surgeons:

BENEFITS TO CONSUMERS

- Informs consumers about cosmetic surgery procedures and related topics;

- Allows consumers to view possible cosmetic changes through online imaging
technology;

- Provides online financing plan application and approval;

- Links consumers with both allied surgeons and subscribing surgeons through
our online directory; and

- Offers our online magazines, health and beauty products and related
magazines and books.

BENEFITS TO SURGEONS

- Offers access to our national buying program;

- Facilitates "best practices" knowledge sharing and provides an online forum
for allied surgeons;

- Describes our business to potential allied surgeons and highlights career
opportunities with allied practices;

- Profiles each practice and its surgeons for inclusion on our websites;

- Institutes patient financing plans;

- Implements practice-specific consumer awareness programs; and

- Designates and trains patient coordinators and develops patient education
programs and materials.

OUR STRATEGY

Our goal is to use our business development services and our consumer and
surgeon websites to affiliate with a large number of plastic surgeons and
improve their practices. To achieve this goal, we intend to provide high quality
business development services to our allied surgeons, increase consumer and
surgeon awareness of our websites, analyze each practice's operations and
develop a strategic plan for the practice, attract consumer inquiries regarding
cosmetic surgery information and services and continue to improve and enhance
our services.

OUR HISTORY

With and as a condition to the closing of this offering, 30 separate
plastic surgery practices will transfer to us certain operating assets in
exchange for cash, notes and shares of our common stock, and they will enter
into long-term business services agreements with us. These founding practices
include 37 plastic surgeons operating 39 offices in 22 metropolitan markets.

Our executive offices are located at 104 West Anapamu Street, Suite G,
Santa Barbara, California 93101, and our telephone number at that address is
(805) 963-0400. Effective May 13, 1999, we changed our name from Better Image,
Inc. to The Plastic Surgery Company. Our Internet addresses are www.Idealme.com
and www.ThePlasticSurgeryCo.com. While we believe information contained on our
websites is material to our allied surgeons and potential consumers of cosmetic
surgery procedures, such information is not necessarily material to potential
purchasers of our common stock. Investors should only rely on information
contained in this prospectus in making an investment decision.

4
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THE OFFERING

Shares offered by us........................ 2,400,000 shares(1)

Total shares outstanding after the
offering.................................... 5,850,473 shares(1)(2)

Use of proceeds............................. Funding the cash portion of the
consideration to be paid to
the founding practices;
paying accrued salaries and
consulting fees of our employees
and consultants; repaying
indebtedness of the founding
practices; and funding website
development and maintenance,
future allied practice
acquisitions, development of
satellite offices and for
general corporate purposes.

Proposed Nasdaq National Market symbol...... NUYU
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(1) Does not include up to 103,800 shares that the underwriters may purchase
from us if they exercise their overallotment option in full.

(2) Excludes: (a) 1,656,604 shares issuable upon exercise of stock options and
warrants outstanding as of July 21, 1999, at a weighted average exercise
price of $2.76 per share; (b) 1,026,500 shares issuable upon exercise of
stock options and warrants that will be issued upon closing of this offering
with an exercise price equal to the initial public offering price; and (c)
108,000 shares of common stock issuable upon exercise of stock purchase
warrants to be issued to Cruttenden Roth Incorporated, the representative of
the underwriters, upon completion of the offering at an exercise price equal
to 120% of the initial public offering price. See "Capitalization,"
"Management-Stock Plans," "Underwriting" and notes 7 and 8 to our financial
statements.

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Unless otherwise indicated, all information in this prospectus assumes (1)
no exercise of the overallotment option granted to the underwriters, (2) an
initial public offering price of $13.00 per share, and (3) a 0.56-for-1 reverse
stock split of the common stock.

The term "allied practice" includes (a) the founding plastic surgery
practices that will, upon the closing of this offering, transfer to us certain
of their operating assets and enter into long-term business services agreements
with us and (b) practices that may enter into similar agreements with us in the
future. Allied practices also include plastic surgery practices that may enter
into management services agreements with us but do not transfer their operating
assets to us. The term "allied surgeon" includes each plastic surgeon who has
entered into an employment agreement with an allied practice. Unless otherwise
indicated, references in this prospectus to "business services agreements"
include consulting agreements that we have entered into with practices in
certain states in lieu of business services agreements due to the regulations in
those states.

Unless otherwise indicated, we derived the industry information referenced
in this prospectus from the Plastic Surgery Information Service and from the
National Clearinghouse of Plastic Surgery Statistics, both sponsored by the
American Society of Plastic and Reconstructive Surgeons. Approximately 97% of
all plastic surgeons certified by the American Board of Plastic Surgery are
members of this society.

RISK FACTORS

Investment in our common stock involves a high degree of risk and could
result in a loss of your entire investment. See "Risk Factors" for a discussion
of various risks associated with an investment in our common stock.

5
<PAGE> 8

SUMMARY FINANCIAL DATA

The following financial information for the period from April 30, 1997
(inception) to December 31, 1997 and for the year ended December 31, 1998 is
derived from our audited financial statements. The following financial
information for the six months ended June 30, 1998 and 1999 and at June 30, 1999
is derived from our unaudited financial statements. We have had no significant
operations to date and will not conduct significant operations until this
offering is completed.

<TABLE>
<CAPTION>
PERIOD FROM
APRIL 30, 1997 SIX MONTHS ENDED JUNE 30,
(INCEPTION) TO YEAR ENDED -------------------------------------
DECEMBER 31, 1997 DECEMBER 31, 1998 1998 1999
----------------- ----------------- ----------------- -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue...................... $ -- $ -- $ -- $ --
------- ------- ------- -------
Total expenses............... 1,888 3,211 839 2,698
Other income................. 8 8 3 6
------- ------- ------- -------
Net loss..................... $(1,880) $(3,203) $ (836) $(2,692)
======= ======= ======= =======
Basic and diluted net loss
per share................. $ (2.27) $ (3.29) $ (0.89) $ (2.41)
======= ======= ======= =======
Shares used in computing
basic and diluted net loss
per share................. 827 972 936 1,118
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1999
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PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)
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(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 91 $ 91 $11,689
Working capital (deficit)................................ (2,369) (15,223) 11,631
Total assets............................................. 3,612 17,959 29,557
Total long-term liabilities.............................. -- 4,011 4,011
Total shareholders' (deficit) equity..................... 1,152 (1,420) 25,434
</TABLE>

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(1) The pro forma balance sheet data gives effect to our acquisitions of 30
founding practices as if they had occurred on June 30, 1999.

(2) Gives effect to the sale by us of 2,400,000 shares of common stock offered
hereby at an assumed initial public offering price of $13.00, after
deducting estimated underwriting discounts and commissions and estimated
offering expenses. See "Use of Proceeds."

6
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RISK FACTORS

You should carefully consider the following risk factors, in addition to
the other information set forth in this prospectus, before purchasing shares of
our common stock. Each of these risk factors could adversely affect our
business, operating results and financial condition, as well as adversely affect
the value of an investment in our common stock.

BECAUSE WE HAVE NO COMBINED OPERATING HISTORY WITH THE FOUNDING PRACTICES, THERE
IS NO HISTORICAL INFORMATION UPON WHICH YOU CAN EVALUATE OUR COMBINED BUSINESS

We have not conducted any operations or generated any revenues to date.
Each of the founding practices has been operating as a separate, independent
entity. The combined historical financial results of the founding practices
cover periods when each practice operated separately and may not be indicative
of our future financial or operating results.

OUR REVENUE DEPENDS ON THE EFFORTS OF OUR ALLIED SURGEONS

We derive substantially all of our revenues from fees we receive for
services we provide to allied practices under our long-term business services
agreements. Our fees under these agreements increase if the revenues of our
allied practices increase, and decrease if the revenues of our allied practices
decrease. However, the success of the allied practices essentially depends upon
the efforts of our allied surgeons, and we do not employ the allied surgeons or
control or own their practices. We do not set the fee schedules for procedures
performed by our allied surgeons. Each individual practice sets its own fees.
Our business services agreements have 20 or 25 year terms, subject to earlier
termination if one party materially defaults in its performance or upon a change
of control. Termination of these agreements or failure by the allied surgeons to
maintain their practices or their medical licenses could reduce our revenues and
negatively affect our financial results. Furthermore, allied surgeons execute
employment agreements with allied practices. These agreements generally have
five year terms. We cannot guarantee that allied surgeons will complete the five
year term or renew their employment at the end of the term. If allied surgeons
do not complete their employment terms or do not renew their contracts, our
revenues will be adversely affected.

AGREEMENTS BETWEEN THE ALLIED SURGEONS AND THEIR ALLIED PRACTICES MAY NOT BE
ENFORCEABLE

We and each allied practice enter into an acquisition or merger agreement
that allows us to acquire certain operating assets of the allied practice. We
and each allied practice also enter into a long-term business services agreement
that requires us to provide certain business services and requires the practice
to pay us certain fees for those services. The value of the business services
agreements depends in part on the ability of each allied practice to maintain
its business. The allied practice enters into employment agreements with its
allied surgeons, who are owners of the allied practice, that contain non-compete
and other provisions. We are not a party to these employment agreements. The
laws of each state differ concerning the enforceability of covenants not to
compete, but generally states will enforce a covenant to the extent necessary to
protect a legitimate business interest if the covenant does not unreasonably
restrain the allied surgeon or conflict with public interest. The state courts
examine all of the facts and circumstances at the time a party seeks to enforce
a non-compete covenant. Although we have attempted to structure the employment
agreements to allow enforcement, we are not able to predict with certainty
whether or not a court will enforce a covenant in any given situation based on
the facts and circumstances at the time. Since we do not directly employ the
allied surgeons, a court may not allow us to protect our business interest in
preventing an allied surgeon from competing with us. If a former allied surgeon
competes with his former allied practice and the courts refuse to enforce the
non-compete covenant, our allied practices would be subject to increased
competition, which could materially and adversely affect our business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- The Founding
Practices -- Business Services Agreements."

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DIFFICULTIES IN IMPLEMENTING OUR EXPANSION STRATEGIES MAY ADVERSELY AFFECT OUR
BUSINESS AND PROSPECTS

We intend to acquire the operating assets of additional practices in the
future. Our ability to grow through acquisitions will depend upon:

- the availability of suitable candidates at acceptable acquisition prices;

- the market value of our common stock;

- the availability of capital to complete acquisitions;

- governmental regulation; and

- integration of the allied practices.

In pursuing acquisitions of allied practices, we may compete with other
companies with similar growth strategies. Some of these companies may be larger
and have greater financial and other resources than we have. Competition for
these targets likely would result in increased prices of, and a diminished pool
of, possible targets. If we are not able to consummate future allied practice
acquisitions or are required to pay higher prices, we may not be able to expand
our network of allied surgeons.

Future acquisitions could also have a significant impact on our financial
condition and capital needs and create fluctuations in our quarterly and annual
operating results. We assume certain liabilities in connection with acquisitions
that could have a material adverse effect on our revenues and financial results.
Although we are indemnified by the allied practices for assumed liabilities, any
payments of indemnification amounts could reduce practice revenues available to
pay operating expenses. Future acquisitions may require us to issue additional
stock and incur additional debt. In addition, some acquisitions completed before
the closing of this offering and all acquisitions completed after the closing of
this offering will require us to amortize the costs of goodwill and intangible
assets, which could have a material adverse effect on our financial results. If
our stock does not maintain a sufficient market value or additional physician
practices do not accept stock for part of the acquisition price, we may be
required to use our cash resources more rapidly than intended. We do not
currently have a line of credit or other financing to fund acquisition costs,
and we anticipate that we will need further acquisition financing in the form of
debt or equity. We cannot guarantee that we will be able to obtain additional
financing on favorable terms or at all. If we fail to obtain additional
financing we may not be able to effectively implement our expansion strategy.

IF OUR AGREEMENTS REQUIRE US TO LOAN FUNDS TO ALLIED PRACTICES AT A TIME WHEN WE
DO NOT HAVE FUNDS AVAILABLE, WE MAY DEFAULT IN OUR OBLIGATIONS TO THE ALLIED
PRACTICES

Under our business services agreements, if a practice does not generate
funds sufficient to cover its operating expenses, we must fund the excess
operating expenses. The amount that we may have to fund is unlimited. Therefore,
we may become obligated to pay excess operating expenses, but we may not have
sufficient funds available to pay these expenses. In such an event, we would be
in breach of our business services agreement with the allied practice, which
would give the allied practice the right to terminate their business services
agreement with us.

If a practice does not generate sufficient funds to cover its operating
expenses and we fund these excess operating expenses on its behalf, we will
record the amount of these operating expenses as a receivable, which will bear
interest. The allied practice will be required to repay this receivable to us
out of its future resources. However, there is no guarantee that a practice will
generate sufficient revenue to repay all or a part of any such receivable.

COMPETITION COULD REDUCE OUR REVENUES

We have no experience in providing services to plastic surgeons, and our
competitors already have extensive experience in providing services. Our
competitors include national and regional providers of management services that
may already provide services to plastic surgeons or may decide to do so in the
future. Some of these competitors may have greater financial, development,
marketing and sales resources

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<PAGE> 11

than we have. Competition may affect our ability to attract additional practices
and the ability of the allied practices to compete in their local markets.
Allied practices also compete in local markets with surgeons who perform the
procedures traditionally performed by plastic surgeons for lower prices.
Reductions in the numbers of procedures performed or in the prices for
procedures could materially and adversely affect our revenues and financial
results.

There are many companies that provide Internet and non-Internet based
information, marketing and advertising services to the healthcare industry.
These Internet healthcare companies will compete with us for consumer traffic.
We expect competition to increase because there are no substantial barriers to
entry into the market for Internet services. Increased competition could result
in reductions in the fees we receive for subscription services, reduced visitor
traffic to our websites and an inability to obtain content and links to other
sites. Any of these occurrences could materially and adversely affect our
business, financial condition and results of operations. Our principal
competitors in the Internet information area include websites that deliver
consumer healthcare information, either as their sole focus or as part of a more
broadly based site, such as Health Oasis, Intelihealth, iVillage, Onhealth,
Thrive Online, Mediconsult and WebMD, website development firms and general
purpose consumer online service providers. Our ability to compete with our
Internet website services depends on a number of factors, including quality of
content, ease of use, timing and market acceptance of new and enhanced services
and other factors outside our control.

IF WE DO NOT CONTINUALLY ENHANCE AND DEVELOP THE CONTENT AND SERVICES PROVIDED
THROUGH OUR WEBSITES, WE MAY NOT BE ABLE TO ATTRACT CONSUMERS AND SURGEONS AND
INCREASE OUR REVENUES

To remain competitive, we must continue to enhance and improve our
websites' content and services. We will produce only a portion of the editorial
content available on our websites. We rely on third parties for most of our
content. There can be no assurance that acceptable content will be available to
us on favorable terms or at all. Other websites may present the same or similar
content in a superior manner to our websites, which may adversely affect the
number of consumers and surgeons who visit our websites. In addition, we must
continually develop and improve the responsiveness, functionality and features
of our websites and create other products and services that will require the
development or licensing of increasingly complex technologies. We may not
succeed in developing, obtaining or introducing content, features, functions,
products and services that will attract consumers and surgeons.

FAILURE TO INTEGRATE OUR ALLIED PRACTICES COULD STRAIN OUR MANAGERIAL,
OPERATIONAL AND FINANCIAL RESOURCES

We will acquire 30 founding practices, upon the closing of this Offering,
and we anticipate acquiring additional allied practices in the future. We must
effectively integrate these allied practices to be successful. This process is
time consuming, and we cannot guarantee that there will not be substantial
unanticipated costs or problems. Acquisitions require us to attract and retain
competent and experienced management personnel and require the integration of
accounting systems, management information systems and other operating systems.
Upon our acquisition of the founding practices, the founding practices will not
be fully integrated into our accounting and management information systems, and
we cannot guarantee that we will be able to successfully complete this
integration in the near future. There can also be no assurance that we will be
able to attract suitable management or other personnel or effectively expand our
operating systems. During the first few months after an acquisition, our
expenses related to an acquisition may exceed the revenue we realize from the
acquisition and may have a negative effect on our short-term operating results.
Our financial results in fiscal quarters immediately following a material
acquisition or series of acquisitions, including the acquisitions of the
founding practices, may decline while we attempt to integrate the acquisition or
acquisitions. As we pursue our expansion strategy, we may not be able to
continue to successfully integrate acquisitions, and any failure or inability to
do so may cause our revenues to decline. The success of our expansion strategy
will depend on our ability to effectively manage an increasing number of new
acquisitions while continuing to manage our existing business.

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<PAGE> 12

WE MAY BE SUBJECT TO MALPRACTICE LIABILITY BECAUSE OUR ALLIED SURGEONS HAVE
LIABILITY FOR PERFORMING PROCEDURES

Each allied surgeon may be exposed to professional liability and other
claims by providing plastic surgery procedures to the public. Each allied
practice is required to maintain general liability and malpractice insurance. As
a result of providing our business development services, we may be named as a
co-defendant in lawsuits against our allied surgeons. Because we do not practice
medicine, we cannot purchase medical malpractice insurance. We do not control
the practice of plastic surgery or the compliance of the allied surgeons and/or
allied practices with regulations or other requirements relating to the practice
of medicine. Successful claims could result in large damage awards that could
exceed insurance limits. The allied practices indemnify us for liability arising
from malpractice claims but the practices may not have funds available to
indemnify us. Successful claims may reduce our earnings and have a material and
adverse effect on our business, financial condition and results of operation. We
maintain insurance coverage for our directors and officers and general liability
insurance. We believe we have adequate coverage, but large damage awards may
exceed our coverage, require us to pay the expenses of our officers and
directors and reduce our earnings. Also, adequate coverage may not always be
available at acceptable costs and on favorable terms.

GOVERNMENT REGULATION MAY DETRIMENTALLY AFFECT US AND REDUCE OUR SERVICES FEES
AND EARNINGS

The medical industry and plastic surgery practices are regulated
extensively at the state and federal levels. We will not control the practice of
plastic surgery by our allied surgeons. However, review of our business
relationships by regulatory authorities or the courts or changes in the
regulatory environment may result in determinations that could adversely affect
the amount of service fees we receive from our allied practices and negatively
affect our earnings. Certain states prohibit non-medical entities from
practicing medicine, owning all or certain assets of a medical practice,
employing physicians or controlling the content of a physician's advertisements.
Certain states also prohibit physicians from paying any portion of fees received
for medical services in consideration for the referral of a patient or from
paying a percentage of revenue to nonphysicians. In addition, many states impose
limits on the procedures that may be delegated by a plastic surgeon to other
staff members. These laws and their interpretations vary from state to state and
are enforced by regulatory authorities with broad discretion. The legality of
our business services agreements may be successfully challenged and
enforceability of their provisions could be limited and prevent us from
receiving service fees. The laws and regulations of states in which we may seek
to expand may require changes in the form of relationships we enter into with
plastic surgeons. These types of changes could restrict our operations in those
states or prevent us from affiliating with plastic surgery practices in those
states. In addition, the laws and regulations of states in which allied
practices presently operate may change or be interpreted in the future to either
restrict or adversely affect our agreements with allied practices in those
states. Currently, the majority of our business services agreements with
founding practices provide for service fees based on 15% of net cash
collections. If changes in these laws require us to revise these agreements and
use consulting agreements with our fees based on a fixed dollar amount with a
fixed percentage increase, our revenues could be materially and adversely
affected.

The United States Congress has considered various healthcare reform
proposals, including comprehensive revisions to the current healthcare system.
It is uncertain what legislative proposals will be adopted in the future or what
actions federal or state legislatures or third-party payors may take in
anticipation of or in response to any healthcare reform proposals or
legislation. Changes in the healthcare industry, such as the growth of managed
care organizations or provider networks, may result in lower payment levels for
the services of the allied surgeons and lower revenues for us.

Generally, fees received from private pay patients are higher than those
from third party payors that have cost containment requirements. Although
approximately 80% of the founding practices' current revenues come from private
pay patients, a decrease in the number of private pay patients could occur due
to federal or state legislative initiatives. Currently most procedures
reimbursed under Medicare, Medicaid or other third-party payment programs
(including commercial insurers, managed care organizations, health maintenance
organizations or preferred provider organizations) for plastic surgery services
are related to reconstructive procedures. The costs of most cosmetic surgery
procedures, which currently represent approximately 75% of
10
<PAGE> 13

the procedures performed by the founding allied surgeons, are not reimbursed by
governmental or private payors and are not subject to cost containment
requirements. Comprehensive healthcare reform that includes reimbursement for
the costs of cosmetic surgery procedures could affect the payment for and
availability of services, including discounted reimbursement rates or more
procedures falling under third-party coverage. These changes could lower the
revenues of the allied practices.

Many states prohibit physicians from using advertising that includes any
name other than the physician's, or from advertising in any manner likely to
lead a person to believe that a non-physician is engaged in the delivery of
medical services. Our business services agreements require all advertising to
conform to these requirements. We have endeavored to structure our websites to
avoid violation of any state licensing requirements, but a state regulatory
authority may allege that some portion of our Internet business violates these
statutes. Any such allegation could result in a material adverse effect on our
business, results of operation and financial condition.

IF ANTITRUST AND MEDICARE/MEDICAID ANTI-KICKBACK LAWS ARE DETERMINED TO APPLY TO
US, WE COULD BE SUBJECT TO FINES AND OTHER PENALTIES AND OUR ALLIED PRACTICES
COULD BE EXCLUDED FROM PARTICIPATION IN FEDERAL HEALTHCARE PROGRAMS

Federal and state antitrust laws are designed to eliminate practices that
interfere with free competition. In particular, these laws prohibit:

- mergers, joint ventures, consolidations, and the acquisition of stock or
assets where the effect may be to substantially lessen competition or
tend to create a monopoly;

- contracts, combinations, and conspiracies that unreasonably restrain
trade;

- monopolization, attempts to monopolize and conspiracies to monopolize;
and

- unfair methods of competition and unfair or deceptive acts or practices,
referrals and kickbacks.

We may be subject to private or governmental investigations or claims.
Violations or alleged violations may result in imprisonment, criminal and civil
fines, treble damages, fees and costs. Federal and state enforcement agencies
have subjected the healthcare industry to increasing scrutiny in recent years
which is likely to continue in the future.

The Medicare/Medicaid anti-kickback statute prohibits the payment or
receipt of any remuneration in return for the referral of patients for services
covered under federal health care programs, including the Medicare and Medicaid
programs, or in return for purchasing, leasing, ordering, or arranging for or
recommending the purchase, lease or order of any item or service that is covered
under a federal health care program. A violation of the anti-kickback statute is
a felony, punishable by imprisonment, fines, or both and may also result in the
imposition of civil money penalties and exclusion from participation in any
federal health care program. The anti-kickback statute has been broadly
interpreted by the courts and enforcement agencies. In addition, many states
have laws that prohibit the payment or receipt of any remuneration in return for
the referral of patients or the purchase of items or services under both
government and private health care programs. Violations of these state laws may
result in payment not being made for the items or services rendered, loss of a
healthcare provider's license, fines, or criminal penalties. These statutes and
regulations vary widely from state to state, are often vague and, in many
states, have not been interpreted by courts or regulatory agencies. Although we
believe that our current business arrangements with allied practices do not
implicate the federal anti-kickback statute or state anti-kickback laws, there
can be no assurance that our business arrangements will not be subject to
scrutiny or an enforcement action or that these laws will not be interpreted in
such a way as to prohibit certain aspects of our current business service
arrangements.

DUE TO LAWS AND REGULATIONS GOVERNING THE INTERNET, OUR REVENUES MAY DECLINE

There is, and will be, an increasing number of laws and regulations
pertaining to the Internet. These laws or regulations may relate to liability
for information received from or transmitted over the Internet, online content
regulation, user privacy and quality of products and services. In addition, the
applicability to the

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<PAGE> 14

Internet of existing laws governing intellectual property ownership and
infringement, copyright, trademark, trade secret, obscenity, libel, employment,
personal privacy and other issues is uncertain and developing.

Our website will retain personal information about our users which we
obtain with their consent. If unauthorized persons penetrate our network
security and gain access to, or otherwise misappropriate, our users' personal
information, we could be subject to liability. Such liability could include
claims for the misuse of personal information, such as for unauthorized
marketing purposes or unauthorized use of credit cards. These claims could
result in litigation, our involvement in which, regardless of the outcome, could
require us to expend significant time and financial resources. Moreover, to the
extent any of the data constitutes or is deemed to constitute patient health
records, a breach of privacy could violate federal law.

The Federal Trade Commission and state governmental bodies have recently
investigated the disclosure of personal identifying information obtained from
individuals by Internet companies. The federal government has also made
legislative proposals in this area. We could incur additional expenses if new
regulations regarding the use of personal information are introduced or if any
regulator chooses to investigate our privacy practices. Any new law or
regulation, or the adverse application or interpretation of existing laws, may
decrease the growth in the use of the Internet or our websites. This could
decrease the demand for our services, increase our cost of doing business and
reduce our earnings. The potential imposition of liability upon us for our
content or services resulting from changes in government regulations could
require us to implement measures to reduce our exposure to this liability, which
might require us to expend substantial resources or to discontinue Internet
service offerings.

IF OUR INTERNET ACTIVITIES BECOME SUBJECT TO TAXATION, OUR CASH FLOWS AND
RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED

A number of legislative proposals have been made at the federal, state and
local level, and by certain foreign governments, that would impose additional
taxes on the sale of goods and services over the Internet or Internet related
activities. Such legislation or other attempts at regulating commerce or the
Internet may impair the growth of commerce on the Internet and, as a result,
adversely affect our opportunity to derive financial benefit from such
activities.

IF WE ARE SUBJECT TO CLAIMS BASED ON THE CONTENT WE PROVIDE ON THE INTERNET, WE
COULD INCUR UNANTICIPATED EXPENSES AND BE LIABLE FOR DAMAGES

We may be subject to claims for defamation, negligence, product liability,
copyright, or trademark infringement, or other matters based on content and
information on our websites supplied by us or third parties. These types of
claims have been brought, sometimes successfully, against other online service
companies in the past. We may also be subject to claims or incur liability for
the content on other websites that are linked to our websites or for content and
materials that may be posted by visitors in chat rooms or bulletin boards. Even
if any such claims do not result in liability to us, we could incur significant
costs investigating and defending against such claims and in implementing
measures to reduce our exposure to these types of claims.

BECAUSE OF OUR DEPENDENCE ON BOTH THE SUCCESSFUL LAUNCHING AND CONTINUED
FUNCTIONING OF OUR WEBSITES, OUR BUSINESS WOULD SUFFER IF EITHER WERE TO FAIL

Early stage companies such as ours, frequently encounter risks and
difficulties in new and rapidly evolving markets, including the Internet market.
Some of the risks and uncertainties that we face relate to our ability to
design, develop and implement effective marketing and advertising programs for
our websites, build our technical infrastructure to manage our growth
effectively, respond effectively to actions taken by our competitors, attract
consumers to our websites, increase awareness of our brand name, develop visitor
loyalty and integrate technologies and services. Our Internet solutions are a
key part of our strategy, and difficulties with our websites could negatively
affect our business and prospects.

The functioning of our websites is important to our business, reputation
and ability to attract consumers and surgeons to our websites. We depend upon
the continuous, reliable and secure operation of Internet
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<PAGE> 15

servers and related hardware and software. To the extent that service is
interrupted or delayed, we could experience a decrease in traffic and revenue.
We do not at present have any back up systems or a formal disaster recovery
plan. Substantially all of our communications hardware and some of our other
computer hardware operations are located in northern California. Events such as
power losses, telecommunication failures, computer viruses, electronic break-ins
or other similar disruptive problems could also adversely affect our websites.

Our websites must accommodate a high volume of traffic and deliver
information that is updated frequently. Our websites may experience slower
response times or decreased traffic for a variety of reasons including
technological deficiencies. In addition, our visitors depend on Internet service
providers, online service providers and other website operators for access to
our websites. Many of them have experienced significant outages in the past and
could experience outages, delays and other difficulties due to system failures
unrelated to our systems in the future. Some of the services we expect to
provide, such as video imaging may require technologically advanced systems to
function seamlessly and quickly. We may not be able to develop, acquire and
maintain these services, which failure could have a material adverse effect on
our business, financial condition and results of operation.

The continuous enhancement of our websites is dependent upon the success of
development efforts that will be performed by our employees and by independent
contractors. To the extent that these development efforts are delayed or
unsuccessful, we will incur additional development expenses and may not remain
competitive in the design and use of our websites.

BECAUSE OUR BUSINESS REQUIRES THE SECURE TRANSMISSION OF DATA OVER THE INTERNET,
WE COULD BECOME SUBJECT TO CLAIMS AND OTHER LIABILITIES IF A BREACH OF SECURITY
OCCURS

A significant barrier to confidential communications and commerce over the
Internet has been the need for secure transmission of confidential information.
Internet usage and access by consumers of our websites could decline if a
compromise of security occurs with respect to our websites. We may incur
significant costs to provide security and protect against the threat of security
breaches or to alleviate problems caused by such breaches. Experienced
programmers could attempt to penetrate our network security. Programmers who are
able to penetrate our network security could misappropriate proprietary
information or cause interruptions in our services, and we could be required to
expend capital and resources to protect against or alleviate problems caused. To
the extent our activities involve the storage or transmission of confidential
information, such as credit information, security breaches could expose us to
claims, litigation and other potential liabilities.

IF WE FACE A CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY OR
FAIL TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, WE COULD BE LIABLE FOR
SIGNIFICANT DAMAGES OR LOSE OUR INTELLECTUAL PROPERTY RIGHTS

We rely on a combination of copyright, trademark and trade secret laws and
contractual provisions to establish and protect our proprietary rights. We have
registered the domain names "www.IdealMe.com," "www.ThePlasticSurgeryCo.com,"
and approximately 25 other domain names. However, we have not yet applied for
federal registration of any trademarks, including trademarks for our corporate
name or our domain names, and, thus, we cannot guarantee that we will be able to
secure registration of these names. If we are required to change our corporate
name, current and potential customers could be confused and our business could
be disrupted. Any of these potential effects could seriously harm our business,
prospects, financial condition and operating results. In addition, any name
change effected after this offering could result in confusion to investors,
which could seriously harm the market price of our common stock.

There can be no assurance that the steps we may take to protect our
proprietary rights will be adequate, that we will be able to secure trademark or
service mark registrations for our marks in the United States or in foreign
countries or that third parties will not infringe upon or misappropriate our
copyrights, trademarks, service marks, domain names and similar proprietary
rights. In addition, effective copyright and trademark protection may be
unenforceable or limited in certain foreign countries, and the global nature of
the Internet makes it impossible to control the ultimate destination of our
services. It is possible that our competitors or others will adopt product or
service names similar to ours, thereby impeding our ability to build brand
identity

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<PAGE> 16

and possibly leading to customer confusion. Moreover, because domain names
derive value from an individual's ability to remember such names, we cannot
guarantee that our domain names will not lose their value if, for example, users
begin to rely on mechanisms other than domain names to access online resources.

THE LOSS OF KEY PERSONNEL COULD HARM OUR BUSINESS

Our success depends, to a significant extent, upon the efforts and
abilities of Dennis Condon, David Challoner, Patricia Altavilla and other
members of senior management. The loss of the services of one or more of these
key employees could disrupt our business and expansion strategy and cause our
revenues to decline.

YOU WILL INCUR IMMEDIATE AND SUBSTANTIAL DILUTION

You will experience an immediate and substantial dilution of $11.52 in the
net tangible book value per share of common stock from the initial public
offering price. Assuming an initial public offering price of $13.00 per share of
common stock, our pro forma net tangible book value as of June 30, 1999 after
giving effect to this offering would be $1.48 per share.

EXISTING SHAREHOLDERS HAVE SUBSTANTIAL CONTROL OVER THE COMPANY AND CAN MAKE
DECISIONS THAT COULD ADVERSELY AFFECT OUR STOCK PRICE

Following this offering, members of management and the owners of the
founding practices will beneficially own approximately 55% of our outstanding
common stock (54% if the underwriters' over-allotment option is exercised in
full). If these persons acted together, they would have sufficient voting power
to control the outcome of corporate actions submitted to our shareholders for
approval and to control our management and affairs, including the election of
our board of directors.

OUR STOCK HAS NOT TRADED PUBLICLY AND AFTER THIS OFFERING ITS MARKET PRICE MAY
FLUCTUATE WIDELY

Prior to this offering, there has not been a public market for our common
stock. We do not know the extent to which investor interest in us will lead to
the development of an active trading market for our common stock or how our
common stock will trade in the future. The market price of our common stock is
likely to be subject to wide fluctuations. The market prices of the securities
of Internet-related companies have been especially volatile and these securities
may be overvalued. If analysts view us as an Internet-related company and if the
market for Internet-related stocks or the stock market in general experiences a
loss of investor confidence, the market price of our common stock could be
materially and adversely affected for reasons unrelated to our business or
results of operations. The initial public offering price will be determined by
negotiations between us and the representatives of the underwriters. You may not
be able to resell your shares at or above the initial public offering price.

The price at which our common stock will trade depends upon a number of
factors, including our historical and anticipated operating results and general
market and economic conditions, some of which are beyond our ability to control.
Factors such as fluctuations in our financial and operating results,
developments affecting us, the markets in which we compete or our industry could
also cause the market price of our common stock to fluctuate substantially. In
addition, the stock market has from time to time experienced extreme price and
volume fluctuations. These broad market fluctuations may adversely affect the
market price of our common stock.

SHARES ELIGIBLE FOR SALE IN THE FUTURE COULD NEGATIVELY AFFECT OUR STOCK PRICE

The market price of our common stock could decline due to sales of a large
number of shares of our common stock or the perception that such sales could
occur. These factors could also make it more difficult for us to raise funds
through future offerings of common stock.

After this offering, 5,850,473 shares of our common stock will be
outstanding (5,954,273 shares if the underwriters' over-allotment option is
exercised in full). Of these shares, the 2,400,000 shares sold in this

14
<PAGE> 17

offering (2,503,800 shares if the underwriters' over-allotment option is
exercised in full) will be freely tradeable without restrictions under the
Securities Act, except for any shares purchased by our "affiliates" (as defined
in Rule 144 under the Securities Act). Our officers and directors and our
shareholders beneficially owning more than 1% of our common stock and all
selling shareholders in the over-allotment option have entered into lock-up
agreements pursuant to which they have agreed not to offer or sell any shares of
common stock for an initial period of 180 days after the date of this prospectus
without the prior written consent of Cruttenden Roth, on behalf of the
underwriters. These individuals have also agreed, pursuant to lock-up
agreements, for an additional period of 180 days commencing on the last day of
the initial lock-up period, not to offer or sell any shares of their common
stock unless they effect the transaction through Cruttenden Roth. Cruttenden
Roth may, at any time and without notice, waive the terms of the lock-up
agreements. Upon expiration of the initial lockup period, 3,450,473 shares may
be sold in the future subject to compliance with the volume limitations and
other restrictions of Rule 144.

PROBLEMS RELATING TO THE YEAR 2000 ISSUE COULD ADVERSELY AFFECT OUR BUSINESS

Some of our software programs may not recognize calendar dates beginning in
the Year 2000. As a result of this problem, some of these systems could fail to
operate or fail to produce correct results. Accordingly, we are reviewing our
internal computer programs and systems to determine if they will be Year 2000
compliant. We presently believe that our computer systems will be Year 2000
compliant in a timely manner, but undetected errors or defects may remain.
Furthermore, we depend on third parties for most of the services provided
through our websites. We are in the process of contacting these third party
suppliers regarding their Year 2000 readiness. If these parties are affected by
the Year 2000 problem, our ability to provide services to our subscribers may be
materially adversely affected. For further information, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Impact of Year 2000."

A THIRD PARTY COULD BE PREVENTED FROM ACQUIRING YOUR SHARES AT A PREMIUM TO THE
MARKET PRICE BECAUSE OF OUR ANTI-TAKEOVER PROVISIONS

Certain provisions of Georgia law and certain provisions of our Articles of
Incorporation and Bylaws could delay or impede the removal of incumbent
directors and could make it more difficult for a third-party to acquire, or
could discourage a third-party from attempting to acquire, control of us. Such
provisions could limit the price that investors might be willing to pay in the
future for shares of our common stock. Our Articles of Incorporation and Bylaws
impose various procedural and other requirements (including a staggered board of
directors, advance notice provisions and the issuance of preferred stock as
described below) that could make it more difficult for shareholders to effect
certain corporate actions. The Articles give our board of directors the
authority to issue up to 20,000,000 shares of preferred stock and to determine
the price, rights, preferences and restrictions, including voting rights of such
shares, without any further vote or action by our shareholders. The rights of
holders of common stock will be subject to, and may be adversely affected by,
the rights of the holders of any preferred stock issued in the future. The "fair
price" and "business combinations" statutes under Georgia law we adopted may
restrict certain business combinations by interested shareholders. Our business
services agreements contain change in control provisions which give allied
practices the right to terminate the business services agreements if any
"person" as defined in the Securities Exchange Act of 1934 through acquisition
or aggregation, becomes the beneficial owner directly or indirectly of 15% or
more of the combined voting power of our outstanding voting stock. These change
in control provisions may hinder, delay, deter or prevent a tender offer, proxy
contest or other attempted takeover because of the potential loss of revenue if
the business services agreements are terminated.

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<PAGE> 18

FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. We have based these
forward-looking statements largely on our current expectations and projections
about future events and financial trends affecting the financial condition of
our business. These forward-looking statements are subject to a number of risks,
uncertainties and assumptions about us, among other things:

- General economic and business conditions, both nationally and in our
markets;

- Our acquisition opportunities;

- Our expectations and estimates concerning future financial performance,
financing plans and the impact of competition;

- Successful implementation of our growth strategy;

- Anticipated trends in our business;

- Existing and future governmental regulations affecting our business; and

- Other risk factors set forth in the "Risk Factors" section of this
prospectus.

In addition, in this prospectus, the words "believe", "may", "will", "estimate",
"continue", "anticipate", "intend", "expect", "could", "should", "would" and
similar expressions, as they relate to us or our management, are intended to
identify forward-looking statements.

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<PAGE> 19

USE OF PROCEEDS

The net proceeds to us from the sale of our common stock in the offering
are estimated to be $26.9 million ($28.1 if the underwriters' over-allotment
option is exercised in full), after deducting underwriting discounts and
commissions and estimated offering expenses of $4.3 million. We will not receive
any proceeds from sales of shares by the selling shareholders upon exercise of
the overallotment option. See "Principal and Selling Shareholders." We intend to
use the net proceeds as follows:

- $12.4 million to pay the cash portion of the consideration to the
founding practices;

- $2.3 million to pay accrued salaries and consulting fees of our employees
and consultants;

- $485,000 to repay indebtedness of the founding practices assumed by us;
and

- the balance for the development and maintenance of our websites,
potential acquisitions of allied practices, development of satellite
offices and general corporate purposes, including working capital and
capital expenditures.

Pending such uses, we may invest the net proceeds temporarily in short-term,
investment grade, interest bearing securities or guaranteed obligations of the
U.S. government.

DIVIDEND POLICY

Except for our payment of $5.7 million in cash consideration to the
founding practices, which will be accounted for under Staff Accounting Bulletin
No. 48, "Transfers of Nonmonetary Assets by Promoters and Shareholders," SAB 48,
in connection with the acquisition of the assets of certain of those practices
and recorded as a cash dividend for financial accounting purposes, we have not
declared or paid, and we do not anticipate declaring or paying, any dividends on
our common stock in the foreseeable future. Our board of directors will, in its
discretion, make any future determination to declare or pay dividends. Any
future determination will depend upon then existing conditions, including our
financial condition, results of operations, contractual and statutory
restrictions, capital requirements, business prospects and other factors as our
board of directors deems relevant.

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<PAGE> 20

DILUTION

Purchasers of the common stock in the offering will experience immediate
and substantial dilution in the net tangible book value of the common stock from
the initial public offering price. Net tangible book value per share represents
the amount of our total tangible assets less our total liabilities, divided by
the number of shares of common stock outstanding. At June 30, 1999, we had a pro
forma net tangible book value (deficit) of ($18.2) million or ($5.27) per share
of common stock. Pro forma net tangible book value is equal to pro forma assets,
excluding intangible assets, less pro forma liabilities. After giving effect to
the sale of 2,400,000 shares of common stock offered by us at an assumed initial
public offering price of $13.00 per share and, after the deduction of
underwriting discounts and commissions and estimated offering expenses payable
by us, our pro forma net tangible book value at June 30, 1999, would have been
$8.7 million or $1.48 per share. This represents an immediate increase in such
net tangible book value of $6.75 per share to existing shareholders and an
immediate and substantial dilution of $11.52 per share to new investors
purchasing common stock in the offering. The following table illustrates this
per share dilution.

<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $13.00
Pro forma net tangible book value deficit at June 30,
1999................................................... $ (5.27)
Increase attributable to new investors.................... 6.75
Pro forma net tangible book value after this offering....... 1.48
------
Dilution in pro forma net tangible book value to new
investors................................................. $11.52
======
</TABLE>

The following table summarizes, on a pro forma basis set forth above at
June 30, 1999, the differences between existing shareholders and new investors
in the offering with respect to the number of shares of common stock purchased
from us, the total consideration paid to us and the average consideration paid
per share (before the deduction of underwriting discounts and commissions and
estimated offering expenses payable by us):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- --------------------- PRICE
NUMBER(1) PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders.................... 3,450,473 59.0% $ 2,001,940 6.0% $ 0.58
New investors............................ 2,400,000 41.0 31,200,000 94.0 13.00
--------- ----- ----------- ------
Total.......................... 5,850,473 100.0% $33,201,940 100.0%
========= ===== =========== ======
</TABLE>

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

(1) Does not include up to 103,800 shares that the underwriters may purchase if
they exercise their over-allotment option.

If the underwriters' over-allotment option is exercised in full, we will
issue an additional 103,800 shares of common stock to new investors representing
42.1% of the total of 5,954,273 shares of our common stock outstanding. In
addition, the total consideration from new investors will be $32.5 million,
which is 94.2% of the total of $34.5 million paid for all shares of common stock
outstanding. The issuance of additional common stock by us will result in
further dilution to you.

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<PAGE> 21

CAPITALIZATION

The following table sets forth our historical, pro forma, and pro forma as
adjusted capitalization as of June 30, 1999, after deducting underwriting
discounts and commissions and estimated offering expenses. You should read the
following table in conjunction with the Unaudited Pro Forma Balance Sheet and
related notes and our audited financial statements and accompanying notes
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1999
-------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED(2)(3)
------- ------------ ------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt and notes payable..... $ -- $ 12,908 $ --
======= ======== ========
Total long-term debt.................................... $ -- $ 4,011 $ 4,011
Shareholders' (deficit) equity:
Preferred stock; 20,000,000 shares authorized; no
shares issued and outstanding...................... -- -- --
Common stock, no par value; 100,000,000 shares
authorized; 1,430,663 shares issued and
outstanding, actual; 3,450,473 shares issued and
outstanding, pro forma; 5,850,473 shares issued and
outstanding, pro forma as adjusted(4).............. -- -- --
Additional paid-in capital............................ (2,437) 237 27,091
Warrants.............................................. 11,363 11,363 11,363
Accumulated deficit................................... (7,774) (13,020) (13,020)
------- -------- --------
Total shareholders' (deficit) equity.......... 1,152 (1,420) 25,434
------- -------- --------
Total capitalization.......................... $ 1,152 $ 2,591 $ 29,455
======= ======== ========
</TABLE>

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

(1) The pro forma balance sheet data gives effect to our acquisitions of 30
founding practices as if they had occurred on June 30, 1999.

(3) Does not include up to 103,800 shares that the underwriters may purchase
from us if they exercise their over-allotment option.

(4) Excludes an aggregate of (a) 1,656,604 shares issuable upon exercise of
stock options and warrants outstanding as of July 20, 1999 and (b) 1,026,500
shares issuable upon exercise of stock options and warrants that will be
issued upon closing of this offering.

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<PAGE> 22

SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
------------------ JUNE 30,
1997 1998 1999
----- ------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................ $ 184 $ 403 $ 91
Working capital (deficit)................................ (176) (1,348) (2,369)
Total assets............................................. 202 440 3,612
Total long-term liabilities.............................. -- -- --
Total shareholders' (deficit) equity..................... (158) (1,311) 1,152
</TABLE>

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<PAGE> 23

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

You should read the following discussion and analysis in conjunction with
our financial statements and related notes included elsewhere in this
prospectus.

OVERVIEW

At the closing of the offering, we will provide business development
services and Internet solutions to our alliance of 37 Board certified or Board
eligible plastic surgeons located in 22 metropolitan markets throughout the
United States. In the future we intend to provide business services and acquire
certain assets of, or to manage, additional plastic surgery practices. Our
Internet strategy is important to our business. We have two proprietary
websites: Idealme.com, our consumer website; and ThePlasticSurgeryCo.com, our
surgeon website. Idealme.com allows consumers to research available procedures,
submit inquiries regarding cosmetic surgery procedures, view possible cosmetic
changes through online imaging technology, obtain financing for procedures and
be directed to Board certified cosmetic surgeons. ThePlasticSurgeryCo.com
provides allied surgeons online access to our national buying programs and
facilitates "best practices" study groups among our allied surgeons. We have not
conducted any significant operations or earned any revenue to date, and we
believe that we will generate substantially all of our future revenues from
service fees earned under our business services agreements with allied surgeons.

THE FOUNDING PRACTICES

Upon the closing of the offering, we will be aligned with 37 plastic
surgeons. Simultaneously with the closing of the offering, we will enter into
business services agreements with 17 founding practices, accounted for pursuant
to SAB 48, and 13 additional founding practices, accounted for based on the fair
value of the assets. The fair value acquisitions will result in approximately
$13.3 million of intangible assets which will be amortized over the 25 year term
of the applicable business services agreements. The shareholders of the
practices to be accounted for pursuant to SAB 48 are considered promoters.

The aggregate consideration paid by us to the founding practices is
approximately $42.7 million, including 2,019,810 shares of common stock based on
an assumed initial offering price of $13.00 approximately $4.0 million in
promissory notes and approximately $12.4 million in cash, all of which is
payable at the closing of the transfer of assets of the founding practices,
which will occur simultaneously with the closing of the offering. Cash proceeds
from the offering will be used to pay the cash portion of the consideration. See
"Use of Proceeds."

Eleven of our founding practices resulted from our acquisition in May 1999
of the right to negotiate business services agreements with plastic surgery
practices originally contacted by ISIS Cosmetic Surgery Partners, Inc. ISIS, a
company not affiliated with us, had entered into letters of intent, which
included an exclusive negotiations clause, with certain plastic surgery
practices. We began preliminary discussions with ISIS in February 1999. In May
1999, ISIS entered into an agreement with us when it was unable to obtain
financing necessary to execute its business plan. Under this agreement, we
purchased ISIS's exclusive negotiation rights with respect to these plastic
surgery practices for 344,263 shares of common stock and cash of approximately
$400,000. We will account for the purchase of these rights as an asset
acquisition and will amortize the intangible asset over periods ranging from 10
to 15 years. Upon the closing of the offering, we will enter into business
services agreements with these plastic surgery practices.

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<PAGE> 24

Intangible assets consist of the excess of the purchase price over the fair
values of the net assets acquired from the business acquisition and the
transaction with ISIS. For those acquired practices, the business services
agreements have a term of 25 years. We will amortize the intangible assets over
the shorter of their estimated useful lives, the term of the business services
agreement, or a shorter period taking into consideration various qualitative
factors. These factors take into consideration the probability that a practice
will be able to extend its existence indefinitely and thus enable us to recover
through profitable operations, the carrying value of the intangible assets.
These factors include the following:

- The strength of the local market as evidenced by such factors as location
in the country, market demographics, and the number of plastic surgery
procedures performed in the market.

- Market recognition of the practice name.

- The existence of business services agreements with other practices in the
same market that could provide continuity of the practice, if necessary.

- The number of physicians in the practices.

Based upon the above factors, the Company is amortizing intangible assets over
periods ranging from 10 to 15 years.

We review the carrying value of our long-lived assets and goodwill at least
quarterly on a practice by practice basis to determine if facts and
circumstances exist which would suggest that assets might be impaired or that
the amortization period needs to be modified. Among the factors we consider in
making the evaluation are changes in the practices' market position, reputation,
profitability, geographic penetration, the relationship with the physicians and
any changes in the legal or regulatory environment. If facts and circumstances
are present which may indicate impairment is probable, we will prepare a
projection of the undiscounted cash flows of the specific practice and determine
if the long-lived assets and/or goodwill are recoverable based on these
undiscounted cash flows. If impairment is indicated, then we will adjust the
carrying amount of these assets to their estimated fair value.

Each allied surgeon affiliated with the founding practices is Board
certified, except for one surgeon who is eligible for Board certification and
one surgeon who is certified by the Canadian Board of Plastic Surgery. Board
certification requires that the surgeon graduate from an accredited medical
school, complete at least five years of additional residency, practice plastic
surgery for two years and pass comprehensive written and oral examinations. Each
allied surgeon, in his sole discretion, determines the fees to be charged for
services provided to patients based on market conditions and other factors
deemed appropriate by the allied surgeon.

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<PAGE> 25

We will recognize revenue from providing services to the practices pursuant
to the business services agreements on a monthly basis as each practice collects
its cash. The services agreements provide that each practice will pay our fees
based on a percentage of the net cash collected by that practice. Our revenue
will consist of the sum of the service fee and amounts equal to the operating
expenses of the practice assumed by us under the services agreements. The
operating expenses of the practice that are our responsibility include the
following:

- salaries, benefits, payroll taxes, workers compensation, health
insurance and other benefit plans, and other direct expenses of
non-medical employees that are our employees located at the practice;

- direct costs of all employees or consultants that provide services to
each practice's office;

- medical and office supplies;

- lease or rent payments, utilities, telephone and maintenance expenses
for practice facilities;

- property taxes on our assets located at the practice offices;

- property, casualty and liability insurance premiums, excluding
malpractice insurance which is the responsibility of the practice;

- surgeon recruiting expenses; and

- advertising and expenses attributable to the promotion of practice
offices.

We will assume all of the above expenses and will pay the third-party
provider of the goods and services. In exchange for assuming these expenses and
providing business services, we will record revenue in amounts equal to the
assumed expenses plus the service fee described above.

The practice will retain the responsibility for payment of any and all
direct employment expenses, including benefits, for any surgeon or other
employee that we are prohibited from employing by applicable law. In addition,
the practice will retain responsibility for the payment of expenses for
continuing education, seminars, professional licenses, professional membership
dues and malpractice insurance and all other expenses of any surgeon. These
expenses that will remain the responsibility of the practice will not be
included in reimbursed operating expenses which is a component of our revenue.

Acquisition Agreements. We have entered into acquisition agreements with
each of the founding practices or the allied surgeons. These acquisition
agreements may be in the form of an asset purchase and sale agreement, a stock
purchase and sale agreement or an agreement and plan of reorganization whereby
we merge with the allied practice. Based on applicable state laws and
regulations, the operating assets of each practice, which include equipment,
inventory, accounts receivable, furniture and other personal property, or some
combination, will be transferred to us pursuant to the acquisition agreements.
As consideration for entering into an acquisition agreement, we will pay
consideration consisting of a combination of common stock, notes and cash.

Business Services Agreements. We have entered into business services
agreements with each of the founding practices. These agreements may be in the
form of a service agreement or consulting agreement as dictated by state law.
Each service agreement generally requires that we provide the following services
for the allied practices:

- acquisition and maintenance of specified furnishings and equipment;

- provision of suitable offices and facilities;

- payroll processing;

- employment of necessary personnel, excluding plastic surgeons and certain
medical personnel;

- development of business systems procedures and forms;

- procurement and inventory management;

- assistance in acquiring malpractice insurance;

- cash management;

- assisting with advertising, marketing and practice development;

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<PAGE> 26

- development of appropriate business systems;

- supervision, management and organization of files and records; and

- financial reporting and analysis.

If we enter into a lease on behalf of the allied practice, the allied practice
will sublease from us. Under the service agreements, we will recognize revenues
in amounts equal to the assumed expenses plus service fees based on the net cash
collected. In future agreements, we may recognize revenues in amounts equal to
the assumed expenses plus a fixed dollar amount with annual fixed percentage
increases.

If required by applicable state law or regulations, an allied practice may
enter into a consulting agreement with us that contains certain of the same
provisions as the service agreement, including: (a) provisions relating to the
obligation to loan funds to the allied practice in the event the allied practice
is unable to pay its current expenses, (b) repurchase of assets and assumption
of liabilities by the allied practice upon expiration or termination, (c)
covenant not to compete, and (d) indemnification. Under the consulting
agreement, we will provide the following services to allied practices in
exchange for a fixed dollar annual fee with annual fixed percentage increases:

- consulting with respect to equipment and office needs;

- preparing staffing models appropriate for the allied practice;

- advising and training with respect to business systems;

- purchasing and maintaining inventory;

- advising with respect to and providing or arranging accounting and
bookkeeping services;

- assisting with the acquisition of malpractice insurance;

- advising with respect to developing a marketing plan;

- assessing the financial feasibility of establishing new offices;

- providing billing and collection services; and

- assisting the allied practices in organizing and developing filing and
recording systems.

The business services agreements have either 20 or 25 year terms for the
founding practices, beginning on the date of this offering. We anticipate
executing business services agreements with 25 year terms for each allied
practice acquired after this offering. The business services agreements are
subject to termination by either party in the event the non-terminating party
becomes subject to voluntary or involuntary bankruptcy proceedings or materially
breaches the agreement, subject to a cure period. The allied practices may also
terminate the business services agreements if we are subject to a change of
control not approved by our board of directors. Upon the termination of the
business services agreements, except upon our breach, the allied practice and
its shareholders are subject to a two year covenant not to compete which
prohibits within a specified territory the following (a) advertising in print
and electronic media; (b) soliciting patients, surgeons or staff associated with
the allied practice; and (c) soliciting any referrals from any physician who
referred one or more patients to the allied practice within three years prior to
the date of such termination.

Pursuant to these business services agreements, we must pay the operating
expenses of a practice. To the extent a practice's operating expenses exceed
revenues, we must pay the excess but the allied practice will be obligated to
repay us, with interest, out of future revenues. Under the business services
agreements, the allied surgeons maintain full control over and ownership of the
allied practices, determine which clinical personnel will be employed by the
allied practices and establish their own practice standards to promote quality
plastic surgery care. We do not engage in the practice of medicine. Each allied
surgeon is responsible for the compliance of his or her allied practice with
state and local regulations, licensing and certification requirements applicable
to the practice of plastic surgery.

Employment Agreements. Each allied surgeon who is an equity holder in an
allied practice or who provides plastic surgery services through an allied
practice an average of more than ten days a month either at the time of
execution of the business services agreement or any time thereafter is required
to execute an employment agreement with the allied practice. Each employment
agreement generally provides that the

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<PAGE> 27

allied surgeon will perform professional services for the allied practice for a
period of five years, commencing on the date of the offering, with automatic
renewal for additional one year terms. After the expiration of the initial five
year term, either the allied practice or the allied surgeon may terminate the
employment agreement at any time without cause by giving ninety days' prior
written notice. Each allied surgeon's compensation will be a percentage of the
net cash collected by the allied practice after the payment of the service fee
and all operating expenses of the allied practice, with such percentage to be
determined by the allied practice. The allied surgeon agrees that upon
termination or expiration of the employment agreement, he or she will not
compete for a period of two years in the market in which the allied practice
operates an office, will not solicit former patients of the allied practice,
will not solicit referrals from any physician who referred one or more patients
to the allied surgeon or the allied practice within the two years prior to the
termination, and will limit the methods of advertising in the area in which an
allied practice is located.

FINANCING PLANS

Third party financing companies will provide online financing for patients
of our allied practices and will be responsible for the approval and application
process. These companies will assume all of the risks related to financing. The
individual practice will receive a payment from these companies equal to 85% to
90% of the financed amount. These companies will not have any recourse against
the individual practices or us for any unpaid balances. Application and approval
procedures will be instituted by these companies and terms of payment will vary
based on the creditworthiness of the patient. Our employees located at the
allied practice will bill patients for services.

POSSIBLE SOURCES OF FUTURE REVENUES

After the closing of the offering, we intend to enter into management
services agreements, rather than business services agreements, with select
plastic surgery practices. Pursuant to our management services agreements, we
will provide business development services and Internet solutions and receive
service fees. We will recognize revenues from these agreements based on a
percentage of the net cash collected by the allied practice. We will not acquire
operating assets of allied practices entering into management services
agreements, and we will not assume the operating expenses of these practices.

We also intend to enter into subscription agreements with surgeons who are
not allied with us which allow these surgeons to be included in the directory of
Board certified or Board eligible cosmetic surgeons on Idealme.com. These
subscribing surgeons listed on our website directory will be listed for the
convenience of potential consumers located in areas where we not affiliated with
an allied practice. We will not investigate the qualifications of the surgeons
who subscribe for this service. Our website will advise consumers to
independently investigate the surgeon's qualifications. Subscribing surgeons
will pay us a fee for the directory listing which we will recognize as revenue
as it is earned. We may generate future revenues from the sale of products and
services through our proprietary websites. The revenue generated may include
fees from banner and sponsorship advertising, subscriptions to our online
magazine and video imaging.

RESULTS OF OPERATIONS

We have not conducted any significant operations or earned any operating
revenue to date. We will not earn any revenues until we acquire the founding
practices.

From inception through June 30, 1999, we incurred start-up costs of
approximately $7.8 million, consisting primarily of operating expenses such as
salaries, consulting fees, rent and professional fees. The cumulative cash
outlay for our start-up expenses was approximately $2.2 million from inception
(April 30, 1997) to June 30, 1999.

For the period from inception (April 30, 1997) to December 31, 1997, the
year ended December 31, 1997 and the six months ended June 30, 1998 and 1999,
salaries, wages and benefits included salaries for all of our employees,
compensation expense related to the issuance of equity securities and related
employee benefits. For the period from inception to December 31, 1997, we
incurred approximately $1.2 million in compensation expense related to warrants
and stock that we issued to employees and non employees. For the year ended

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<PAGE> 28

December 31, 1998, we incurred approximately $788,000 in compensation expense in
connection with our issuance of stock to employees and non employees. For the
six months ended June 30, 1999, we incurred approximately $1.1 million in
compensation expense in connection with the issuance of warrants to employees
and nonemployees. The remaining salaries, wages and benefits differs between the
period from inception (April 30, 1997) to December 31, 1997, the year ended
December 31, 1998 and between the six months ended June 30, 1998 and 1999, due
to the addition of several senior management members in 1998 and 1999.

General and administrative expenses primarily include professional fees,
office expenses and accrued relocation expenses. Professional fees have
increased since inception. Additionally, in 1998, we accrued approximately
$175,000 for relocation expenses for lease obligations that we cancelled upon
our corporate relocation to Santa Barbara, California.

Other income is from investments in money market funds of our proceeds from
the sale of our common stock. This income differs among periods primarily due to
the amount of cash invested.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our start-up costs primarily through
private sales of our securities. If the acquisitions of the founding practices
had occurred on June 30, 1999, we would have had a pro forma working capital
deficit of approximately $15.2 million, including the accrual of $12.4 million
for cash payable to the founding practices. We will require capital for the
following purposes:

- to fund the cash portion of the acquisitions of the founding practices of
approximately $12.4 million;

- to pay accrued salaries and consulting fees of our employees or
consultants of approximately $2.3 million;

- to repay indebtedness of the founding practices of approximately
$485,000;

- to pay amounts owed to allied practices pursuant to notes issued in the
acquisitions of the founding practices;

- to pay, if necessary, operating expenses;

- to form additional affiliations with plastic surgery practices;

- to pay costs associated with the development and maintenance of our
websites;

- to fund corporate costs for providing business services; and

- to pay certain costs related to the development of satellite offices and
related services for allied practices, including site selection and
marketing research and support.

The notes issued in the acquisitions of the founding practices bear
interest at 8% per annum and provide for equal monthly payments of principal and
interest over the five year term of the note.

Each business services agreement obligates us, with no limitation, to pay
the operating expenses of an allied practice. These operating expenses will be
paid out of individual practice cash accounts that we control. To the extent a
practice's operating expenses exceed its revenues, we will be required to pay
any excess expense but the allied practice will be obligated to repay this
amount to us with interest. We will record this amount as a receivable from the
practice bearing interest at the prime rate as published in The Wall Street
Journal plus one percent. The allied practice will be required to repay any
receivable to us out of its future revenues. This receivable will be repaid
after the payment of the service fee and before the allied surgeon receives any
compensation. There is no defined payment date related to this receivable. We
intend to fund these excess operating expenses from working capital or
borrowings under a credit facility, which we anticipate establishing following
the closing of the offering. Since approximately 75% of the procedures performed
by our allied surgeons are cosmetic with fees generally paid no later than the
time the procedure is performed, we believe that our requirement to finance the
excess operating expenses of the allied practices can be funded through our
working capital. In addition, our allied practices must pay our service fees and
their operating

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<PAGE> 29

expenses before the surgeons receive any funds from the practice. We do not
believe that a lag in collections of patient receivables would occur or if
occurred would significantly affect our liquidity.

We believe that the net proceeds of the offering, expected cash flow from
operations and anticipated borrowings under a credit facility we expect to be
established after the offering will be sufficient to fund our ongoing operations
and our planned capital needs for the next 12 months. However, if the capital
sources above are insufficient to satisfy our liquidity requirements, we may
need to sell additional equity or debt securities or increase our anticipated
credit facility. To the extent we are unable to obtain a credit facility after
the offering, we may not be able to fully implement our acquisition program.

INTEREST RATE RISK

We do not trade in derivative financial instruments nor do we engage in any
commodity trading activities. Our exposure to interest rates relates primarily
to our investments of cash and cash equivalents. We invest cash and cash
equivalents in financial instruments with original maturities of three months or
less. These investments are denominated in U.S. dollars. Any interest earned on
these investments is recorded as interest income in the statements of
operations. Because of the short maturity of our investments, a near term change
in interest rates would not materially affect our financial position, results of
operations or cash flows.

IMPACT OF YEAR 2000

Many computer systems and software products are coded to accept only
two-digit entries in date code fields. Beginning in the year 2000, these date
code fields will need to distinguish 21st century dates from 20th century dates.
As a result, computer systems and software used by many companies may need to be
upgraded to comply with "Year 2000" requirements. Although we believe that our
software is Year 2000 compliant, we may discover coding errors or other defects
in the future. We have appointed a Year 2000 task force to assess the scope of
our risks and bring our applications into compliance. This task force is
undertaking its assessment of our compliance and recently began testing our
corporate business and information systems. To date, we have discovered few
problems during our Year 2000 testing, and we have fixed those identified in our
day to day operating environment. We intend to complete the compliance testing
in September 1999. To date, we have incurred minimal expenses related to Year
2000 compliance and expect to incur immaterial expenses in 1999 related to Year
2000 compliance. We have not adopted a contingency plan to address possible
risks to our systems.

We rely on a number of software programs and systems provided by third
parties, any of which could contain coding which is not Year 2000 compliant.
These systems include server software to operate the network servers, software
controlled routers, switches and other components of the data network, firewall,
security, monitoring and back-up software used by us, as well as desktop PC
applications software. In each case, we employ widely available software
applications from leading third-party vendors and expect that these vendors will
provide any required upgrades or modifications in a timely fashion. However, if
any third party software suppliers fail to provide Year 2000 compliant versions
of the software, our operations could be disrupted.

Year 2000 compliance problems also could undermine the general
infrastructure necessary to support our operations. For instance, we depend on
third-party Internet service providers or hosting centers to provide connections
to the Internet and to customer information systems. Any interruption of service
from these Internet service providers or hosting centers could result in a
temporary interruption of our services. Any interruption in the security,
access, monitoring or power systems at the Internet service providers or hosting
centers could result in an interruption of services. Moreover, it is difficult
to predict what effects Year 2000 compliance problems will have on the integrity
and stability of the Internet. If businesses and consumers are not able to
reliably access the Internet, the demand for our Internet solutions could
decline, resulting in an adverse impact to our business, financial condition and
results of operations.

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BUSINESS

At the closing of this offering, we will provide business development
services and Internet solutions to our alliance of 37 Board certified or Board
eligible plastic surgeons located in 22 metropolitan markets throughout the
United States. Our consumer website, IdealMe.com, allows consumers to research
available procedures, submit inquiries regarding cosmetic surgery procedures,
view possible cosmetic changes through online imaging technology, obtain
financing for procedures and be directed to Board certified plastic surgeons. We
expect our consumer website to increase the number of procedures performed by
our allied surgeons. We provide our web-based services free of charge to
consumers, except for a fee for online imaging. Our surgeon website,
ThePlasticSurgeryCo.com, will provide allied surgeons online access to our
national buying program and facilitate "best practices" study groups among our
allied surgeons. Our business development services include the implementation of
strategic business plans, practice-specific programs, patient financing plans,
patient education strategies and materials and related services and products. We
were incorporated in April 1997 and have not conducted any significant
operations.

BACKGROUND

The market for plastic surgery, which includes both cosmetic and
reconstructive procedures, exceeds $15 billion per year according to Form and
Figure magazine. The market for cosmetic surgery procedures has grown rapidly
over the last several years. From 1992 to 1998, facelifts, liposuction and
breast augmentations have increased approximately 75%, 260% and 300%,
respectively. During this period, the Internet has emerged as a global
communications medium, enabling millions of people worldwide to communicate,
share information and conduct business electronically. According to
International Data Corporation, the number of Internet users worldwide will grow
from an estimated 97 million in 1998 to an estimated 319 million by 2002. We
believe that cosmetic plastic surgeons can use the Internet to improve quality
of patient education and increase practice efficiency.

Plastic Surgery Trends

Cosmetic surgery procedures reshape normal anatomical features to improve
the patient's appearance and self-esteem. These procedures include elective
aesthetic procedures such as facelifts, liposuction and breast augmentations. We
estimate that cosmetic surgery constitutes approximately $10 billion of the
plastic surgery industry and remains 100% private pay without government
reimbursement pressures. In contrast, reconstructive surgery procedures reshape
abnormal anatomical features caused by congenital defects, developmental
abnormalities, trauma, infection or disease, usually to improve function but
also to approximate normal appearance. We believe that revenue from
reconstructive procedures constitutes approximately 30%, or $5 billion, of the
industry and is primarily reimbursed by third party payors.

The primary market for cosmetic surgery procedures is women aged 19 to 50.
In 1997, nearly 85% of all cosmetic surgery procedures performed were for women
and approximately 70% were for adults aged 50 and under. Recent trends indicate
men are having more cosmetic surgery procedures, as evidenced by male
liposuction and facelift procedures tripling and doubling, respectively, since
1992. Approximately 2.8 million cosmetic surgery procedures were performed in
1998, according to a survey by the American Society of Aesthetic Plastic
Surgery. The market for cosmetic surgery procedures has grown rapidly over the
last several years, and we expect this market to continue to grow as a result of
various factors, including:

- aging of the baby boomer generation;

- increasing media attention to and cultural acceptance of cosmetic
surgery;

- continuing improvements in technology resulting in less invasive
procedures and shorter recovery times;

- growing awareness of available cosmetic surgery procedures through
consumer education; and

- increasing availability and access to healthcare information via the
Internet.

The consumer market is served in part by approximately 5,000 Board
certified plastic surgeons in the United States. In recent years, fees for
reconstructive procedures have declined primarily due to cost containment
pressures from third party payors. As a result, many plastic surgeons have
attempted to shift the focus of their practices from reconstructive to cosmetic
surgery procedures. This has resulted in increased

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<PAGE> 31

competition for private pay cosmetic surgery procedures. Physicians practicing
in other disciplines, such as ophthalmologists and dermatologists, are also
performing cosmetic surgery procedures traditionally performed by plastic
surgeons, such as eyelid surgery and liposuction, to earn the higher fees
associated with these procedures. Consequently, plastic surgeons are attempting
to emphasize the importance of having plastic surgery procedures performed by
Board certified plastic surgeons.

Internet-Based Healthcare Information Trends

The Internet is a comprehensive and inexpensive information source that has
dramatically improved information flow, enhanced communications and increased
business opportunities for healthcare providers. Cyber Dialogue, an on-line
survey company, estimates that 17 million adults in the U.S. searched online for
health information in 1998, an increase of 119% from July 1996, and that
approximately 50% of these individuals made purchases after seeking information
on the Internet. According to Cyber Dialogue, these users are better educated,
have higher household incomes and are most often female. The growing interest in
cosmetic surgery is creating increased demand for reliable, easy access to
cosmetic surgery information. Cosmetic surgery is an elective, private pay niche
that benefits by direct to consumer information. Consumers of cosmetic surgery
procedures are more involved than average healthcare consumers in choosing which
procedures are performed, the results they wish to achieve and the surgeons they
believe are most qualified to perform the procedure. In addition, the Internet
provides cosmetic surgery consumers privacy in researching their choices.

OUR SOLUTION

Our business development services and Internet solutions are designed to
increase the number of procedures performed by our allied surgeons, improve the
quality of patient education and increase practice efficiency. We have a
consumer website and are developing a surgeon website to facilitate the exchange
of information between surgeons and prospective and existing patients and the
exchange of information among surgeons, via the Internet. Content on our
consumer website, Idealme.com, is a combination of informational and interactive
pages that provide consumers with information about procedures, outcomes and
surgeon qualifications. Idealme.com allows us to influence purchase decisions at
the consumer level and leverage the clinical expertise and reputation of our
allied surgeons. Our surgeon website, ThePlasticSurgeryCo.com, will provide our
allied surgeons online access to our national buying programs and will
facilitate "best practices" study groups among our allied surgeons, while
highlighting the benefits of becoming affiliated with us.

We believe our solution provides the following benefits to our consumers
and surgeons:

Benefits to Consumers

Informs consumers about cosmetic surgery procedures and related
topics. Idealme.com contains regularly updated, comprehensive information about
cosmetic surgery procedures ranging from specific procedures to other
health-related topics such as wellness, skin care and diet. We believe the
quality of the information we provide about cosmetic surgery procedures and
related topics will help to establish our consumer website as a relevant and
trusted information source. On Idealme.com, a consumer is able to view a photo
gallery which contains several before and after pictures for each type of
procedure. Idealme.com also consolidates information on new technologies and
leading edge procedures.

Allows consumers to view possible cosmetic changes through online imaging
technology. On Idealme.com, we offer interactive, online computer imaging which
allows consumers to view possible cosmetic changes for a fee. Computer imaging
technology allows a potential consumer of cosmetic surgery procedures to submit
a digital photograph, have the image modified to reflect the potential
consumer's desired procedure and receive the modified image via e-mail. This
technology enhances the potential consumer's ability to more fully evaluate
cosmetic surgery alternatives.

Provides online financing plan application and approval. Potential
cosmetic surgery consumers can apply directly through our website for financing
of cosmetic surgery procedures through third party financing companies. A
visitor to Idealme.com will be able to review options for financing plans,
access and submit online applications and receive approval, all from the privacy
of home.

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<PAGE> 32

Links consumers with both allied surgeons and subscribing surgeons through
our online directory. Each allied surgeon will have his own web page that may
be accessed by hyperlinks from Idealme.com. Potential consumers can enter their
zip code and access a list of allied surgeons' web pages in their local market.
Subscribing surgeons are listed on our website directory for the convenience of
potential consumers located in areas where we are not affiliated with an allied
practice. Prior to linking directly to an allied surgeon's website, a consumer
is able to view a short video introducing the allied surgeon, the surgeon's
patient coordinator, and the services provided by the surgeon. An allied
surgeon's website also highlights the surgeon's clinical expertise and cosmetic
procedure focus and gives information regarding any upcoming seminars offered by
the allied surgeon. Idealme.com also allows potential consumers to research the
background, credentials and professional qualifications of the surgeons listed
in the surgeon directory through hyperlinks to the websites of the American
Medical Association, the Administrators in Medicine and the American Board of
Medical Specialities.

Offers our online magazines, health and beauty products and related
magazines and books. We intend to reinforce our brand awareness through our
online magazine. This magazine will present various articles on cosmetic surgery
procedures and the latest technological developments and techniques. Our
articles will address key topics affecting the cosmetic surgery industry such as
the critical nature of choosing a Board certified plastic surgeon to perform
cosmetic surgery procedures. A consumer visiting Idealme.com may register for a
subscription to the Cosmetic Surgery Online Magazine and will be able to
purchase health and beauty products and related magazines. Our online magazine
will be produced quarterly and e-mailed to subscribers, and archived editions
will be stored and available on the website. We also intend to partner with
recognizable health and beauty product companies to provide related products
through our website. Through these partnerships, informational and clinical
products, such as skin care products, will be available for purchase through our
website.

BENEFITS TO SURGEONS

Offers access to our national buying programs. Our network of allied
surgeons gives us collective buying power to negotiate favorable terms with key
suppliers and vendors. Our national buying program includes our negotiated
pricing discounts and quantities and types of products available. Allied
surgeons can choose, through our surgeon website, the products and services that
we can provide at a lower cost due to our collective buying power. We also
intend to negotiate favorable prices and terms with manufacturers and
distributors of equipment and technology such as lasers and photographic imaging
and ultrasonic liposuction machines.

Facilitates "best practices" knowledge sharing and provide an online forum
for allied surgeons. By creating an alliance of plastic surgeons with shared
strategic and economic goals, we believe we can create an environment in which
each allied surgeon will share his "best practices" with other allied surgeons
to increase the overall success of the alliance. We will assist in the sharing
of this knowledge by researching and documenting methods and programs in the
most successful allied practices and by condensing and customizing the most
effective strategies into transferable templates to be implemented by other
allied practices. Only allied surgeons will be able to access these "best
practices" through our surgeon website, newsletters and quarterly allied surgeon
educational meetings. ThePlasticSurgeryCo.com will also provide an online forum,
for sharing the latest clinical techniques, specialized procedures that
affiliates have developed, questions and answers on clinical challenges and
comments on experiences with the latest equipment and instruments.

Describes our business to potential allied surgeons and highlight career
opportunities with allied practices. Through ThePlasticSurgeryCo.com, plastic
surgeons will have access to information outlining the benefits of an alliance
with us and career opportunities for association with our allied surgeons. The
description of our business is designed to attract potential allied surgeons and
to assist us in the recruiting process. This information will include
testimonials from allied surgeons who have had success with our various
programs, links to Idealme.com and the opportunity to post questions and receive
an e-mail response from us and our allied surgeons. Our career placement
information will include the practice location, a description of the position
and a profile of the allied surgeon and practice.

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<PAGE> 33

Profiles each practice and its surgeons for inclusion on our websites. We
will collect information on each allied surgeon in order to complete our
standard template webpage. The template webpage will include items such as
credentials, specialized procedures, available related services and
representative before and after pictures. We will also highlight the staff and
the facility and provide a streaming video introducing the surgeon and the
patient coordinator. Each allied surgeon will have this template webpage as part
of Idealme.com. From these webpages, a consumer may either e-mail the surgeon
for an appointment or link directly to the various custom pages that our allied
surgeons have established.

Institutes patient financing plans. Elective cosmetic surgery is not
covered by third party payors and is not affordable for much of the potential
market. By instituting patient financing plans through third party financing
companies, we can assist our allied surgeons in providing cosmetic services to a
segment of the population that would not otherwise be able to afford cosmetic
surgery procedures. Patient financing plans increase consumer access to cosmetic
surgery procedures and allow allied surgeons to reach an expanded audience,
thereby increasing the overall potential patient population.

Implements practice-specific consumer awareness programs. Cosmetic surgery
remains a 100% private pay, retail oriented business. As such, reaching the
market with consumer awareness programs is key to growing a successful plastic
surgery practice. We assist our allied surgeons in developing consumer awareness
programs specific to each allied practice, which incorporate our website
capabilities, market demographics, various media vehicles such as seminars,
newspaper ads, direct mailings and radio, and available cosmetic surgery
procedures and related services.

Designates and trains patient coordinators and develops patient education
programs and materials. Generally, there is little consistency in the patient
management process in plastic surgery practices resulting in inefficient patient
flow and inhibiting effective patient education and counseling. In an effort to
maximize efficiency we assist our allied surgeons in designating and training
the appropriate person as a patient coordinator. The patient coordinator will
manage the initial patient consultation and educate the patient to increase the
patient's awareness of the various cosmetic surgery procedures. We intend to
create and develop patient education program manuals and materials for the
allied surgeons to complement the efforts of the patient coordinator, which will
also be available through ThePlasticSurgeryCo.com. The primary objective of the
patient education process will be to fully inform patients about their chosen
procedures, raise the patient's awareness of alternative or complementary
procedures or services and educate the patient about the allied surgeon's
background and clinical expertise. We believe that a better educated patient
will increase a practice's conversion rate and sales of related services, is
more likely to elect to have a procedure performed and is more likely to be
satisfied with the outcome and become a referral source for the surgeon.

OUR STRATEGY

Provide high quality business development services to our allied
surgeons. We will target Board certified and Board eligible surgeons and will
align with these surgeons through acquisitions or the establishment of a
management relationship. We have a dedicated development team that seeks to
identify surgeons who maintain a reputation for high quality care within their
community and peer group, are located in attractive metropolitan markets and
provide an opportunity for increased revenue growth. We believe Idealme.com and
ThePlasticSurgeryCo.com will also generate interest in and demand for our
business development and other services from Board certified and Board eligible
cosmetic surgeons.

Increase consumer and surgeon awareness of our websites. We intend to
increase awareness of our websites by advertising in various media such as
magazines and other print media. We believe that increasing awareness of our
websites is critical to attract new consumers and surgeons, raise awareness of
available cosmetic surgery procedures and increase the number of cosmetic
surgery procedures performed by our allied surgeons.

Analyze each practice's operations and develop a strategic plan for the
practice. After a plastic surgeon aligns with us, we conduct an in depth
analysis of his practice's operations. We review existing consumer
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<PAGE> 34

awareness programs, revenues by cosmetic and reconstructive procedures,
procurement programs, information systems and patient flow. We then develop a
strategic plan for the practice for streamlining operations and improving
consumer awareness programs.

Attract consumer inquiries regarding cosmetic surgery information and
services. The Internet is increasingly the medium of choice for people seeking
healthcare information, and we believe that Idealme.com will position us to
attract consumer inquiries regarding cosmetic surgery procedures. We intend to
build a network of websites from our library of plastic surgery related
proprietary domain names in order to capture a broader number of plastic surgery
inquiries and information searches. Each website will have its own set of
relevant keywords intended to be within a broad topic inquiry search in plastic
surgery, ranging from procedures and products to services.

Continue to improve and enhance our services. We intend to assist our
allied surgeons in introducing new or additional services such as hair removal
and skin care. We expect these services to serve as a cross-selling opportunity
for our allied surgeons. We also intend to continue to develop programs to
enable our allied surgeons to increase the profitability of their practices. We
intend to update and expand the content on our consumer and surgeon websites and
implement new technologies to enhance the quality of services we provide for
surgeons and consumers.

THE FOUNDING ALLIED PRACTICES

The 30 founding allied practices include 35 Board certified and one Board
eligible and one certified by the Canadian Board of Plastic Surgery plastic
surgeons operating 39 offices located in 22 metropolitan markets. The founding
practices generated combined revenue of approximately $41.6 million in 1998.
Approximately 75% of the procedures performed by our allied surgeons are
cosmetic. We believe that each of the founding practices is a leading practice
in its market. We selected the founding practices based upon a variety of
factors, including:

- Board certification, licensing and good standing of allied surgeons;

- practice size, historical financial performance and potential for future
growth;

- geographic location; and

- reputation among local consumers and peers within the plastic surgery
industry.

The following table sets forth the number of surgeons and locations of our
founding allied surgeons.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
METROPOLITAN MARKET SURGEONS OFFICES
- ------------------- --------- ---------
<S> <C> <C>
California
Los Angeles............ 3 5
San Francisco.......... 1 1
Colorado
Denver................. 5 4
Florida
Ft. Myers.............. 1 2
Orlando................ 2 2
Miami.................. 1 2
Georgia
Atlanta................ 1 1
Hawaii
Honolulu............... 1 3
Kansas
Kansas City............ 1 1
Maryland
Baltimore.............. 2 2
</TABLE>

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
METROPOLITAN MARKET SURGEONS OFFICES
- ------------------- --------- ---------
<S> <C> <C>
Maine
Portland............... 1 1
New York
New York............... 3 5
North Carolina
Raleigh................ 1 1
Ohio
Cincinnati............. 1 1
Cleveland.............. 2 1
Oklahoma
Oklahoma City.......... 1 1
Oregon
Portland............... 1 1
Pennsylvania
Philadelphia........... 4 1
Texas
Amarillo............... 1 1
Austin................. 2 1
Houston................ 1 1
Virginia
Virginia Beach......... 1 1
---- ---
37 39
==== ===
</TABLE>

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<PAGE> 35

OPERATIONS

We will make available support and services to the allied practices,
including administrative and back office functions, purchasing, marketing,
training and patient education programs. We intend to offer to the allied
surgeons a variety of operating procedures and systems designed to improve the
productivity and increase the revenue of each allied practice and to achieve
economies of scale, such as:

- national group purchasing contracts for medical and office supplies and
equipment, implants and pharmaceuticals;

- centralized payroll processing and employee benefits packages;

- appropriate credit and collection policies to accommodate specific needs
of the target market of each allied practice;

- patient flow and work flow enhancements from physical improvements in
design of facilities to increase the number of patients seen and the
productivity of the allied surgeons; and

- promotional programs to include newsletters, direct mail, seminars and
patient financing to expand the allied surgeon's patient base.

We intend to institute operating efficiencies and economies on a per market
or per allied practice basis after thorough analysis, including review of work
flow, patient flow, aged accounts receivable history, facilities, employee work
load and productivity, and employee and patient satisfaction.

GOVERNMENT REGULATION

Overview. The health care industry is highly regulated, and there can be
no assurance that the regulatory environment in which we operate will not change
significantly and adversely in the future. In general, regulation of health care
providers and companies is increasing.

Every state imposes licensing requirements on medical doctors and on their
facilities and services. In addition, many states require regulatory approval,
including certificates of need, before establishing certain types of health care
facilities, offering certain services or making expenditures in excess of
statutory thresholds for health care equipment, facilities, or programs. The
execution of a business services agreement with an allied practice currently
does not require any health care regulatory approval on our part or on the part
of the allied practice. However, in connection with the expansion of existing
operations and the entry into new markets, we and our allied practices may
become subject to additional regulation.

Health Care Regulations. Federal and state laws regulate the health care
industry, the relationships between practice management companies such as us and
physicians, and the relationships among physicians and other providers of health
care services.

Corporate Practice of Medicine. The laws of many states prohibit
corporations and other entities that are not owned entirely by medical doctors
from employing medical doctors, having control over clinical decisions, or
engaging in other activities deemed to constitute the practice of medicine. We
will contract with professional associations, which will be owned by one or more
medical doctors and which in turn will employ or contract with physicians and
other health care providers to provide professional services. We will perform
only non-professional services, will not represent to the public that we provide
medical services, and will not exercise influence or control over the practices
of the medical doctors employed by the professional associations. The business
services agreements and consulting agreements specifically provide that all
decisions required by law to be made by licensed physicians or other licensed
professionals shall be made by those individuals. While certain shareholders of
managed professional corporations that practice medicine may also be involved in
company management, they act independently when making decisions on behalf of
their professional corporations and we will have no right, and will not attempt
to exercise any right, to control those decisions.

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<PAGE> 36

Fee-Splitting and Anti-kickback Laws

State Law. Many states prohibit "fee-splitting" by physicians with any
party except other physicians in the same professional practice association. In
most cases, these laws have been construed as applying to the payment of a
portion of a fee to another person for referring a patient or otherwise
generating business and not to prohibit payment of reasonable compensation for
facilities and services, other than the generation of referrals, even if the
payment is based on a percentage of the practice's revenues. In addition, most
states have laws prohibiting the payment or receipt of any remuneration that is
intended to induce referrals for health care products or services. For example,
the Florida fee-splitting law prohibits the payment or receipt of any
commission, bonus, kickback, or rebate, or engaging in any split-fee arrangement
in any form for patient referrals to providers of goods or services. 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 if the manager does not refer patients to the practice.
Other states, such as New York, have fee-splitting statutes that have been
interpreted to prohibit any compensation arrangement that is based on a
percentage of physicians' revenue.

Federal Law. The fraud and abuse provisions of the Medicare and Medicaid
statutes prohibit the payment or receipt of any 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 such programs, and impose significant penalties for false or improper
billings under such programs. In addition, under legislation known as the "Stark
Bill," physicians' referrals for certain designated health services to entities
with which they have a financial relationship are prohibited unless certain
exceptions apply. Violations of these laws may result in substantial civil or
criminal penalties, including exclusion from participation in the Medicare and
Medicaid programs, or recoveries of prior payment.

The several laws described above have civil and criminal penalties and have
been subject to judicial and regulatory interpretation. They are enforced by
regulatory agencies vested with broad discretion in interpreting them. Our
agreements and proposed activities have not been examined by federal or state
authorities under these laws and regulations. Currently, we are not a separate
provider of Medicare or state health program reimbursed services. Although we
believe that our operations and those of our allied practices will be conducted
so as to comply with all of the foregoing laws, there can be no assurance that
these operations will not be successfully challenged as violative of one or more
such laws. In addition, these laws and their interpretation vary from state to
state. The regulatory framework of certain jurisdictions may limit our expansion
into, or ability to continue operations within, such jurisdictions if we are
unable to modify our operational structure to conform with such regulatory
framework. Any limitation on our ability to expand could have an adverse effect
on us. See "Risk Factors-Government Regulation May Detrimentally Affect Us."

Impact of Healthcare Reform. The United States Congress has considered
various healthcare reform proposals, including comprehensive revisions to the
current healthcare system. It is uncertain what legislative proposals will be
adopted in the future or what actions federal or state legislatures or
third-party payors may take in anticipation of or in response to any healthcare
reform proposals or legislation. Changes in the healthcare industry, such as the
growth of managed care organizations or provider networks, may result in lower
payment levels for the services of the allied surgeons and lower revenues for
us.

Internet Regulation. There are an increasing number of laws and
regulations pertaining to the Internet. In addition, a number of legislative and
regulatory proposals are under consideration by federal, state, local and
foreign governments and agencies. Laws or regulations may be adopted with
respect to the Internet relating to liability for information retrieved from or
transmitted over the Internet, online content regulation, visitor privacy,
taxation and quality of products and services. Moreover, the applicability to
the Internet of existing laws governing issues such as intellectual property
ownership and infringement, copyright, trademark, trade secret, obscenity,
libel, employment and personal privacy is uncertain and developing. Any new
legislation or regulation, or the application or interpretation of existing laws
may have an adverse effect on our Internet business. In addition to Internet
regulation, our websites may be subject to numerous state and

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federal laws that govern the delivery of healthcare services and goods in the
United States. These laws range from laws prohibiting the offer, payment or
receipt of remuneration to induce referrals to entities providing healthcare
services and goods to licensure requirements as well as special protection for
healthcare data. These laws are complex and are under constant revision and
interpretation. These laws and their active enforcement, particularly in the
areas of healthcare fraud, affect the way all healthcare providers structure
their business relationships and deliver healthcare services and goods. New
developments in this area could affect the structure and operation of our
Internet business. In the event some state or federal regulatory agency
determined that our relationship with one or more of our advertisers that
deliver healthcare services or goods violate any such laws, then we could be
subjected to fines and other costs and could be required to revise or terminate
that portion of our business.

Liability for Information Retrieved from Our Websites and from the
Internet. Content may be accessed on our websites and this content may be
downloaded by visitors and subsequently transmitted over the Internet. This
could result in claims against us based on a variety of theories, including
defamation, practicing medicine without a license, malpractice, obscenity,
negligence, copyright or trademark infringement or other theories based on the
nature, publication and distribution of this content. Some of these types of
claims have been brought, sometimes successfully, against providers of Internet
services in the past. In addition, we may be subject to claims alleging that, by
directly or indirectly providing links to other websites, we are liable for
copyright or trademark infringement or the wrongful actions of third parties
through their respective websites. Any claims brought against us in this respect
may have a material and adverse effect on our business.

Domain Names. Domain names are Internet "addresses." The current system
for registering, allocating and managing domain names has been the subject of
litigation, including trademark litigation, and of proposed regulatory reform.
We have registered IdealMe.com, ThePlasticSurgeryCo.com and approximately 25
additional domain names. There can be no assurance that our domain names will
not lose their value, or that we will not have to obtain entirely new domain
names in addition to or in lieu of our current domain names if reform efforts
result in a restructuring of the current system.

Jurisdiction. Due to the global nature of the Internet, it is possible
that, although transmissions by us over the Internet originate primarily in the
United States, the governments of states and foreign countries might attempt to
regulate our transmissions or prosecute us for violations of their laws. These
laws may be modified, or new laws enacted, in the future. Any of the foregoing
developments could have a material adverse effect on our business, results of
operations and financial condition. In addition, as our service is available
over the Internet in multiple states and foreign countries, these jurisdictions
may claim that we are required to qualify to do business as a foreign
corporation in each state or foreign country. We have not qualified to do
business as a foreign corporation in every jurisdiction. Our failure to qualify
as a foreign corporation in a jurisdiction where we are required to do so could
subject us to taxes and penalties and could result in our inability to enforce
contracts in such jurisdictions. Any new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not
currently apply to our business, or the application of existing laws and
regulations to the Internet and other online services could have a material
adverse effect on our business, financial condition, and results of operations.

COMPETITION

There are several companies that affiliate with physicians in the area of
plastic surgery, and we realize that additional entities may enter this market.
We intend to capitalize on the reputations and relationships of the founding
practices and their allied surgeons to assist us in affiliating with additional
plastic surgery practices. Based on our preliminary review and analysis of, and
discussions with, the founding practices, we believe that our emphasis on high
quality patient care and our business, marketing, technological and practice-
growth support systems will encourage plastic surgeons to affiliate with us.

The business of providing plastic surgery services is highly competitive in
each market in which the allied surgeons operate. Allied surgeons compete with
plastic surgeons that maintain single offices or operate a single satellite
office, as well as with plastic surgeons that maintain group practices or
operate in multiple offices. Allied surgeons also compete with general surgeons
and dermatologists and ophthalmologists who provide

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<PAGE> 38

certain plastic surgery services. The provision of plastic surgery services by
such general practitioners and dermatologists has increased in recent years. We
believe that with the operations and growth strategies outlined above, the
allied surgeons will continue to be leaders in their respective markets.

We are aware of several entities that provide healthcare information
through the Internet. These entities will compete with our efforts to provide
relevant healthcare information to the Internet consumer and establish brand
loyalty to their websites. All of these companies compete with us for visitor
traffic. We expect competition to continue to increase as there are no
substantial barriers to entry in our market. Increased competition could result
in reductions in fees we receive for subscription services, reduced visitor
traffic to our website, or loss of market share. Any of these occurrences could
materially and adversely affect our business, financial condition and results of
operations. Competition is also likely to increase significantly, not only as
new entities enter the market, but also as current competitors expand their
services. Our principal competitors in the Internet sector of our business are
Onhealth, HealthOasis, Intelihealth, iVillage, Thrive Online, Mediconsult and
WebMD.

SEASONALITY

The allied practices typically experience a significant decrease in demand
for and revenue from cosmetic surgery procedures during July and August.

EMPLOYEES

As of June 30, 1999, we had 8 employees. Upon completion of the
acquisitions of the founding practices, we will employ an aggregate of
approximately 165 full-time and approximately 100 part-time employees. None of
our employees are covered by a collective bargaining agreement. We consider our
relationship with our employees to be good.

INTELLECTUAL PROPERTY

We have not applied for federal registration of the service mark "The
Plastic Surgery Company." We intend to use this name in our marketing and
advertising campaigns in order to associate the name The Plastic Surgery Company
with a reputation for nationwide quality plastic surgery care.

LITIGATION AND INSURANCE

We are not a party to any pending litigation that if adversely determined
would have a material adverse effect on our operations. Many of the founding
practices have pending litigation arising in the ordinary course of business.
Each allied surgeon must disclose all pending material litigation relating to
his practice in his acquisition agreement. In a stock purchase or merger
transaction, we will assume the liabilities of the practice prior to the
transaction relating to litigation. We intend to vigorously defend any and all
litigation. We maintain general liability insurance for us and on behalf of our
allied practices. We believe that, where permitted by applicable law and
insurers, we will be named as an additional insured under the policies of the
allied practices. The allied surgeons maintain professional liability insurance
covering the delivery of health services. Also, we are indemnified under the
business services agreements for liabilities we incur as a result of the
performance of medical services by allied surgeons. Successful malpractice
claims against allied practices could have an adverse effect on our
profitability. While we believe we have 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. There can also be no assurance that coverage will continue to be
available at acceptable costs and on favorable terms.

FACILITIES

We lease approximately 2,900 square feet of office space in Santa Barbara,
California for our headquarters and approximately 2,600 square feet of office
space in Atlanta, Georgia.

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MANAGEMENT

The following table sets forth the age and position of each of our
executive officers and directors:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jonathan E. Wilfong........................ 50 Chairman of the Board
Dennis E. Condon(1)........................ 50 President, Chief Executive Officer and
Director
Gunnar Sundstrom........................... 53 Chief Financial Officer
David H. Challoner......................... 39 Chief Development Officer
Patricia A. Altavilla...................... 41 Executive Vice President of Marketing and
Business Planning
Robert A. Ersek, M.D., F.A.C.S.(1)......... 60 Director
Richard A. Mladick, M.D., F.A.C.S.(1)...... 64 Director
John C. Schantz, M.D., F.A.C.S.(1)......... 56 Director
W. Grant Stevens, M.D., F.A.C.S.(1)........ 45 Director
Mark A. Kaiser(1).......................... 41 Director
</TABLE>

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

(1) Agreed to serve as directors upon the closing of the offering.

EXECUTIVE OFFICERS AND DIRECTORS

Jonathan E. Wilfong, Chairman of the Board. Mr. Wilfong is our founder and
served as our Chief Executive Officer until June 1998, and has served as
Chairman of the Board of Directors since 1997. From June 1996 to May 1997, Mr.
Wilfong served as a consultant for OrthAlliance, Inc., a public company which
provides business development services to orthodontic practices, and from May
1997 to May 1999 he served as Chairman of the Board of OrthAlliance, Inc. and
continues to serve as a director. In 1996, Mr. Wilfong founded Newfound Capital
Associates, an investment banking advisory firm. Mr. Wilfong is a Certified
Public Accountant, and from 1983 to 1996 was a partner with Price Waterhouse LLP
in Atlanta, Georgia and Greenville, South Carolina where he worked primarily
with high growth companies.

Dennis E. Condon, President, Chief Executive Officer and Director. Mr.
Condon has served as our President and Chief Executive Officer since June 1998
and will be appointed a director immediately upon the closing of the offering.
From 1984 until joining us, Mr. Condon was employed by Mentor Corporation, an
international supplier of medical products and technology, serving from 1991 to
1998 as President of the Mentor's medical device division specializing in
aesthetic surgery implants and electromechanical medical instrumentation.

Gunnar Sundstrom, Chief Financial Officer. Mr. Sundstrom has served as
Chief Financial Officer since May 1999. From 1992 to 1999, Mr. Sundstrom was
employed by Mentor's medical device division, serving as Vice President and
Controller since 1996.

David H. Challoner, Chief Development Officer. Mr. Challoner joined us as
Chief Development Officer in October 1997. From August 1994 to September 1997,
Mr. Challoner directed the start-up of Rejuve, Inc., a cosmetic laser center
company, and served as its Chief Development Officer. From 1993 to 1994, Mr.
Challoner founded and was President of Ocupro, Inc., an ophthalmology practice
management company. In December 1994, Ocupro merged with Equivision, Inc.
(subsequently Equimed, Inc.) and Mr. Challoner served in a development capacity
for Equimed, Inc., until July 1996.

Patricia A. Altavilla, Executive Vice President of Marketing and Business
Planning. Ms. Altavilla has served as our Vice President of Marketing and
Business Planning since August 1998. From 1984 to 1998, Ms. Altavilla was
employed by Mentor, serving as Vice President of Marketing since 1993.

Robert A. Ersek, M.D., F.A.C.S., Director. Dr. Ersek has agreed to serve
as and will be appointed a director immediately upon the closing of the
offering. Dr. Ersek has been practicing plastic surgery in Austin,

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Texas since 1978. In 1996, he formed Personique, Inc., a company focusing on
patient orientation procedures. Dr. Ersek is the former President of both the
Austin Plastic Surgery Society and the Lipoplasty Society of Board Certified
Plastic Surgeons of North America. Since 1970, he has served as the Medical
Director and a member of the Board of Directors of Genetic Laboratories Wound
Care, a wound care product manufacturing company, now a wholly-owned subsidiary
of Derma Science. Dr. Ersek is a member of the American Medical Association, a
fellow of the American College of Surgeons and the American Board of Plastic
Surgery, American Society of Plastic and Reconstructive Surgeons, and American
Aesthetic Surgery Society. Dr. Ersek received his M.D. in 1966 from Hahnemann
University Medical School, performed an internship and general surgery residency
at the University of Minnesota, a residency in plastic surgery at Tulane
University and a fellowship in plastic surgery at the University of Mississippi.

Richard A. Mladick, M.D., F.A.C.S., Director. Dr. Mladick has agreed to
serve as and will be appointed a director immediately upon the closing of the
offering. Dr. Mladick has been practicing plastic surgery since 1968 and founded
and serves as director of Plastic Surgery Center, Inc., a founding practice in
Virginia Beach, Virginia. Dr. Mladick is a former President of the Virginia
Society of Plastic and Reconstructive Surgeons. He received his M.D. from
Northwestern University Medical School in 1959 and completed residency in
plastic surgery from Duke University Medical Center in 1968.

John C. Schantz, M.D., F.A.C.S., Director. Dr. Schantz has agreed to serve
as and will be appointed a director immediately upon the closing of the
offering. Dr. Schantz founded Plastic Surgery Associates, P.C., a founding
practice, in Lancaster, Pennsylvania in 1978. He currently serves as the Chief
of the Division of Plastic Surgery at Lancaster General Hospital and serves on
the active staff of HealthSouth Surgery Center of Lancaster. He is a member of
the Governing Board, Department of Surgery and serves as Chairman, Surgical
Practice Council at the Lancaster General Hospital. He is a member of the
American Society of Plastic and Reconstructive Surgeons and a fellow of the
American College of Surgeons. Dr. Schantz received his M.D. in 1971 from
Hahnemann Medical College and completed his residency training at the Hershey
Medical Center, Hershey, Pennsylvania.

W. Grant Stevens, M.D., F.A.C.S., Director. Dr. Stevens has agreed to
serve as and will be appointed a director immediately upon the closing of the
offering. Dr. Stevens has served as President of W. Grant Stevens, M.D., Inc.
(d/b/a/ Plastic Surgery Associates), a founding practice in Marina Del Ray,
California, since 1988. Dr. Stevens is a Board Certified Diplomate of the
American Board of Plastic Surgery and is a member of the American Society of
Plastic and Reconstructive Surgeons, The American Society of Aesthetic Plastic
Surgery, the California Society of Plastic Surgeons, as well as several other
professional societies. Dr. Stevens is also on the clinical faculty at U.C.L.A.
Dr. Stevens served as Chairman of the Department of Surgery and was on the
Medical Executive Committee at Daniel Freeman Marina Hospital from 1989 through
1996. Dr. Stevens is an editorial advisory board member of Cosmetic Surgery
Times, Plastic Surgery Products, and Wounds: A Compendium of Current Research
and Practice. Dr. Stevens received his M.D. with honors in 1980 from the
Washington University School of Medicine in St. Louis, Missouri, where he also
completed his plastic surgery training. Dr. Stevens also received the Special
Congressional Certificate of Recognition and the Distinguished Service Citation
from the Medical Board of California.

Mark A. Kaiser, Director. Mr. Kaiser has agreed to serve as and will be
appointed a director immediately upon the closing of the offering. Mr. Kaiser is
Chairman of the Board and Chief Executive Officer of Caredata.com, Inc., a
healthcare Internet content company. Prior to joining Caredata.com in 1991, Mr.
Kaiser was Vice President of Sales and Marketing for Charter Medical
Corporation, a chain of psychiatric hospitals. From 1987 to 1990 Mr. Kaiser
served as Senior Vice President of Marketing at Telecom USA, a publicly traded
long distance company acquired by MCI Communications Corporation. Mr. Kaiser is
a member of the Board of Directors of R.S. Andrews Enterprises, Inc., a national
home services contractor. Mr. Kaiser holds Bachelor of Science degrees in
Computer Science and Mathematics from Furman University.

38
<PAGE> 41

BOARD OF DIRECTORS

Classification of Board of Directors. Our board of directors is divided
into three classes, which consist, as nearly as practicable, of one-third of the
total number of directors serving on the board. The board may have up to nine
members and is currently composed of one member. Immediately prior to the
closing of the acquisitions of the founding practices, the board will be
expanded to eight members. The members of each class serve staggered three-year
terms. The initial term of class I expires at the annual shareholders' meeting
in 2000, the initial term of class II expires at the annual shareholders'
meeting in 2001, and the initial term of class III expires at the annual
shareholders' meeting in 2002. Drs. Mladick and Schantz will be members of class
I, Drs. Ersek and Stevens and Mr. Kaiser will be members of class II; and Mr.
Wilfong is, and Mr. Condon will be members of class III.

Directors appointed will serve until their respective successors are
elected and qualified. At each annual meeting of shareholders, or at a special
meeting of shareholders called for purposes that include the election of
directors, directors will be appointed to succeed those in the class whose terms
then expire, with each director so appointed to serve for a term of three years.

Additional Directorships, Vacancies and Removal of Directors. The board is
authorized to create additional directorships and abolish any vacant
directorships. Newly created directorships and vacancies may be filled by a
majority vote of the remaining directors then in office, to hold office until
the next annual meeting of shareholders, and until their successors shall be
appointed and qualified. Our bylaws provide that directors may be removed with
or without cause by the shareholders only at a shareholders' meeting for which
notice of the removal action has been given. The directors elected by a
particular voting group may be removed only by the shareholders in that voting
group.

BOARD COMMITTEES

The board has an executive committee, a nominating committee, an audit
committee and a compensation committee. The executive committee is authorized to
take all action which may be delegated by the board under Georgia law. The
nominating committee recommends candidates for election to the board, examines
the performance of incumbent directors and makes recommendations concerning the
retention of directors. The audit committee recommends the annual appointment of
the company's auditors, with whom the audit committee reviews the scope of audit
and non-audit assignments and related fees, accounting principles used by the
company in financial reporting and the adequacy of the company's internal
control procedures. The compensation committee administers the Employee Stock
Plan. See "-- Stock Plans -- Administration." The compensation committee also
has the responsibility for reviewing and approving salaries, bonuses and other
compensation including benefits of executive officers.

DIRECTOR COMPENSATION

Members of the board are reimbursed for their out-of-pocket expenses for
each meeting attended, but otherwise serve without cash compensation. We have
adopted the 1999 Non-Employee Director Stock Plan, pursuant to which each
non-employee director receives a nondiscretionary grant to purchase 8,400 shares
of common stock upon his or her election or appointment to the board and, if
serving as a non-employee director following the annual meeting each year, an
additional non-discretionary grant for the purchase of 8,400 shares of common
stock. See "-- Stock Plans -- Non-Employee Director Plan."

COMPENSATION COMMITTEE INTERLOCKS

We did not have a compensation committee prior to the offering. Prior to
the offering, the Board (Mr. Wilfong) determined executive compensation. None of
our executive officers serve as a member of a compensation committee or as a
director of any entity of which our directors serve as an executive officer.

39
<PAGE> 42

LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

In accordance with Georgia law, our Articles of Incorporation provide that
no director will be personally liable for breach of fiduciary duty as a director
except for

- any appropriation, in violation of the director's duties, of any
business opportunity of the company;

- acts or omissions that involve intentional misconduct or a knowing
violation of the law;

- liabilities that relate to unlawful payments of dividends and
unlawful stock repurchases and redemptions; or

- any transaction from which the director derived an improper personal
benefit.

This provision does not eliminate a director's fiduciary duties; it merely
eliminates the possibility of damage awards against a director personally which
may be occasioned by certain unintentional breaches, including situations that
may involve grossly negligent business decisions, by the director of those
duties. The provision has no effect on the availability of equitable remedies,
such as injunctive relief or rescission, which might be necessitated by a
director's breach of his or her fiduciary duties. However, equitable remedies
may not be available as a practical matter where transactions, such as merger
transactions, have already been consummated. The inclusion of this provision in
our Articles of Incorporation may have the effect of reducing the likelihood of
derivative litigation against directors, and may discourage or deter
shareholders or management from bringing a lawsuit against directors for breach
of their duty of care, even though such an action, if successful, might
otherwise have benefitted us and our shareholders.

Our Bylaws provide that we shall indemnify and hold harmless each of our
directors, officers, employees and agents to the extent that he or she is or was
a party, or is threatened to be made a party, to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative by reason of the fact that such person is or was our director,
officer, employee or agent, against any expenses, judgments, fines and amounts
paid in settlement in connection with such action, suit or proceeding; provided,
however, that no indemnification shall be made for:

- any appropriation, in violation of the director's duties, of any business
opportunity of the company;

- acts or omissions that involve intentional misconduct or a knowing
violation of the law;

- any liability that relates to unlawful payments of dividends and unlawful
stock repurchases and redemptions; or

- any transaction from which the director derived an improper personal
benefit.

Our Bylaws provide that we shall have the power to purchase and maintain
insurance on behalf of any of our directors, officers, employees or agents
against any liability asserted against and incurred by such person in any such
capacity, whether or not we have the power to indemnify such person against such
liability at that time under our Articles of Incorporation or Bylaws.

40
<PAGE> 43

EXECUTIVE COMPENSATION

The following table sets forth information with respect to all compensation
paid or accrued in the fiscal years ended December 31, 1997 and 1998, for
services rendered in all capacities to us by our Chief Executive Officer and
other officers earning in excess of $100,000. We were incorporated in April 1997
and did not conduct any operations prior to that time.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
OTHER ANNUAL
YEAR SALARY(1) BONUS(2) COMPENSATION(3)
---- --------- -------- ---------------
<S> <C> <C> <C> <C>
Dennis E. Condon................................... 1998 $100,000 $ 30,000 $ --
President, Chief Executive Officer
and Director
Jonathan E. Wilfong................................ 1998 264,750 150,000 --
Chairman of the Board, former Chief Executive 1997 187,250 -- --
Officer
David H. Challoner................................. 1998 195,000 -- 900
Chief Development Officer 1997 52,500 -- --
</TABLE>

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

(1) Includes total accrued and unpaid salary of $16,666 for Mr. Condon, $316,000
for Mr. Wilfong and $124,500 for Mr. Challoner and amounts paid under
consulting agreements. See "Certain Transactions."

(2) All bonus amounts are accrued and unpaid.

(3) Represents health insurance premium reimbursements.

OPTION GRANTS DURING LAST FISCAL YEAR

The following table sets forth certain information with respect to stock
options granted to each of the Named Executive Officers during 1998, including
the potential realizable value over the 10 year term of the options based on
assumed rates of stock appreciation of 5% and 10%, compounded annually. These
assumed rates of appreciation comply with the rules of the SEC and do not
represent the Company's estimate of future stock price. Actual gains, if any, on
stock option exercises will be dependent on the future performance of the common
stock. In 1998, the Company granted options to acquire up to an aggregate of
50,400 shares to employees, all under the Company's Stock Option Plan and all at
an exercise price equal to not less than the fair market value of the common
stock on the date of grant as determined in good faith by the board of
directors.

<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
NUMBER ANNUAL RATES OF
OF PERCENT OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTIONS TERMS
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------
NAME GRANTED FISCAL 1998 SHARE DATE 5% 10%
- ---- ---------- ------------- --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Dennis E. Condon(1)................. 33,600 67% $8.93 6-15-03 $82,884 $183,153
</TABLE>

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

(1) Does not reflect options to purchase 168,000 shares of common stock to be
granted with the closing of the offering with an exercise price equal to the
initial public offering price.

41
<PAGE> 44

No Named Executive Officer exercised any stock option during the fiscal
year ended December 31, 1998. The following table sets forth certain information
regarding stock options held as of December 31, 1998 by the Named Executive
Officers. The "Value of Unexercised In-the-Money Options at December 31, 1998"
is based upon a value of $13.00 per share, the assumed offering price, minus the
per share exercise price, multiplied by the number of shares underlying the
option.

<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
----------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1998 AT DECEMBER 31, 1998
---------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Dennis E. Condon............................... 33,600 -- $136,752 --
</TABLE>

EMPLOYMENT AGREEMENTS

The company has entered into employment agreements with Mr. Condon, Mr.
Challoner, and Ms. Altavilla providing for annual base salaries of $200,000,
$150,000 and $150,000, respectively, with Mr. Condon, Mr. Challoner, and Ms.
Altavilla each being eligible for a cash bonus of up to 30% of his or her base
salary if certain annual financial performance targets are met. Pursuant to the
agreements, the company granted Mr. Condon and Ms. Altavilla options to purchase
33,600 and 16,800 shares of common stock, respectively, at an exercise price of
$8.93 per share with such options vesting on June 15, 1998 and August 1, 1998,
respectively. Additionally, the company will grant at the closing of the
offering options for the purchase of common stock to each of Mr. Condon, Mr.
Challoner, and Ms. Altavilla for 168,000, 84,000 and 84,000, shares respectively
at the price to the public in the offering with 20% of these options vesting
upon the effective date of the offering and the remainder vesting 20% per year
on each of the first four anniversary dates of the offering. Each of these
employment agreements is for an initial term of five years with an automatic
renewal for successive one year terms unless prior notice of termination is
provided. The company may terminate an employment agreement for cause, without
cause upon 30 days prior written notice, or upon death or disability of the
employee. The employee may terminate the employment agreement within 120 days
after a constructive termination (as defined therein). If the employee's
employment is terminated by the company without cause, by the employee within
120 days following a constructive termination, or upon occurrence of a change in
control, we will pay the employee on the date of termination:

- severance pay in the amount of two times annual base salary;

- base salary accrued but unpaid from the last monthly payment date to the
date of termination;

- specified expense reimbursements;

- a pro-rata portion of the annual maximum bonus for the year in which the
termination occurs; and

- two times the amount of the bonus actually earned for the prior calendar
year, or if the termination occurs during the first year of employment,
two times the pro-rata portion of the annual maximum bonus for the first
year.

We have entered into an employment agreement with Mr. Sundstrom providing
for an annual base salary of $130,000. Mr. Sundstrom is also eligible for a
bonus of $15,000 upon the closing of the offering. Under the agreement, Mr.
Sundstrom will receive 84,000 options for the purchase of the common stock at
the price to the public in the offering. Twenty percent of these options will
vest on the closing of the offering, with the remainder vesting 20% per year on
each anniversary date of the offering. The termination provisions of the
agreement are the same as those discussed above for the other agreements.

Each agreement prohibits the employee from competing with us for a period
of two years following termination of employment.

42
<PAGE> 45

STOCK OPTION PLANS

We have adopted the 1998 Employee Stock Option Plan and the 1998
Non-Employee Director Stock Plan. We intend to register the shares of common
stock issuable upon exercise of options granted under these plans. Upon
registration, such shares will be eligible for resale in the public market,
subject to applicable rules and regulations of the Securities Act.

1998 Employee Stock Option Plan. The board has adopted and the
shareholders have approved the 1998 Employee Stock Option Plan. Awards under the
employee plan are to be determined by the compensation committee and granted to
officers and employees as incentive or non-incentive stock options. The employee
plan may be terminated by the board at any time.

Eight hundred forty thousand shares of common stock are reserved for
issuance pursuant to the employee plan, subject to certain anti-dilution
provisions. Options for the purchase of 655,000 shares of common stock will be
granted at the closing of the offering to certain officers and employees at an
exercise price equal to the price to the public in the offering. These options
will vest 20% upon the closing of the offering, with the balance vesting 20% per
year on the first through fourth anniversary dates of the date of grant. The
options expire five years from the date of grant. Mr. Condon and Ms. Altavilla
were granted non-qualified options under the employee plan for the purchase of
33,600 and 16,800 shares of common stock, respectively, at an exercise price of
$8.93 per share. These options vest 100% upon the effective date of their
respective employment agreements. See "Management -- Employment Agreements."

1999 Non-Employee Director Stock Plan. The board has adopted and the
shareholders have approved the 1999 Non-Employee Director Stock Plan. Awards
under this plan are to be granted to non-employee directors to purchase shares
of our common stock.

Two hundred eighty thousand shares of common stock are reserved for
issuance to the non-employee directors under the director plan. Each person who
is elected or appointed a non-employee director will be granted a
nondiscretionary option to purchase 8,400 shares of common stock at the time of
his or her election or appointment. Beginning in 2000, each person who continues
to serve as a non-employee director following the annual meeting each year will
receive a nondiscretionary option to purchase 8,400 shares of common stock.
Options issued to non-employee directors under this plan will be non-qualified
stock options, and will expire ten years from the date of the grant. The
exercise price will be equal to the average closing bid price for the five
trading days before election or appointment of the director. Options issued to
non-employee directors become exercisable on the first anniversary of the date
of the grant.

Administration of the Stock Option Plans. The employee plan will be
administered by the compensation committee of the board. The director plan is
self-governing. Under the employee plan, the compensation committee will
determine who will receive, and the times at which, awards are granted, the
types of awards granted, and all other terms and conditions of the awards. Under
the employee plan, the compensation committee must consist of at least two
directors, and for grants of options or awards to any persons subject to Section
16 of the Exchange Act, the committee must consist of at least two directors who
are non-employee directors under Rule 16b-3.

43
<PAGE> 46

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of common stock as of July 20, 1999 and as adjusted to reflect the
completion of this offering by:

- each of our directors and executive officers;

- all of our directors and executive officers as a group;

- each shareholder that will sell shares if the underwriters exercise their
overallotment option; and

- each person who is known by us to own beneficially more than 5% of our
common stock.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OWNED(1) COMMON STOCK
---------------------- ----------------------
BEFORE THE AFTER THE BEFORE THE AFTER THE
NAME AND ADDRESS(1) OFFERING OFFERING OFFERING OFFERING
- ------------------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Jonathan E. Wilfong(2)................................ 1,115,400 1,115,400 26.9% 16.8%
Dennis E. Condon(3)................................... 232,600 232,600 6.3 3.8
Patricia A. Altavilla(4).............................. 84,100 84,100 2.4 1.4
David H. Challoner(5)................................. 105,600 105,600 3.0 1.7
Gunnar Sundstrom(6)................................... 20,000 20,000 0.6 0.3
William G. Armiger, M.D., F.A.C.S. ................... 320,884 320,884 9.3 5.4
Robert A. Ersek, M.D., F.A.C.S........................ 316,875 316,875 9.2 5.3
Richard A. Mladick, M.D., F.A.C.S.(7)................. 69,762 69,762 2.0 1.2
W. Grant Stevens, M.D., F.A.C.S.(8)................... 453,730 431,330 12.8 7.2
Robert Garces(9)...................................... 205,800 205,800 6.0 3.5
Robert Qualls(10)..................................... 231,240 231,240 6.6 3.8
John C. Schantz, M.D., F.A.C.S. ...................... -- -- -- --
Mark A. Kaiser........................................ -- -- -- --
Randall A. Schmidt, D.D.S............................. 47,600 19,600 1.4 *
Ronald O. Parsons, D.D.S.............................. 36,064 -- 1.1 --
Paul A. Quiros........................................ 33,600 -- * --
Hilbert Dreesen....................................... 22,736 -- * --
David C. Poole........................................ 16,800 -- * --
Michael D. and Patricia Y. Goodwin.................... 13,664 -- * --
MC Investments, LLC................................... 11,200 -- * --
S.L. and Laura A. Schlesinger, M.D., F.A.C.S.......... 11,200 -- * --
Cliff McGehee......................................... 8,400 4,200 * *
Dorothy B. McGehee.................................... 8,400 4,200 * *
Marilyn M. Elkins..................................... 8,400 4,200 * *
Sands Family Trust.................................... 7,840 5,600 * *
Dana E. Fender, D.D.S................................. 5,600 -- * --
Wayne Hester, D.D.S................................... 5,600 -- * --
Darrell Measel/Barbara Measel......................... 4,480 -- * --
Sammy A. Caves, D.D.S................................. 4,480 2,240 * *
Ronald L. Receveur, D.D.S............................. 3,696 -- * --
Gerald Smernoff, D.D.S................................ 2,800 -- * --
Jim Burns............................................. 2,800 -- * --
John Fuller........................................... 2,800 -- * --
Shirley J. Smith...................................... 2,800 -- * --
C. Graham McGehee..................................... 2,240 1,120 * *
E. William Koons, III................................. 2,240 -- * --
Elizabeth McGehee..................................... 2,240 1,120 * *
Howard C. Chandler.................................... 2,240 -- * --
Meredith R. Elkins.................................... 2,240 1,120 * *
</TABLE>

44
<PAGE> 47

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

* Less than one percent.

(1) Unless otherwise indicated, the address of each of the beneficial owners
identified is c/o The Plastic Surgery Company, 104 West Anapamu, Suite G,
Santa Barbara, California 93101. Except as otherwise indicated, such
beneficial owners have sole voting and investment power with respect to all
shares of common stock owned by them, subject to community property laws
where applicable.
(2) Includes (i) 392,000 shares of common stock held of record; (ii) 700,000
shares subject to presently exercisable warrants; and (iii) 8,400 shares of
common stock and 15,000 shares subject to presently exercisable warrants
held of record by his wife. Mr. Wilfong disclaims beneficial ownership of
the shares held by his wife.
(3) Includes (i) 14,000 shares of common stock held of record; and (ii) 218,600
shares subject to presently exercisable options.
(4) Includes (i) 9,800 shares of common stock held of record; and (ii) 74,300
shares subject to presently exercisable options.
(5) Includes (i) 19,600 shares of common stock held of record; and (ii) 86,000
shares subject to presently exercisable warrants and options.
(6) Includes 20,000 shares subject to presently exercisable options.
(7) Includes (i) 57,510 shares of common stock held of record; and 12,252
shares subject to presently exercisable warrants.
(8) Includes (i) 363,730 shares of common stock held of record; (ii) 75,000
shares subject to presently exercisable warrants; and (iii) 15,000 shares
subject to presently exercisable warrants held by his wife. Dr. Stevens
disclaims beneficial ownership of the warrants held by his wife.
(9) The business address of Mr. Garces is 3500 Parkway Lane, Suite 310,
Norcross, Georgia 30092.
(10) The business address of Mr. Qualls is 1003 Landfall Way, Johns Island,
South Carolina 29455. Includes (i) 106,350 shares of common stock held of
record; (ii) 70,000 shares subject to presently exercisable warrants; and
(iii) 54,890 shares of common stock held of record by a profit sharing plan
for Mr. Quall's benefit.

CERTAIN TRANSACTIONS

Simultaneously with and as a condition to the closing of the offering, we
will acquire certain operating assets of, or the stock of 17 founding practices
in exchange for cash and shares of our common stock, which will be accounted for
under SAB 48, and we will enter into business services agreements with these
founding practices. In addition, we will acquire 13 founding practices which
will be accounted for at the fair value of the assets. Each of these
transactions was individually negotiated by us and each founding practice with
respect to all material terms including, without limitation, valuation. Our
executive officers and Mr. Wilfong negotiated the transactions with the founding
practices. The aggregate consideration to be paid by us to these founding
practices upon closing of the offering is approximately $42.7 million,
consisting of 2,019,810 shares of our common stock and approximately $12.4
million in cash and the delivery of approximately $4.0 million in promissory
notes. The cash portion of the consideration will be paid from proceeds received
by us in the offering. Drs. Ersek, Mladick, Schantz and Stevens, all of whom
will be our directors, will receive 278,716, 42,857, 31,552 and 271,754 shares
of our common stock, respectively, and $905,827, $1,392,849, $102,547 and

45
<PAGE> 48

$883,201 in cash, respectively, as a result of the acquisition of the founding
practices. The consideration that we agreed to pay each of the founding
practices of Drs. Ersek, Mladick, Schantz and Stevens was calculated in the same
manner as the consideration for each of the other founding practices.

The following table provides certain information concerning the
stockholders of the Founding Practices (who are considered promoters) that will
be accounted for under SAB 48.

<TABLE>
<CAPTION>
CONSIDERATION TO BE RECEIVED
---------------------------------------
ASSETS TO BE LIABILITIES CASH VALUE OF NUMBER OF
CONTRIBUTED(1) ASSUMED(1) DISTRIBUTION SHARES(2) SHARES(2)
-------------- -------------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
William G. Armiger, M.D.,
F.A.C.S......................... $ 171,489 $ -- $ 869,898 $ 3,479,591 267,661
Kenneth R. Arthur, M.D.,
F.A.C.S......................... 3,973 -- 102,546 410,186 31,553
John L. Baeke, M.D................ 59,571 -- 307,149 1,228,594 94,507
Robert A. Ersek, M.D., F.A.C.S.... 225,764 -- 905,827 3,623,310 278,716
Michael S. Flood, M.D.,
F.A.C.S......................... 3,973 -- 102,546 410,186 31,553
Stanley P. Gulin, M.D.,
F.A.C.S......................... 224,598 53,661 297,143 1,188,573 91,429
Stiles T. Jewett, Jr., M.D.,
F.A.C.S......................... 56,723 -- 117,985 471,938 36,303
John C. Kelleher, Jr., M.D.,
F.A.C.S......................... 29,101 -- 340,242 1,360,967 104,690
Graham M. Kemsley, M.D.,
F.R.C.S......................... 49,684 -- 246,331 985,324 75,794
John L. LeRoy, M.D., F.A.C.S...... 7,487 -- 60,898 243,594 18,738
Robert V. Mandraccia, M.D......... -- 220,000 880,000 67,692
Richard M. Nazareth, M.D.,
F.A.C.S......................... 41,443 -- 304,973 1,219,893 93,838
John C. Schantz, M.D., F.A.C.S.... 3,973 -- 102,547 410,185 31,552
S.L. Schlesinger, M.D.,
F.A.C.S......................... 24,207 211,412 214,045 1,487,783 114,445
Joel B. Singer, M.D., F.A.C.S..... 9,328 -- 201,119 804,478 61,883
Charles W. Spenler, M.D........... -- -- 132,097 528,390 40,645
W. Grant Stevens, M.D.,
F.A.C.S......................... 14,548 220,000 883,201 3,532,806 271,754
Gloria Thomas, M.D................ 46,870 -- 150,624 602,498 46,346
Verne M. Weisberg, M.D.,
F.A.C.S......................... 5,000 -- 178,856 715,422 55,032
---------- -------- ---------- ----------- ----------
Total................... $ 977,732 $485,073 $5,738,027 $23,583,718 1,814,131
========== ======== ========== =========== ==========
</TABLE>

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

(1) Assets to be contributed reflect the historical book value of the assets of
each practice, as of June 30, 1999. Of the assets to be contributed,
approximately 95% are property and equipment. Liabilities assumed are debts
of the practice.

(2) Assumes an initial public offering price of $13.00, the mid-point of the
estimated initial public offering price range.

Upon the closing of the acquisition of the founding practices, we will
enter into a business services agreement and employment agreement with each of
Drs. Ersek, Schantz and Stevens, substantially on the terms described for such
agreements in "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Business Services Agreements."

In June of 1997, we entered into a consulting agreement, which was amended
on September 30, 1998, with Mr. Wilfong, the Chairman of the Board of Directors.
Under his consulting agreement, Mr. Wilfong has agreed to provide us with
financial and general business services, and we have agreed to pay Mr. Wilfong a
consulting fee of $428,000 for such services. This consulting fee is payable in
monthly installments of $8,000, with the balance, net of payments made through
September 30, 1998, payable at the effective date of the offering. From
September 30, 1998 to the earlier of September 30, 1999 or 90 days after the
effective date of the offering, Mr. Wilfong will receive monthly payments of
$8,000. Mr. Wilfong will also receive a bonus accrued and earned in 1998 of
$150,000 payable upon the closing of the offering.

In June of 1997, we entered into a consulting agreement with Robert D.
Garces. Under his consulting agreement, Mr. Garces agreed to provide us with
financial and general business services, and we agreed to pay Mr. Garces a
consulting fee of $428,000 for these services. This consulting fee was payable
in monthly installments of $8,000 through September 30, 1998 and $500 from
September 30, 1998 through the earlier of

46
<PAGE> 49

September 30, 1999 or the effective date of the offering. The balance, net of
these payments, is payable at the effective date of the offering.

Under a consulting agreement that terminated on September 30, 1998, we paid
Mr. Challoner $110,500 and issued him a warrant to purchase 56,000 shares of
common stock at $4.46 per share, exercisable on or before October 1, 2002. Mr.
Challoner will receive an additional $99,500 upon the closing of the offering.

On May 13, 1999, we sold warrants to purchase 1,390,204 shares of common
stock at an exercise price per share equal to $2.50. The purchase price was $.50
per share. We received cash proceeds of $303,852 from the sale of these
warrants. We received notes from Mr. Wilfong (Chairman of the Board), Mr. Condon
(President and Chief Executive Officer), and Ms. Altavilla (Executive Vice
President of Marketing and Business Planning) in the amount of $350,000, $12,500
and $8,750, respectively, for the $.50 per share purchase price of the warrants.
The notes are full recourse notes that mature three years from the date of
issuance and accrue interest at a rate of 8% per annum. Interest is payable on a
quarterly basis beginning the first quarter after the closing of the offering,
but no later than September 30, 1999. The warrants may be exercised in whole or
in part for a five year term commencing on the date of issuance. The warrants
are not subject to adjustment for stock splits, stock dividends or any other
reorganization of our outstanding stock. We recorded an expense related to the
issuance of these warrants based on the fair value of our common stock on the
date of issuance of $8.93 per share.

We will grant warrants to purchase an aggregate of 146,500 shares of common
stock with an exercise price per share equal to the initial public offering
price, exercisable for a five year term commencing on the closing of the
offering, to the following allied surgeons: 75,000 to Dr. Stevens, who is a
director, for referring allied surgeons to us for affiliation and assisting us
in recruiting of our officers; and 8,750 to Dr. Dinner, 8,750 to Dr. Ellenby,
10,000 to Dr. Jewett, 30,000 to Dr. Schlesinger, 10,000 to Dr. Singer, and 4,000
to Dr. Terino for referring allied surgeons to us for affiliation. We will
record expense related to these warrants at the closing of the offering.

We also issued warrants to individuals not affiliated with us to purchase
an aggregate of 125,000 shares of common stock with an exercise price per share
equal to the initial public offering price, exercisable for a five year term
commencing on the date of the offering, for referring allied surgeons to us. We
will record expense related to these warrants at the closing of the offering.

On May 12, 1999, we issued warrants to purchase 100,000 shares of common
stock to Mr. Condon and warrants to purchase 10,000 shares of common stock to
Ms. Altavilla for an exercise price per share equal to $2.50. The warrants are
not subject to adjustment for split up, stock dividends or any other
reorganization of our outstanding stock. We will record expense related to the
issuance of these warrants based on the fair value of our common stock on the
date of issuance of $8.93 per share.

In June 1999, we agreed to pay to Mr. Condon a cash bonus in the amount of
$75,000 for past services provided. This cash bonus will be paid and recorded as
expense upon the successful completion of the offering.

DESCRIPTION OF CAPITAL STOCK

The following summary description of capital stock is not intended to be
complete and is subject to the provisions of the Articles of Incorporation and
Bylaws, copies of which have been included as exhibits to the registration
statement of which this prospectus forms a part, and the applicable provisions
of Georgia law. The following discussion is qualified in its entirety by
reference to such exhibits.

We have authority to issue up to 100,000,000 shares of common stock, no par
value per share. Immediately prior to the date of the offering, 50,400 shares of
common stock were issuable pursuant to outstanding options to purchase common
stock and 1,606,204 shares of common stock were issuable pursuant to warrants to
purchase common stock. As of the completion of the acquisitions of the founding
practices, there will be 5,850,473 shares of common stock issued and
outstanding.

47
<PAGE> 50

COMMON STOCK

As of July 20, 1999, there were 1,430,663 shares of common stock
outstanding and held of record by 80 shareholders.

Each holder of common stock is entitled to one vote for each share held on
all matters submitted to a vote of shareholders. Holders of common stock are
entitled to such dividends as may be declared from time to time by the board out
of funds legally available therefore, subject to any contractual limitations.
Holders of common stock will participate as one class with respect to any
dividends declared and paid on the stock. There are no redemption, sinking fund,
conversion or preemptive rights with respect to the shares of common stock. The
holders of common stock will share ratably in all assets of the company
remaining after the payment of liabilities in the event of any dissolution,
liquidation, or winding up of the company. All presently issued and outstanding
shares of common stock are fully paid and nonassessable.

PREFERRED STOCK

The Articles of Incorporation authorize the Board of Directors, from time
to time and without any stockholder action or approval, to provide for the
issuance of up to 20,000,000 shares of preferred stock, in one or more series,
and to fix the relative rights and preferences of the shares, including voting
powers, dividend rights, liquidation preferences, redemption rights and
conversion privileges. As of the date hereof, the board has not provided for the
issuance of any series of preferred stock, and there are no agreements or
understandings for the issuance of any preferred stock. Because of its broad
discretion with respect to the creation and issuance of preferred stock without
stockholders approval, the board could adversely affect the voting power of the
holders of common stock and, by issuing shares of preferred stock with certain
voting, conversion and/or redemption rights, could discourage any attempt to
obtain control of us.

WARRANTS

Warrants for the purchase of 1,606,204 shares of common stock have been
issued and are outstanding. The exercise price per share of the warrants is
equal to (a) $4.46 or (b) $2.50 per share. For a more detailed discussion of
these warrants, see "Certain Transactions."

GEORGIA ANTI-TAKEOVER STATUTES

Georgia law restricts certain business combinations with "interested
shareholders" and contains fair price requirements applicable to certain mergers
with certain "interested shareholders" that are summarized below. The
restrictions imposed by these statutes will not apply to a corporation unless it
elects to be covered by these statutes. We have elected to be covered by these
restrictions.

Georgia law regulates business combinations such as mergers,
consolidations, share exchanges and asset purchases where the acquired business
has at least 100 shareholders residing in Georgia and has its principal office
in Georgia, and where the acquiror became an "interested shareholder" of the
corporation, unless either

- prior to such time, the board approves either the business combination or
the transaction by which such shareholder became an interested
shareholder,

- in the transaction that resulted in the shareholder becoming an
interested shareholder, the interested shareholder became the beneficial
owner of at least 90% of the outstanding voting stock of the company
which was not held by directors, officers, affiliates thereof,
subsidiaries or certain employee stock option plans of the company, or

- subsequent to becoming an interested shareholder, such shareholder
acquired additional shares resulting in such shareholder owning at least
90% of the outstanding voting stock of the company and the business
combination is approved by a majority of the disinterested shareholders'
shares not held by directors, officers, affiliates thereof, subsidiaries
or certain employee stock option plans of the company.

48
<PAGE> 51

Under the relevant provisions of Georgia law, a "business combination" is
defined to include, among other things,

- any merger, consolidation, share exchange or any sale, transfer or other
disposition (or series of related sales or transfers) of assets of the
company having an aggregate book value of 10% or more of the company's
net assets (measured as of the end of the most recent fiscal quarter),
with an interested shareholder of the company or any other corporation
which is or, after giving effect to such business combination, becomes an
affiliate of any such interested shareholder,

- the liquidation or dissolution of the company,

- the receipt by an interested shareholder of any benefit from any loan,
advance, guarantee, pledge, tax credit or other financial benefit from
the company, other than in the ordinary course of business, and

- certain other transactions involving the issuance or reclassification of
securities of the company which produce the result that 5% or more of the
total equity shares of the company, or of any class or series thereof, is
owned by an interested shareholder.

An "interested shareholder" is defined by Georgia law to include any person
or entity that, together with its affiliates, beneficially owns or has the right
to own 10% or more of the outstanding voting shares of the company, or any
person that is an affiliate of the company and has, at any time within the
preceding two-year period, been the beneficial owner of 10% or more of the
outstanding voting shares of the company. The restrictions on business
combinations shall not apply to any person who was an interested shareholder
before the adoption of the Bylaws which made the provisions applicable to the
company nor to any persons who subsequently become interested shareholders
inadvertently, subsequently divest sufficient shares so that the shareholder
ceases to be an interested shareholder and would not, at any time within the
five-year period immediately before a business combination involving the
shareholder, have been an interested shareholder but for the inadvertent
acquisition. The statute restricting business combinations is broad in its scope
and is designed to inhibit unfriendly acquisitions.

Georgia law prohibits certain business combinations between a Georgia
corporation and an "interested shareholder" unless:

- certain "fair price" criteria are satisfied,

- the business combination is unanimously approved by the continuing
directors,

- the business combination is recommended by at least two-thirds of the
continuing directors of the company and approved by a majority of the
votes entitled to be cast by holders of common stock, other than the
common stock beneficially owned by the interested shareholder who is a
party to the business combination, or

- the interested shareholder has been such for at least three years and has
not increased his ownership position in such three-year period by more
than one percent in any twelve-month period. For these purposes,
"business combination" generally includes any merger, asset-sale, share
exchange, or other transaction resulting in a financial benefit to an
interested shareholder, defined to mean a person who is the beneficial
owner of 10% or more of the common stock. The fair price statute is
designed to inhibit unfriendly acquisitions that do not satisfy the
specified "fair price" requirements.

ANTI-TAKEOVER EFFECTS

The foregoing provisions of the Articles and Bylaws and Georgia law could
discourage potential acquisition proposals and could delay or prevent a change
in control. These provisions are intended to enhance the continuity and
stability of the board and the policies formulated by the board and to
discourage certain types of transactions that may involve an actual or
threatened change in control. These provisions are also designed to reduce our
vulnerability to an unsolicited acquisition proposal and to discourage certain
tactics that may be used in proxy fights. Such provisions, however, may
discourage third parties from making tender offers for our shares. As a result,
the market price of the common stock may not benefit from any premium

49
<PAGE> 52

that might occur in anticipation of a potential or actual change in control.
Such provisions also may have the effect of preventing changes in our
management. The board is classified into three classes, consisting, as nearly as
practicable, of one-third of the total number of directors serving on the board,
which will total seven directors immediately upon the closing of the offering.
The members of each class will serve staggered one, two and three year terms
and, thereafter, for successive three year terms. This provision for directors'
terms could also discourage potential acquisition proposals and could delay or
prevent a change in control of the company.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is American Stock
Transfer Company.

SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for our common
stock. The market price of our common stock could drop due to sales of a large
number of shares of our common stock or the perception that such sales could
occur. These factors could also make it more difficult to raise funds through
future offerings of common stock.

After this offering, 5,850,473 shares of common stock will be outstanding,
5,954,273 shares if the underwriters exercise their over-allotment options and
6,155,673 shares of common stock will be issuable upon the exercise of
exercisable outstanding options. See "Capitalization." Of these shares, the
2,400,000 shares (2,503,800 shares if the underwriters exercise their
over-allotment options in full) sold in this offering will be freely tradeable
without restriction under the Securities Act except for any shares purchased by
"affiliates" of the company as defined in Rule 144 under the Securities Act. The
remaining 3,450,473 shares are "restricted securities" within the meaning of
Rule 144 under the Securities Act. The restricted securities generally 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
under the Securities Act.

Our officers and directors and our shareholders beneficially owning more
than 1% of our common stock and all selling shareholders in the over-allotment
option have entered into lock-up agreements pursuant to which they have agreed
not to offer or sell any shares of common stock for an initial period of 180
days after the date of this prospectus without the prior written consent of
Cruttenden Roth, on behalf of the underwriters. These individuals have also
agreed, pursuant to the lock-up agreements, for an additional period of 180 days
commencing on the last day of the lock-up period, not to offer or sell any
shares of their common stock unless they effect the transaction through
Cruttenden Roth. See "Underwriting." Also, Cruttenden Roth may, at any time and
without notice, waive these lock-up agreements specified in the underwriting
agreements on some shares. Following the initial lock-up period, these shares
will not be eligible for sale in the public market without registration under
the Securities Act unless such sales meet the conditions and restrictions of
Rule 144 as described below.

In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
shares for a period of at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then-outstanding shares of common stock and the average weekly trading
volume in the common stock during the four calendar weeks immediately preceding
the date on which the notice of such sale on Form 144 is filed with the SEC.
Sales under Rule 144 are also subject to certain provisions relating to notice
and manner of sale and the availability of current public information about the
company. In addition, a person (or persons whose shares are aggregated) who has
not been an affiliate of the company at any time during the 90 days immediately
preceding a sale, and who has beneficially owned the shares for at least two
years, would be entitled to sell such shares under Rule 144(k) without regard to
the volume limitation and other conditions described above. The foregoing
summary of Rule 144 is not intended to be a complete description.

50
<PAGE> 53

As soon as practicable following the consummation of this offering, we
intend to file a registration statement under the Securities Act to register the
shares of common stock available for issuance pursuant to its stock option plans
as of the date of this prospectus. See "Management -- Stock Plans." Shares
issued pursuant to these plans after the effective date of such registration
statement will be available for sale in the open market subject to the lock-up
period and, for our affiliates, subject to certain conditions and restrictions
of Rule 144.

51
<PAGE> 54

UNDERWRITING

Subject to the terms and conditions of our underwriting agreement, the
underwriters named below, for whom Cruttenden Roth Incorporated is acting as a
representative, have severally agreed to purchase from us, and we have agreed to
sell to the underwriters, the respective number of shares of common stock set
forth opposite each underwriter's name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Cruttenden Roth Incorporated................................
---------
Total.............................................
=========
</TABLE>

Our underwriting agreement provides that the obligations of the
underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in our business, the receipt of certificates,
opinions and letters from our counsel and independent public accountants. The
nature of the underwriters' obligation is such that they are committed to
purchase and pay for all the shares of common stock if any are purchased.

We have been advised by Cruttenden Roth that the underwriters propose to
offer the shares of common stock directly to the public on the terms set forth
on the cover page of this prospectus. The underwriters may allow selected
dealers a concession of not more than $ per share, and the underwriters may
allow, and such selected dealers may reallow, a concession of not more than
$ per share, to other dealers. After the initial public offering of the
shares, the public offering price and other selling terms may be changed by
Cruttenden Roth. No change in such terms shall change the amount of proceeds to
be received by us as set forth on the cover page of this prospectus.

We and selling shareholders have granted an option to the underwriters,
exercisable for a period of 45 days after the date of this prospectus, to
purchase up to an additional 360,000 shares of common stock at the same price
per share as the initial shares to be purchased by the underwriters to cover
overallotments, if any. To the extent that the underwriters exercise this
option, each of the underwriters will be committed, subject to certain
conditions, to purchase such additional shares of common stock in approximately
the same proportion as set forth in the above table.

Cruttenden Roth has advised us that they do not expect any sales of the
shares of common stock offered hereby to be made to discretionary accounts
controlled by the underwriters.

We have agreed to pay Cruttenden Roth a nonaccountable expense allowance
equal to 1% of the aggregate price of the shares of common stock offered hereby
(including with respect to shares of common stock underlying the overallotment
option, if and to the extent it is exercised) set forth on the front cover of
this prospectus. Cruttenden Roth will bear its expenses in excess of the
nonaccountable expense allowance, including legal expenses.

We have agreed to issue to Cruttenden Roth at the closing of the offering
warrants to purchase up to 108,000 shares of common stock at an exercise price
per share equal to 120% of the initial per share public offering price.
Cruttenden Roth's warrants are exercisable for a period of three years beginning
two years from the date of this prospectus.

The holders of Cruttenden Roth's warrants will have no voting, dividend or
other shareholder rights until the warrants are exercised. The terms of the
warrants were established as the result of negotiations between Cruttenden Roth
and us. If the warrants are exercised, Cruttenden Roth realizes additional
compensation. By their terms, the warrants will be restricted from sale,
transfer, assignment or hypothecation, except to persons that are officers of
Cruttenden Roth. The number of shares covered by the warrants and the exercise
price are

52
<PAGE> 55

subject to adjustment to prevent dilution. In addition, we have granted certain
rights to the holders of the warrants to register the warrants and the common
stock underlying the warrants under the Securities Act.

Total compensation to Cruttenden Roth and the underwriters is as follows:

- Commissions -- $ per share of common stock sold;

- Nonaccountable expense allowance -- $ per share of common stock
sold; and

- Warrants to purchase up to 108,000 shares of common stock at 120% of
the per share offering price.

Our directors and officers and our shareholders beneficially owning more
than 1% of our common stock and all selling shareholders in the over-allotment
option have entered into lock-up agreements with Cruttenden Roth which provide
that they will not offer, sell or otherwise dispose of any common stock for an
initial period of 180 days after the date of this prospectus without the prior
written consent of Cruttenden Roth, on behalf of the underwriters. These
individuals have also agreed, pursuant to the lock-up agreements, for an
additional period of 180 days commencing on the last day of the initial lock-up
period, not to offer or sell their common stock unless they effect the
transaction through Cruttenden Roth. Cruttenden Roth may charge usual and
customary fees and commissions for these transactions. Cruttenden Roth has no
present intention to release the locked-up shares prior to expiration of the
initial lock-up period although Cruttenden Roth may release the locked-up shares
prior to expiration of such period. The granting of any release would be
conditioned, in the judgment of Cruttenden Roth, on such sale not materially
adversely impacting the prevailing trading market for the common stock on the
Nasdaq National Market. Specifically, factors such as average trading volume,
recent price trends, and the need for additional public float in the market for
the common stock would be considered in evaluating such a request.

Prior to the offering, there has been no established trading market for the
common stock. Consequently, the initial public offering price for the common
stock offered hereby has been determined by negotiations between Cruttenden Roth
and us. Among the factors considered in such negotiations were the preliminary
demand for the common stock, the prevailing market and economic conditions, our
results of operations, estimates of our business potential and prospects, the
present state of our business operations, an assessment of our management, the
consideration of these factors in relation to the market valuation of comparable
companies in related businesses, the current condition of the markets in which
we operate, and other factors deemed relevant. There can be no assurance that an
active trading market will develop for the common stock or that the common stock
will trade in the public market after the offering at or above the initial
public offering price.

Cruttenden Roth has advised us that, pursuant to Regulation M under the
Securities Act, some persons participating in the offering may engage in
transactions, including stabilizing bids, syndicate covering transactions or the
imposition of penalty bids, that may have the effect of stabilizing or
maintaining the market price of the shares of common stock at a level above that
which might otherwise prevail in the open market. A "stabilizing bid" is a bid
for or the purchase of shares of common stock on behalf of the underwriters for
the purpose of fixing or maintaining the price of the common stock. A "syndicate
covering transaction" is the bid for or purchase of common stock on behalf of
the underwriters to reduce a short position incurred by the underwriters in
connection with the offering. A "penalty bid" is an arrangement permitting
Cruttenden Roth to reclaim the selling concession otherwise accruing to an
underwriter or syndicate member in connection with the offering if the common
stock originally sold by such underwriter or syndicate member purchased by the
representatives in a syndicate covering transaction and has therefore not been
effectively placed by such underwriter or syndicate member. Cruttenden Roth has
advised us that such transactions may be effected on the Nasdaq National Market
or otherwise and, if commenced, may be discontinued at any time.

The underwriting agreement provides that we will indemnify the underwriters and
their controlling persons against liabilities under the Securities Act or will
contribute to payments the underwriters and their controlling persons may be
required to make in respect thereof.

53
<PAGE> 56

LEGAL MATTERS

Certain legal matters in connection with the sale of the shares of common
stock offered in this offering will be passed upon for us by King & Spalding,
Atlanta, Georgia. Certain legal matters in connection with the offering will be
passed upon for the underwriters by Nelson Mullins Riley & Scarborough, L.L.P.,
Atlanta, Georgia. A partner in the law firm of King & Spalding owns 33,600
shares of our common stock on the date of this prospectus and intends to sell
all of these shares if the underwriters exercise their over-allotment option in
full.

EXPERTS

The financial statements for The Plastic Surgery Company, formerly known as
Better Image, Inc., as of December 31, 1997 and 1998 and for the period from
inception (April 30, 1997) to December 31, 1997 and for the year ended December
31, 1998 included in this prospectus and elsewhere in the registration statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.

ADDITIONAL INFORMATION

We have filed with the Commission a registration statement on Form S-1
under the Securities Act with respect to the common stock offered hereby. This
prospectus, which constitutes a part of the registration statement, does not
contain all of the information set forth in the registration statement.
Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete. In each such instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the registration statement. Prospective investors may read and copy
the registration statement and its exhibits and schedules without charge at the
Public Reference Room maintained by the Commission at 450 5th Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices in Chicago,
Illinois and New York, New York. Prospective investors may obtain information on
the operation of the Public Reference Rooms by calling the Commission at
1-800-SEC-0330. In addition, we are required to file electronic versions of
these documents with the Commission through Commission's Electronic Data
Gathering, Analysis, and Retrieval (EDGAR) system. The Commission maintains a
World Wide Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. Also, we have applied for the common stock
to be listed for trading on the Nasdaq National Market. Reports and other
information concerning us also may be inspected at the offices of the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006.

We intend to furnish our shareholders with annual reports containing
financial statements audited by our independent public accountants. We also
intend to furnish our shareholders with quarterly reports containing unaudited
financial statements for the first three fiscal quarters of each fiscal year.

54
<PAGE> 57

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
The Plastic Surgery Company
Report of Independent Public Accountants.................. F-2
Balance Sheets at December 31, 1997 and 1998 and June 30,
1999 (Unaudited)....................................... F-3
Statements of Operations for the Period from Inception
(April 30, 1997) to December 31, 1997, for the Year
Ended December 31, 1998, For the Period from Inception
(April 30, 1997) to December 31, 1998 and for the Six
Months Ended June 30, 1998 and 1999 (Unaudited)........ F-4
Statements of Shareholders' Deficit For the Period From
Inception (April 30, 1997) to December 31, 1997, for
the Year Ended December 31, 1998 and for the Six Months
Ended June 30, 1999 (Unaudited)........................ F-5
Statements of Cash Flows For the Period From Inception
(April 30, 1997) to December 31, 1997, for the Year
Ended December 31, 1998, For the Period from Inception
(April 30, 1997) to December 31, 1998 and for the Six
Months Ended June 30, 1998 and 1999 (Unaudited)........ F-6
Notes to Financial Statements............................. F-7
Unaudited Pro Forma Balance Sheet
Unaudited Pro Forma Combined Balance Sheet at June 30,
1999................................................... F-20
Notes to Unaudited Pro Forma Balance Sheet................ F-22
</TABLE>

F-1
<PAGE> 58

After the stock split as discussed in Note 8 to the financial statements of The
Plastic Surgery Company is approved by the board of directors, we expect to be
in a position to render the following audit report.

ARTHUR ANDERSEN LLP

Atlanta, Georgia
May 13, 1999

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Plastic Surgery Company:

We have audited the accompanying balance sheets of The Plastic Surgery
Company (a development stage enterprise, a Georgia corporation and formerly
known as Better Image, Inc.) as of December 31, 1997 and 1998 and the related
statements of operations, shareholders' deficit, and cash flows for the period
from inception (April 30, 1997) to December 31, 1997 and for the year ended
December 31, 1998. 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 Plastic Surgery Company
as of December 31, 1997 and 1998 and the results of its operations and its cash
flows for the period from inception (April 30, 1997) to December 31, 1997 and
for the year ended December 31, 1998 in conformity with generally accepted
accounting principles.

F-2
<PAGE> 59

THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------- JUNE 30,
1997 1998 1999
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................. $ 184,151 $ 402,860 $ 91,179
EQUIPMENT, at cost...................................... 19,724 45,760 48,087
Less accumulated depreciation......................... (1,973) (8,521) (13,155)
----------- ----------- -----------
Equipment, net..................................... 17,751 37,239 34,932
----------- ----------- -----------
INTANGIBLE ASSETS....................................... -- -- 3,500,580
Less accumulated amortization......................... -- -- (14,586)
----------- ----------- -----------
Intangible assets, net............................. -- -- 3,485,994
----------- ----------- -----------
Total assets.................................. $ 201,902 $ 440,099 $ 3,612,105
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable...................................... $ 56,486 $ 571,142 $ 946,130
Accrued employee and consultant compensation.......... 303,895 1,179,812 1,514,462
----------- ----------- -----------
Total current liabilities..................... 360,381 1,750,954 2,460,592
----------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT):
Common stock; no par value; 100,000,000 shares
authorized, 918,400, 1,059,856 and 1,430,663 shares
issued and outstanding at December 31, 1997 and
1998 and June 30, 1999............................. -- -- --
Paid-in capital....................................... 1,471,440 3,521,940 (2,437,160)
Warrants.............................................. 250,000 250,000 11,363,095
Deficit accumulated during the development stage...... (1,879,919) (5,082,795) (7,774,422)
----------- ----------- -----------
Total shareholders' equity (deficit).......... (158,479) (1,310,855) 1,151,513
----------- ----------- -----------
Total liabilities and shareholders' equity
(deficit)................................... $ 201,902 $ 440,099 $ 3,612,105
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE> 60

THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these statements.

F-4
<PAGE> 61

THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED TOTAL
COMMON STOCK DURING SHAREHOLDERS'
------------------ PAID-IN DEVELOPMENT EQUITY
SHARES AMOUNT CAPITAL STAGE WARRANTS (DEFICIT)
--------- ------ ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT APRIL 30, 1997 -- $ -- $ -- $ -- $ -- $ --
Common stock issued to
founders and employees..... 806,400 -- 721,440 -- -- 721,440
Common stock issued to
investors.................. 112,000 -- 500,000 -- -- 500,000
Common stock sold to
consultant from
shareholder................ -- -- 250,000 -- -- 250,000
Warrants granted to
consultant................. -- -- -- -- 250,000 250,000
Net loss..................... -- -- -- (1,879,919) -- (1,879,919)
--------- ---- ----------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1997... 918,400 -- 1,471,440 (1,879,919) 250,000 (158,479)
Common stock issued to
investors.................. 141,456 -- 1,263,000 -- -- 1,263,000
Common stock sold to
consultants and employees
from shareholder........... -- -- 787,500 -- -- 787,500
Net loss..................... -- -- -- (3,202,876) -- (3,202,876)
--------- ---- ----------- ----------- ----------- -----------
BALANCE AT DECEMBER 31, 1998... 1,059,856 -- 3,521,940 (5,082,795) 250,000 (1,310,855)
Common stock issued to
investors (unaudited)...... 26,544 -- 237,000 -- -- 237,000
Warrants issued to employees
and consultants
(unaudited)................ -- -- -- -- 1,148,112 1,148,112
Warrants issued to
shareholders (unaudited)... -- -- (9,269,880) -- 9,964,983 695,103
Stock issued to ISIS
(unaudited)................ 344,263 -- 3,073,780 -- -- 3,073,780
Net loss (unaudited)......... -- -- -- (2,691,627) -- (2,691,627)
--------- ---- ----------- ----------- ----------- -----------
BALANCE AT JUNE 30, 1999
(unaudited).................. 1,430,663 $ -- $(2,437,160) $(7,774,422) $11,363,095 $ 1,151,513
========= ==== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE> 62

THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
FROM INCEPTION FOR THE FROM INCEPTION FOR THE SIX FOR THE SIX
(APRIL 30, 1997) YEAR ENDED (APRIL 30, 1997) MONTHS ENDED MONTHS ENDED
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31, JUNE 30, JUNE 30,
1997 1998 1998 1998 1999
---------------- ------------ ---------------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss....................... $(1,879,919) $(3,202,876) $(5,082,795) $(835,671) $(2,691,627)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and
amortization............... 1,973 6,548 8,521 2,200 19,220
Expense related to
warrants................... 250,000 -- 250,000 -- --
Expense related to stock and
warrant issuances to
founders and employees..... 720,000 -- 720,000 -- 1,148,112
Expense related to stock sold
to employees and
consultants by
shareholder................ 250,000 787,500 1,037,500 -- --
Changes in assets and
liabilities:
Accounts payable........... 56,486 514,656 571,142 45,443 374,988
Accrued employee and
consultant
compensation............ 303,895 875,917 1,179,812 345,920 299,100
----------- ----------- ----------- --------- -----------
Total adjustments....... 1,582,354 2,184,621 3,766,975 393,563 1,841,420
----------- ----------- ----------- --------- -----------
Net cash used in
operating
activities............ (297,565) (1,018,255) (1,315,820) (442,108) (850,207)
----------- ----------- ----------- --------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equipment.......... (19,724) (26,036) (45,760) (3,834) (2,327)
----------- ----------- ----------- --------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Warrants issued to investors -- -- -- -- 303,853
Common stock issued to
founders..................... 1,440 -- 1,440 -- --
Common stock issued to
investors.................... 500,000 1,263,000 1,763,000 413,000 237,000
----------- ----------- ----------- --------- -----------
Net cash provided by
financing
activities............ 501,440 1,263,000 1,764,440 413,000 540,853
----------- ----------- ----------- --------- -----------
NET CHANGE IN CASH AND CASH
EQUIVALENTS.................... 184,151 218,709 402,860 (32,942) (311,681)
CASH AND CASH EQUIVALENTS,
beginning of period............ -- 184,151 -- 184,151 402,860
----------- ----------- ----------- --------- -----------
CASH AND CASH EQUIVALENTS, end of
period......................... $ 184,151 $ 402,860 $ 402,860 $ 151,209 $ 91,179
=========== =========== =========== ========= ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE> 63

THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1998

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

1. BUSINESS AND ORGANIZATION

The Plastic Surgery Company (formerly known as Better Image, Inc.)(the
"Company") was incorporated as a Georgia corporation on April 30, 1997. Upon the
closing of an initial public offering (the "Offering"), the Company will provide
business development services and Internet solutions to plastic surgery
practices.

Upon the closing of the Offering, the Company will effect the transfer (the
"Transfer"), of certain operating assets and certain liabilities of, or the
stock of an entity holding certain assets and certain liabilities of, plastic
surgery practice entities (the "Founding Practices"). The Company will enter
into long-term business services agreements with these Founding Practices. The
Company will account for certain of the Founding Practices acquired in the
Transfers under Staff Accounting Bulletin No. 48, "Transfers of Nonmonetary
Assets by Promoters and Shareholders" ("SAB 48"). The shareholders of these
Founding Practices are considered promoters. The Company will account for the
remaining Founding Practices acquired in the Transfers at fair value which will
result in intangible assets being recorded. The Company will amortize these
intangible assets over periods ranging from 10 to 15 years. (See Note
2 -- Intangible Assets.)

The Company has had no significant operations to date, and the financial
statements have been prepared on the basis that the Transfers will occur,
although no assurance can be made that the Transfers will be completed or that
the Company will be successful in completing planned future acquisitions. In
order to expand in the future, the Company will need further acquisition
financing in the form of debt or equity financing. There can be no assurance
that such financing will be available.

In the Transfers, the Company will acquire certain operating assets or the
stock of entities holding certain operating assets of the Founding Practices in
exchange for cash, notes and shares of common stock and will enter into
long-term business services agreements with each practice. The Company is unable
to hold certain assets of the practices under applicable state law. These assets
will not be acquired by the Company. Each Founding Practice transaction was
individually negotiated between the Company and the Founding Practice as to all
material terms. For the Transfers accounted for under SAB 48, the Founding
Practice will receive up to a maximum of 25% of the total consideration for each
transaction in cash and the balance in shares of common stock. For the Transfers
not accounted for under SAB 48, the Founding Practice will receive 50% in cash,
30% in notes and the balance in shares of common stock. The actual number of
shares of common stock to be issued by the Company in the Transfers shall be
determined subtracting the cash and note portions from the total consideration
and dividing such remaining amount by the initial public offering price. The
Transfers accounted for under SAB 48 will result in the assets and liabilities
of the Founding Practices being recorded at their historical costs. For the
Transfers not accounted for under SAB 48, the Company will record the Transfers
as asset acquisitions and will record intangible assets that will be amortized
over periods ranging from 10 to 15 years. (See Note 2 -- Intangible Assets.) The
assets to be transferred include receivables, supplies inventory, prepaid
expenses, net equipment and certain other current and non-current assets. The
liabilities to be transferred include long-term debt. The cash paid to the
Founding Practices accounted for under SAB 48 will be recorded as a dividend by
the Company.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenue from managing the practices pursuant to the business services
agreements will be recognized on a monthly basis as cash is collected by the
practice. The revenue of the Company will consist of the sum of the service fees
and amounts equal to the operating expenses of the practice assumed by the
Company under such

F-7
<PAGE> 64
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

business services agreements. See Note 5 "Operating Expenses of the Founding
Practices" for a discussion of those expenses that will be the responsibility of
the Company and included as a component of the Company's revenue. In general,
the business services agreements provide for the payment of fees to the Company
based on a percentage of the net cash collected by the Founding Practices.
Expenses not required to be paid by the Company pursuant to the agreements
primarily consist of professional expenses of the surgeons.

The Emerging Issues Task Force of the Financial Accounting Standards Board
issued its consensus Opinion 97-2 ("EITF 97-2"), which addresses certain
specific matters pertaining to the practice management industry. EITF 97-2 will
be effective for the Company upon the Offering. EITF 97-2 addresses the ability
of certain practice management companies to consolidate the results of certain
practices with which it has an existing contractual relationship. The Company
currently will not consolidate the operations of the plastic surgery practices
that it manages as the agreements with the practices do not meet the
requirements for consolidation as set forth in EITF 97-2.

After the closing of the Offering, the Company also intends to enter into
management services agreements with select plastic surgery practices rather than
business services agreements. Pursuant to the management services agreements, we
will provide business development services and Internet solutions and receive
service fees. The Company will recognize revenues from these agreements based on
a percentage of the net cash collected by the practice. The Company will not
acquire operating assets of the practices entering into management services
agreements, and will not assume the operating expenses of these practices.

The Company will enter into subscription agreements with subscribing
surgeons which will allow these surgeons to be included in the directory of
Board certified or Board eligible cosmetic surgeons on the Company's consumer
website. Subscribing surgeons will pay the Company a fee for the directory
listing which will be recognized as revenue as it is earned.

The Company anticipates generating future revenues from the sale of
products and services through the Company's proprietary websites. The revenue
generated may include fees from banner and sponsorship advertising,
subscriptions to our online magazine and video imaging.

CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments purchased within 90
days or less of maturity. They are recorded at cost which approximates fair
value.

EQUIPMENT

Equipment is stated at cost less accumulated depreciation. Depreciation is
provided using the straight-line method over the assets' estimated useful lives
of five to seven years.

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1997 1998 1999
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Equipment consisted of the following:
Computer equipment....................................... $14,275 $21,914 $ 24,241
Furniture and fixtures................................... 5,449 23,846 23,846
------- ------- --------
19,724 45,760 48,087
Less accumulated depreciation......................... (1,973) (8,521) (13,155)
------- ------- --------
$17,751 $37,239 $ 34,932
======= ======= ========
</TABLE>

F-8
<PAGE> 65
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of cash and accounts payable approximate their fair
values principally because of the short-term maturities of these instruments.

USE OF ESTIMATES

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

STOCK OPTIONS AND WARRANTS

The Company accounts for the issuance of options and warrants to employees
in accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB No. 25"). Options and warrants issued to
employees at an exercise price at or above fair value at the date of grant would
require no compensation expense to be recorded under APB No. 25. Options and
warrants issued to non-employees are accounted for under Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS
No. 123"). Options and warrants issued to non-employees will require
compensation expense to be recorded for the fair value of the equity instrument
issued less any consideration received.

BASIC AND DILUTED NET LOSS PER SHARE

Basic and diluted net loss per share was computed in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share", using
the weighted average number of common shares outstanding. Diluted net loss per
share does not include the impact of common stock equivalents for options and
warrants of 56,000, 106,400, 56,000 and 106,400 for the period from inception
(April 30, 1997) to December 31, 1997, for the year ended December 31, 1998 and
for the six months ended June 30, 1998 and 1999, respectively, as their effect
would be anti-dilutive.

ACCRUED EXPENSES

During 1998, the Company decided to move its corporate headquarters from
Atlanta, Georgia to Santa Barbara, California. In connection with this decision,
the Company accrued approximately $138,000 in 1998 related to contractual lease
agreements that will not benefit future periods.

COMPREHENSIVE LOSS

Comprehensive loss for the period from Inception (April 30, 1997) to
December 31, 1997, for the year ended December 1998 and for the six months ended
June 30, 1998 and 1999 is the same as net loss presented in the accompanying
statements of operations.

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. For those
acquired practices, the business services agreements have a term of 25 years.
The Company amortizes the intangible assets over the shorter of their estimated
useful lives, the

F-9
<PAGE> 66
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

term of the business services agreement, or a shorter period taking into
consideration various qualitative factors. These factors take into consideration
the probability that a practice will be able to extend its existence
indefinitely and thus enable the Company to recover through profitable
operations, the carrying value of the intangible assets. These factors include
the following:

- The strength of the local market as evidenced by such factors as location
in the country, market demographics, and the number of plastic surgery
procedures performed in the market.

- Market recognition of the practice name.

- The existence of business services agreements with other practices in the
same market that could provide continuity of the practice, if necessary.

- The number of physicians in the practices.

Based upon the above factors, the Company is amortizing intangible assets
over periods ranging from 10 to 15 years.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews the carrying value of its long-lived assets and
goodwill at least quarterly on a practice by practice basis to determine if
facts and circumstances exist which would suggest that assets might 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 practices' market
position, reputation, profitability geographic penetration, the relationship
with the physicians and any changes in the legal or regulatory environment. If
facts and circumstances are present which may indicate impairment is probable,
the Company will prepare a projection of the undiscounted cash flows of the
specific practice and determine if the long-lived assets and/or goodwill are
recoverable based on these undiscounted cash flows. If impairment is indicated,
then an adjustment will be made to reduce the carrying amount of these assets to
their estimated fair value.

INTERIM UNAUDITED FINANCIAL INFORMATION

The financial statements as of June 30, 1999 and for the six months ended
June 30, 1998 and 1999 are unaudited; however, in the opinion of management, all
adjustments (consisting solely of normal recurring adjustments) necessary for a
fair presentation of the unaudited financial statements for these interim
periods have been included. The results of interim periods are not necessarily
indicative of the results to be obtained for a full year.

NEW ACCOUNTING PRONOUNCEMENT

In June of 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. SFAS No.
133 is effective for the Company beginning with fiscal 2000. Management does not
expect the adoption of SFAS No. 133 to have a significant impact on the
financial position or results of operations of the Company.

F-10
<PAGE> 67
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

3. SHAREHOLDERS' DEFICIT

The Company was incorporated in the State of Georgia on April 30, 1997.
Shortly after the date of incorporation, 806,400 shares of common stock were
issued to the founders and certain employees for $.001 per share. The Company
recorded $720,000 in expense on these shares based on a fair value of
approximately $0.89 per share as determined by management.

In May 1997, the Company began selling 112,000 shares of common stock to
affiliates of anticipated Founding Practices and other unrelated investors
through a private placement memorandum ("PPM") at a price of approximately $4.46
per share. As of December 31, 1997, all 112,000 shares were issued under the PPM
for net proceeds of $500,000.

In December 1997, a principal stockholder of the Company sold 56,000 shares
of his common stock to a consultant of the Company for $.004 per share. The
Company recorded expense of $250,000 on these shares in 1997 based on a fair
value of approximately $4.46 per share as determined by management.

In March 1998, the Company began selling 168,000 shares of common stock to
affiliates of anticipated Founding Practices and other unrelated investors
through a second private placement memorandum ("PPM2") at a price of
approximately $8.93 per share. As of December 31, 1998, 141,456 shares were
issued under the PPM2 for net proceeds of $1,263,000.

In November 1998, a principal stockholder of the Company sold 88,200 shares
of his common stock to certain employees and consultants of the Company for
approximately $.004 per share. The Company recorded expense of $787,500 on these
shares in 1998 based on a fair value of approximately $8.93 per share as
determined by management.

In January and February of 1999, the Company sold the remaining 26,544
shares of common stock under PPM2 for net proceeds of $237,000 at a price of
approximately $8.93 per share.

4. INCOME TAXES

As reflected in the accompanying statements of operations, the Company
incurred a loss from operations during the period from inception (April 30,
1997) to December 31, 1997, for the year ended December 31, 1998 and for the six
months ended June 30, 1999. Due to the limited operations of the Company since
its inception and the pending offering, a valuation allowance has been recorded
to fully reserve for the deferred tax benefits. The components of the deferred
tax assets as of December 31, 1997 and 1998 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------
<S> <C> <C>
Net operating loss carryforwards............................ $ 579,814 $ 646,368
Accrued liabilities and organizational expenses............. 133,213 569,691
--------- -----------
Total deferred tax assets......................... 713,027 1,216,059
Valuation allowance............................... (713,027) (1,216,059)
--------- -----------
Net deferred tax assets................. $ -- $ --
========= ===========
</TABLE>

The net operating loss carryforwards begin expiring in 2012. A valuation
allowance has been provided on the deferred tax assets as management believes
that it is more likely than not that future operations, due to the limited
operating history of the Company, will not result in realization of the net
operating loss carryforwards or deferred tax assets. The Company will record the
benefits from the deferred tax assets when it is more likely

F-11
<PAGE> 68
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

than not that these assets will be realized. There are no significant
differences in the tax and book bases of the Company's assets or liabilities
that would give rise to deferred tax balances.

5. TRANSACTIONS WITH FOUNDING PRACTICES

As discussed in Note 1, the Company plans to complete, through a series of
stock acquisitions and mergers and asset transfers, the acquisition of certain
assets and assumption of certain liabilities of the Founding Practices
concurrently with an initial public offering of shares of its common stock.

The Founding Practices will enter into 20 or 25 year business service
agreements with the Company. Additionally, the surgeons at the Founding
Practices will enter into employment agreements including noncompete provisions
with the Founding Practices.

AGREEMENTS WITH FOUNDING PRACTICES

As part of the business services arrangements, each Founding Practice has
entered into three agreements: (i) an acquisition agreement pursuant to which
the Company purchases certain operating assets of each practice; (ii) a business
services agreement whereby the Company agrees to provide management or
consulting services to the practice; and (iii) an employment agreement between
the practice and each surgeon who is an equity holder in the practice or who
provides services through such practice on an average of more than ten days each
month. To the extent we enter into these agreements in future acquisitions, the
terms may differ materially from the terms described below.

Acquisition Agreements. The Founding Practices and the surgeons have
entered into an acquisition agreements with the Company which may be in the form
of (i) an asset purchase and sale agreement; (ii) a stock purchase and sale
agreement; or (iii) an agreement and plan of reorganization whereby the practice
merges with the Company (individually an "acquisition agreement" or collectively
"acquisition agreements"). Based on applicable state laws and regulations, the
operating assets of each practice, which include equipment, inventory, accounts
receivable, furniture and other personal property, or some combination thereof
will be transferred to the Company pursuant to the acquisition agreements. As
consideration for entering into an acquisition agreement, the Company will pay
consideration consisting of a combination of common stock, notes and cash.

Business Services Agreements. Each Founding Practice will enter into a
business services agreement, in the form of a service agreement or consulting
agreement as dictated by state law. Each service agreement generally requires
that the Company provide the following services for the practices: acquisition
and maintenance of specified furnishings and equipment; provision of suitable
offices and facilities; payroll processing; employment of necessary personnel
(excluding plastic surgeons and certain medical personnel); development of
business systems procedures and forms; procurement and inventory management;
assistance in acquiring malpractice insurance; cash management; advertising,
marketing and practice development; development of appropriate business systems;
supervision, management and organization of files and records; and financial
reporting and analysis. Any leases entered into by the Company on behalf of the
practice will be subleased by the practice from the Company. Under the service
agreements, the Company will receive a service fee of 15% of net cash collected.
If required by applicable state law or regulations, a practice may enter into
consulting agreements that contain certain of the same provisions as the
business services agreement, including: (i) provisions relating to the
obligation to loan funds to the practice in the event the practice is unable to
pay its current expenses, (ii) repurchase of assets and assumption of
liabilities by the practice upon expiration or termination, (iii) assignment,
(iv) covenant not to compete, (v) term and termination, and (vi)
indemnification. Under consulting agreements, the Company will provide the
following services to

F-12
<PAGE> 69
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

practices in exchange for a fixed dollar annual fee with annual fixed percentage
increase: consulting with respect to equipment and office needs; preparing
staffing models appropriate for the practice; advising and training with respect
to business systems; purchasing and maintaining inventory; advising with respect
to and providing or arranging accounting and bookkeeping services; assisting
with the acquisition of malpractice insurance; advising with respect to
developing a marketing plan; assessing the financial feasibility of establishing
new offices; providing billing and collection services; and assisting the
practices in organizing and developing filing and recording systems. Pursuant to
these business services agreements, the Company must pay the operating expenses
of a practice. To the extent a practice's operating expenses exceed revenues,
the practice will be responsible for the difference.

The business services agreements have either 20 or 25 year terms for the
Founding Practices, beginning on the date of the Offering. The Company
anticipates executing business services agreements with 25 year terms for each
practice acquired subsequent to the Offering. The business services agreements
are subject to termination by either party in the event the non-terminating
party becomes subject to voluntary or involuntary bankruptcy proceedings or
materially breaches the agreement, subject to a cure period. The practices may
also terminate the business services agreements if the Company is subject to a
change of control. Upon the termination of the business services agreements
(except upon a breach by the Company), the practice and its shareholders are
subject to a two year covenant not to compete which prohibits the following
within a specified territory the following: (i) advertising in print and
electronic media (ii) soliciting patients, surgeons or staff associated with the
practice and (iii) soliciting any referrals from any physician who referred one
or more patients to the practice within three years prior to the date of such
termination.

Under the business services agreements, the surgeons maintain full control
over and ownership of the practices, determine which personnel will be
affiliated with the practices and establish their own practice standards to
promote quality plastic surgery care. The Company does not engage in the
practice of medicine. Each surgeon is responsible for the compliance of his or
her practice with state and local regulations, licensing, and certification
requirements applicable to the practice of plastic surgery. Each practice, in
its sole discretion, determines the fees to be charged for services provided to
patients based upon market conditions in the service area and other factors
deemed appropriate by the practice.

Employment Agreements. Each surgeon who is an equity holder in a practice
or who provides plastic surgery services through a practice an average of more
than ten days a month either at the time of execution of the business services
agreement or any time thereafter is required to execute an employment agreement
with the practice. Each employment agreement generally provides that the surgeon
will perform professional services for the practice for a period of five years,
commencing on the date of the Offering, with automatic renewal for additional
one year terms. After the expiration of the initial five year term, either the
practice or the surgeon may terminate the employment agreement at any time
without cause by giving ninety days prior written notice. Each surgeon's
compensation will be a percentage of net cash collected by the practice after
the payment of the service fee and all operating expenses of the practice, with
such percentage to be determined by the practice. The surgeon agrees that upon
termination or expiration of the employment agreement, he or she will not
compete for a period of two years in the market in which the practice operates
an office, will not solicit former patients of the practice, will not solicit
referrals from any physician who referred one or more patients to the surgeon or
the practice within the two years prior to the termination, and will limit the
methods of advertising in the area in which a practice is located.

F-13
<PAGE> 70
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

CALCULATION OF SERVICES FEES

Under the services agreements, the Company will recognize revenue in
amounts equal to the assumed expenses plus service fees of 15% of the net cash
collected by the practice. In the future, the Company may recognize revenues in
amounts equal to the assumed expenses plus a fixed dollar amount with annual
fixed percentage increases. Net cash collected is defined as revenue resulting
from fees and charges for each month earned and collected by and on behalf of
the practice as a result of professional services provided by the practice's
surgeons and those under the surgeons' supervision and other fees or income
generated by the practice, less any adjustments for refunds or other items that
do not generate a fee.

OPERATING EXPENSES OF THE FOUNDING PRACTICES

Subsequent to the Transfers, the Company will be responsible for the
payment of certain operating expenses incurred by the practice to the extent
permitted by applicable law. These expenses include the following:

- Salaries, benefits, payroll taxes, workers compensation, health insurance
and other benefit plans, and other direct expenses of non-medical
employees of the Company at each practice office,

- Direct costs of all employees or consultants that provide services to
each practice office

- Medical and office supplies

- Lease or rent payments, utilities, telephone and maintenance expenses for
practice facilities

- Property taxes on the Company assets located at practice offices

- Property, casualty and liability insurance premiums, excluding
malpractice insurance which will be the responsibility of the practice

- Surgeon recruiting expenses

- Advertising and other expenses attributable to the promotion of practice
offices

All of the above expenses will be assumed by the Company and be paid
directly to the third-party provider of the goods or services. These operating
expenses will be paid out of individual practice cash accounts that are
controlled by the Company. In exchange for assuming these expenses and providing
management services, the Company will record revenue in amounts equal to the
assumed expenses plus the management fee described above.

The Founding Practices will retain responsibility for the payment of any
and all direct employment expenses, including benefits, for any surgeon or other
employee that the Company is prohibited from employing by applicable state law.
In addition, the Founding Practices will retain responsibility for the payment
of expenses for continuing education, seminars, professional licenses,
professional membership dues and malpractice insurance and all other expenses of
any surgeon. These expenses will remain the responsibility of the Founding
Practices and will not be included in reimbursed operating expenses, which is a
component of the Company's revenue. See Note 2 "Revenue Recognition" for further
discussion of the revenue of the Company.

Each business services agreement obligates the Company, with no limitation,
to pay the operating expenses of a practice. To the extent a practice's
operating expenses exceed its revenues, the practice will be responsible for the
difference. The Company will record the difference (excess operating expenses)
as a

F-14
<PAGE> 71
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

receivable from the practice bearing interest at the prime rate as published in
The Wall Street Journal plus one percent. Any receivable created will be repaid
as an operating expense. This receivable will be repaid after the payment of the
service fee and before the surgeon receives any compensation. There is no
defined payment date related to this receivable. The Company will fund the
excess operating expenses from working capital or borrowings under a credit
facility, which the Company anticipates establishing following the closing of
the Offering.

FINANCING PLANS

Third party financing companies will provide online financing for patients
of the Company's allied practices and will be responsible for the approval and
application process. These companies will assume all of the risks related to
financing. The practice will receive a payment from these companies equal to 85%
to 90% of the financed amount. These companies will not have any recourse
against the individual practices or the Company for any unpaid balances.
Application and approval procedures will be instituted by these companies and
terms of payment will vary upon the creditworthiness of the patient. The billing
of patients is the responsibility of the Company employees located at the
practice.

6. COMMITMENTS AND CONTINGENCIES

The Company will be subject to certain government regulations at the
federal and state levels. In compliance with certain regulatory requirements,
the Company will not control the practice of medicine. The business services
agreements may be challenged by certain states as to their legality. There also
can be no assurance that the laws and regulations of states in which the Company
will maintain operations will not change or be interpreted in the future to
restrict the Company's relationships with the Founding Practices.

Each surgeon may be exposed to professional liability and other claims by
providing plastic surgery procedures to the public. Each Founding Practice is
required to maintain general liability and malpractice insurance. As a result of
providing business services, the Company may be named as a co-defendant in
lawsuits against surgeons affiliated with the Founding Practices. The Company
does not control the practice of plastic surgery and cannot purchase malpractice
insurance. The Company does not control the compliance of the surgeons with
regulations or other requirements relating to the practice of medicine.
Successful claims could result in large damage awards that could exceed
insurance limits. Insurance coverage can be very expensive and vary from state
to state. The practices indemnify the Company for liability arising from
malpractice claims but any indemnification might reduce a practice's ability to
pay its expenses. Successful claims may have a material and adverse effect on
the Company's revenues and financial results. The Company maintains professional
liability coverage for its directors and officers and general liability
insurance.

7. STOCK OPTIONS AND WARRANTS

The Company has established the 1998 Employee Stock Option Plan. All
options issued under this plan will be accounted for in accordance with APB No.
25, and any required compensation expense on these options will be recorded at
the date of grant. The total number of shares to be granted under the plan may
not exceed 840,000 shares. The Company had 50,400 options outstanding and
exercisable under the plan at December 31, 1998 and has 509,600 shares available
for future grants.

The Company has adopted the 1999 Non-Employee Director Stock Plan. The
total number of shares to be granted under the plan may not exceed 280,000
shares. No options were outstanding under this director plan as of December 31,
1998.

F-15
<PAGE> 72
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

In October 1997, the Company granted a consultant warrants to purchase
56,000 shares of common stock at an exercise price of approximately $4.46 per
share. These warrants were 100% vested at the date of grant. This individual
subsequently became an employee of the Company in October 1998. The Company
recorded compensation expense in 1997 of $250,000 on these warrants based on a
fair value per share of approximately $4.46 as determined by management.

A summary of changes in outstanding warrants and options during the period
from inception (April 30, 1997) to December 31, 1997 and for the year ended
December 31, 1998 is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE EXERCISE
WARRANTS OPTIONS PRICE PRICE
-------- ------- ------------- --------
<S> <C> <C> <C> <C>
April 30, 1997........................................ -- -- $ -- $ --
Granted............................................. 56,000 -- 4.46 4.46
Exercised........................................... -- -- -- --
Cancelled........................................... -- -- -- --
------- ------
December 31, 1997..................................... 56,000 --
Granted............................................. -- 50,400 $8.93 $8.93
Exercised........................................... -- -- -- --
Cancelled........................................... -- -- -- --
------- ------
December 31, 1998..................................... 56,000 50,400 $4.46 - $8.93 $6.58
======= ======
</TABLE>

STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123

SFAS No. 123 requires the Company to disclose pro forma net loss and net
loss per share as if the Company had accounted for its employee stock option
grants under SFAS No. 123. The fair value of each option and warrant granted has
been estimated as of the date of grant using the Black-Scholes valuation model
with the following assumptions:

<TABLE>
<S> <C>
- - Dividend yield 0
- - Expected volatility 49%
- - Risk-free interest rate at the date of grant 5.38% - 5.47%
- - Expected life 5 years
</TABLE>

Using these assumptions, the fair value of the employee stock options
granted during 1998 was $223,168, which would be expensed in 1998 as all options
granted were fully vested on the date of grant.

The weighted average fair market value of options at the date of grant for
1998 was $8.93.

F-16
<PAGE> 73
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

The following pro forma information adjusts the net loss and net loss per
share of common stock for the impact of SFAS No. 123:

<TABLE>
<CAPTION>
1998
-----------
<S> <C>
Net loss:
As reported............................................... $(3,202,876)
Pro forma in accordance with SFAS No. 123................. $(3,426,044)
Net loss per share:
As reported............................................... $ (3.29)
Pro forma in accordance with SFAS No. 123................. $ (3.52)
</TABLE>

The following table summarizes the range of exercise price, weighted
average exercise price and weighted average remaining contractual lives for the
options and warrants outstanding as of December 31, 1998:

<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED WEIGHTED AVERAGE
AVERAGE AVERAGE REMAINING
NUMBER OF RANGE OF FAIR EXERCISE CONTRACTUAL
YEAR OF GRANT SHARES EXERCISE PRICE VALUE PRICE LIFE
- ------------- --------- -------------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
1997............................... 56,000 $4.46 $4.46 $4.46 4 years
1998............................... 50,400 $8.93 $8.93 $8.93 5 years
</TABLE>

At the closing of the Offering, the Company will grant options to purchase
420,000 shares of common stock at the Offering price. These options vest 20%
annually from the date of the Offering. The Company will account for these
options under APB No. 25. As the exercise price will equal the fair value of the
option on the date of grant, the Offering date, no compensation expense will be
recorded.

8. SUBSEQUENT EVENTS

STOCK SPLIT

Immediately before the effective date of the Offering, the Company will
effect an assumed .56 for 1 reverse stock split. Accordingly, the accompanying
financial statements reflect the assumed reverse stock split as if it occurred
at the beginning of each period presented.

FOUNDING PRACTICE INFORMATION

The combined operating data of the Founding Practices for the year ended
December 31, 1998 and for the six months ended June 30, 1999 was as follows:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1998 JUNE 30, 1999
----------------- ----------------
<S> <C> <C>
Patient Revenues (unaudited).......................... $41,595,370 $22,738,520
Operating Expenses (unaudited)........................ 27,201,423 14,980,146
</TABLE>

The Company's service fee under business services agreements is based on
15% of the net cash collected by the practice. Patient revenues and operating
expenses above are presented on an accrual basis as required by generally
accepted accounting principles. The difference between the net cash collected
and the accrual basis net patient revenue for the Founding Practices in any
given period is not material. The payment of the service fee of 15% of net cash
collected would not differ materially from that calculated as 15% of accrual
basis revenues between reporting periods. The operating expenses of the Founding
Practices are presented as the accrual basis operating expenses will be recorded
as a component of net revenues in the statement of

F-17
<PAGE> 74
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

operations of the Company beginning with the date of Transfers. The historical
information for the Founding Practices presented herein is not related to the
financial position or results of operations of the Company. This information is
presented solely for the purpose of providing disclosures to potential investors
regarding the group of entities with which the Company will enter into business
services agreements. The Founding Practices were not operated under common
control or management during the fiscal year ended December 31, 1998 or the six
months ended June 30, 1999.

PURCHASE OF RIGHTS

Certain of the Founding Practices resulted from the Company's acquisition
in May 1999 of the right to negotiate business development agreements with
plastic surgery practices originally contacted by ISIS Cosmetic Surgery
Partners, Inc. ("ISIS"). With the closing of the Offering, the Company will
enter into business services agreements with these plastic surgery practices. In
connection with this acquisition, the Company paid aggregate consideration of
approximately $3,400,000, which consisted of 344,263 shares of common stock
valued at approximately $8.93 per share and cash of approximately $400,000. ISIS
had entered into letters of intent, which included an exclusive negotiations
clause, with certain practices to have those practices enter into management
services agreements with ISIS at a later date. ISIS was to provide services
similar to the Company. ISIS and the Company were unrelated entities at the time
of the purchase. The acquisition was accounted for as an asset acquisition and
the Company will amortize the intangible asset over periods ranging from 10 to
15 years.

ISSUANCE OF WARRANTS

On May 13, 1999, the Company sold warrants to purchase 1,390,204 shares of
common stock at an exercise price per share equal to $2.50. The purchase price
was $.50 per warrant. The Company received cash proceeds of $303,852 from the
sale of these warrants. The Company received notes from a consultant and certain
officers and employees in the amount of $391,250, for the $.50 per warrant
purchase price of the warrants. The notes are full recourse notes that mature
three years from the date of issuance and accrue interest at a rate of 8% per
annum. Interest is payable on a quarterly basis beginning the first quarter
after the closing of the Offering, but no later than September 30, 1999. The
warrants may be exercised in whole or in part for a five year term commencing on
the date of issuance. The warrants are not subject to adjustment for split up,
stock dividends or any other reorganization of the Company's outstanding stock.
As the warrants were a cost of raising capital, the Company recorded a charge to
additional paid-in capital of $9,269,880 related to the issuance of these
warrants based on the fair value of the Company's common stock on the date of
issuance of $8.93 per share.

Certain Founding Practice surgeons will receive warrants to purchase an
aggregate of 146,500 shares of common stock with an exercise price per share
equal to the initial public offering price, exercisable for a five year term
commencing on the closing of the Offering, for referring surgeons for
affiliation with the Company and assistance in the recruitment of officers of
the Company. The Company will record expense related to these warrants at the
closing of the Offering.

The Company also issued warrants to individuals not affiliated with the
Company to purchase an aggregate of 125,000 shares of common stock with an
exercise price per share equal to the initial public offering price, exercisable
for a five year term commencing on the date of the Offering, for referring
surgeons to the Company. The Company will record expense of $692,886 related to
these warrants at the closing of the Offering.

F-18
<PAGE> 75
THE PLASTIC SURGERY COMPANY
(A DEVELOPMENT-STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED

JUNE 30, 1998 AND 1999 IS UNAUDITED)

On May 12, 1999, the Company issued warrants to purchase 160,000 shares of
common stock to certain employees and a consultant of the Company for an
exercise price per share equal to $2.50. The warrants are not subject to
adjustment for split up, stock dividends or any other reorganization of the
Company's outstanding stock. The Company will record expense of $1,148,112
related to the issuance of these warrants based on the fair value of the
Company's common stock on the date of issuance of $8.93 per share.

F-19
<PAGE> 76

THE PLASTIC SURGERY COMPANY

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

JUNE 30, 1999

Simultaneously with and as a condition to the closing of the offering, the
Company will acquire certain operating assets and assume certain liabilities of
30 separate plastic surgery practices (collectively, the "Founding Practices")
in exchange for cash, shares of common stock and promissory notes and enter into
long-term business services agreements with the Founding Practices (the
"Transfers"). In May of 1999, the Company purchased, for common stock and cash,
the rights to negotiate business services agreements with certain Founding
Practices who signed letters of intent which contained an exclusive negotiations
clause with ISIS Cosmetic Surgery Partners, Inc. ("ISIS").

The unaudited pro forma balance sheet gives effect to the following as if
they occurred on June 30, 1999 (1) the Transfers, and (2) the sale by the
Company of 2,400,000 shares of common stock at an assumed initial public
offering price of $13.00 per share. The proforma balance sheet is based upon the
historical financial statements of The Plastic Surgery Company and the Founding
Practices as a group. The unaudited pro forma balance sheet should be read in
conjunction with other financial information, including the financial statements
of The Plastic Surgery Company, included elsewhere in this Prospectus. Certain
of the Transfers are not deemed to be business combinations and will be
accounted for in accordance with SAB 48. The Transfers accounted for under SAB
48 will result in assets and liabilities of the Founding Practices being
recorded by the Company at the historical cost to the Founding Practices. The
consideration paid to these Founders will be in cash and common stock of the
Company. The remaining Transfers are deemed to be business combinations and will
be accounted for in accordance with APB 16 as asset acquisitions. The Transfers
accounted for under APB 16 will result in assets and liabilities being recorded
by the Company at fair value and intangible assets being recorded for the excess
value of consideration over the fair value of those assets. The consideration
paid to these Founding Practices will be in cash, promissory notes and stock of
the Company. The number of shares of common stock issued in the Transfers will
depend on the initial public offering price. The unaudited pro forma balance
sheet is presented for illustrative purposes only and is not necessarily
indicative of the operating results or financial position that would have been
achieved if the above transactions had been consummated on the date indicated,
nor is it necessarily indicative of our future operating results.

F-20
<PAGE> 77

THE PLASTIC SURGERY COMPANY

PRO FORMA BALANCE SHEET

JUNE 30, 1999

<TABLE>
<CAPTION>
SAB48 APB 16 POST
FOUNDING FOUNDING PRO FORMA PRO FORMA OFFERING PRO FORMA
TPSC PRACTICES PRACTICES ADJUSTMENTS COMBINED ADJUSTMENTS AS ADJUSTED
----------- ---------- ---------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash
equivalents.............. $ 91,179 $ 680,174 $1,091,123 $ (680,174)(1) $ 91,179 $ 26,854,000(5) $ 11,689,440
(1,091,123)(2) (12,422,574)(6)
(1,514,462)(6)
(833,630)(6)
(485,073)(7)
Patient receivables,
net...................... -- 1,752,115 254,921 (1,752,115)(1) -- -- --
(254,921)(2)
Other current assets...... -- 276,712 425,604 (223,051)(1) 53,661 -- 53,661
(425,604)(2)
----------- ---------- ---------- ----------- ----------- ------------ ------------
Total current
assets........... 91,179 2,709,001 1,771,648 (4,426,988) 144,840 11,598,261 11,743,101
Equipment, net............ 34,932 1,257,405 884,041 (333,333)(1) 1,035,806 -- 1,035,806
(884,041)(2)
76,802(4)
Intangible assets, net.... 3,485,994 -- -- 13,292,292(4) 16,778,286 -- 16,778,286
Other assets.............. -- 36,020 97,815 (36,020)(1) -- -- --
(97,815)(2)
----------- ---------- ---------- ----------- ----------- ------------ ------------
Total assets....... $ 3,612,105 $4,002,426 $2,753,504 $ 7,590,897 $17,958,932 $ 11,598,261 $ 29,557,193
=========== ========== ========== =========== =========== ============ ============

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable.......... $ 946,130 $ 284,145 $ 225,827 $ (284,145)(1) $ 946,130 $ (833,630)(6) $ 112,500
(225,827)(2)
Accrued liabilities....... 1,514,462 303,558 63,357 (303,558)(1) 1,514,462 (1,514,462)(6) --
(63,357)(2)
Current portion of
long-term debt........... -- 679,026 535,374 (193,953)(1) 485,073 (485,073)(7) --
(535,374)(2)
Payable to Founding
Practices................ -- -- -- 5,738,027(3) 12,422,574 (12,422,574)(6) --
6,684,547(4)
----------- ---------- ---------- ----------- ----------- ------------ ------------
Total current
liabilities...... 2,460,592 1,266,729 824,558 10,816,360 15,368,239 (15,255,739) 112,500
Long-term debt, less
current portion.......... -- 427,088 829,440 (427,088)(1) 4,010,730 -- 4,010,730
(829,440)(2)
4,010,730(4)
----------- ---------- ---------- ----------- ----------- ------------ ------------
Total
liabilities...... 2,460,592 1,693,817 1,653,998 13,570,562 19,378,969 (15,255,739) 4,123,230
----------- ---------- ---------- ----------- ----------- ------------ ------------
SHAREHOLDERS' EQUITY
(DEFICIT)
Capital stock............ -- -- -- -- -- -- --
Additional paid-in
capital................ (2,437,160) -- -- 2,673,817(4) 236,657 26,854,000(5) 27,090,657
Warrants................. 11,363,095 -- -- 11,363,095 11,363,095
Accumulated deficit...... (7,774,422) -- -- (1,815,949)(1) (13,019,789) (13,019,789)
(5,738,027)(3)
2,308,609(3)
Combined Founding
Practices's Equity..... -- 2,308,609 1,099,506 (1,099,506)(2) -- --
(2,308,609)(3)
----------- ---------- ---------- ----------- ----------- ------------ ------------
Total shareholders'
equity (deficit)....... 1,151,513 2,308,609 1,099,506 (5,979,665) (1,420,037) 26,854,000 25,433,963
----------- ---------- ---------- ----------- ----------- ------------ ------------
Total liabilities and
shareholders' equity... $ 3,612,105 $4,002,426 $2,753,504 $ 7,590,897 $17,958,932 $ 11,598,261 $ 29,557,193
=========== ========== ========== =========== =========== ============ ============
</TABLE>

F-21
<PAGE> 78

THE PLASTIC SURGERY COMPANY

NOTES TO UNAUDITED PRO FORMA BALANCE SHEET

1. Reflects the removal of certain assets not acquired and certain
liabilities not assumed in connection with the acquisition of the Founding
Practices accounted for in accordance with SAB 48. The Company is unable to
purchase certain assets pursuant to applicable state law and will not
assume certain personal liabilities of the Founding Practices. The
operating assets acquired and liabilities assumed are as follows:

<TABLE>
<S> <C>
Equipment, net.............................................. $1,035,806
Current portion of long-term debt........................... 485,073
Other assets................................................ 53,661
</TABLE>

2. Reflects the removal of the historical basis of assets,
liabilities, and equity of the Founding Practices acquired and accounted
for as asset acquisitions in accordance with APB 16.

3. Reflects the issuance of 1,814,131 shares of common stock of the
Company and the accrual of cash owed of $5,738,027 reflected as a dividend
for the acquisition of the Founding Practices accounted for in accordance
with SAB 48.

4. Reflects the issuance of 205,679 shares of common stock of the
Company valued at the assumed initial public offering price of $13.00 per
share, notes payable of $4,010,730, the accrual of cash owed of $6,684,547
and the establishment of the fair value of the assets acquired and
liabilities assumed for the acquisition of certain assets of the Founding
Practices acquired and accounted for as asset acquisitions in accordance
with APB 16. The intangible assets will be amortized over periods ranging
from 10 to 15 years.

5. Reflects the issuance of 2,400,000 shares of common stock of the
Company valued at $13.00 per share and receipt of net proceeds of
$26,854,000.

6. Reflects the payment of $12,422,574 to owners of the Founding
Practices and $2,348,092 for accrued compensation and consulting fees.

7. Reflects the payment of the notes payable assumed from the Founding
Practices of $485,073.

F-22
<PAGE> 79

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

[COMPANY LOGO]

UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 80

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the expenses (other than underwriting
discounts and commissions) in connection with the offering described in this
Registration Statement, all of which shall be paid by the company. All such
amounts (except the SEC Registration Fee, the NASD Filing Fee and the Nasdaq
Stock Market Fee) are estimated.

<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 10,742
National Association of Securities Dealers Filing Fee....... 4,364
Nasdaq Stock Market Fee..................................... 50,000
Blue Sky Fees and Expenses.................................. 10,000
Accountants' Fees and Expenses.............................. 450,000
Legal Fees and Expenses..................................... 700,000
Transfer Agent and Registrar Fees and Expenses.............. 5,000
Printing and Engraving Expenses............................. 370,000
Miscellaneous............................................... 249,894
----------
Total*............................................ $1,850,000
==========
</TABLE>

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

* The selling shareholders will not bear any portion of these expenses.

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Georgia Business Corporation Code permits a corporation to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of duty of care or other duty as a
director, provided that no provisions shall eliminate or limit the liability of
a director: (A) for any appropriation, in violation of his duties, of any
business opportunity of the corporation; (B) for acts or omissions which involve
intentional misconduct or a knowing violation of law; (C) for unlawful corporate
distributions; or (D) for any transaction from which the director received an
improper personal benefit. This provision pertains only to breaches of duty by
directors in their capacity as directors (and not in any other corporate
capacity, such as officers) and limits liability only for breaches of fiduciary
duties under Georgia corporate law (and not for violation of other laws, such as
the Federal securities laws).

Pursuant to the company's Amended and Restated Articles of Incorporation
and Bylaws, officers and directors shall be indemnified by the company to the
fullest extent allowed under Georgia law for claims brought against them in
their capacities as officers and directors. Indemnification is not allowed if
the officer or director does not act in good faith and in a manner reasonably
believed to be in the best interests of the company, or if the officer or
director had no reasonable cause to believe his conduct was lawful. Accordingly,
indemnification may occur for liabilities arising under the Securities Act.

The company and the underwriters have agreed to indemnify each other
(including officers and directors) against liabilities, including liabilities
under the Securities Act. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted for directors, officers and
controlling persons of the company pursuant to the foregoing provisions or
otherwise, the company has been advised that in the opinion of the Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

The company has purchased insurance on behalf of its directors and officers
against certain liabilities that may be asserted against, or incurred by, such
persons in their capacities as directors and officers of the registrant, or that
may arise out of their status as directors or officers of the registrant,
including liabilities under federal and state securities laws.

II-1
<PAGE> 81

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On May 15, 1997, in connection with the formation of the company, we issued
806,400 shares of common stock, no par value per share at $.001 per share to
approximately 14 founding individuals. This issuance was exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended.

From June 2, 1997 to October 30, 1997, we issued 112,000 shares of common
stock to 24 investors for $4.46 per share. These sales were exempt from
registration under Regulation D ("Regulation D") promulgated under Section 4(2)
of the Securities Act of 1933.

From March 2, 1998 to February 24, 1999, we issued 168,000 shares of common
stock to 24 investors for $8.93 per share. All of these sales were to accredited
investors and were exempt from registration under Regulation D.

On July 1, 1998 and August 1, 1998, we granted to employees an aggregate of
50,400 options with an exercise price of $8.93 per share. We relied on the
exemption in Rule 701 promulgated under the Securities Act of 1933, as amended
("Rule 701") for the grants.

On May 13, 1999, we issued to various employees warrants to purchase
160,000 shares of our common stock at $2.50 per share. The warrants are
exercisable for 5 years from date of grant. We relied on Rule 701 for exemption
from registration under the Securities Act.

On May 13, 1999, we sold to our existing shareholders for $.50 per share
warrants to purchase 1,390,204 shares of our common stock at $2.50 per share.
The warrants are exercisable for five years from the grant date. Four of the
purchasers purchased the warrants in exchange for notes issued to the company in
an aggregate principal amount of $391,250. We relied on Regulation D for
exemption from registration under the Securities Act.

On May 13, 1999, we issued to Isis Cosmetic Surgery Partners, Inc. 344,263
shares of our common stock in exchange for rights to negotiate business
development agreements with certain plastic surgery practices. We relied on
exemptions from registration under the Securities Act.

In each issuance, we also relied on exemptions form registration under
state securities regulations.

The Company used the proceeds from the above referenced sales to fund
working capital and operating expenses. No underwriter was engaged in connection
with these sales.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1* -- Underwriting Agreement
2.1** -- Form of Agreement and Plan of Reorganization between the
company and founding practices
2.2** -- Form of Amendment to the Form of Agreement and Plan of
Reorganization between the company and founding practices
2.3** -- Form of Purchase and Sale Agreement between the company and
founding practices
2.4** -- Form of Stock Purchase and Sale Agreement between the
company and the founding practices
2.5 -- Letter Agreement between the company and Isis Cosmetic
Surgery Partners, Inc. dated May 13, 1999
3.1 -- Form of Amended and Restated Articles of Incorporation
3.2 -- Form of Amended and Restated Bylaws
4.1 -- Specimen Common Stock Certificate
5.1 -- Opinion of King & Spalding as to the legality of the common
stock being registered
10.1** -- Employment Agreement between the company and Dennis E.
Condon dated June 15, 1998
10.2 -- Employment Agreement between the company and David H.
Challoner dated November 1, 1998
10.3** -- Amendment to Employment Agreement between the company and
David Challoner dated February 25, 1999.
</TABLE>

II-2
<PAGE> 82

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
10.4** -- Employment Agreement between the company and Patricia
Altavilla dated July 22, 1998
10.5** -- Amendment to Employment Agreement between the company and
Patricia A. Altavilla dated March 1, 1999.
10.6 -- Consulting Agreement between the company and Jonathan E.
Wilfong dated September 30, 1998
10.7** -- Form of Service Agreement between the company and the
founding practices
10.8** -- Form Amendment to Form of Service Agreement between the
company and the founding practices
10.9** -- Form of Consulting and Business Services Agreement between
the company and the founding practices
10.10** -- Form of Employment Agreement between the allied surgeons and
the allied practices
10.11 -- 1998 Employee Stock Option Plan
10.12 -- 1999 Non-Employee Director Stock Plan
10.13 -- Amendment to Employment Agreement between the company and
Dennis E. Condon dated June 30, 1999
10.14 -- Amendment to Employment Agreement between the company and
Patricia Altavilla dated June 30, 1999
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of King & Spalding (contained in Exhibit 5.1)
23.3** -- Consent of John C. Schantz, M.D.
23.4** -- Consent of Dennis E. Condon
23.5** -- Consent of Robert A. Ersek, M.D.
23.6** -- Consent of W. Grant Stevens, M.D.
23.7** -- Consent of Richard A. Mladick, M.D.
23.8 -- Consent of Mark A. Kaiser
24.1** -- Powers of Attorney (contained on the signature page)
27.1** -- Financial Data Schedule (for SEC use only)
27.2** -- Financial Data Schedule (for SEC use only)
27.3** -- Financial Data Schedule (for SEC use only)
</TABLE>

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

* To be filed by amendment.
** Previously filed.

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the
Underwriters, at the closing specified in the Underwriting Agreement,
certificates representing the shares of Common Stock offered hereby in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 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 of whether such

II-3
<PAGE> 83

indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

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 a
part of the registration statement in reliance upon Rule 430A and contained
in a form prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) 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-4
<PAGE> 84

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly
caused Amendment No. 3 to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Santa Barbara,
State of California on July 22, 1999.

THE PLASTIC SURGERY COMPANY

By: /s/ DENNIS E. CONDON
------------------------------------
Dennis E. Condon
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, Amendment No. 3
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ JONATHAN WILFONG Chairman of the Board July 22, 1999
- -----------------------------------------------------
Jonathan Wilfong

/s/ DENNIS CONDON President and Chief Executive July 22, 1999
- ----------------------------------------------------- Officer (Principal Executive
Dennis Condon Officer)

/s/ GUNNAR SUNDSTROM Chief Financial Officer July 22, 1999
- ----------------------------------------------------- (Principal Accounting Officer)
Gunnar Sundstrom
</TABLE>

II-5
<PAGE> 85

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <C> <S> <C>
1.1* -- Underwriting Agreement......................................
2.1** -- Form of Agreement and Plan of Reorganization between the
company and the founding practices..........................
2.2** -- Form of Amendment to the Form of Agreement and Plan of
Reorganization between the company and the founding
practices...................................................
2.3** -- Form of Purchase and Sale Agreement between the company and
the founding practices......................................
2.4** -- Form of Stock Purchase and Sale Agreement between the
company and the founding practices..........................
2.5 -- Letter Agreement between the company and Isis Cosmetic
Surgery Partners, Inc. dated May 13, 1999...................
3.1 -- Form of Amended and Restated Articles of Incorporation......
3.2 -- Form of Amended and Restated Bylaws.........................
4.1 -- Specimen Common Stock Certificate...........................
5.1 -- Opinion of King & Spalding as to the legality of the common
stock being registered......................................
10.1** -- Employment Agreement between the company and Dennis E.
Condon dated June 15, 1998..................................
10.2 -- Employment Agreement between the company and David H.
Challoner dated November 1, 1998............................
10.3** -- Amendment to Employment Agreement between the company and
David Challoner dated February 25, 1999.....................
10.4** -- Employment Agreement between the company and Patricia
Altavilla dated July 22, 1998...............................
10.5** -- Amendment to Employment Agreement between the company and
Patricia A. Altavilla dated March 1, 1999...................
10.6 -- Consulting Agreement between the company and Jonathan E.
Wilfong dated September 30, 1998............................
10.7** -- Form of Service Agreement between the company and the
founding practices..........................................
10.8** -- Form of Amendment to Form of Service Agreement between the
company and the founding practices..........................
10.9** -- Form of Consulting and Business Services Agreement between
the company and the founding practices......................
10.10** -- Form of Employment Agreement between the allied surgeons and
the allied practices........................................
10.11 -- 1998 Employee Stock Option Plan.............................
10.12 -- 1999 Non-Employee Director Stock Plan.......................
10.13 -- Amendment to Employment Agreement between the company and
Dennis E. Condon dated June 30, 1999
10.14 -- Amendment to Employment Agreement between the company and
Patricia Altavilla dated June 30, 1999
23.1 -- Consent of Arthur Andersen LLP..............................
23.2 -- Consent of King & Spalding (contained in Exhibit 5.1).......
23.3** -- Consent of John C. Schantz, M.D.............................
</TABLE>

II-6
<PAGE> 86

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <C> <S> <C>
23.4** -- Consent of Dennis E. Condon.................................
23.5** -- Consent of Robert A. Ersek, M.D.............................
23.6** -- Consent of W. Grant Stevens, M.D............................
23.7** -- Consent of Richard A. Mladick, M.D..........................
23.8 -- Consent of Mark A. Kaiser...................................
24.1** -- Powers of Attorney (contained on the signature page)........
27.1** -- Financial Data Schedule (for SEC use only)..................
27.2** -- Financial Data Schedule (for SEC use only)..................
27.3** -- Financial Data Schedule (for SEC use only)..................
</TABLE>

* To be filed by amendment.
** Previously filed.

II-7

<PAGE> 1

Exhibit 2.5

May 13, 1999

Mr. Robert Qualls
Chairman & Chief Executive Officer
Isis Cosmetic Partners, Inc.
1003 Landfall Way
Johns Island, S.C. 29455

Dear Bob:

Reference is made to that letter of intent (the "LOI") between Isis
Cosmetic Partners, Inc. ("Isis") and Better Image, Inc. ("BII") dated March 17,
1999. Pursuant to the LOI, Isis assigned (the "Assignment") certain Services
Agreements to BII.

BII has executed definitive agreements with 12 Isis Prospect Practices (as
defined in the LOI) identified on Exhibit A attached hereto (the "ISIS
Practices"). In exchange for all assets of Isis, the Assignments and the Isis
Practices, BII agrees to issue to Isis 614,756 shares of BII common stock, no
par value per share.

If you agree with the matters stated above, please sign and return a copy
of this letter to me.

Sincerely,

BETTER IMAGE, INC.

By: /s/ Jonathan E. Wilfong
------------------------------------
Jonathan E. Wilfong
Chairman

Accepted and Agreed as of the
date of this Letter:

ISIS COSMETIC SURGERY PARTNERS, INC.

By: /s/ Robert Qualls
----------------------------------
Robert Qualls
Chairman

<PAGE> 1
EXHIBIT 3.1

FORM OF

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

THE PLASTIC SURGERY COMPANY

The name of the Corporation is the Plastic Surgery Company.

Section 2.1. Common Stock. The aggregate number of common
shares (referred to in these Articles of Incorporation as "Common Stock") which
the Corporation shall have the authority to issue is 100,000,000, with no par
value per share. Each share of Common Stock shall have one vote on each matter
submitted to a vote of the shareholders of the Corporation. Subject to the
provisions of applicable law and the rights of the holders of the outstanding
shares of Preferred Stock, if any, the holders of shares of Common Stock shall
be entitled to receive, when and as declared by the Board of Directors of the
Corporation, out of the assets of the Corporation legally available therefor,
dividends or other distributions, whether payable in cash, property or
securities of the Corporation. The holders of shares of Common Stock shall be
entitled to receive, in proportion to the number of shares of Common Stock held,
the net assets of the Corporation upon dissolution after any preferential
amounts required to be paid or distributed to holders of outstanding shares of
Preferred Stock, if any, are so paid or distributed.

Section 2.2. Preferred Stock. The aggregate number of
preferred shares (referred to in these Articles of Incorporation as "Preferred
Stock") which the Corporation shall have authority to issue is 20,000,000, with
no par value per share. The Preferred Stock may be issued from time to time by
the Board of Directors as shares of one or more series. The description of
shares of each series of Preferred Stock, including any designations,
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption shall be as set forth in resolutions adopted by the Board of
Directors, and articles of amendment shall be filed with the Georgia Secretary
of State as required by law to be filed with respect to issuance of such
Preferred Stock, prior to the issuance of any shares of such series.

The Board of Directors is expressly authorized, at any time,
by adopting resolutions providing for the issuance of, or providing for a change
in the number of, shares of

<PAGE> 2

any particular series of Preferred Stock and, if and to the extent from time to
time required by law, by filing articles of amendment which are effective
without shareholder action, to increase or decrease the number of shares
included in each series of Preferred Stock, but not below the number of shares
then issued, and to set in any one or more respects the designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms and conditions of
redemption relating to the shares of each such series. The authority of the
Board of Directors with respect to each series of Preferred Stock shall include,
but not be limited to, setting or changing the following:

(i) the dividend rate, if any, on shares of such series,
the times of payment and the date from which dividends shall be
accumulated, if dividends are to be cumulative;

(ii) whether the shares of such series shall be redeemable
and, if so, the redemption price and the terms and conditions of such
redemption;

(iii) the obligation, if any, of the Corporation to redeem
shares of such series pursuant to a sinking fund;

(iv) whether shares of such series shall be convertible
into, or exchangeable for, shares of stock of any other class or
classes and, if so, the terms and conditions of such conversion or
exchange, including the price or prices or the rate or rates of
conversion or exchange and the terms of adjustment, if any;

(v) whether the shares of such series shall have voting
rights, in addition to the voting rights provided by law, and, if so,
the extent of such voting rights;

(vi) the rights of the shares of such series in the event
of voluntary or involuntary liquidation, dissolution or winding-up of
the Corporation; and

(vii) any other relative rights, powers, preferences,
qualifications, limitations or restrictions thereof relating to such
series.

No shareholder shall have any preemptive right to subscribe
for or to purchase any shares or other securities issued by the Corporation.

Section 4.1. Personal Liability of Directors. No director of
the Corporation shall be personally liable to the Corporation or its
shareholders for monetary damages for breach of duty of care or other duty as a
director, except for liability (i) for any appropriation, in violation of the
director's duties, of any business opportunity of the Corporation, (ii) for acts
or omissions

<PAGE> 3

which involved intentional misconduct or a knowing violation of law, (iii) for
the types of liabilities set forth in Section 14-2-832 of the Georgia Business
Corporation Code, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Georgia Business Corporation Code is amended
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Georgia
Business Corporation Code, as amended.

Section 4.2. Effect of Repeal or Modification. Neither the
repeal or modification of this Article 4 nor the adoption of any provision of
these Articles of Incorporation inconsistent with these Articles shall eliminate
or adversely affect any right or protection of a director of the Corporation
existing immediately prior to such repeal, modification or adoption.

Section 5.1. Number and Term of Directors. Subject to the
rights of the holders of any series of Preferred Stock to elect additional
directors under specified circumstances, the Board of Directors of the
Corporation shall have up to nine members with the exact number to be determined
from time to time exclusively by the Board of Directors pursuant to a resolution
adopted by a majority of the entire Board. Each director shall serve for a term
as described in Section 5.2.

Section 5.2. Classified Board. The directors of the
Corporation (other than any directors who may be elected by holders of any
series of Preferred Stock then outstanding) shall be and are divided into three
classes: Class I, Class II and Class III. The number of directors in each class
shall be as nearly equal as the then-authorized number of directors constituting
the Board of Directors permits. Each director shall serve for a term ending on
the date of the third annual meeting following the annual meeting at which such
director was elected; provided, however, that the directors first elected to
Class I shall serve for a term ending on the date of the annual meeting next
following the end of the calendar year 1999, the directors first elected to
Class II shall serve for a term ending on the date of the second annual meeting
next following the end of the calendar year 1999, and the directors first
elected to Class III shall serve for a term ending on the date of the third
annual meeting next following the end of the calendar year 1999. Any director
who may be elected by holders of any series of Preferred Stock then outstanding
shall serve for a term ending on the date of the next annual meeting following
the annual meeting at which such director was elected.

Section 5.3. Increase or Decrease in Authorized Number of
Directors. In the event of any increase or decrease in the authorized number of
directors:

(a) Each director then serving shall nevertheless
continue as a director of the class of which he is a member until the
expiration of his term, or his prior death, retirement, resignation or
removal; and

<PAGE> 4

(b) Newly-created or eliminated directorships resulting
from any increase or decrease shall be apportioned by the Board of
Directors among the three classes so as to keep the number of directors
in each class as nearly equal as possible.

Section 5.4. Removal. Subject to the rights of the holders of
any series of Preferred Stock then outstanding, any or all directors may be
removed from office at any time with or without cause, but only by the same
affirmative vote of the shareholders required to amend this Article 5 as
provided in Article 8 of these Articles of Incorporation.

Section 5.5. Vacancies. Subject to the rights of the holders
of any series of Preferred Stock then outstanding to fill director vacancies,
vacancies on the Board of Directors (including vacancies resulting from
retirement, resignation, removal from office or death) shall be filled
exclusively by action of a majority of the remaining members of the Board of
Directors, although such majority is less than a quorum. Any director so elected
shall hold office until the next annual meeting of shareholders.

In discharging the duties of their respective positions and in
determining what is believed to be in the best interests of the Corporation, the
Board of Directors, committees of the Board of Directors, and individual
directors, in addition to considering the effects of any action on the
Corporation or its shareholders, may consider the interests of the employees,
customers, suppliers and creditors of the Corporation and its subsidiaries, the
communities in which offices or other establishments of the Corporation and its
subsidiaries are located, and all other factors the Board of Directors,
committees of the Board of Directors and such individual directors consider
pertinent; provided, however, that this provision solely grants discretionary
authority to the directors and no constituency shall be deemed to have been
given any right to consideration hereby.

The mailing address of the principal office of the Corporation
is 104 West Anapamu Street, Suite G, Santa Barbara, California 93101.

Notwithstanding any provision of law to the contrary, the
affirmative vote of greater than fifty percent (50%) of all of the votes
entitled to be cast on the matter shall be necessary, after due authorization,
approval or advice of such action by the Board of Directors, as required by law,
to approve and authorize the following acts of the Corporation:

a. amendment of the Articles of Incorporation of the
Corporation;

<PAGE> 5

b. a Change in Control of the Corporation. "Change of Control"
shall mean (x) any merger or consolidation of the Corporation with any other
business entity (other than a merger in which the Corporation is the surviving
corporation and as a result of which persons who owned beneficially a majority
in voting power of the outstanding voting capital stock of the Corporation
immediately prior to the merger continue to own beneficially, in substantially
the same proportions, a majority in voting power of the outstanding voting
capital stock of the Corporation immediately after such merger), or (z) any
sale, lease, transfer or other disposition of all or substantially all the
assets of the Corporation;

c. the voluntary liquidation, dissolution or winding-up of the
Corporation; or

d. any other transaction that Section 14-2-1110 of the Georgia
Business Corporation Code defines as a "Business Combination."

<PAGE> 1

EXHIBIT 3.2

FORM OF

AMENDED AND RESTATED BYLAWS

THE PLASTIC SURGERY COMPANY

References in these Bylaws to "Articles of Incorporation" are to the
Amended and Restated Articles of Incorporation of THE PLASTIC SURGERY COMPANY,
a Georgia corporation (the "Corporation"), as amended and restated from time to
time (the "Articles").

All of these Bylaws are subject to contrary provisions, if any, of the
Articles (including provisions designating the preferences, limitations, and
relative rights of any class or series of shares), the Georgia Business
Corporation Code (the "Code"), and other applicable law, as in effect on and
after the effective date of these Bylaws. References in these Bylaws to
"Sections" shall refer to sections of the Bylaws, unless otherwise indicated.

Article One

Office

1.1 Registered Office and Agent. The Corporation shall maintain a
registered office and shall have a registered agent whose business office is
the same as the registered office.

1.2 Principal Office. The principal office of the Corporation
shall be at the place designated in the Corporation's annual registration with
the Georgia Secretary of State.

1.3 Other Offices. In addition to its registered office and
principal office, the Corporation may have offices at other locations either in
or outside the State of Georgia, as the Board of Directors may determine from
time to time and the business of the Corporation may make desirable.

Article Two

Shareholders' Meetings

2.1 Place of Meetings. Meetings of the Corporation's shareholders
may be held at any location inside or outside the State of Georgia designated
by the Board of Directors or any

<PAGE> 2

other person or persons who properly call the meeting, or if the Board of
Directors or such other person or persons do not specify a location, at the
Corporation's principal office.

2.2 Annual Meetings. The Corporation shall hold an annual meeting
of shareholders, at a time determined by the Board of Directors, to elect
directors and to transact any business that properly may come before the
meeting. The annual meeting may be combined with any other meeting of
shareholders, whether annual or special.

2.3 Special Meetings. Special meetings of shareholders of one or
more classes or series of the Corporation's shares may be called at any time by
the Board of Directors, the Chairman of the Board, or the President, and shall
be called by the corporation upon the written request (in compliance with
applicable requirements of the Code) of the holders of shares representing
twenty-five percent (25%) or more of the votes entitled to be cast on each
issue proposed to be considered at the special meeting. The business that may
be transacted at any special meeting of shareholders shall be limited to that
proposed in the notice of the special meeting given in accordance with Section
2.4 (including related or incidental matters that may be necessary or
appropriate to effectuate the proposed business).

2.4 Notice of Meetings. In accordance with Section 9.5 and subject
to waiver by a shareholder pursuant to Section 2.5, the Corporation shall give
written notice of the date, time, and place of each annual and special
shareholders' meeting no fewer than 10 days nor more than 60 days before the
meeting date to each shareholder of record entitled to vote at the meeting. The
notice of an annual meeting need not state the purpose of the meeting unless
these Bylaws require otherwise. The notice of a special meeting shall state the
purpose for which the meeting is called. If an annual or special shareholders'
meeting is adjourned to a different date, time, or location, the Corporation
shall give shareholders notice of the new date, time, or location of the
adjourned meeting, unless a quorum of shareholders was present at the meeting
and information regarding the adjournment was announced before the meeting was
adjourned; provided, however, that if a new record date is or must be fixed in
accordance with Section 7.6, the Corporation must give notice of the adjourned
meeting to all shareholders of record as of the new record date who are
entitled to vote at the adjourned meeting.

2.5 Waiver of Notice. A shareholder may waive any notice required
by the Code, the Articles, or these Bylaws, before or after the date and time
of the matter to which the notice relates, by delivering to the Corporation a
written waiver of notice signed by the shareholder entitled to the notice. In
addition, a shareholder's attendance at a meeting shall constitute: (a) a
waiver of objection to lack of notice or defective notice of the meeting,
unless the shareholder at the beginning of the meeting objects to holding the
meeting or transacting business at the meeting, and (b) a waiver of objection
to consideration of a particular matter at the meeting that is not within the
purpose stated in the meeting notice, unless the shareholder objects to
considering the matter when it is presented. Except as otherwise required by
the Code, neither the purpose of nor the business transacted at the meeting
need be specified in any waiver.

2.6 Voting Group: Quorum; Vote Required to Act.

2
<PAGE> 3

(a) Unless otherwise required by the Code or the Articles,
all classes or series of the Corporation's shares entitled to vote generally on
a matter shall for that purpose be considered a single voting group (a "Voting
Group"). If either the Articles or the Code requires separate voting by two or
more Voting Groups on a matter, action on that matter is taken only when voted
upon by each such Voting Group separately. At all meetings of shareholders, any
Voting Group entitled to vote on a matter may take action on the matter only if
a quorum of that Voting Group exists at the meeting, and if a quorum exists,
the Voting Group may take action on the matter notwithstanding the absence of a
quorum of any other Voting Group that may be entitled to vote separately on the
matter. Unless the Articles, these Bylaws, or the Code provides otherwise, the
presence (in person or by proxy) of shares representing a majority of votes
entitled to be cast on a matter by a Voting Group shall constitute a quorum of
that Voting Group with regard to that matter. Once a share is present at any
meeting other than solely to object to holding the meeting or transacting
business at the meeting, the share shall be deemed present for quorum purposes
for the remainder of the meeting and for any adjournments of that meeting,
unless a new record date for the adjourned meeting is or must be set pursuant
to Section 7.6 of these Bylaws.

(b) If a quorum exists, action on a matter by a Voting Group
is approved by that Voting Group if the votes cast within the Voting Group
favoring the action exceed the votes cast opposing the action, unless the
Articles, a provision of these Bylaws that has been adopted pursuant to Section
14-2-1021 of the Code (or any successor provision), or the Code requires a
greater number of affirmative votes.

2.7 Voting of Shares. Unless otherwise required by the Code or the
Articles, each outstanding share of any class or series having voting rights
shall be entitled to one vote on each matter that is submitted to a vote of
shareholders.

2.8 Proxies. A shareholder entitled to vote on a matter may vote
in person or by proxy pursuant to an appointment executed in writing by the
shareholder or by his attorney-in-fact. An appointment of a proxy shall be
valid for 11 months from the date of its execution, unless a longer or shorter
period is expressly stated in the proxy.

2.9 Presiding Officer. Except as otherwise provided in this
Section 2.9, the Chairman of the Board, and in his absence or disability the
President, shall preside at every shareholders' meeting (and any adjournment
thereof) as its chairman, if either of them is present and willing to serve. If
neither the Chairman of the Board nor the President is present and willing to
serve as chairman of the meeting, and if the Chairman of the Board has not
designated another person who is present and willing to serve, then a majority
of the Corporation's directors present at the meeting shall be entitled to
designate a person to serve as chairman. If no director of the Corporation is
present at the meeting or if a majority of the directors who are present cannot
be established, then a chairman of the meeting shall be selected by a majority
vote of (a) the shares present at the meeting that would be entitled to vote in
an election of directors, or (b) if no such shares are present at the meeting,
then the shares present at the meeting comprising the Voting Group with the
largest number of shares present at the meeting and entitled to vote on a
matter properly proposed to be considered at the meeting. The chairman of the
meeting may designate other persons to assist with the meeting.

2.10 Adjournments. At any meeting of shareholders (including an
adjourned meeting),

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a majority of shares of any Voting Group present and entitled to vote at the
meeting (whether or not those shares constitute a quorum) may adjourn the
meeting, but only with respect to that Voting Group, to reconvene at a specific
time and place. If more than one Voting Group is present and entitled to vote
on a matter at the meeting, then the meeting may be continued with respect to
any such Voting Group that does not vote to adjourn as provided above, and such
Voting Group may proceed to vote on any matter to which it is otherwise
entitled; provided, however, that if (a) more than one Voting Group is required
to take action on a matter at the meeting and (b) any one of those Voting
Groups votes to adjourn the meeting (in accordance with the preceding
sentence), then the action shall not be deemed to have been taken until the
requisite vote of any adjourned Voting Group is obtained at its reconvened
meeting. The only business that may be transacted at any reconvened meeting is
business that could have been transacted at the meeting that was adjourned,
unless further notice of the adjourned meeting has been given in compliance
with the requirements for a special meeting that specifies the additional
purpose or purposes for which the meeting is called. Nothing contained in this
Section 2.10 shall be deemed or otherwise construed to limit any lawful
authority of the chairman of a meeting to adjourn the meeting.

2.11 Conduct of the Meeting. At any meeting of shareholders, the
chairman of the meeting shall be entitled to establish the rules of order
governing the conduct of business at the meeting.

2.12 Nominations of Directors and Shareholder Proposals.

(a) Nominations by the Board of Directors. The Board of
Directors or a committee thereof shall have exclusive jurisdiction over the
selection of the management nominees for election from time to time as
directors.

(b) Nominations by Shareholders. Only persons who are
nominated by, or at the direction of, the Board of Directors or by a
shareholder who has given timely written notice to the Secretary prior to the
meeting at which directors are to be elected will be eligible for election as
directors of the Corporation. For notice of shareholder nominations to be
timely, such notice must be received by the Corporation not less than 120 nor
more than 150 days prior to the first anniversary of the previous year's annual
meeting. Such notification shall contain the following information:

(i) the name and record address of the
shareholder who intends to make the nomination;

(ii) the name, age and business and residence
addresses of each proposed nominee;

(iii) the principal business, occupation or
employment of each proposed nominee during the last five
years;

(iv) such other information relating to the
nominee proposed by such shareholder as is required to be
included in a proxy statement or otherwise required pursuant
to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), including the written
consent of each nominee

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to be named in the proxy statement and to serve as a director
of the Company if so elected;

(v) the name and record address of the notifying
shareholder if different from (i) above; and

(vi) the class, series and number of shares held
of record, beneficially and by proxy, by the shareholder and
the nominee as of the record date of such meeting (if such
record date is publicly available) and as of the date of such
notice.

(c) Shareholder Proposals. At annual and special meetings
only such business may be conducted as has been brought before the meeting by,
or at the direction of, the Board of Directors or by a shareholder who has
given timely written notice to the Secretary of the Corporation of such
shareholder's intention to bring such business before such meeting. For notice
of business to be conducted at an annual or special meeting to be timely, such
notice must be received by the Corporation, in the case of an annual meeting,
not less than 120 nor more than 150 days prior to the first anniversary of the
previous year's annual meeting or, in the case of a special meeting, not less
than 90 days prior to the date of the meeting as set forth in the written
request to the Corporation provided pursuant to Section 2 hereof. Such
notification shall contain the following information:

(i) a brief description of the business desired
to brought before the meeting and the reasons for conducting
such business at the meeting;

(ii) the name and address, as they appear on the
Corporation's books, of the shareholder proposing such
business;

(iii) the class, series and number of shares of
the Corporation's capital stock which are held of record,
beneficially and by proxy, by the shareholder as of the
record date of such meeting (if such record date is publicly
available) and as of the date of such notice;

(iv) a description of all arrangements or
understandings between the shareholder and any other persons
(naming such person or persons) in connection with the
proposing of such business by the shareholder; and

(v) any material interest of such shareholder in
such business.

(d) Certain Procedures. The Chairman of the Board, or his
designee, at any meeting of shareholders at which one or more directors are to
be elected may disregard any nomination not made in accordance with this
Section 2.12, and upon the instructions of the Chairman of the Board, or his
designee, the voting inspectors shall disregard all votes cast for such
nominees. In addition, the Chairman of the Board, or his designee, at any
annual or special meeting of shareholders may disregard any shareholder
proposals not made in accordance with this Section 2.12. The Chairman of the
Board, or his designee, for good cause shown and with proper regard for the
orderly conduct of business at the meeting, may waive in whole or in part the
operation of this Section 2.12.

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(e) Section 14 of the Exchange Act. Notwithstanding anything
to the contrary in this Section 2.12, any shareholder requesting that a
proposal be included in the Corporation's proxy statement must also meet all of
the requirements of Section 14 of the Exchange Act and Regulation 14A
promulgated thereunder.

Article Three

Board of Directors

3.1 General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall
be managed by, the Board of Directors, subject to any limitation set forth in
the Code, Articles, in bylaws approved by the shareholders, or any legal
agreement among shareholders.

3.2 Number, Election and Term of Office. The Board of Directors of
the Corporation shall consist of up to nine (9) directors, the exact number to
be determined by resolution of the Board of Directors from time to time.

3.3 Classification of Board of Directors; Election. The directors
shall be divided into three classes, as nearly equal in number as possible,
with respect to the times for which they shall severally hold office. Directors
of the first class first chosen shall hold office until the first annual
meeting of shareholders following their election; directors of the second class
first chosen shall hold office until the second annual meeting of shareholders
following their election; and directors of the third class first chosen shall
hold office until the third annual meeting of shareholders following their
election. At each annual meeting of the shareholders after such first annual
meeting of the shareholders, the successors to the class of directors whose
terms shall expire at the time shall be elected to hold office until the third
succeeding annual meeting after their election, so that the term of office of
one class of directors shall expire in each year. Each director elected shall
hold office until his or her successor shall be elected and shall qualify.

3.4 Removal of Directors. At any shareholders' meeting for which
notice of such purpose has been given, the entire Board of Directors or any
individual director may be removed, with or without cause, by the affirmative
vote of a majority of the shares of the Corporation then outstanding and
entitled to vote at an election of directors, except that any director who has
been elected by the holders of the shares of any class or series may be
removed, with or without cause, by the affirmative vote of a majority of the
outstanding shares of that class or series and not by vote of the outstanding
shares as a whole.

3.5 Change in Number of Directors. Any increase or decrease in the
number of directors shall be so apportioned among the classes as to make all
classes authorized by the requisite vote of shareholders as nearly equal in
number as possible. When any directorships created pursuant to an increase in
the number of directorships are filled by the Board of Directors, the directors
so chosen shall hold office for a term expiring at the next annual meeting of
shareholders at which a successor shall be elected and qualify.

3.6 Vacancies in Board of Directors. Any vacancy in the Board of
Directors occurring as a result of the removal of a director as provided in
Section 14-2-808 of the Georgia

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Business Corporation Code shall be filled by the shareholders, or if authorized
by the shareholders, by the remaining director(s), but only for a term of the
office continuing until the next election of directors by shareholders and
until the election and qualification of the successor. Any vacancies in the
Board of Directors resulting from death, resignation or retirement of a
director, or any other cause other than removal by the shareholders or increase
in the number of directors shall be filled by a majority vote of the remaining
directors, though less than a quorum, for a term corresponding to the unexpired
term of his or her predecessor in office.

3.7 Compensation. Directors may receive such compensation for
their services as directors as may be fixed by the Compensation Committee
(hereinafter provided for) of the Board of Directors from time to time.
Directors shall be entitled to be reimbursed for all reasonable out-of-pocket
expenses incurred in connection with their services as directors. A director
may also serve the Corporation in one or more capacities other than that of
director and receive compensation for services rendered in those other
capacities as may be approved by the Compensation Committee from time to time.

3.8 Committees of the Board of Directors.

(a) The Board of Directors may designate by resolution, from
among its members, one or more standing or ad hoc committees, each consisting
of one or more directors, who serve at the pleasure of the Board of Directors.
Subject to the limitations imposed by the Code, each committee shall have the
authority set forth in the resolution establishing the committee or in any
other resolution of the Board of Directors specifying, enlarging, or limiting
the authority of the committee.

(b) There shall be a Compensation Committee consisting of
three directors appointed by the Board of Directors. A quorum for meetings of
the Compensation Committee shall be two. The Compensation Committee shall have
the authority to do the things provided for it to do in any resolution of the
Board of Directors and in these Bylaws.

(c) There shall be an Audit Committee consisting of three
directors. In addition to the foregoing committee members, the President of the
Corporation shall be an ex-officio, non-voting member of the Audit Committee.
The Audit Committee shall have the authority to select the Corporation's
auditors, to review the audit and to have all other authority customary for an
audit committee.

3.9 Qualification of Directors. No person elected to serve as a
director of the Corporation shall assume office and begin serving unless and
until duly qualified to serve, as determined by reference to the Code, the
Articles, and any further eligibility requirements established in these Bylaws.

3.10 Dealings with Insiders. The Board of Directors shall make the
determination whether to allow or permit any director, officer, personnel,
consultant or shareholder or persons actually or constructively related to any
of the foregoing (within the meaning of section 267(c) of the Internal Revenue
Code) to have either directly or indirectly an interest in any corporation,
partnership, proprietorship, association or other person or entity which
furnishes or sells services or products to the Company or in any corporation,
partnership, proprietorship, association or other person or entity to which
services or products are furnished or sold by the Company. For

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the purposes of this Section, there shall be disregarded any interest which
arises solely from the ownership of less than a five percent (5%) equity
interest in any corporation whose stock is regularly traded on any national
securities exchange or in the over-the-counter market and in which such person
has no management role.

Article Four

Meetings of the Board of Directors

4.1 Regular Meetings. A regular meeting of the Board of Directors
shall be held in conjunction with each annual meeting of shareholders. In
addition, the Board of Directors may, by prior resolution, hold regular
meetings at other times. In addition, until a majority of all members of the
Board shall determine otherwise, there shall be a regular meeting of the Board
of Directors each quarter on a date and at a time determined by the Board of
Directors.

4.2 Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, the President,
or any directors in office at that time.

4.3 Place of Meetings. Directors may hold their meetings at any
place in or outside the State of Georgia that the Board of Directors may
establish from time to time.

4.4 Notice of Meetings. Directors need not be provided with notice
of any regular meeting of the Board of Directors. Unless waived in accordance
with Section 4.10, the Corporation shall give at least two days' notice to each
director of the date, time, and place of each special meeting. Notice of a
meeting shall be deemed to have been given to any director in attendance at any
prior meeting at which the date, time, and place of the subsequent meeting was
announced.

4.5 Quorum. At meetings of the Board of Directors, a majority of
the directors in office shall constitute a quorum for the transaction of
business.

4.6 Vote Required for Action. If a quorum is present when a vote
is taken, the vote of a majority of the directors present at the time of the
vote will be the act of the Board of Directors, unless the vote of a greater
number is required by the Code, the Articles, or these Bylaws. A director who
is present at a meeting of the Board of Directors when corporate action is
taken is deemed to have assented to the action taken unless (a) he or she
objects at the beginning of the meeting (or promptly upon his or her arrival)
to holding the meeting or transacting business at such meeting; (b) his or her
dissent or abstention from the action taken is entered in the minutes of the
meeting; or (c) he or she delivers written notice of his or her dissent or
abstention to the presiding officer of the meeting before its adjournment or to
the Corporation immediately after adjournment of the meeting. The right of
dissent or abstention is not available to a director who votes in favor of the
action taken.

4.7 Participation by Conference Telephone. Members of the Board of
Directors may participate in a meeting of the Board by means of conference
telephone or similar communications equipment through which all persons
participating may hear and speak to each

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other. Participation in a meeting pursuant to this Section 4.7 shall constitute
presence in person at the meeting.

4.8 Action by Directors Without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if a written consent, describing the action taken, is signed
by each director and delivered to the Corporation for inclusion in the minutes
or filing with the corporate records. The consent may be executed in
counterpart, and shall have the same force and effect as a unanimous vote of
the Board of Directors at a duly convened meeting.

4.9 Adjournments. A meeting of the Board of Directors, whether or
not a quorum is present, may be adjourned by a majority of the directors
present to reconvene at a specific time and place. It shall not be necessary to
give notice to the directors of the reconvened meeting or of the business to be
transacted, other than by announcement at the meeting that was adjourned,
unless a quorum was not present at the meeting that was adjourned, in which
case notice shall be given to directors in the same manner as for a special
meeting. At any such reconvened meeting at which a quorum is present, any
business may be transacted that could have been transacted at the meeting that
was adjourned.

4.10 Waiver of Notice. A director may waive any notice required by
the Code, the Articles, or these Bylaws before or after the date and time of
the matter to which the notice relates, by a written waiver signed by the
director and delivered to the Corporation for inclusion in the minutes or
filing with the corporate records. Attendance by a director at a meeting shall
constitute waiver of notice of the meeting, except where a director at the
beginning of the meeting (or promptly upon his or her arrival) objects to
holding the meeting or to transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.

Article Five

Officers

5.1 Officers. The officers of the Corporation shall consist of a
President, a Secretary, and a Treasurer, each of whom shall be elected or
appointed by the Board of Directors. The Board of Directors may also elect a
Chairman of the Board from among its members. The Board of Directors from time
to time may create and establish the duties of other offices and may elect or
appoint, or authorize specific senior officers to appoint, the persons who
shall hold such other offices, including, without limitation, one or more Vice
Presidents (including Executive Vice Presidents, Senior Vice Presidents,
Assistant Vice Presidents, and the like), one or more Assistant Secretaries,
and one or more Assistant Treasurers. Whether or not so provided by the Board
of Directors, the Chairman of the Board may appoint one or more Assistant
Secretaries and one or more Assistant Treasurers. Any two or more offices may
be held by the same person.

5.2 Term. Each officer shall serve at the pleasure of the Board of
Directors until his or her death, resignation, or removal, or until his or her
replacement is elected or appointed in accordance with this Article Five.

5.3 Compensation. The compensation of the President of the
Corporation and the

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Executive Vice Presidents of the Corporation shall be approved by the
Compensation Committee. Officers may serve without compensation.

5.4 Removal. All officers (regardless of how elected or appointed)
may be removed, with or without cause, by the Board of Directors, and any
officer appointed by another officer may also be removed, with or without
cause, by any senior officer authorized to have appointed the officer to be
removed. Removal will be without prejudice to the contract rights, if any, of
the person removed, but shall be effective notwithstanding any damage claim
that may result from infringement of such contract rights.

5.5 Chairman of the Board. The Chairman of the Board (if there be
one) shall preside at and serve as chairman of meetings of the shareholders and
of the Board of Directors (unless another person is selected under Section 2.9
to act as chairman). The Chairman of the Board shall perform other duties and
have other authority as may from time to time be delegated by the Board of
Directors.

5.6 President. Unless otherwise provided in these Bylaws or by
resolution of the Board of Directors, the President shall be the chief
executive officer of the Corporation, shall be charged with the general and
active management of the business of the Corporation, shall see that all orders
and resolutions of the Board of Directors are carried into effect, shall have
the authority to select and appoint employees and agents of the Corporation,
and shall, in the absence or disability of the Chairman of the Board, perform
the duties and exercise the powers of the Chairman of the Board. The President
shall perform any other duties and have any other authority as may be delegated
from time to time by the Board of Directors, and shall be subject to the
limitations fixed from time to time by the Board of Directors.

5.7 Vice Presidents. The Vice President (if there be one) shall,
in the absence or disability of the President, or at the direction of the
President, perform the duties and exercise the powers of the President, whether
the duties and powers are specified in these Bylaws or otherwise. If the
Corporation has more than one Vice President, the one designated by the Board
of Directors or the President (in that order of precedence) shall act in the
event of the absence or disability of the President. Vice Presidents shall
perform any other duties and have any other authority as from time to time may
be delegated by the Board of Directors or the President.

5.8 Secretary. The Secretary shall be responsible for preparing
minutes of the meetings of shareholders, directors, and committees of directors
and for authenticating records of the Corporation. The Secretary or any
Assistant Secretary shall have authority to give all notices required by law or
these Bylaws. The Secretary shall be responsible for the custody of the
corporate books, records, contracts, and other documents. The Secretary or any
Assistant Secretary may affix the corporate seal to any lawfully executed
documents requiring it, may attest to the signature of any officer of the
Corporation, and shall sign any instrument that requires the Secretary's
signature. The Secretary or any Assistant Secretary shall perform any other
duties and have any other authority as from time to time may be delegated by
the Board of Directors or the President.

5.9 Treasurer. Unless otherwise provided by the Board of
Directors, the Treasurer shall be the chief financial officer of the
Corporation and shall be responsible for the custody of all funds and
securities belonging to the Corporation and for the receipt, deposit, or
disbursement

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of these funds and securities under the direction of the Board of Directors.
The Treasurer shall cause full and true accounts of all receipts and
disbursements to be maintained and shall make reports of these receipts and
disbursements to the Board of Directors and President upon request. The
Treasurer or any Assistant Treasurer shall perform any other duties and have
any other authority as from time to time may be delegated by the Board of
Directors or the President.

Article Six

Distributions and Dividends

Unless the Articles provide otherwise, the Board of Directors, from
time to time in its discretion, may authorize or declare distributions or share
dividends in accordance with the Code.

Article Seven

7.1 Share Certificates. The interest of each shareholder in the
Corporation shall be evidenced by a certificate or certificates representing
shares of the Corporation, which shall be in such form as the Board of
Directors from time to time may adopt in accordance with the Code. Share
certificates shall be in registered form and shall indicate the date of issue,
the name of the Corporation, that the Corporation is organized under the laws
of the State of Georgia, the name of the shareholder, and the number and class
of shares and designation of the series, if any, represented by the
certificate. Each certificate shall be signed by the President or a Vice
President (or in lieu thereof, by the Chairman of the Board or Chief Executive
Officer, if there be one) and may be signed by the Secretary or an Assistant
Secretary; provided, however, that where the certificate is signed (either
manually or by facsimile) by a transfer agent, or registered by a registrar,
the signatures of those officers may be facsimiles.

7.2 Rights of Corporation With Respect to Registered Owners. Prior
to due presentation for transfer of registration of its shares, the Corporation
may treat the registered owner of the shares (or the beneficial owner of the
shares to the extent of any rights granted by a nominee certificate on file
with the Corporation pursuant to any procedure that may be established by the
Corporation in accordance with the Code) as the person exclusively entitled to
vote the shares, to receive any dividend or other distribution with respect to
the shares, and for all other purposes; and the Corporation shall not be bound
to recognize any equitable or other claim to or interest in the shares on the
part of any other person, whether or not it has express or other notice of such
a claim or interest, except as otherwise provided by law.

7.3 Transfers of Shares. Transfers of shares shall be made upon
the books of the Corporation kept by the Corporation or by the transfer agent
designated to transfer the shares, only upon direction of the person named in
the certificate or by an attorney lawfully constituted in writing. Before a new
certificate is issued, the old certificate shall be surrendered for
cancellation or, in the case of a certificate alleged to have been lost,
stolen, or destroyed, the

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provisions of Section 7.5 of these Bylaws shall have been complied with.

7.4 Duty of Corporation to Register Transfer. Notwithstanding any
of the provisions of Section 7.3 of these Bylaws, the Corporation is under a
duty to register the transfer of its shares only if: (a) the share certificate
is endorsed by the appropriate person or persons; (b) reasonable assurance is
given that each required endorsement is genuine and effective; (c) the
Corporation has no duty to inquire into adverse claims or has discharged any
such duty; (d) any applicable law relating to the collection of taxes has been
complied with; (e) the transfer is in fact rightful or is to a bona fide
purchaser; and (f) the transfer is in compliance with applicable provisions of
any transfer restrictions of which the Corporation shall have notice.

7.5 Lost, Stolen, or Destroyed Certificates. Any person claiming a
share certificate to be lost, stolen, or destroyed shall make an affidavit or
affirmation of this claim in such a manner as the Corporation may require and
shall, if the Corporation requires, give the Corporation a bond of indemnity in
form and amount, and with one or more sureties satisfactory to the Corporation,
as the Corporation may require, whereupon an appropriate new certificate may be
issued in lieu of the one alleged to have been lost, stolen or destroyed.

7.6 Fixing of Record Date. For the purpose of determining
shareholders (a) entitled to notice of or to vote at any meeting of
shareholders or, if necessary, any adjournment thereof, (b) entitled to receive
payment of any distribution or dividend, or (c) for any other proper purpose,
the Board of Directors may fix in advance a date as the record date. The record
date may not be more than 70 days (and, in the case of a notice to shareholders
of a shareholders' meeting, not less than 10 days) prior to the date on which
the particular action, requiring the determination of shareholders, is to be
taken. A determination of shareholders of record entitled to notice of or to
vote at a meeting of shareholders shall apply to any adjournment of the
meeting, unless the Board of Directors shall fix a new record date for the
reconvened meeting, which it must do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.

7.7 Record Date if None Fixed. If no record date is fixed as
provided in Section 7.6. then the record date for any determination of
shareholders that may be proper or required by law shall be, as appropriate,
the date on which notice of a shareholders' meeting is mailed, the date on
which the Board of Directors adopts a resolution declaring a dividend or
authorizing a distribution, or the date on which any other action is taken that
requires a determination of shareholders.

7.8 Conflicting Requirements. To the extent any portion of this
Article Seven is in conflict with any provision of the Articles or the Code,
the Articles or the Code shall control. To the extent any portion of this
Article Seven is not in conflict but deals with the same matter as a provision
of the Articles, such portion shall be deemed supplementary to such provision.

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Article Eight

Indemnification

8.1 Indemnification of Directors. The Corporation shall indemnify
and hold harmless any person (an "Indemnified Person") who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative, whether formal or informal, including any action or suit by or
in the right of the Corporation (for purposes of this Article Eight,
collectively, a "Proceeding") because he or she is or was a director, officer,
employee or agent of the Corporation or because he or she is or was serving at
the Corporation's request as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against any judgment, settlement, penalty,
fine, or reasonable expenses (including, but not limited to, attorneys' fees
and disbursements, court costs, and expert witness fees) incurred with respect
to the Proceeding (for purposes of this Article Eight, a "Liability"), if he or
she acted in a manner he or she believed in good faith to be in or not opposed
to the best interests of the Corporation, and, in the case of any criminal
proceeding, had no reasonable cause to believe his or her conduct was unlawful;
provided, however, that no indemnification shall be made for any Liability for
which, under the Code, indemnification may not be authorized by action of the
Board of Directors, the shareholders, or otherwise, including, but not limited
to, any Liability of a director to the Corporation for: (a) any appropriation
by a director, in violation of the director's duties, of any business
opportunity of the Corporation; (b) any acts or omissions of a director that
involve intentional misconduct or a knowing violation of law; (c) the types of
liability set forth in Code Section 14-2-832; or (d) any transaction from which
the director received an improper personal benefit. Indemnification in
connection with a Proceeding brought by or in the right of the Corporation is
limited to reasonable expenses incurred in connection with the Proceeding.

8.2 Determination. Notwithstanding any judgment, order,
settlement, conviction, or plea in any Proceeding, an Indemnified Person shall
be entitled to indemnification as provided in section 8.1 if a determination
that such Indemnified Person is entitled to such indemnification shall be made
(a) by the Board of Directors by a majority vote of a quorum consisting of
directors who are not at the time parties to the Proceeding; (b) if a quorum
cannot be obtained under (a) above, by majority vote of a committee duly
designated by the Board of Directors (in which designation directors who are
parties may participate), consisting solely of two or more directors who are
not at the time parties to the Proceeding; (c) in a written opinion by special
legal counsel selected as required by the Code; or (d) by the shareholders;
provided, however, that shares owned by or voted under the control of directors
who are at the time parties to the Proceeding may not be voted on the
determination.

8.3 Advances. To the extent the Corporation has funds reasonably
available to be used for this purpose, expenses (including, but not limited to,
attorneys' fees and disbursements, court costs, and expert witness fees)
incurred by the Indemnified Person in defending any Proceeding of the kind
described in Section 8.1 shall be paid by the Corporation in advance of the
final disposition of such Proceeding as set forth herein. The Corporation shall
promptly pay the amount of such expenses to the Indemnified Person, but in no
event later than 10 days

13
<PAGE> 14

following the Indemnified Person's delivery to the Corporation of a written
request for an advance pursuant to this Section 8.3, together with a reasonable
accounting of such expenses; provided, however, that the Indemnified Person
shall furnish the Corporation a written affirmation of his good faith belief
that he has met the standard of conduct set forth in the Code and a written
undertaking and agreement to repay to the Corporation any advances made
pursuant to this Section 8.3 if it shall be determined that the Indemnified
Person is not entitled to be indemnified by the Corporation for such amounts.
The Corporation may make the advances contemplated by this Section 8.3
regardless of the Indemnified Person's financial ability to make repayment. Any
advances and undertakings to repay pursuant to this Section 8.3 may be
unsecured and interest-free.

8.4 Non-Exclusivity. Subject to any applicable limitation imposed
by the Code or the Articles, the indemnification and advancement of expenses
provided by or granted pursuant to this Article Eight shall not be deemed
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any provision of the Articles, or
any Bylaw, resolution, or agreement specifically or in general terms approved
or ratified by the affirmative vote of holders of a majority of the shares
entitled to be voted thereon.

8.5 Insurance. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee, or agent of the Corporation, or who, while serving in such a
capacity, is also or was also serving at the request of the Corporation as a
director, officer, trustee, partner, employee, or agent of any corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
against any Liability that may be asserted against him or her or incurred by
him or her in any such capacity, or arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him or her
against such liability under the provisions of this Article Eight.

8.6 Notice. If the Corporation indemnifies or advances expenses to
a director under any of Sections 14-2-851 through 14-2-854 of the Code (or any
equivalent provision of these Bylaws) in connection with a Proceeding by or in
the right of the Corporation, the Corporation shall, to the extent required by
Section 14-2-1621 or any other applicable provision of the Code, report the
indemnification or advance in writing to the shareholders with or before the
notice of the next shareholders' meeting.

8.7 Security. The Corporation may designate certain of its assets
as collateral, provide self-insurance, establish one or more indemnification
trusts, or otherwise secure or facilitate its ability to meet its obligations
under this Article Eight, or under any indemnification agreement or plan of
indemnification adopted and entered into in accordance with the provisions of
this Article Eight, as the Board of Directors deems appropriate.

8.8 Amendment. Any amendment to this Article Eight that limits or
otherwise adversely affects the right of indemnification, advancement of
expenses, or other rights of any Indemnified Person hereunder shall, as to such
Indemnified Person, apply only to Proceedings based on actions, events, or
omissions occurring after such amendment and after delivery of notice of such
amendment to the Indemnified Person so affected (collectively, "Post Amendment
Events"). Any Indemnified Person shall, as to any Proceeding based on actions,
events, or omissions occurring prior to the date of receipt of such notice, be
entitled to the right of indemnification, advancement of expenses, and other
rights under this Article Eight to the same

14
<PAGE> 15

extent as if such provisions had continued as part of the Bylaws of the
Corporation without such amendment. This Section 8.8 cannot be altered,
amended, or repealed in a manner effective as to any Indemnified Person (except
as to Post Amendment Events) without the prior written consent of such
Indemnified Person.

8.9 Agreements. The provisions of this Article Eight shall be
deemed to constitute an agreement between the Corporation and each Indemnified
Person hereunder. In addition to the rights provided in this Article Eight, the
Corporation shall have the power, upon authorization by the Board of Directors,
to enter into an agreement or agreements providing to any Indemnified Person
indemnification rights substantially similar to those provided in this Article
Eight.

8.10 Continuing Benefits. The rights of indemnification and
advancement of expenses permitted or authorized by this Article Eight shall,
unless otherwise provided when such rights are granted or conferred, continue
as to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such
person.

8.11 Successors. For purposes of this Article Eight, the term
"Corporation" shall include any corporation, joint venture, trust, partnership,
or unincorporated business association that is the successor to all or
substantially all of the business or assets of this Corporation, as a result of
merger, consolidation, sale, liquidation, or otherwise, and any such successor
shall be liable to the persons indemnified under this Article Eight on the same
terms and conditions and to the same extent as this Corporation.

8.12 Severability. Each of the Sections of this Article Eight, and
each of the clauses set forth herein, shall be deemed separate and independent,
and should any part of any such Section or clause be declared invalid or
unenforceable by any court of competent jurisdiction, such invalidity or
unenforceability shall in no way render invalid or unenforceable any other part
thereof or any separate Section or clause of this Article Eight that is not
declared invalid or unenforceable.

8.13 Additional Indemnification. In addition to the specific
indemnification rights set forth herein, the Corporation shall indemnify each
of its directors and such of its officers as have been designated by the Board
of Directors to the full extent permitted by action of the Board of Directors
without shareholder approval under the Code or other laws of the State of
Georgia as in effect from time to time.

Article Nine

Miscellaneous

9.1 Inspection of Books and Records. The Board of Directors shall
have the power to determine which accounts, books, and records of the
Corporation shall be available for shareholders to inspect or copy, except for
those books and records required by the Code to be made available upon
compliance by a shareholder with applicable requirements, and shall have the
power to fix reasonable rules and regulations (including confidentiality
restrictions and

15
<PAGE> 16

procedures) not in conflict with applicable law for the inspection and copying
of accounts, books, and records that by law or by determination of the Board of
Directors are made available. Unless required by the Code or otherwise provided
by the Board of Directors, a shareholder of the Corporation holding less than
two percent of the total shares of the Corporation then outstanding shall have
no right to inspect the books and records of the Corporation.

9.2 Fiscal Year. The fiscal year of the Corporation shall be the
year ending December 31.

9.3 Corporate Seal. The corporate seal will be in such form as the
Board of Directors may from time to time determine. The Board of Directors may
authorize the use of one or more facsimile forms of the corporate seal. The
corporate seal need not be used unless its use is required by law, by these
Bylaws, or by the Articles.

9.4 Annual Statements. Not later than one hundred twenty (120)
days after the close of each fiscal year, and in any case prior to the next
annual meeting of shareholders, the Corporation shall prepare (a) a balance
sheet showing in reasonable detail the financial condition of the Corporation
as of the close of its fiscal year, and (b) a profit and loss statement showing
the results of its operations during its fiscal year. Upon receipt of written
request or as required by the Exchange Act, the Corporation promptly shall mail
to any shareholder of record a copy of the most recent such balance sheet and
profit and loss statement, in such form and with such information as the Code
or the Exchange Act may require.

9.5 Notice.

(a) Whenever these Bylaws require notice to be given to any
shareholder or to any director, the notice may be given by mail, in person, by
courier delivery, by telephone, or by telecopier, telegraph, or similar
electronic means. Whenever notice is given to a shareholder or director by
mail, the notice shall be sent by depositing the notice in a post office or
letter box in a postage-prepaid, sealed envelope addressed to the shareholder
or director at his or her address as it appears on the books of the
Corporation. Any such written notice given by mail shall be effective: (i) if
given to shareholders, at the time the same is deposited in the United States
mail; and (ii) in all other cases, at the earliest of (x) when received or when
delivered, properly addressed, to the addressees last known principal place of
business or residence, (y) five days after its deposit in the mail, as
evidenced by the postmark, if mailed with first-class postage prepaid and
correctly addressed, or (z) on the date shown on the return receipt, if sent by
registered or certified mail, return receipt requested, and the receipt is
signed by or on behalf of the addressee. Whenever notice is given to a
shareholder or director by any means other than mail, the notice shall be
deemed given when received.

(b) In calculating time periods for notice, when a period of
time measured in days, weeks, months, years, or other measurement of time is
prescribed for the exercise of any privilege or the discharge of any duty, the
first day shall not be counted but the last day shall be counted.

9.6 Fair Price Requirements; Business Combinations. All of the
requirements of Part 2 of Article 11 and all of the requirements of Article 11A
of the Code, as the same may be amended from time to time, and any successor
provision of the Code, shall be applicable to the

16
<PAGE> 17

Corporation.

Article Ten

Amendments

Except as otherwise provided under the Code, the Board of Directors
shall have the power to alter, amend, or repeal these Bylaws or adopt new
Bylaws. Any Bylaws adopted by the Board of Directors may be altered, amended,
or repealed, and new Bylaws adopted, by the shareholders. The shareholders may
prescribe in adopting any Bylaw or Bylaws that the Bylaw or Bylaws so adopted
shall not be altered, amended, or repealed by the Board of Directors.

Dated as of July __, 1999

<PAGE> 1
EXHIBIT 4.1

NUMBER SHARES

THE PLASTIC SURGERY COMPANY

INCORPORATED UNDER THE LAWS OF THE STATE OF GEORGIA
AUTHORIZED 100,000,000 SHARES OF COMMON STOCK, NO PAR VALUE

This certifies that _________________________________________________ is the
registered holder of __________________________________________________Shares of
Common Stock, no par value per share, of The Plastic Surgery Company,
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.

IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ________________________ day of ________________________A.D. 19____

______________________________________ SEAL _________________________________
President Secretary

<PAGE> 2
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.

<TABLE>
<S> <C> <C> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- ____________ Custodian _______________
(Cust) (Minor)
TEN ENT -- as tenants by the entireties under Uniform Gifts to Minors

JT TEN -- as joint tenants with right of Act __________________________________
survivorship and not as tenants (State)
in common
</TABLE>

Additional abbreviations may also be used though not in the above list.

For value received, _________________________________ hereby sell, assign
and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________________________________________________________

_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE

_______________________________________________________________________________

_________________________________________________________________________ Shares

represented by the within Certificate, and do hereby irrevocably constitute and

appoint________________________________________________________________________

_______________________________________________________________________________

Attorney to transfer the said shares on the books of the within-named
Corporation with full power of substitution in the premises.

Dated, ______________

_______________________________

In presence of

___________________________________

NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

<PAGE> 1

KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA 30303-1763
TELEPHONE: 404/572-4600
FACSIMILE: 404/572-5100

EXHIBIT 5.1
July 22, 1999

The Plastic Surgery Company
Two Midtown Plaza
Suite 1220
1360 Peachtree Street, NE
Atlanta, GA 30309

RE: REGISTRATION STATEMENT ON FORM S-1 RELATING TO COMMON STOCK,
NO PAR VALUE, OF THE PLASTIC SURGERY COMPANY

Gentlemen:

We have acted as counsel for The Plastic Surgery Company, a Georgia
corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Registration
Statement"), relating to approximately 2,760,000 shares of Common Stock of the
Company, no par value ("Common Stock"), to be sold by the Company to the
underwriters named in the Registration Statement pursuant to an Underwriting
Agreement, the form of which has been filed as an Exhibit to the Registration
Statement (the "Underwriting Agreement").

Such 2,760,000 shares include approximately 360,000 shares that may be
purchased by the underwriters upon the exercise of an over-allotment option
granted to the underwriters by the Company of which 228,200 shares will be sold
by certain selling shareholders.

As counsel, we have examined and relied upon such records, documents,
certificates and other instruments as in our judgment are necessary or
appropriate to form the basis for the opinions hereinafter set forth. In all
such examinations, we have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to us as certified, conformed or photographic copies, and as to certificates of
public officials, we have assumed the same to have been properly given and to
be accurate.

Based upon the foregoing, we are of the opinion that the shares of
Common Stock to be issued and sold by the Company pursuant to the Underwriting
Agreement have been duly authorized and, when issued in accordance with the
terms set forth in the Underwriting Agreement, will be validly issued, fully
paid and nonassessable.

<TABLE>
<S> <C> <C>
1730 PENNSYLVANIA AVENUE, N.W. 1185 AVENUE OF THE AMERICAS 1100 LOUISIANA STREET, SUITE 3300
WASHINGTON, D.C. 20006-4706 NEW YORK, NY 10036-4003 HOUSTON, TX 77002-5219
TELEPHONE: 202/737-0500 TELEPHONE: 212/566-2100 TELEPHONE: 713/751-3200
FACSIMILE: 202/626-3737 FACSIMILE: 212/556-2222 FACSIMILE: 713/751-3290
</TABLE>

<PAGE> 2
The Plastic Surgery Company
July 22, 1999
Page 2

We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to us under the caption "Legal
Matters" in the Prospectus that forms a part of the Registration Statement.

Very truly yours,

/s/ KING & SPALDING
KING & SPALDING

<PAGE> 1
EXHIBIT 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of November 1,
1998, is entered by and between Better Image, Inc., a Georgia corporation (the
"Company"), and David Challoner ("Executive").

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00), the
mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the Company and
the Executive hereby agree as follows:

SECTION 1. EMPLOYMENT. The Company hereby agrees to employ
Executive, and Executive hereby accepts employment by the Company, upon the
terms and subject to the conditions hereinafter set forth.

SECTION 2. DUTIES. Executive shall serve as the Chief Operating
Officer of the Company. Executive will perform the duties attendant to his
executive position with the Company under the direction of the Board of
Directors of the Company. Executive agrees to devote his reasonable best efforts
to the performance of his duties to the Company.

SECTION 3. TERM. The term of this Agreement shall be for five
(5) years, commencing on November 1, 1998 (the "Commencement Date"), and shall
be automatically renewed for successive one year terms unless either party gives
to the other written notice of termination pursuant to the provisions of Section
6 hereof, no fewer than ninety (90) days prior to the expiration of any such
term that it does not wish to extend this Agreement.

SECTION 4. COMPENSATION AND BENEFITS. In consideration for the
services of the Executive hereunder, the Company will compensate Executive as
follows:

(a) Base Salary. Commencing on November 1, 1998, Executive shall
be entitled to receive a base salary of $150,000 per annum.

(b) Bonus. Executive shall be eligible to receive an annual cash
bonus in an amount equal to 30% of his base salary in the event that certain
annual financial performance targets established by the Board of Directors are
achieved.

(c) Benefits. The Company shall grant to Executive, immediately
prior to the underwritten initial public offering (the "IPO") of the Company's
common stock (the "IPO"), an option to purchase one hundred fifty thousand
(150,000) shares of the Company's Common Stock at an exercise price equal to the
price to the public of the Company's Common Stock in the IPO

<PAGE> 2

thereof, which grant shall vest with respect to 20% of the shares on the
effective date of the IPO and 20% on each of the first through fourth
anniversaries of the IPO. The term of this option shall be five years from the
anniversary of the IPO. Both option grants shall be subject to the terms of
Section 7 hereof. In addition, during the term of this Agreement, Executive
shall be entitled to participate in and receive benefits under any and all
executive benefit plans and programs which are from time to time generally made
available to the executives of the Company, subject to approval and grant by the
appropriate Company committee with respect to programs calling for such
approvals or grants. Executive shall be entitled to receive a health insurance
allowance of $300 per month until such time as the Company has a health
insurance plan in place covering Executive.

SECTION 5. EXPENSES. It is acknowledged that Executive, in
connection with the services to be performed by him pursuant to the terms of
this Agreement, will be required to make payments for travel, entertainment of
business associates and similar expenses. The Company will reimburse Executive
for all reasonable expenses of types authorized by the Company and incurred by
Executive in the performance of his duties hereunder. Executive will comply with
such budget limitations and approval and reporting requirements with respect to
expenses as the Company may establish from time to time.

SECTION 6. TERMINATION. Executive's employment hereunder will
commence on the Commencement Date and continue until the end of the term
specified in Section 3 hereof and any renewals of such term, except that the
employment of Executive hereunder will terminate earlier in the following
manner:

(a) Death or Disability. Immediately upon the death of Executive
during the term of his employment hereunder or, at the option of the Company, in
the event of Executive's disability, upon 30 days prior written notice to
Executive. Executive will be deemed disabled if, as a result of Executive's
incapacity due to physical or mental illness, Executive shall have been unable
to perform his duties with the Company on a full-time basis for 120 consecutive
business days. Executive will be eligible for short and/or long-term disability
benefits made available to Company executives. Additionally, Executive will be
entitled to severance pay as defined herein, less any short and/or long term
disability benefits made available to the Executive.

(b) For Cause. For "Cause" immediately upon written notice by the
Company to Executive. For purposes of this Agreement, a termination will be for
Cause if (i) Executive willfully and continuously fails to perform his duties
with the Company (other than any such failure resulting from incapacity due to
physical or mental illness), (ii) Executive willfully engages in misconduct
materially and demonstrably injurious to the Company for personal profit and
upon receipt of written notice of termination for such misconduct is unable to
cure the misconduct within a reasonable period of time, or (iii) Executive has
been convicted of a felony or a crime involving theft or fraud.

(c) Failure of Financing. Automatically in the event that the IPO
is not consummated or other sources of adequate working capital are not secured
on or prior to June 30, 1999.

2
<PAGE> 3

(d) Without "Cause." Without "Cause" by the Company upon 30 days
prior written notice to Executive.

(e) Constructive Termination. At Executive's option, upon written
notice by Executive to the Company within 120 days following a Constructive
Termination. As used herein, the term "Constructive Termination" means (i) a
change in Executive's title without Executive's consent, (ii) a material
reduction in Executive's duties and responsibilities without Executive's
consent, (iii) a material reduction in Executive's base compensation or maximum
eligible bonus from the immediately preceding year without Executive's consent
or (iv) the relocation of the Executive's office outside a 50 mile radius of
Santa Barbara, California without Executive's consent.

(f) Voluntary Termination. At Executive's option, upon 30 days
prior written notice by Executive to the Company. Upon Voluntary Termination,
Executive forfeits the right to (i) the vesting of any options to purchase the
Company's Common Stock that have not yet vested as defined in Section 4(c)
herein, (ii) eligibility to receive the annual cash bonus for the year of
termination as defined in Section 4(b) herein and (iii) any severance pay of the
Company as defined in Section 6 herein. If Executive has any vested but
unexercised options upon voluntary termination, such options shall remain
exercisable for the greater of 90 days or the time period specified in any
applicable option plan or option agreement.

Executive will not be entitled to any severance pay or other
compensation upon termination of his employment pursuant to Subsections 6(b),
(c), (f), or upon the death of the Executive, except for any portion of his base
salary accrued but unpaid from the last monthly payment date to the date of
termination and expense reimbursements under Section 5 hereof for expenses
incurred in the performance of his duties hereunder prior to termination. In the
event Executive's employment with the company is terminated as a result of
Executive's disability, Executive will be entitled to severance pay as defined
herein, less any short and/or long term disability benefits made available to
the Executive. In the event Executive's employment with the Company (i) is
terminated by the Company without Cause or (ii) is terminated by Executive
within 120 days following a Constructive Termination, or (iii) upon the
occurrence of a Change in Control (as hereafter defined) followed within ninety
(90) days by the termination of Executive's employment by Executive, the Company
will pay Executive on the date of termination (aa) severance pay in the amount
of Executive's monthly base salary at the rate in effect immediately preceding
the termination of Executive's employment multiplied by 24 months (the
"Separation Payment"), which Separation Payment will be paid by the Company in a
lump sum on the date of termination, (bb) the portion of his base salary accrued
but unpaid from the last monthly payment date to the date of termination, (cc)
expense reimbursements under Section 5 hereof for expenses incurred in the
performance of his duties hereunder prior to termination, (dd) a pro-rata
portion of the annual maximum bonus for the year in which the termination
occurs, and (ee) an amount equal to two times the amount of the bonus actually
earned by Executive the prior calendar year, provided if the termination occurs
during the first year of employment, Executive will receive an amount equal to
two times the pro-rata portion of the annual maximum bonus for the first year.

3
<PAGE> 4

Change In Control. A Change In Control will be deemed to have occurred
for purposes hereof (i) when a change of stock ownership of the Company of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and any successor Item of a similar nature has occurred;
or (ii) upon the acquisition of beneficial ownership, directly or indirectly, by
any person (as such term is used in Section 14(d)(2) of the Exchange Act) of
securities of the Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; or (iii) a change during any
period of two consecutive years of a majority of the members of the Board of
Directors of the Company for any reason, unless the election, or the nomination
for election by the Company's shareholders, of each director was approved by a
vote of a majority of the directors then still in office who were directors at
the beginning of the period; or (iv) upon approval by the Company's shareholders
of a complete liquidation of the Company; or (v) upon an agreement for the sale
or disposition of Company or all or substantially all of its assets; or (vi)
upon approval by the Company's shareholders of a merger or consolidation of the
Company with any other corporation, except a merger or consolidation which would
result in the voting Common Stock of the Company outstanding immediately prior
thereto continuing to represent at least 51% of the combined voting power of the
surviving entity or a merger or consolidation effected to implement a
recapitalization of the Company in which no shareholder acquires more than 50%
of the voting power of the Company; provided that a Change In Control will not
be deemed to have occurred for purposes hereof with respect to any person
meeting the requirements of clauses (i) and (ii) of Rule 13d-1(b)(1) promulgated
under the Securities Exchange Act of 1934, as amended.

SECTION 7. EFFECT OF TERMINATION ON OPTIONS/COMMON STOCK. Any
options to purchase the Company's Common Stock held by the Executive that have
not yet vested will automatically expire if the Executive's employment with the
Company is terminated for Cause as defined in Section 6(b) or if the Executive
voluntarily leaves the employment of the Company in breach of this Agreement. If
Executive's employment with the Company ends for any reason other than
termination for Cause or voluntary departure in breach of this Agreement, such
Executive's options will remain exercisable and will vest and expire in
accordance with the terms of the applicable option agreements. If the Executive
dies while employed by the Company, his vested options shall become fully
exercisable on the date of his death and shall expire twelve months thereafter.
If Executive has any vested but unexercised options upon any termination of
employment, such options shall remain exercisable for the greater of 90 days or
the time period specified in any applicable option plan or option agreement.

SECTION 8. CONFIDENTIAL INFORMATION. Executive recognizes and
acknowledges that certain assets of Employer and its affiliates, including,
without limitation, information regarding customers, pricing policies, methods
of operation, proprietary computer programs, sales, products, profits, costs,
markets, key personnel, formulae, product applications, technical processes, and
trade secrets (hereinafter called "Confidential Information") are valuable,
special and unique assets of Employer and its affiliates. Executive will not,
during or after his term of employment, disclose any of the Confidential
Information to any person, firm, corporation, association, or any other entity
for any reason or purpose whatsoever, directly or indirectly, except

4
<PAGE> 5

as may be required pursuant to his employment hereunder, unless and until such
Confidential Information becomes publicly available other than as a consequence
of the breach by Executive of his confidentiality obligations hereunder. In the
event of the termination of his employment, whether voluntary or involuntary and
whether by the Company or Executive, Executive will deliver to the Company all
documents and data pertaining to the Confidential Information and will not take
with him any documents or data of any kind or any reproductions (in whole or in
part) of any items relating to the Confidential Information.

SECTION 9. NONCOMPETITION; NONSOLICITATION. Until two years
after termination of Executive's employment hereunder, Executive will not (i)
engage directly or indirectly, alone or as a shareholder, partner, officer,
director, Executive or consultant of any other business organization, in any
business activities which (A) relate to the acquisition, consolidation or
management of surgical or physician practices (the "Designated Industry") and
(B) were either conducted by the Company prior to Executive's termination or
proposed to be conducted by the Company at the time of such termination, (ii)
divert to any competitor of the Company in the Designated Industry any customer
of the Company, or (iii) solicit or encourage any officer, executive, employee
or consultant of the Company to leave his employ for employment by or with any
competitor of the Company in the Designated Industry. The parties acknowledge
that Executive's noncompetition and nonsolicitation obligations hereunder will
not preclude Executive from owning less than 5% of the common stock of any
publicly traded corporation conducting business activities in the Designated
Industry. Executive will continue to be bound by the provisions of this Section
9 until their expiration and will not be entitled to any additional compensation
from the Company with respect thereto. If Executive's termination is a result of
a Change of Control as defined in Section 6 herein, the provisions of this
Section 9 will expire immediately upon such termination. The provisions of
Section 9 shall remain in effect only during such time as the Executive is
entitled to receive severance pay from the Company, as defined in Section 6
herein, and only during such time as the Executive actually receives such
severance pay from the Company. If at any time the provisions of this Section 9
are determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 9 will be
considered divisible and will become and be immediately amended to only such
area, duration and scope of activity as will be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
Executive agrees that this Section 9 as so amended will be valid and binding as
though any invalid or unenforceable provision had not been included herein.

SECTION 10. GENERAL.

(a) Notices. All notices and other communications hereunder shall
be in writing, and will be deemed to have been duly given (i) upon receipt if
delivered personally, (ii) three days after mailing, if mailed by certified
mail, return receipt requested, (iii) on the next business day if sent by
overnight delivery service, or (iv) upon confirmation of transmission if by
telecopier, to the relevant address set forth below, or to such other address as
the recipient of such notice or communication will have specified to the other
party hereto in accordance with this Section 10(a):

5
<PAGE> 6

IF TO EMPLOYER, TO:

Better Image, Inc.
Two Midtown Plaza
Suite 1220
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Jonathan E. Wilfong
Telecopier: (404) 898-1247
Telephone: (404) 898-1240

IF TO EXECUTIVE, TO:

David Challoner

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

---------------------
Telecopier:
---------
Telephone:
----------

(b) Withholding. All payments required to be made by Employer
under this Agreement to Executive will be subject to the withholding of such
amounts, if any, relating to federal, state and local taxes as may be required
by law.

(c) Equitable Remedies. Each of the parties hereto acknowledges
and agrees that upon any breach by Executive of his obligations under any of
Sections 8, and 9 hereof, the Company will have no adequate remedy at law, and
accordingly will be entitled to specific performance and other appropriate
injunctive and equitable relief.

(d) Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision will be fully severable and
this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof will remain in full force and effect and will not be affected
by the illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
will be added automatically as part of this Agreement a provision as similar in
its terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.

(e) Waivers. No delay or omission by either party hereto in
exercising any right, power or privilege hereunder will impair such right, power
or privilege, nor will any single or partial exercise of any such right, power
or privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.

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<PAGE> 7

(f) Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.

(g) Captions. The captions in this Agreement are for convenience
of reference only and will not limit or otherwise affect any of the terms or
provisions hereof.

(h) Reference to Agreement. Use of the words "herein," "hereof,"
"hereto" and the like in this Agreement refer to this Agreement only as a whole
and not to any particular subsection or provision of this Agreement, unless
otherwise noted.

(i) Binding Agreement. This Agreement will be binding upon and
inure to the benefit of the parties and will be enforceable by the personal
representatives and heirs of Executive and the successors of Employer. If
Executive dies while any amounts would still be payable to him hereunder, such
amounts will be paid to Executive's estate. This Agreement is not otherwise
assignable by Executive.

(j) Entire Agreement. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and understandings
relating to the subject matter hereof and may not be amended except by a written
instrument hereafter signed by each of the parties hereto.

(k) Governing Law. This Agreement and the performance hereof will
be construed and governed in accordance with the laws of the State of Georgia,
without regard to its choice of law principles. In the event that any action is
instituted to enforce or interpret this Agreement, or arising out of this
Agreement, such action shall be brought and maintained solely and exclusively in
the appropriate state court of the State of Georgia. Each of the parties hereby
consents to the jurisdiction of such court and agrees not to assert any
objection to such jurisdiction. In the event of any such action, the party
prevailing in such action shall be entitled to recover its reasonable attorney's
fees and costs.

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<PAGE> 8

This Agreement was executed as of the date first above written.

BETTER IMAGE, INC.:

By: /s/ JONATHAN E. WILFONG
-----------------------------------------
Jonathan E. Wilfong, Chairman

By: /s/ DENNIS E. CONDON
-----------------------------------------
Dennis E. Condon, Chief Executive Officer

EXECUTIVE:

By: /s/ DAVID CHALLONER
-----------------------------------------
David Challoner

<PAGE> 1
Exhibit 10.6

BETTER IMAGE, INC.

CONSULTING AGREEMENT

This Consulting Agreement (the "Agreement") is made and entered into as
of the 1st day of June, 1997, by and between JONATHAN E. WILFONG ("Consultant"),
and BETTER IMAGE, INC. ("BII"), a Georgia corporation with its headquarters in
Atlanta, Georgia. Because BII desires to retain Consultant and because
Consultant desires to be retained by BII, both parties, in consideration of the
mutual and exchanged promises and agreements contained herein, particularly the
non-disclosure, non-solicitation and non-competition covenants set forth in
Sections 5, 6 and 7, and of fees paid and services rendered hereunder, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby agree as follows:

Section 1. Consulting Term. Subject to the terms contained in this
Agreement, BII seeks to retain Consultant as a consultant. Consultant shall be a
consultant to BII until the termination of Consultant's engagement as a
consultant to BII pursuant to Section 4, which period shall be referred to in
this Agreement as the "Consulting Term."

Section 2. Consulting. During the Consulting Term, BII shall engage
Consultant as a consultant and as an independent contractor and Consultant shall
act as a consultant to BII, rendering financial and general business services
and such other consultation as the Board of Directors of BII shall from time to
time reasonably request. Consultant shall have the right to (i) enter into
negotiations, including but not limited to letters of intent, with respect to
potential business combinations, (ii) engage underwriters and other advisors
with respect to potential business combinations and sales of stock of the
Corporation, (iii) engage such other consultants as Consultant deems necessary
in connection with services to be provided to the Corporation and (iv) designate
or engage, at his discretion, and at any time, agents to act on Consultant's
behalf in fulfilling any duties or obligations of Consultant pursuant to this
Agreement. During the Consulting Term, Consultant will not engage in any
activities in conflict with the best interests of BII or of any Affiliate. As
used in this Agreement, the term "Affiliate" shall mean each corporation or
other business entity directly or indirectly controlling, controlled by, or
under common control with BII. It is understood that the rights of the
Consultant outlined above all require the advance approval and consent of BII
and its Board of Directors.

Section 3. Consulting Fee, Expenses, Warrant.

(a) Consulting Fee. BII shall pay Consultant a consulting fee
of Four Hundred Twenty-eight Thousand Dollars ($428,000), (the "Consulting
Fee"), $8,000 will be paid monthly commencing June 1, 1997 with the balance, net
of payments made, paid at the effective date of the Initial Public Offering. For
purposes of this Agreement, "Initial Public Offering" shall mean a public
offering of equity securities of BII, or an Affiliate, that is effected through
a firm commitment underwriting and pursuant to a registration statement declared
effective under the Securities Act of 1933. Due to Consultant's being an
independent contractor during the Consulting Term, BII shall not withhold any
taxes from the Consulting Fee, unless otherwise required by law. As an
independent contractor,

<PAGE> 2

Consultant shall not be entitled to any benefits or payments not expressly
provided for in this Section 3.

(b) Expenses. In addition to the Consulting Fee, Consultant
shall be entitled to reimbursement by BII for all actual, reasonable and direct
expenses incurred by him in the performance of his duties hereunder, provided
such expenses are properly characterized as being business expenses that are
properly tax deductible for BII. Consultant shall provide BII with written
documentation of such expenses in form complying with the records required of
BII by the Internal Revenue Service and appropriate state authorities for tax
deductibility purposes in such cases, and reimbursement for each item of
approved expenses shall be made within a reasonable time after receipt by BII of
the written documentation thereof.

(c) Warrant. In addition to the Consulting Fee, as further
consideration for his services hereunder, Consultant shall be issued a Warrant
to purchase Three Hundred Thousand (300,000) shares of the common stock of BII,
(the "Warrant") at the net initial public offering price per share, which
Warrant shall be exercisable upon and only upon the closing of an Initial Public
Offering. The Warrant shall have a term of five (5) years from the effective
date of the IPO.

Section 4. Termination.

(a) Consulting Term. Notwithstanding anything herein to the
contrary, the Consulting Term shall terminate upon the earlier to occur of the
following:

(i) September 30, 1998;

(ii) The death or Permanent Disability (as defined
below) of Consultant; for purposes of this Agreement, the term "Permanent
Disability" shall mean that by reason of any physical or mental incapacity or
other cause Consultant has been unable, or it is reasonably determined by the
Board of Directors of BII that Consultant will be unable, for a period of at
least 180 substantially consecutive days to perform its duties and
responsibilities to BII pursuant to this Agreement in a reasonably satisfactory
manner; or

(iii) The expiration of six (6) months after the
receipt by BII of Consultant's written notice of resignation as a consultant
pursuant to this Agreement; and

(iv) The delivery by BII to Consultant of BII's
written notice of termination of Consultant's engagement as a consultant to BII
pursuant to this Agreement for Cause; for purposes of this Agreement, the term
"Cause" shall mean any conduct by Consultant involving moral turpitude,
conviction of Consultant of any felony, fraud or theft, any misconduct or gross
negligence on the part of Consultant in complying with the terms of this
Agreement or in performing any of his duties for BII, including knowing failure
to disclose or stop the dishonesty of others, dishonesty of Consultant, any

2
<PAGE> 3

act on the part of Consultant of fraud, deceit or misappropriation, any failure
or refusal on the part of Consultant to perform his duties under this Agreement
or to obey lawful directives from the Board of Directors of BII or its
designees, any breach by consultant of any obligation under this Agreement or
any other agreement with BII, any act on the part of Consultant in violation of
the spirit or terms of the Non-disclosure, Non-solicitation or Non-competition
covenants contained in this Agreement, regardless of whether those covenants are
deemed or held to be legally unenforceable, any act or omission by Consultant
that has the potential of injuring the reputation of BII, failure of Consultant
to adhere to any written or established policy of BII.

(b) Effect of Termination.

(i) Upon the termination of the Consulting Term
pursuant to this Section 4, by reason of the death or Permanent Disability of
Consultant, BII shall be obligated to Consultant or Consultant's Personal
Representative, as the case may be, for the Consulting Fee only if the Initial
Public Offering has become effective prior to the date of such termination of
the Consulting Term. Upon the termination of the Consulting Term for Cause,
Consultant shall forfeit any and all right to the Consulting Fee, unless the
Initial Public Offering has closed prior to such termination of the Consulting
Term. For purposes of this Agreement, the term "Personal Representative" shall
mean any person acting in a representative capacity as the executor or
administrator of Consultant's estate or the duly appointed guardian of the
property of Consultant or any attorney-in-fact acting for Consultant pursuant to
a valid and binding power of attorney.

(ii) Notwithstanding anything else in this Agreement
to the contrary, the provisions of Sections 4, 5 and 6 hereof shall survive the
termination of the Consulting Term pursuant to this Section 4.

Section 5. Non-Disclosure of Trade Secrets and Confidential
Information.

(a) Trade Secrets Defined. As used in this Agreement, the term
"Trade Secrets" shall mean all secret, proprietary or confidential information
regarding BII and each Affiliate or BII or Affiliate activities, including any
and all information not generally known to, or ascertainable by, persons not
employed by BII or any Affiliate, the disclosure or knowledge of which would
permit those persons to derive actual or potential economic value therefrom or
to cause economic or financial harm to BII or any Affiliate. Such information
shall include, but not be limited to, customer lists, computer software
(including, without limitation, source code, object code and manuals), customer
billing information, technical information regarding BII or any Affiliate
products or services, prices paid by customers, purchase and supply information,
current and future development and expansion or contraction plans of BII or any
Affiliate, sales and marketing techniques, information concerning personnel
assignments and operations of BII or any Affiliate and matters concerning the
financial affairs, future plans and management of BII or any Affiliate. "Trade
Secrets" shall not include information that has become generally available to
the public by the act of one who has the right to disclose such information
without violating any right or privilege of BII or any Affiliate. This
definition shall not limit

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<PAGE> 4

any definition of "trade secrets" under state or federal law.

(b) Non-Disclosure of Trade Secrets. Throughout the term of
this Agreement and at all times after the date that this Agreement terminates
for any reason, Consultant shall not directly or indirectly transmit or disclose
any Trade Secret of BII or any Affiliate to any person, concern or entity, and
shall not make use of any such Trade Secret, directly or indirectly, for himself
or for others, without the prior written consent of BII, except (i) to the
extent such disclosure is consistent with Consultant's duties hereunder or (ii)
for a disclosure that is required by a law or regulation or court order, in
which latter case Consultant shall provide BII prior written notice of such
disclosure and an opportunity to contest such disclosure.

(c) Confidential Information Defined. As used in this
Agreement, the term "Confidential Information" shall mean all information
regarding BII or any Affiliate, BII's or any Affiliate's activities, BII's or
any Affiliate's business or BII's or any Affiliate's customers that is not
generally known to persons not employed by BII but that does not rise to the
level of a Trade Secret and that is not generally disclosed by BII practice or
authority to persons not employed by BII. "Confidential Information" shall not
include information that has become generally available to the public by the act
of one who has the right to disclose such information without violating any
right or privilege of BII. This definition shall not limit any definition of
"confidential information" or any equivalent designation under state or federal
law.

(d) Non-Disclosure of Confidential Information. During the
Consulting Term and for two (2) years thereafter, Consultant shall not directly
or indirectly transmit or disclose any Confidential Information to any person,
concern or entity, or make any use of any such Confidential Information,
directly or indirectly, for himself or for others, without the prior written
consent of BII, except to the extent such disclosure is consistent with
Consultant's duties hereunder. Upon termination of the Consulting Term,
Consultant will return all Trade Secrets and all Confidential Information of BII
and Affiliates, including without limitation, any documents, notes, analyses,
compilations or other materials incorporation or based on any Trade Secrets or
Confidential Information of BII or any Affiliate.

(e) Injunctive Relief. Consultant acknowledges that the
nondisclosure covenants contained in this Section are a reasonable means of
protecting and preserving BII's and any Affiliate's interest in the
confidentiality of this information. Consultant agrees that any breach of these
covenants will result in irreparable damage and injury to BII or Affiliates and
that BII will be entitled to injunctive relief in any court of competent
jurisdiction without the necessity of posting any bond. Consultant also agrees
that any such injunctive relief shall be in addition to any damages that may be
recoverable by BII.

(f) Enforceability of Covenants. Consultant and BIII agree
that Consultant's obligations under these non-disclosure covenants are separate
and distinct from its obligations under other provisions of this Agreement, and
a failure or alleged

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<PAGE> 5

failure of BII to perform its obligations under any provision of this Agreement
shall not constitute a defense to the enforceability of these non-disclosure
covenants.

Section 6. Non-Solicitation.

(a) For a period of eighteen (18) months after the date
hereof, Consultant or affiliates shall not directly or indirectly recruit or
attempt to recruit or make an offer of employment to become engaged in a
business that competes with BII to any person who is then an employee, officer,
director or independent contractor of BII or any Affiliate or who has terminated
such employment or relationship without the consent of BII or any Affiliate
within one hundred eighty (180) days of such recruitment or offer. This
non-solicitation provision will also apply to offers of employment as
independent consultants.

(b) Consultant covenants that he will not take or use any
customer lists or supplier lists of BII or any affiliate and that he will, for a
period of thirty-six (36) months following the date hereof, refrain from
soliciting or attempting to solicit directly or by assisting others, any
business from any of BII's or any Affiliate's, (i) customers, including actively
sought prospective customers, or (ii) suppliers or manufacturers whose products
are marketed or sold by BII or any Affiliate, including actively sought
prospective suppliers or manufacturers whose products are marketed or sold by
BII or any Affiliate, and with whom Consultant has "material contact" (as
defined below) during the Consulting Term, for purposes of providing products or
services that are similar to or competitive with those provided by BII or any
Affiliate. For the purposes of this Section 6(b), "material contact" exists
between Consultant and each customer or potential customer and each current or
potential supplier or manufacturer whose products are marketed or sold by BII or
any Affiliate with whom Consultant dealt (either in person or in writing) in
connection with the provision of his consulting service hereunder.

Section 7. Non-Competition.

(a) During Consultant's engagement by BII as a contractor and
for a period of two (2) years following the termination of such engagement for
any reason whatsoever, the Consultant shall not (except on behalf of or with the
prior written consent of BII), either directly or indirectly, on the
Consultant's own behalf or on behalf of others (i) solicit, divert, appropriate
to or accept on behalf of any Competing Business (as such term is hereinafter
defined), or (ii) attempt to solicit, divert, appropriate to or accept on behalf
of a Competing Business, any business from any plastic surgeon, customer, client
or patient or actively sought prospective plastic surgeons, customer, client or
patient of BII with whom the Consultant has had contact, or whose contacts with
BII have been supervised by the Consultant, or about whom the Consultant has
acquired proprietary information in the course of his or her engagement.

(b) During Consultant's engagement by BII as a contractor and
for a period of two (2) years following the termination of such engagement for
any reason whatsoever, the Consultant shall not (except on behalf of or with the
prior written consent of BII), within the Continental United States (the
"Area"), either directly or indirectly, on his

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<PAGE> 6

or her own behalf or in the service or on behalf of others, (i) be engaged in or
perform services in any capacity for any Competing Business which involves
duties and responsibilities similar to the services provided by Consultant to
BII, (ii) take or cause to be taken any action of whatever nature which would
require, or undertake any engagement or at the time of taking such action could
reasonably be expected to result in, the disclosure or use of proprietary
information; or (iii) own, manage, operate, join, contract with, or participate
in the ownership, management or control of or be engaged in or be connected in
any manner with (whether as principal, partner, shareholder, director, officer,
employee, agent, consultant or otherwise) any business which is or may be
competitive in any manner with the business engaged in by BII; it being
understood that the business engaged in by BII includes, but is not limited to,
consulting services for, and management of the practices of plastic surgeons. It
is the express intention of the parties that the Area, as herein defined, is
related to the area where the Consultant performs or performed services on
behalf of BII under this Agreement as of, or within a reasonable time prior to,
the termination of the Consultant's engagement hereunder.

(c) "Competing Business" means any business organization of
whatever form directly engaged in any business or enterprise which is the same
as, or substantially the same as, the Business of BII.

Section 8. Arbitration.

(a) The parties will attempt through good faith
negotiation to resolve their disputes. The term "disputes" includes, without
limitation, any disagreements between the parties concerning the existence,
formation, interpretation and implementation of this Agreement. If the parties
are unable to resolve their disputes by negotiation, either party may commence
arbitration by sending a written notice of arbitration to the other party. The
notice will state the dispute with particularity.

(b) There will be one arbitrator. If the parties fail
to select a mutually acceptable arbitrator within ten (10) days after the notice
of arbitration, a single arbitrator will be appointed as soon as possible on the
request of either party by the American Arbitration Association in Atlanta,
Georgia. The fee payable to the arbitrator will be based upon the then current
fee schedule of the American Arbitration Association and will be advanced one
half by each party, upon the written request of the arbitrator or the American
Arbitration Association.

(d) Except as set forth in this Section, the
arbitrator will conduct the arbitration according to the Commercial Arbitration
Rules of the American Arbitration Association. Arbitration will take place in
Atlanta, Georgia unless the parties otherwise agree. The arbitrator will base
the decision on the express language of this Agreement. Within ten (10) days
after the arbitrator is appointed, or as soon thereafter as will be reasonably
practicable, the arbitrator will conduct a hearing on the dispute. Each party

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may make written submissions to the arbitrator, and each party will have a
reasonable opportunity for rebuttal, but no longer than ten (10) days. As soon
as reasonably practicable, but not later than ten (10) days after the hearing is
completed, the arbitrator will arrive at a final decision, which will be reduced
to writing, signed by the arbitrator and mailed to each party and its legal
counsel.

(e) All decisions of the arbitrator will be final,
and binding on both parties, and (except as provided below) will constitute the
only method of resolving disputes. Judgment may be entered upon the decision in
accordance with applicable law in any court having jurisdiction.

(f) This arbitration section and all decisions of the
arbitrator will be specifically enforceable in a court of law, or in the
arbitral tribunal.

Section 9. Miscellaneous.

(a) Severability. The covenants set forth in this
Agreement shall be considered and construed as separate and independent
covenants. Should any part or provision of any covenant be held invalid, void or
unenforceable in any court of competent jurisdiction, such invalidity, voidness
or unenforceability shall not render invalid, void or unenforceable any other
part or provision of this Agreement. If any portion of the foregoing provisions
is found to be invalid or unenforceable by a court of competent jurisdiction
because of its duration, the territory, the definition of activities or the
definition of information covered is invalid or unreasonable in scope, the
invalid or unreasonable term shall be redefined, or a new enforceable term
provided, such that the intent of BII and Consultant in agreeing to the
provisions of this Agreement will not be impaired and the provision in question
shall be enforceable to the fullest extent of the applicable laws.

(b) Waiver. The waiver by any party to this Agreement
of a breach of any of the provisions of this Agreement shall not operate or be
construed as a waiver of any other or subsequent breach.

(c) Governing Law. This Agreement shall be deemed to
be made in and shall in all respects be interpreted, construed and governed by
and in accordance with the laws of the State of Georgia (without giving effect
to the conflict of law principles thereof). No provision of this Agreement or
any related documents shall be construed against, or interpreted to the
disadvantage of, any party hereto, by any court or any governmental or judicial
authority by reason of such party having or being deemed to have structured or
drafted such provision.

(d) Entire Agreement. This Agreement is intended by
the parties hereto to be the final expression of their agreement with respect to
the subject matter hereof and this is the complete and exclusive statement of
the terms of their agreement, notwithstanding any representations, statements or
agreements to the contrary heretofore made. This Agreement supersedes any former
agreements governing the same subject matter. This Agreement may be modified
only by a written instrument signed by each of

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the parties hereto.

(e) Assignability. This Agreement may not be assigned
by either party without the prior written consent of the other party.

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

CONSULTANT: COMPANY:

BETTER IMAGE, INC.

By: /s/ Jonathan E. Wilfong By: /s/ Robert D. Garces

Name: Jonathan E. Wilfong Name: Robert D. Garces

Title: Chairman

<PAGE> 1

EXHIBIT 10.11

BETTER IMAGE, INC.

1998 EMPLOYEE STOCK OPTION PLAN

<PAGE> 2

BETTER IMAGE, INC.
1998 EMPLOYEE STOCK OPTION PLAN

ARTICLE I
DEFINITIONS

As used herein, the following terms have the following meanings unless
the context clearly indicates to the contrary:

1.1 "Board" shall mean the Board of Directors of the Company.

1.2 "Change in Control" shall mean the occurrence of either of the
following events:

(a) any of:

(i) a reorganization, merger or consolidation of
the Company with one or more other
corporations (except with respect to a
transaction, the sole purpose of which is to
change the domicile or name of the Company),
as a result of which the Company ceases to
exist or becomes a subsidiary of another
corporation (which shall be deemed to have
occurred if another corporation shall own,
directly or indirectly, more than fifty
percent (50%) of the aggregate voting power
of all outstanding equity securities of the
Company); or

(ii) a sale of all or substantially all of the
Company's assets; or

(b) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than any person
who is a shareholder of the Company on or before the
effective date of the Plan, by the acquisition or
aggregation of securities is or becomes the
beneficial owner, directly or indirectly, of
securities of the Company representing fifty percent
(50%) or more of the combined voting power of the
Company's then outstanding securities ordinarily (and
apart from rights accruing under special
circumstances) having the right to vote at elections
of directors (the "Base Capital Stock"); except that
any change in the relative beneficial ownership of
the Company's securities by any person resulting
solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any
decrease thereafter in such person's ownership of
securities, shall be disregarded until such person
increases in any manner, directly or indirectly, such
person's beneficial ownership of any securities of
the Company.

<PAGE> 3

1.3 "Code" shall mean the Internal Revenue Code of 1986, as
amended, including effective date and transition rules (whether or not
codified). Any reference herein to a specific section of the Code shall be
deemed to include a reference to any applicable corresponding provision of
future law.

1.4 "Committee" shall mean a committee of at least two (2)
Directors appointed from time to time by the Board, having the duties and
authority set forth herein in addition to any other authority granted by the
Board; provided, however, that with respect to any Options granted to an
individual who is also a Section 16 Insider, the Committee shall consist solely
of two (2) or more Directors (who need not be members of the Committee with
respect to Options granted to any other individuals) who are Non-Employee
Directors (within the meaning of Rule 16b-3), and all authority and discretion
shall be exercised by such Non-Employee Directors, and references herein to the
"Committee" shall mean such Non-Employee Directors insofar as any actions or
determinations of the Committee shall relate to or affect Options made to or
held by any Section 16 Insider. At any time that the Board shall not have
appointed a committee as described above, any reference herein to the Committee
shall mean a reference to the Board.

1.5 "Company" shall mean Better Image, Inc., a Georgia
corporation.

1.6 "Director" shall mean a member of the Board and any person who
is an advisory, honorary or emeritus director of the Company if such person is
considered a director for the purposes of Section 16 of the Exchange Act, as
determined by reference to such Section 16 and to the rules, regulations,
judicial decisions, and interpretative or "no-action" positions with respect
thereto of the Securities and Exchange Commission, as the same may be in effect
or set forth from time to time.

1.7 "Disabled Optionee" shall mean an Optionee who suffers a
Disability.

1.8 "Disability" shall mean a physical or mental infirmity which
impairs an Optionee's ability to substantially perform his duties with the
Company or a Subsidiary for a period of 180 consecutive days, as determined by
an independent physician selected by agreement between the Company and the
Optionee or, failing such agreement, selected by two physicians (one of which
shall be selected by the Company and the other by the Optionee); provided,
however, that "Disability" shall have the meaning set forth in Code Section
22(e)(3) and the regulations promulgated thereunder with respect to an Optionee
granted Incentive Stock Options.

1.9 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended. Any reference herein to a specific section of the Exchange Act shall
be deemed to include a reference to any applicable corresponding provision of
future law.

1.10 "Exercise Price" shall mean the price at which an Optionee may
purchase a share of Stock under a Stock Option Agreement.

- 2 -

<PAGE> 4

1.11 "Fair Market Value" on any date shall mean (i) the average
closing sales price of the Stock on such date on the national securities
exchange having the greatest volume of trading in the Stock during the thirty
(30) day period preceding such date or, if such exchange was not open for
trading on such date, the next preceding date on which it was open; (ii) if the
Stock is not traded on any national securities exchange, the average of the
closing high bid and low asked prices of the Stock on the over-the-counter
market on the date such value is to be determined, or in the absence of closing
bids on such date, the closing bids on the next preceding date on which there
were bids; or (iii) if the Stock is not traded on a national securities exchange
or the over-the-counter market, the fair market value as determined in good
faith by the Board or the Committee based on such relevant facts as may be
available, including, without limitation, the price at which recent sales of
Stock have been made, the book value of the Stock and the Company's current and
future earnings. With respect to grants that are effective upon the initial
public offering of Common Stock, Fair Market Value shall mean the price to the
public in the initial public offering.

1.12 "For Cause" termination shall mean the termination of an
Optionee's employment as a result of: (i) any act that constitutes on the part
of the Optionee, fraud, dishonesty, gross malfeasance of duty, or conduct
grossly inappropriate to the Optionee's position of employment; or (ii) the
conviction (from which no appeal may be or is timely taken) of the Optionee of a
felony.

1.13 "Incentive Stock Option" shall mean an option to purchase
Stock of the Company which complies with and is subject to the terms,
limitations, and conditions of Section 422 of the Code and any regulations
promulgated with respect thereto.

1.14 "Officer" shall mean a person who constitutes an officer of
the Company for the purposes of Section 16 of the Exchange Act, as determined by
reference to such Section 16 and to the rules, regulations, judicial decisions,
and interpretative or "no-action" positions with respect thereto of the
Securities and Exchange Commission, as the same may be in effect or set forth
from time to time.

1.15 "Option" shall mean an option, including an Incentive Stock
Option, to purchase Stock granted pursuant to the provisions of Article VI
hereof.

1.16 "Optionee" shall mean a person to whom an Option has been
granted hereunder or his permitted assign.

1.17 "Plan" shall mean the Better Image, Inc. 1998 Employee Stock
Option Plan, the terms of which are set forth herein.

1.18 "Purchasable" shall refer to Stock which may be purchased by
an Optionee under the terms of this Plan on or after a certain date specified in
an applicable Stock Option Agreement.

1.19 "Section 16 Insider" shall mean any person who is subject to
the provisions of Section 16 of the Exchange Act.

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<PAGE> 5

1.20 "Stock" shall mean the Common Stock, no par value per share,
of the Company, subject to applicable provisions of Section 5.2.

1.21 "Stock Option Agreement" shall mean a written agreement
between the Company and an Optionee under which the Optionee may purchase Stock
hereunder, as provided in Article VI hereof.

1.22 "Subsidiary" shall mean any corporation in which the Company
directly or indirectly owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock of such corporation.

ARTICLE II
THE PLAN

2.1 Name. This Plan shall be known as the "Better Image, Inc.
1998 Employee Stock Option Plan."

2.2 Purpose. The purpose of the Plan is to advance the interests
of the Company, its Subsidiaries and its shareholders by affording certain
officers and employees of the Company and its Subsidiaries an opportunity to
acquire or increase their proprietary interests in the Company. The objective of
the Options is to promote the growth and profitability of the Company and its
Subsidiaries by providing Optionees with an additional incentive to achieve the
Company's objectives through participation in its success and growth and by
encouraging their continued association with or service to the Company and its
Subsidiaries.

2.3 Effective Date. The effective date of this Plan is
May 1, 1998.

ARTICLE III
PARTICIPANTS

The class of persons eligible to participate in the Plan shall consist
of all officers and employees of the Company or any Subsidiary whose
participation in the Plan the Committee determines to be in the best interests
of the Company.

ARTICLE IV
ADMINISTRATION

4.1 Duties and Powers of the Committee. This Plan shall be
administered by the Committee. The Committee shall select one of its members as
its Chairman and shall hold its meetings at such times and places as it may
determine. The Committee shall keep minutes of its meetings and shall make such
rules and regulations for the conduct of its business as it may deem necessary.
The Committee shall have the power to act by unanimous written consent in lieu
of a meeting, and to meet telephonically. In administering this Plan, the
Committee's actions and

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<PAGE> 6

determinations shall be binding on all interested parties. The Committee shall
have the power to grant Options in accordance with the provisions of this Plan.
Subject to the provisions of this Plan, the Committee shall have the discretion
and authority to determine those persons to whom Options will be granted, the
number of shares of Stock subject to each Option, such other matters as are
specified herein, and any other terms and conditions of a Stock Option
Agreement. To the extent not inconsistent with the provisions of this Plan, the
Committee may give an Optionee an election to surrender an Option in exchange
for the grant of a new Option, and shall have the authority to amend or modify
an outstanding Stock Option Agreement or to waive any provision thereof,
provided that the Optionee consents to such action.

4.2 Interpretation; Rules. Subject to the express provisions of
the Plan, the Committee shall have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all other
determinations necessary or advisable for the administration of the Plan,
including, without limitation, the amending or altering of the Plan and any
Options granted hereunder as may be required to comply with or to conform to any
federal, state or local laws or regulations.

4.3 No Liability. Neither any Director nor any member of the
Committee shall be liable to any person for any act or determination made in
good faith with respect to the Plan or any Option granted hereunder.

4.4 Majority Rule. A majority of the members of the Committee
shall constitute a quorum, and any action taken by a majority at a meeting at
which a quorum is present, or any action taken without a meeting evidenced by a
writing executed by all the members of the Committee, shall constitute the
action of the Committee.

4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.

ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN

5.1 Limitations. Subject to any antidilution adjustment pursuant
to the provisions of Section 5.2 hereof, the maximum number of shares of Stock
that may be issued hereunder shall be One Million Five Hundred Thousand
(1,500,000). The amount of Stock subject to the Plan may be increased from time
to time in accordance with Article VIII hereof; provided, however, that the
total number of shares of Stock issuable pursuant to Incentive Stock Options
shall not exceed One Million Five Hundred Thousand (1,500,000) (other than
pursuant to antidilution adjustments) without shareholder approval. Shares
subject to an Option may be either authorized and unissued shares or shares
issued and later acquired by the

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<PAGE> 7

Company. The shares covered by any unexercised portion of an Option that has
terminated for any reason (except as set forth in the following paragraph) may
again be optioned under this Plan, and such shares shall not be considered as
having been optioned or issued in computing the number of shares of Stock
remaining available for Options hereunder.

If Options are issued in respect of options to acquire stock of any
entity acquired, by merger or otherwise, by the Company or any Subsidiary, to
the extent that such issuance shall not be inconsistent with the terms,
limitations and conditions of Code Section 422 (only with respect to Options
which are Incentive Stock Options) or Rule 16b-3 under the Exchange Act, the
aggregate number of shares of Stock for which Options may be granted hereunder
shall automatically be increased by the number of shares subject to the Options
so issued.

5.2 Antidilution.

(a) If (i) the outstanding shares of Stock are increased,
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of merger (excluding mergers of
surgical practices with and into the Company), consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, or stock
split or stock dividend, (ii) any spin-off, split-off or other distribution of
assets materially affects the price of the Company's stock, or (iii) there is
any assumption and conversion to this Plan by the Company of an acquired
company's outstanding option grants, then:

(A) the aggregate number and kind of shares of
Stock for which Options may be granted hereunder shall be
adjusted appropriately by the Committee; and

(B) the rights of Optionees (concerning the
number of shares of Stock subject to Options and the Exercise
Price) under outstanding Options shall be adjusted
appropriately by the Committee.

(b) If not provided in a Stock Option Agreement to the
contrary, if a Change in Control occurs, the Committee, in its discretion, may
provide:

(i) notwithstanding other provisions hereof,
that all Options granted under this Plan shall become
exercisable immediately, and that all such Options shall
terminate ninety (90) days after the Committee gives written
notice of the immediate right to exercise all such Options and
of the decision to terminate all Options not exercised within
such 90-day period; or

(ii) notice to all Optionees that all Options
granted under this Plan shall be assumed by the successor
corporation or substituted on an equitable basis with options
issued by such successor corporation.

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<PAGE> 8

(c) If the Company is to be liquidated or dissolved in
connection with a Change in Control, the provisions of Section 5.2(b) shall
apply. In all other instances, the adoption of a plan of dissolution or
liquidation of the Company shall, notwithstanding other provisions hereof, cause
all then-remaining restrictions pertaining to Options under the Plan to lapse,
and shall cause every Option outstanding under the Plan to terminate to the
extent not exercised prior to the adoption of the plan of dissolution or
liquidation by the shareholders; provided, however, that, notwithstanding any
other provisions hereof, the Committee may declare all Options granted under the
Plan to be exercisable at any time on or before the fifth (5th) business day
following such adoption, notwithstanding the provisions of the respective Stock
Option Agreements regarding exercisability.

(d) The adjustments described in paragraphs (a) through
(c) of this Section 5.2, and the manner of their application, shall be
determined solely by the Committee, and any such adjustment may provide for the
elimination of fractional share interests; provided, however, that any
adjustment made by the Committee shall be made in a manner that will not cause
an Incentive Stock Option to be other than an Incentive Stock Option under
applicable statutory and regulatory provisions. The adjustments required under
this Article V shall apply to any successors of the Company and shall be made
regardless of the number or type of successive events requiring such
adjustments.

ARTICLE VI
OPTIONS

6.1 Types of Options Granted. The Committee may, under this Plan,
grant either Incentive Stock Options or Options which do not qualify as
Incentive Stock Options. Within the limitations provided in this Plan, both
types of Options may be granted to the same person at the same time, or at
different times, under different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of this Plan.
Without limitation of the foregoing, Options may be granted subject to
conditions based on the financial performance of the Company or any other factor
the Committee deems relevant. Neither the Company, nor any Subsidiary or any
other person warrants or otherwise represents that (i) any Option granted under
this Plan shall be considered an Incentive Stock Option for applicable tax
purposes, or (ii) favorable or desirable tax treatment or characterization will
be applicable in respect of any Option or Stock.

6.2 Option Grant and Agreement. Each Option granted hereunder
shall be evidenced by minutes of a meeting or the written consent of the
Committee and by a written Stock Option Agreement executed by the Company and
the Optionee. The terms of the Option, including the Option's duration, time or
times of exercise and exercise price, shall be stated in the Stock Option
Agreement. No Incentive Stock Option may be granted more than ten (10) years
after the earlier to occur of the effective date of the Plan or the date the
Plan is approved by the Company's shareholders. Every Optionee shall be given a
copy of the Plan.

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<PAGE> 9

6.3 Optionee Limitations. The Committee shall not grant an
Incentive Stock Option to any person who, at the time the Incentive Stock Option
is granted:

(a) is not an employee of the Company or any of its
Subsidiaries; or

(b) owns or is considered to own stock possessing at
least 10% of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries (within the meaning of Code Sections 422 and
424); provided, however, that this limitation shall not apply if at the time an
Incentive Stock Option is granted the Exercise Price is at least 110% of the
Fair Market Value of the Stock subject to such Option and such Option by its
terms would not be exercisable after five (5) years from the date on which the
Option is granted. For the purpose of this subsection (b), a person shall be
considered to own (i) the Stock owned, directly or indirectly, by or for his or
her brothers and sisters (whether by whole or half blood), spouse, ancestors and
lineal descendants; (ii) the stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust in proportion to such person's stock
interest, partnership interest or beneficial interest therein; (iii) or stock
otherwise considered to be owned by such person pursuant to Code Sections 422
and 424.

6.4 $100,000 Limitation. Except as provided below, the Committee
shall not grant an Incentive Stock Option to, or modify the exercise provisions
of, any outstanding Incentive Stock Option held by any person who, at the time
the Incentive Stock Option is granted (or modified), would thereby receive or
hold any Incentive Stock Options of the Company and any Subsidiary, such that
the aggregate Fair Market Value (determined as of the respective dates of grant
or modification of each Option) of the Stock with respect to which such
Incentive Stock Options are exercisable for the first time during any calendar
year is in excess of $100,000 (or such other limit as may be prescribed by the
Code from time to time); provided, that the foregoing restriction on
modification of outstanding Incentive Stock Options shall not preclude the
Committee from modifying an outstanding Incentive Stock Option if, as a result
of such modification and with the consent of the Optionee, such Option no longer
constitutes an Incentive Stock Option; and provided further that, if the
$100,000 limitation (or such other limitation prescribed by the Code) described
in this Section 6.4 is exceeded, the Incentive Stock Option, the granting or
modification of which resulted in the exceeding of such limit, shall be treated
as an Incentive Stock Option up to the limitation and the excess shall be
treated as an Option not qualifying as an Incentive Stock Option.

6.5 Exercise Price. The Exercise Price of the Stock subject to
each Option shall be determined by the Committee. The Exercise Price of an
Incentive Stock Option shall not be less than the Fair Market Value of the Stock
as of the date such Option is granted (or in the case of an Incentive Stock
Option that is subsequently modified, on the date of such modification). The
Exercise Price of an Option that does not qualify as an Incentive Stock Option
shall not be less than adequate consideration as determined by the Committee.

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<PAGE> 10

6.6 Exercise Period. The period for the exercise of each Option
granted hereunder shall be determined by the Committee, but the Stock Option
Agreement with respect to each Option intended to be an Incentive Stock Option
shall provide that such Option shall not be exercisable after the expiration of
ten (10) years from the date of grant (or modification) of the Option.

6.7 Option Exercise.

(a) Unless otherwise provided in the Stock Option
Agreement or Section 6.6 hereof, an Option may be exercised at any time or from
time to time during the term of the Option as to any or all full shares which
have become Purchasable under the provisions of the Option, but not at any time
as to less than one hundred (100) shares unless the remaining shares that have
become so Purchasable are less than one hundred (100) shares. The Committee
shall have the authority to prescribe in any Stock Option Agreement that the
Option may be exercised only in accordance with a vesting schedule during the
term of the Option.

(b) An Option shall be exercised by (i) delivery to the
Company at its principal office of a written notice of exercise with respect to
a specified number of shares of Stock and (ii) payment to the Company at that
office of the full amount of the Exercise Price for such number of shares in
accordance with Section 6.7(c). If requested by an Optionee, an Option may be
exercised with the involvement of a stockbroker in accordance with the federal
margin rules set forth in Regulation T (in which case the certificates
representing the underlying shares will be delivered by the Company directly to
the stockbroker).

(c) The Exercise Price is to be paid in full in cash by a
certified or cashier's check payable to the Company upon the exercise of the
Option and the Company shall not be required to deliver certificates for the
shares purchased until such payment has been made; provided, however, that the
Committee may provide in a Stock Option Agreement (or may otherwise determine in
its sole discretion at the time of exercise) that in lieu of cash, all or any
portion of the Exercise Price may be paid by tendering to the Company shares of
Stock duly endorsed for transfer and owned by the Optionee, or by authorization
to the Company to withhold shares of Stock otherwise issuable upon exercise of
the Option, in each case to be credited against the Exercise Price at the Fair
Market Value of such shares on the date of exercise (however, no fractional
shares may be so transferred, and the Company shall not be obligated to make any
cash payments in consideration of any excess of the aggregate Fair Market Value
of shares transferred over the aggregate Exercise Price); provided further, the
Committee may provide in a Stock Option Agreement (or may otherwise determine in
its sole discretion at the time of exercise) that, in lieu of cash or shares,
full payment may be effected through a broker-dealer sale and remittance
procedure pursuant to which the Optionee (i) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate Exercise Price
(plus all applicable Federal and State income and employment taxes required to
be withheld by the Company by reason of such purchase) and (ii) shall provide
written directives to the Company to deliver the certificates for the purchased
shares directly to such

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<PAGE> 11

brokerage firm in order to complete the sale transaction; or that all or a
portion of the Exercise Price may be paid by the Optionee's execution of a
recourse promissory note the principal amount of which shall be equal to at
least the Exercise Price or relevant portion thereof, subject to compliance with
applicable state and federal laws, rules and regulations.

(d) In addition to and at the time of payment of the
Exercise Price, the Company may withhold, or require the Optionee to pay to the
Company in cash, the amount of any federal, state and local income, employment
or other withholding taxes which the Committee determines are required to be
withheld under federal, state or local law in connection with the exercise of an
Option; provided, however, the Committee may provide in a Stock Option Agreement
(or may otherwise determine in its sole discretion at the time of exercise) that
all or any portion of such tax obligations may, upon the election of the
Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid, and
subject to such restrictions as to the approval and timing of any such election
as the Committee may from time to time determine to be necessary or appropriate
to satisfy the conditions of the exemption set forth in Rule 16b-3 under the
Exchange Act, if such rule is applicable. To the extent tax withholding is
required at an applicable time with respect to Options or Stock acquired under
this Plan by an Optionee, the Company, applicable Subsidiary or other entity
upon which such withholding obligation arises shall be entitled to withhold from
such Optionee's compensation (derived from this Plan or otherwise) the
applicable amount required to be withheld.

(e) The holder of an Option shall not have any of the
rights of a shareholder with respect to the shares of Stock subject to the
Option until such shares have been issued and transferred to the Optionee upon
the exercise of the Option.

(f) Notwithstanding anything to the contrary herein or in
a Stock Option Agreement, a given Option shall not be exercisable to the extent
the exercise thereof would cause the Company to be a reporting company under the
Exchange Act.

6.8 Nontransferability of Option. No Option shall be transferable
by an Optionee other than by will or the laws of descent and distribution.
During the lifetime of an Optionee, Options shall be exercisable only by such
Optionee (or by such Optionee's guardian or legal representative, should one be
appointed).

6.9 Termination of Employment or Service. The Committee shall have
the power to specify, with respect to the Options granted to a particular
Optionee, the effect upon such Optionee's right to exercise an Option as a
result of termination of such Optionee's employment or service under various
circumstances, which effect may include immediate or deferred termination of
such Optionee's rights under an Option, or acceleration of the date at which an

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<PAGE> 12

Option may be exercised in full; provided, however, that in no event may an
Incentive Stock Option be exercised after the expiration of ten (10) years from
the date of grant thereof.

6.10 Employment Rights. Nothing in the Plan or in any Stock Option
Agreement shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the right
of the Company or any of its Subsidiaries to terminate such person's employment
at any time.

6.11 Certain Successor Options. To the extent not inconsistent with
the terms, limitations and conditions of Code Section 422 and any regulations
promulgated with respect thereto, an Option issued in respect of an option held
by an employee to acquire stock of any entity acquired, by merger or otherwise,
by the Company (or any Subsidiary of the Company) may contain terms that differ
from those stated in this Article, but solely to the extent necessary to
preserve for any such employee the rights and benefits contained in such
predecessor option, or to satisfy the requirements of Code Section 424(a).

ARTICLE VII
STOCK CERTIFICATES

The Company shall not be required to issue or deliver any certificate
for shares of Stock purchased upon the exercise of any Option granted hereunder
or any portion thereof, prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed;

(b) The completion of any registration or other
qualification of such shares which the Committee shall deem necessary or
advisable under any federal or state law or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory
body;

(c) The obtaining of any approval or other clearance from
any federal or state governmental agency or body which the Committee shall
determine to be necessary or advisable; and

(d) The lapse of such reasonable period of time following
the exercise of the Option as the Board from time to time may establish for
reasons of administrative convenience.

Stock certificates issued and delivered to Optionees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws.

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<PAGE> 13

ARTICLE VIII
TERMINATION AND AMENDMENT OF PLAN

8.1 Termination and Amendment. The Board may at any time terminate
the Plan, and may at any time and from time to time and in any respect amend the
Plan; provided, however, that the Board (unless its actions are approved or
ratified by the shareholders of the Company within twelve (12) months of the
date that the Board amends the Plan) may not amend the Plan to:

(a) Increase the total number of shares of Stock issuable
pursuant to Incentive Stock Options under the Plan or materially increase the
number of shares of Stock subject to the Plan, in each case except as
contemplated in Section 5.2 hereof;

(b) Change the class of employees eligible to receive
Incentive Stock Options that may participate in the Plan or materially change
the class of persons that may participate in the Plan; or

8.2 Effect on Optionee's Rights. No termination, amendment or
modification of the Plan shall affect adversely an Optionee's rights under a
Stock Option Agreement without the consent of the Optionee or his legal
representative.

ARTICLE IX
RELATIONSHIP TO OTHER COMPENSATION PLANS

The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for employees or Directors of the Company or any of its
Subsidiaries.

ARTICLE X
MISCELLANEOUS

10.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or accept the surrender of outstanding Options and grant new
Options in substitution for them. However no modification of an Option shall
adversely affect an Optionee's rights under a Stock Option Agreement without the
consent of the Optionee or his legal representative.

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<PAGE> 14

10.2 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.

10.3 Singular, Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural and the masculine pronoun shall include the
feminine gender and vice versa.

10.4 Headings Not Part of Plan. Headings of Articles and Sections
hereof are inserted for convenience and reference and do not constitute part of
the Plan.

10.5 Interpretation. With respect to Section 16 Insiders,
transactions under this Plan, are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Plan administrators fails to so
comply, it shall be deemed void to the extent permitted by law and deemed
advisable by the Plan administrators.

10.6 Governing Law. This Plan shall be governed by, and construed
in accordance with, the laws of the State of Georgia without regard to conflicts
of laws principles.

* * * *

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<PAGE> 15

Better Image, Inc.
1998 Employee Stock Option Plan
Form of Stock Option Agreement

BETTER IMAGE, INC.
STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (this "Agreement"), entered into as of this
_____ day of ________________, 1998 by and between Better Image, Inc., a Georgia
corporation (the "Company"), and _________________ (the "Optionee").

WHEREAS, on _____________, 1998, the Board of Directors of the Company
adopted a stock option plan known as the "Better Image, Inc. 1998 Employee Stock
Option Plan" (the "Plan") and recommended that the Plan be approved by the
Company's shareholders; and

WHEREAS, on __________, 1998, the shareholders of the Company approved
the Plan; and

WHEREAS, the Committee has granted the Optionee an Option (as described
below) to purchase the number of shares of the Company's Common Stock (the
"Stock") as set forth below, and in consideration of the granting of the Option
the Optionee intends to remain in the employ of the Company; and

WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to the Option in accordance with the Plan; and

WHEREAS, capitalized terms not defined herein shall have the meanings
ascribed to them in the Plan;

NOW, THEREFORE, as an employment incentive and to encourage stock
ownership, and also in consideration of the mutual covenants contained herein,
the parties hereto agree as follows.

1. Incorporation of Plan. This Option is granted pursuant to the
provisions of the Plan and the terms and definitions of the Plan are
incorporated herein by reference and made a part hereof. A copy of the Plan has
been delivered to, and receipt is hereby acknowledged by, the Optionee.
Notwithstanding anything in this Agreement to the contrary, to the extent the
terms of this Agreement conflict with or otherwise attempt to exceed the
authority set forth under the Plan, the Plan shall govern and control in all
respects.

2. Grant of Option. Subject to the terms, restrictions,
limitations, and conditions stated herein and the terms of the Plan, the Company
hereby evidences its grant to the Optionee, not in lieu of salary or other
compensation, of the right and option to purchase all or any part of the number
of shares of Stock (as defined under the Plan), set forth on Schedule A attached
hereto and incorporated herein by reference (the "Option"). The Option shall be
exercisable in the amounts and at the times specified on Schedule A. The Option
shall expire and shall not be

<PAGE> 16

exercisable after the date specified on Schedule A as the expiration date or on
such earlier date as determined pursuant to the Plan. Schedule A states whether
or not the Option is intended to be an Incentive Stock Option.

3. Purchase Price. The price per share to be paid by the Optionee
for the shares subject to this Option (the "Exercise Price") shall be as
specified on Schedule A, which price shall be an amount not less than the Fair
Market Value of a share of Stock as of the Date of Grant (as defined in Section
11 below) if the Option is an Incentive Stock Option.

4. Exercise Terms. In the event this Option is not exercised with
respect to all or any part of the shares subject to this Option prior to its
expiration, the shares with respect to which this Option was not exercised shall
no longer be subject to this Option.

5. Restrictions on Transferability. No Option shall be
transferable by Optionee other than by will or the laws of descent and
distribution. During the lifetime of Optionee, Options shall be exercisable only
by Optionee (or by Optionee's guardian or legal representative, should one be
appointed).

6. Notice of Exercise of Option. This Option may be exercised by
the Optionee, or by the Optionee's administrators, executors or personal
representatives, by a written notice (in substantially the form of the Notice of
Exercise attached hereto as Schedule B) signed by the Optionee, or by such
administrators, executors or personal representatives, and delivered or mailed
to the Company as specified in Section 15 hereof to the attention of the Senior
Vice President, General Counsel or such other officer as the Company may
designate. Any such notice shall (a) specify the number of shares of Stock which
the Optionee or the Optionee's administrators, executors or personal
representatives, as the case may be, then elects to purchase hereunder, (b)
contain such information as may be reasonably required pursuant to Section 12
hereof, and (c) be accompanied by (i) a certified or cashier's check payable to
the Company in payment of the total Exercise Price applicable to such shares as
provided herein, (ii) shares of Stock (valued at the fair market value of such
shares on the date of exercise of the Option) owned by the Optionee and duly
endorsed or accompanied by stock transfer powers having a Fair Market Value
equal to the total Exercise Price applicable to such shares purchased hereunder,
or (iii) a certified or cashier's check accompanied by the number of shares of
Stock whose Fair Market Value when added to the amount of the check equals the
total Exercise Price applicable to such shares purchased hereunder, (iv) payment
through a broker-dealer sale and remittance procedure pursuant to which Optionee
shall provide irrevocable written instructions to a designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the Company, out
of the sale proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price (plus all applicable Federal and State income and
employment taxes required to be withheld by the Company by reason of such
exercise) and written directives to the Company to deliver the certificates for
the purchased shares directly to such brokerage firm in order to complete the
sale transaction, or (v) payment of all or a portion of the Exercise Price by
Optionee's execution of a recourse promissory note, subject to compliance with
applicable federal and state laws. Upon

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<PAGE> 17

receipt of any such notice and accompanying payment, and subject to the terms
hereof, the Company agrees to issue to the Optionee or the Optionee's
administrators, executors or personal representatives, as the case may be, stock
certificates for the number of shares specified in such notice registered in the
name of the person exercising this Option.

7. Adjustment in Option. The number of shares of Stock subject to
this Option, the Exercise Price and other matters are subject to adjustment
during the term of this Option in accordance with the Plan.

8. Termination of Employment.

(a) Except as otherwise specified in Schedule A hereto,
in the event of the termination of the Optionee's employment with the Company or
any of its Subsidiaries, other than a termination that is either (i) For Cause,
or (ii) for reasons of death or Disability or retirement, the Optionee (or his
or her personal representative) may exercise this Option at any time within
ninety (90) days after such termination to the extent of the number of shares
which were Purchasable hereunder at the date of such termination.

(b) Except as specified in Schedule A, in the event of a
termination of the Optionee's employment that is For Cause, this Option, to the
extent not previously exercised, shall terminate immediately and shall not
thereafter be or become exercisable.

(c) Unless and to the extent otherwise provided in
Schedule A, in the event of the retirement of the Optionee at the normal
retirement date as prescribed from time to time by the Company or any
Subsidiary, the Optionee shall continue to have the right to exercise any
Options for shares which were Purchasable at the date of the Optionee's
retirement until the expiration date of such Option; provided however, that any
Incentive Stock Option may not be exercised after three (3) months from the
Optionee's termination date.

(d) This Option does not confer upon the Optionee any
right with respect to continuance of employment by the Company or by any of its
Subsidiaries. This Option shall not be affected by any change of employment so
long as the Optionee continues to be an employee of the Company or any of its
Subsidiaries.

9. Disabled Optionee. In the event of termination of employment
because of the Optionee's becoming a Disabled Optionee, the Optionee (or his or
her legal representative) may exercise this Option within a period ending on the
earlier of (a) the last day of the one (1) year period following the beginning
of the Optionee's Disability or (b) the expiration date of this Option, to the
extent of the number of shares which were Purchasable hereunder at the date of
such termination.

10. Death of Optionee. Except as otherwise set forth in Schedule A
with respect to the rights of the Optionee upon termination of employment under
Section 8(a) above, in the event of

- 3 -

<PAGE> 18

the Optionee's death, the appropriate persons described in Section 6 hereof or
persons to whom all or a portion of this Option is transferred in accordance
with Section 5 hereof may exercise this Option at any time within a period
ending on the earlier of (a) the last day of the one (1) year period following
the Optionee's death or (b) the expiration date of this Option. If the Optionee
was an employee of the Company at the time of death, this Option may be so
exercised to the extent of the number of shares that were Purchasable hereunder
at the date of death. If the Optionee's employment terminated prior to his or
her death, this Option may be exercised only to the extent of the number of
shares covered by this Option which were Purchasable hereunder at the date of
such termination.

11. Date of Grant. This Option was granted by the Board or
Committee on the date set forth in Schedule A (the "Date of Grant").

12. Compliance with Regulatory Matters. The Optionee acknowledges
that the issuance of capital stock of the Company is subject to limitations
imposed by federal and state law and the Optionee hereby agrees that the Company
shall not be obligated to issue any shares of Stock upon exercise of this Option
that would cause the Company to violate law or any rule, regulation, order or
consent decree of any regulatory authority (including without limitation the
Securities and Exchange Commission) having jurisdiction over the affairs of the
Company. The Optionee agrees that he or she will provide the Company with such
information as is reasonably requested by the Company or its counsel to
determine whether the issuance of Stock complies with the provisions described
by this Section.

13. Restriction on Disposition of Shares. The shares of Stock
purchased pursuant to the exercise of this Option shall not be transferred by
the Optionee except pursuant to the Optionee's will or the laws of descent and
distribution until such date which is the later of two (2) years after the Date
of Grant or one (1) year after the transfer of the shares of Stock to the
Optionee pursuant to the exercise of such Option.

14. Investment Representation of Optionee

(a) Optionee represents to the Company the following:

(i) that Optionee has read and understands the
terms and provisions of the Plan, and hereby accepts this
Agreement subject to all the terms and provisions of the Plan;

(ii) that Optionee shall accept as binding and
final all decisions or interpretations of the Board or of the
Committee upon any questions arising under the Plan;

(iii) Optionee understands that the existence of
the Plan and the execution of this Agreement are not
sufficient by themselves to cause any exercise of any

- 4 -

<PAGE> 19

Incentive Stock Options granted under the Plan and this
Agreement to qualify for favorable tax treatment through the
application of Section 422(a) of the Code; and that Optionee
must, in order to so qualify, individually meet by Optionee's
own action all applicable requirements of Section 422,
including without limitation, the requirement that no
disposition of Stock may be made by Optionee within two (2)
years from the date of the grant of the Option nor within one
(1) year after the transfer of such Stock to Optionee; and

(iv) Optionee understands that, unless at the
time of exercise of the Option, a registration statement under
the Securities Act of 1933, as amended, is in effect covering
the Stock, as a condition to the exercise of the Option the
Company may require Optionee to represent that Optionee is
acquiring the Stock for Optionee's own account only and not
with a view to, or for sale in connection with, any
distribution of the Stock.

(b) The Optionee understands and agrees that the
certificate or certificates representing any shares of Stock acquired hereunder
may bear an appropriate legend relating to registration and resale under federal
and state securities laws.

(c) The Optionee shall not have any rights of a
shareholder of the Company with respect to the shares of Stock which may be
purchased upon exercise of this Option, unless and until such shares shall have
been issued and delivered and his/her name has been entered as a shareholder on
the stock transfer records of the Company.

15. Miscellaneous.

(a) This Agreement shall be binding upon the parties
hereto and their representatives, successors and assigns.

(b) This Agreement shall be governed by the laws of the
State of Georgia, without regard to conflicts of laws principles.

(c) Any notice, request, document or other communication
given hereunder shall be deemed to be sufficiently given upon personal delivery
to the other party or upon the expiration of three (3) days after depositing
same in the United States mail, return receipt requested, properly addressed to
the respective parties or such other address as they may give to the other party
in writing in the same manner as follows:

- 5 -

<PAGE> 20

Company: Better Image, Inc.
Two Midtown Plaza
Suite 1220
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309

Attention: ______________________
Telecopier: (404) 898-1247
Telephone: (404) 898-1240

Optionee: ___________________________________

___________________________________

(d) This Agreement may not be modified except in writing
executed by each of the parties hereto.

(e) This Agreement, together with the Plan, contains the
entire understanding of the parties hereto and supersedes any prior
understanding and/or written or oral agreement between them respecting the
subject matter hereof.

(f) The parties agree that the provisions of this
Agreement are severable and the invalidity or unenforceability of any provision
in whole or part shall not affect the validity or enforceability of any
enforceable part of such provision or any other provisions hereof.

(g) The headings with Sections herein are included solely
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.

(h) No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.

(i) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

- 6 -

<PAGE> 21

IN WITNESS WHEREOF, the Board or Committee has caused this
Stock Option Agreement to be executed on behalf of the Company and attested by
the Secretary or an Assistant Secretary of the Company, and the Optionee has
executed this Stock Option Agreement, all as of the day and year first above
written.

COMPANY:

BETTER IMAGE, INC.

By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------

OPTIONEE:

By:
---------------------------------------

- 7 -

<PAGE> 22

SCHEDULE A
TO
STOCK OPTION AGREEMENT
BETWEEN
BETTER IMAGE, INC.
AND
[Name of Optionee]

Dated ________________

1. Number of Shares Subject to Option: ________________ shares of Stock.

2. This Option (Check one) [ ] is [ ] is not an Incentive Stock Option.

3. Option Exercise Price: $______________ per share.

4. Date of Grant: ________________________

5. Option Vesting Schedule:

Options are exercisable with respect to the number of shares of Stock indicated
below on or after the date indicated next to the number of shares:

No. of Shares Vesting Date

Notwithstanding the vesting schedule set forth above, upon a Change in
Control, as defined in the Plan, all Options granted hereunder shall become
exercisable immediately upon the occurrence of such Change in Control for a
period of ninety (90) days after written notice to Optionee of the right to such
Options. Any Options not exercised within such ninety (90) day period shall
terminate after the expiration of such period.

6. Option Exercise Period:

<PAGE> 23

SCHEDULE B
TO
STOCK OPTION AGREEMENT
BETWEEN
BETTER IMAGE, INC.
AND
[Name of Optionee]

Dated ________________

NOTICE OF EXERCISE

The undersigned hereby notifies Better Image, Inc. (the
"Company") of this election to exercise the undersigned's stock option to
purchase ________________ shares of Stock (as defined under the Plan) pursuant
to the Stock Option Agreement (the "Agreement") between the undersigned and the
Company dated ________________. Accompanying this Notice is (1) a certified or a
cashier's check in the amount of $________________ payable to the Company,
and/or (2) _______________ shares of Stock (as defined under the Plan) presently
owned by the undersigned and duly endorsed or accompanied by stock transfer
powers, having an aggregate Fair Market Value (as defined under the Plan) as of
the date hereof of $__________________, such amounts being equal, in the
aggregate, to the purchase price per share set forth in Section 3 of the
Agreement multiplied by the number of shares being purchased hereby (in each
instance subject to appropriate adjustment pursuant to Section 5 of the
Agreement) (3) evidence of a cashless exercise as set forth in Section 6 of the
Agreement, and/or (4) delivery of a recourse promissory note.

The undersigned is a resident of the State of _______________.

IN WITNESS WHEREOF, the undersigned has set his/her hand and
seal, this ________ day of ________________, ______.

OPTIONEE [OR OPTIONEE'S ADMINISTRATOR,
EXECUTOR OR PERSONAL REPRESENTATIVE]

----------------------------------------
Name:
-----------------------------------
Position (if other than Optionee):

<PAGE> 1
Exhibit 10.12

BETTER IMAGE, INC.
1999 NON-EMPLOYEE DIRECTOR STOCK PLAN

ARTICLE I
DEFINITIONS

As used herein, the following terms have the following meanings unless
the context clearly indicates to the contrary:

1.1 "Board" shall mean the Board of Directors of the Company.

1.2 "Change in Control" shall mean the occurrence of:

(a) any of the following events:

(i) the dissolution or liquidation of the
Company; or

(ii) a reorganization, merger or consolidation of
the Company with one or more other
corporations (except with respect to a
transaction, the sole purpose of which is to
change the domicile or name of the Company),
as a result of which the Company ceases to
exist or becomes a subsidiary of another
corporation (which shall be deemed to have
occurred if another corporation shall own,
directly or indirectly, more than fifty
percent (50%) of the aggregate voting power
of all outstanding equity securities of the
Company); or

(iii) a sale of all or substantially all of the
Company's assets; or

(b) Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than any person
who is a stockholder of the Company on or before the
effective date of the Plan, by the acquisition or
aggregation of securities is or becomes the
beneficial owner, directly or indirectly, of
securities of the Company representing fifty percent
(50%) or more of the combined voting power of the
Company's then outstanding securities ordinarily (and
apart from rights accruing under special
circumstances) having the right to vote at elections
of Directors (the "Base Capital Stock"); except that
any change in the relative beneficial ownership of
the Company's securities by any person resulting
solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock, and any
decrease thereafter in such person's ownership of
securities, shall be disregarded until such person
increases in any manner, directly or indirectly, such
person's beneficial ownership of any securities of
the

<PAGE> 1

EXHIBIT 10.13

AMENDMENT TO
EMPLOYMENT AGREEMENT

THIS AMENDMENT TO THE EMPLOYMENT AGREEMENT is made and entered into
effective the 30th day of June, 1999, by and between The Plastic Surgery Company
(the "Company"), and Dennis E. Condon ("Executive").

WHEREAS, the Company and the Executive entered into a written
Employment Agreement (the "Employment Agreement") dated the 15th day of June,
1998; and

WHEREAS, pursuant to Section 6(c) of the Employment Agreement, the
Employment Agreement provided that the Employment Agreement terminates
automatically in the event that the initial public offering of the Company's
common stock is not consummated or other sources of working capital are not
secured on or prior to June 30, 1999; and

WHEREAS, the parties hereto desire that the Employment Agreement be
amended to substitute the date of September 30, 1999 for the date of June 30,
1999 in Section 6(c) of the Employment Agreement;

THEREFORE, IN CONSIDERATION of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, the Company and the
Executive agree as follows:

1. Substitution. Paragraph 6(c) is hereby amended to substitute a
date of September 30, 1999 for the date of June 30, 1999.

2. Remaining Terms and Conditions. Except as hereinabove set
forth, the terms and conditions of the Employment Agreement shall remain in full
force and effect without change or modification.

IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written.

THE PLASTIC SURGERY COMPANY

By: /s/ Jonathan E. Wilfong
-------------------------------
Title: Chairman
-----------------------------

Executive:

/s/ Dennis E. Condon
----------------------------
Dennis E. Condon

<PAGE> 1

EXHIBIT 10.14

AMENDMENT TO
EMPLOYMENT AGREEMENT

THIS AMENDMENT TO THE EMPLOYMENT AGREEMENT is made and entered into
effective the 30th day of June, 1999, by and between The Plastic Surgery Company
(the "Company"), and Patricia Altavilla ("Executive").

WHEREAS, the Company and the Executive entered into a written
Employment Agreement (the "Employment Agreement") dated the 22nd day of July,
1998; and

WHEREAS, pursuant to Section 6(c) of the Employment Agreement, the
Agreement provided that the Employment Agreement would terminate automatically
in the event that the initial public offering of the Company's common stock is
not consummated or other sources of working capital are not secured on or prior
to June 30, 1999; and

WHEREAS, the parties hereto desire that the Employment Agreement be
amended to substitute the date of September 30, 1999 for June 30, 1999 in
Section 6(c) of the Employment Agreement;

1. Substitution. Paragraph 6(c) is hereby amended to substitute a
date of September 30, 1999 for June 30, 1999.

2. Remaining Terms and Conditions. Except as hereinabove set
forth, the terms and conditions of the Employment Agreement shall remain in full
force and effect without change or modification.

IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the day and year first above written.

THE PLASTIC SURGERY COMPANY

By: /s/ Jonathan E. Wilfong
--------------------------------------
Title: Chairman
----------------------------------

Executive:

/s/ Patricia Altavilla
----------------------------
Patricia Altavilla

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to use of our report (and
all references to our Firm) included in this Registration Statement for The
Plastic Surgery Company.

ARTHUR ANDERSEN LLP
Atlanta, Georgia

July 21, 1999

<PAGE> 1
EXHIBIT 23.8

CONSENT

In accordance with Rule 438 under the Securities Act of 1933, as amended,
the undersigned consents to being named in this Registration Statement on Form
S-1 as a person who is about to become a director of The Plastic Surgery
Company.

July 14, 1999.

/s/ Mark A. Kaiser
------------------------
Mark A. Kaiser