1 800 CONTACTS INC
S-1, 1997-11-26
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<PAGE>   1
 
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 26, 1997
 
                                                    REGISTRATION NO. 333-
   =============================================================================
 
                        SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D.C. 20549
 
                               ---------------------
 
                                     FORM S-1
 
                              REGISTRATION STATEMENT
                         UNDER THE SECURITIES ACT OF 1933
 
                               ---------------------
 
                               1-800 CONTACTS, INC.
              (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                               <C>                               <C>
             DELAWARE                            5961                           87-0571643
 (STATE OR OTHER JURISDICTION OF     (PRIMARY STANDARD INDUSTRIAL            (I.R.S. EMPLOYER
  INCORPORATION OR ORGANIZATION)     CLASSIFICATION CODE NUMBER)           IDENTIFICATION NO.)
</TABLE>
 
                 13751 SOUTH WADSWORTH PARK DRIVE, SUITE D-140
                               DRAPER, UTAH 84020
                           TELEPHONE: (801) 572-8225
              (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
            INCLUDING AREA CODE, OF REGISTRANT'S EXECUTIVE OFFICES)
 
                          JONATHAN C. COON, PRESIDENT
                              1-800 CONTACTS, INC.
                 13751 SOUTH WADSWORTH PARK DRIVE, SUITE D-140
                               DRAPER, UTAH 84020
                           TELEPHONE: (801) 572-8225
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)
 
                                   COPIES TO:
 
<TABLE>
<S>                                                <C>
               DENNIS M. MYERS, ESQ.                              DAVID A. ZAGORE, ESQ.
                 Kirkland & Ellis                           Squire, Sanders & Dempsey L.L.P.
              200 East Randolph Drive                       4900 Key Tower, 127 Public Square
              Chicago, Illinois 60601                             Cleveland, Ohio 44114
                  (312) 861-2000                                     (216) 479-8500
</TABLE>
 
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
                               ------------------
 
    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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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, please 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 number of the earlier effective registration statement for the same
offering.  [ ]
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]
                               ------------------
 
                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<CAPTION>
=========================================================================================================
                                                      PROPOSED MAXIMUM
            TITLE OF EACH CLASS OF                   AGGREGATE OFFERING               AMOUNT OF
          SECURITIES TO BE REGISTERED                   PRICE(1)(2)                REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
<S>                                             <C>                          <C>
Common Stock, par value $.01 per share.........         $30,360,000                     $9,200
=========================================================================================================
</TABLE>
 
(1) Estimated solely for the purposes of determining the registration fee
    pursuant to Rule 457 under the Securities Act of 1933, as amended.
 
(2) Includes shares issuable upon the exercise of an over-allotment option
    granted to the Underwriters.
 
    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.
================================================================================
<PAGE>   2
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
                             SUBJECT TO COMPLETION
                PRELIMINARY PROSPECTUS, DATED NOVEMBER 26, 1997
 
                                2,200,000 SHARES
 
                              1-800 CONTACTS, INC.
 
                                  COMMON STOCK
 
     Of the 2,200,000 shares of Common Stock, par value $.01 per share ("Common
Stock"), offered hereby (the "Offering"), 1,925,000 are being offered by 1-800
CONTACTS, INC., a Delaware corporation (the "Company"), and 275,000 are being
offered by the Selling Stockholder (as defined). See "Principal and Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
any shares of Common Stock by the Selling Stockholder. Prior to the Offering,
there has been no public market for the Common Stock of the Company. It is
currently anticipated that the initial public offering price will be between
$10.00 and $12.00 per share. See "Underwriting" for information relating to the
factors to be considered in determining the initial public offering price of the
Common Stock.
 
     Application has been made for inclusion of the Common Stock in the Nasdaq
National Market System under the symbol "CTAC."
 
     SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
                               ------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
==================================================================================================
                                             UNDERWRITING                          PROCEEDS TO
                            PRICE TO        DISCOUNTS AND       PROCEEDS TO          SELLING
                             PUBLIC         COMMISSIONS(1)       COMPANY(2)        STOCKHOLDER
- --------------------------------------------------------------------------------------------------
<S>                    <C>                <C>                <C>                <C>
Per Share.............         $                  $                  $                  $
- --------------------------------------------------------------------------------------------------
Total(3)..............         $                  $                  $                  $
==================================================================================================
</TABLE>
 
(1) The Company and the Selling Stockholder have agreed to indemnify the
    Underwriters against certain liabilities, including liabilities under the
    Securities Act of 1933, as amended. See "Underwriting."
 
(2) Before deducting estimated expenses of $750,000, which will be paid by the
    Company.
 
(3) The Company has granted to the Underwriters an option, exercisable within 30
    days hereof, to purchase up to an aggregate of 330,000 additional shares of
    Common Stock at the price to the public, less underwriting discounts and
    commissions, solely to cover over-allotments, if any. If such option is
    exercised in full, the total Price to Public, Underwriting Discounts and
    Commissions and Proceeds to Company will be $          ,           and
              , respectively. See "Underwriting."
                               ------------------
 
     At the request of the Company, up to           shares offered in the
Offering have been reserved for sale to directors, officers and employees of the
Company and certain members of their families at the initial public offering
price. The shares of Common Stock are offered by the Underwriters, subject to
prior sale, when, as and if issued to and accepted by them. The Underwriters
reserve the right to withdraw, cancel or modify such offer and to reject any
order in whole or in part. It is expected that delivery of the shares of Common
Stock will be made against payment therefor at the offices of McDonald & Company
Securities, Inc. or through the facilities of The Depository Trust Company on or
about             , 1998.
 
MCDONALD & COMPANY                                 MORGAN KEEGAN & COMPANY, INC.
       SECURITIES, INC.
 
               The date of this Prospectus is             , 1998
<PAGE>   3
 
            [PICTURE OF REPRESENTATIVE PRODUCTS SOLD BY THE COMPANY]
 
     CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
 
                                        i
<PAGE>   4
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements and
notes thereto included elsewhere in this Prospectus, including the information
contained under the heading "Risk Factors" beginning on page 5. Unless otherwise
stated, the information contained in this Prospectus: (i) assumes no exercise of
the Underwriters' over-allotment option; (ii) reflects the reincorporation of
the Company from Utah to Delaware and the associated changes to the Company's
charter and by-laws in connection with such reincorporation; (iii) reflects a
414.175-for-one stock split to be accomplished in connection with the
reincorporation; and (iv) gives effect to the exercise by the Company of an
option to repurchase a portion of the Company's outstanding common stock upon
completion of the Offering. See "Certain Transactions" and "Description of
Capital Stock." Unless otherwise stated in this Prospectus, references to the
"Company" shall mean 1-800 CONTACTS, INC. and its predecessors.
 
                                  THE COMPANY
 
     1-800 CONTACTS, INC. (the "Company") is a leading and rapidly growing
direct marketer of replacement contact lenses. Through its easy-to-remember,
toll-free telephone number, "1-800 CONTACTS" (1-800-266-8228), the Company sells
substantially all of the most popular brands of contact lenses, including those
manufactured by Johnson & Johnson, CIBA Vision, Wesley Jessen/Barnes-Hind,
Bausch & Lomb and CooperVision. The Company's high volume, cost-efficient
operations, supported by its proprietary management information system, enable
it to offer its products at competitive prices while delivering a high level of
customer service. As a result of its extensive inventory, the Company is
generally able to ship approximately 80% of its orders within 24 hours of
receipt. The Company believes that it offers consumers an attractive alternative
for obtaining replacement contact lenses in terms of price, convenience and
speed of delivery. The Company's net sales have grown rapidly, from $609,470 in
1995 to $3.6 million in 1996, an increase of 495%. For the nine months ended
September 30, 1997, the Company generated net sales of approximately $14.1
million, as compared to approximately $1.9 million for the nine months ended
September 30, 1996, an increase of 661%.
 
     The Company markets its products through a national advertising campaign.
As compared to other direct marketers of replacement contact lenses, the Company
believes that its toll-free telephone number, 1-800 CONTACTS, affords it a
significant competitive advantage in generating consumer awareness and repeat
business. The Company believes, based upon an independent source, that "vanity"
numbers, like 1-800 CONTACTS, generate higher response rates than traditional
1-800 numbers. After the Company first began using the 1-800 CONTACTS number in
July 1995, net sales per advertising dollar increased by over 20%. The Company
believes its marketing strategy, combined with the higher response rates
attributable to the 1-800 CONTACTS telephone number, allows the Company to
acquire new customers at a lower average cost per customer. The Company spent
approximately $3.4 million (including the capitalized portion thereof), on
advertising in the nine months ended September 30, 1997, and plans to use a
significant portion of the net proceeds from this Offering to increase its sales
and marketing activities. The Company's experience has been that increases in
advertising expenditures have had a direct and immediate impact on the growth of
net sales. The Company believes that the planned increase in advertising
activities will enable it to attract significant numbers of new customers.
 
     The Company operates within the large and growing contact lens industry. In
1996, sales of contact lenses in the United States totaled approximately $2.5
billion and, according to industry analysts, the U.S. market for contact lenses
is expected to grow by approximately 10% per year through the year 2000. This
anticipated growth is due largely to the shift in the contact lens market away
from traditional soft lenses, which generally are replaced on an annual basis,
to disposable lenses, which are replaced on a daily, weekly or bi-weekly basis.
Over the last decade, the contact lens industry has experienced significant
changes in the ways in which contact lenses are sold to consumers in the United
States. Driven primarily by the growing popularity of commodity-like contact
lens products, such as disposable lenses, direct marketers of contact lenses
have emerged as an attractive alternative to more traditional providers, such as
eye care practitioners and retail optical chains. The Company estimates that
direct marketers accounted for approximately 5% of contact lenses sales in the
United States during 1996. The Company believes that consumers are increasingly
seeking the convenience, speed and home delivery that can be provided by direct
marketers of replacement contact lenses.
 
                                        1
<PAGE>   5
 
     The Company's sales and marketing efforts, combined with its focus on
delivering a high level of customer service, have built a loyal customer base.
Historically, each $1.00 of sales to new customers has generated approximately
$0.78 of reorder sales within 12 months. During September 1997, approximately
$641,000 of the Company's net sales were to repeat customers, compared to net
sales to repeat customers of approximately $76,000 in September 1996. The
Company's proprietary management information system creates a customer profile
containing prescription information, address and payment history, which allows a
repeat sale to the customer to be made in approximately one-third the time of a
sale to a new customer. The shorter call duration of a repeat order is more
convenient for the customer and more profitable for the Company. The Company
believes that as more wearers switch to disposable contact lenses, its ability
to attract and retain its customers will play an integral role in the Company's
continued growth.
 
COMPETITIVE STRENGTHS
 
     The Company attributes its success in the direct marketing segment of the
contact lens industry and its significant opportunities for growth to several
competitive strengths, including the following:
 
     -  1-800 CONTACTS Telephone Number.  The Company believes that its
        easy-to-remember, toll-free telephone number, 1-800 CONTACTS, affords it
        a significant competitive advantage over other direct marketers of
        contact lenses in its ability to generate consumer awareness in a
        cost-effective manner.
 
     -  Proprietary Management Information System.  The Company believes that
        the operating efficiency resulting from its proprietary management
        information system is largely responsible for average sales per employee
        being approximately three to five times higher than its largest direct
        marketing competitor.
 
     -  Customer Service.  Delivering high quality, consistent customer service
        has been a cornerstone of the Company's strategy since its inception,
        and the Company believes that consistently providing every customer with
        prompt and courteous service throughout their relationship with the
        Company increases the Company's ability to attract and retain customers.
 
     -  Extensive Inventory; Convenient, Rapid Delivery.  The Company stocks a
        large inventory of contact lenses from which it can ship approximately
        80% of its orders within 24 hours of receipt and intends to use a
        portion of the net proceeds from the Offering to invest in additional
        inventory.
 
     -  Competitive Pricing.  The Company believes that its prices are generally
        25% lower than prices typically charged by eye care practitioners and
        comparable to those charged by large retail optical chains and mass
        merchandisers, who generally do not offer the convenience of telephone
        ordering and home delivery.
 
GROWTH STRATEGY
 
     The Company believes that it has significant opportunities to attract and
retain new customers and increase sales through several strategic initiatives,
including the following:
 
     -  Expand Sales and Marketing Activities.  Following the Offering, the
        Company plans to significantly expand its sales and marketing activities
        to attract new customers and increase sales to existing customers. The
        Company's experience has been that increases in advertising expenditures
        have had a direct and immediate impact on the growth of net sales.
 
     -  Continue to Deliver High Level of Customer Service.  Historically, each
        $1.00 of sales to new customers has generated $0.78 of reorder sales
        within 12 months. The Company expects its sales to repeat customers to
        continue to grow as the contact lens market continues to shift towards
        disposable contact lenses, and consumers increase the frequency with
        which they replace their contact lenses.
 
     -  Leverage Existing Infrastructure.  To support anticipated growth, the
        Company has expended considerable resources in establishing proprietary
        management information and telecommunication systems and
 
                                        2
<PAGE>   6
 
operating and distribution facilities that have the capacity to handle the
Company's contemplated sales growth for the foreseeable future with minimal
additional capital expenditures.
 
     -  Capitalize on Favorable Industry Trends.  According to industry
        analysts, the number of soft contact lens wearers in the United States
        has increased from 19 million in 1990 to over 25 million in 1996 and are
        projected to increase by approximately 5% annually through the year 2000
        as soft contact lenses continue to gain popularity and the number of
        14-to-25 year olds (the prime age group for new lens wearers) increases.
 
     The Company was incorporated under the laws of the State of Utah in
February 1995 and will be reincorporated under the laws of the State of Delaware
prior to the completion of the Offering. The Company is the successor to the
business founded by the Company's Vice President of Operations in March 1991.
The Company's principal executive office is located at 13751 South Wadsworth
Park Drive, Suite D-140, Draper, Utah 84020 and its telephone number is (801)
572-8225. The Company maintains a website on the Internet at
www.1800contacts.com. The Company's website and the information contained
therein shall not be deemed to be part of this Prospectus.
 
                                  THE OFFERING
 
<TABLE>
<S>                                       <C>
Common Stock offered by the Company.....  1,925,000 shares(1)
Common Stock offered by the Selling
  Stockholder...........................  275,000 shares
Common Stock outstanding after the
  Offering..............................  6,141,818 shares(2)
Use of Proceeds.........................  The net proceeds to be received by the Company from
                                          the Offering will be used: (i) to fund additional
                                          sales and marketing activities; (ii) to increase
                                          inventory; (iii) to repay certain existing
                                          indebtedness; (iv) to fund the approximately $0.9
                                          million S Corporation Distribution (as defined);
                                          (v) to repurchase approximately 442,651 shares of
                                          Common Stock from an existing stockholder of the
                                          Company for $1.9 million; and (vi) any remaining
                                          net proceeds for general corporate purposes,
                                          including working capital. The anticipated uses of
                                          the net proceeds are subject to change due to the
                                          actual circumstances of operating the Company's
                                          business. Pending such uses, the Company currently
                                          plans to invest the net proceeds in investment
                                          grade, short-term, interest-bearing securities. See
                                          "Use of Proceeds," "S Corporation Matters" and
                                          "Certain Transactions."
Proposed Nasdaq National Market
  Symbol................................  CTAC
</TABLE>
 
- ---------------
(1) Does not include the Underwriters' over-allotment option granted by the
    Company for an aggregate of 330,000 shares of Common Stock.
 
(2) Does not include 139,161 shares of Common Stock issuable upon the exercise
    of outstanding options granted to certain members of management or an
    additional 310,000 shares of Common Stock available for future issuance to
    employees or non-employee Directors under the Stock Option Plan (as
    defined). See "Management--Incentive Stock Option Plan."
 
                                  RISK FACTORS
 
     Prospective investors should carefully consider the factors set forth under
"Risk Factors," as well as the other information set forth in this Prospectus
before making an investment in the Common Stock offered hereby. Such risk
factors include, among others, that: (i) the Company has experienced rapid
growth and has a limited operating history; (ii) a substantial portion of the
Company's sales do not comply with applicable state laws and
 
                                        3
<PAGE>   7
 
regulations; (iii) the Company currently purchases a substantial portion of its
products from unauthorized distributors, such as large optical retail chains
with excess inventory and purchased approximately 27%, 40% and 32% of its
contact lens inventory in 1995, 1996 and the first nine months of 1997,
respectively, from a single distributor; (iv) the Company is dependant upon its
telephone and management information systems; (v) the retail sale of contact
lenses is highly competitive; (vi) the Company is dependent upon the continued
contributions of key management personnel; (vii) upon completion of the
Offering, the existing stockholders of the Company (the "Existing Stockholders")
will control approximately 64% of the aggregate voting power of the Company;
(viii) the direct marketing industry is experiencing technological changes in
marketing methods; and (ix) the Company does not have and cannot acquire any
property rights to the 1-800 CONTACTS telephone number under the applicable
regulations of the Federal Communications Commission (the "FCC").
 
                SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                                                         COMPANY
                                          PREDECESSOR(1)         --------------------------------------------------------
                                    --------------------------   FEBRUARY 1,                          NINE MONTHS
                                        YEAR        ONE MONTH        1995           YEAR                 ENDED
                                       ENDED          ENDED           TO           ENDED             SEPTEMBER 30,
                                    DECEMBER 31,   JANUARY 31,   DECEMBER 31,   DECEMBER 31,   --------------------------
                                        1994          1995           1995           1996          1996           1997
                                    ------------   -----------   ------------   ------------   -----------   ------------
                                                                                               (UNAUDITED)
<S>                                 <C>            <C>           <C>            <C>            <C>           <C>
STATEMENT OF OPERATIONS DATA:
Net sales.........................    $212,584       $21,552       $587,918     $  3,628,296   $ 1,857,878   $ 14,144,835
Gross profit......................      95,258         8,483        232,452        1,412,990       823,598      4,692,022
Selling, general and
  administrative expenses.........      78,584         9,369        317,898        1,041,312       554,776      3,858,856
Income (loss) from operations.....      16,674          (886)       (85,446)         371,678       268,822        833,166
Net income (loss)(2)..............    $ 16,674       $  (886)      $(94,551)    $    348,363   $   253,713   $    792,142
                                      ========       =======       ========     ============   ===========   ============
PRO FORMA STATEMENT OF OPERATIONS
  DATA:
Pro forma net income (loss)(3)....                                 $(58,149)    $    214,243   $   156,033   $    487,167
                                                                   ========     ============   ===========   ============
Pro forma net income per common
  share(4)........................                                              $       0.05                 $       0.10
                                                                                ============                 ============
Pro forma weighted average common
  shares outstanding(4)...........                                                 4,663,528                    4,729,490
                                                                                ============                 ============
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                           SEPTEMBER 30, 1997
                                                                                -----------------------------------------
                                                                                                   PRO       PRO FORMA AS
                                                                                   ACTUAL       FORMA(5)     ADJUSTED(6)
                                                                                ------------   -----------   ------------
<S>                                 <C>            <C>           <C>            <C>            <C>           <C>
BALANCE SHEET DATA:
Working capital (deficit).........                                              $ (1,425,259)  $(1,960,738)  $ 14,761,913
Total assets......................                                                 5,760,772     5,760,772     19,926,051
Total debt (including current
  portion)........................                                                 2,341,992     2,877,471        --
Stockholders' equity (deficit)....                                                   675,762      (446,459)    16,596,291
</TABLE>
 
- ---------------
(1) The term "Predecessor" is used herein to refer to the combined historical
    financial and operating data of the Discount Lens Club.
 
(2) For all periods indicated, the Company has operated as an S corporation and
    has not been subject to federal and certain state income taxes.
 
(3) Pro forma net income reflects historical net income less pro forma income
    taxes. Pro forma income taxes are provided at an assumed 38.5% effective
    income tax rate, as if the Company had been a C corporation rather than an S
    corporation for the above periods. Prior to the closing of this Offering,
    the Company's S corporation status will terminate; at that date, the Company
    will record a non-recurring, non-cash charge to earnings to recognize
    deferred income taxes in accordance with Statement of Financial Accounting
    Standards No. 109 ("SFAS 109"). See "S Corporation Matters."
 
(4) Pro forma net income per share is based on the weighted average shares of
    Common Stock and Common Stock equivalents outstanding, including actual
    shares outstanding and shares deemed to be outstanding. The shares deemed to
    be outstanding include the number of shares being offered by the Company
    hereby sufficient to fund an assumed S corporation distribution of
    approximately $535,479 at September 30, 1997 or approximately $6,076 at
    December 31, 1996 (based on the amount of retained earnings at such dates,
    net of notes receivable due from stockholders of the Company of $510,475).
    Common Stock equivalents were determined using the treasury stock method.
 
(5) Gives effect to: (i) an assumed distribution of retained earnings of
    $1,045,954 to the Company's stockholders upon the termination of the
    Company's S Corporation status; (ii) the repayment of notes receivable due
    from stockholders of $510,475; and (iii) the recording of a deferred income
    tax liability of $586,742 that would be recorded upon termination of the
    Company's S Corporation status in accordance with SFAS 109. See "S
    Corporation Matters" and "Certain Transactions."
 
(6) As adjusted to reflect the sale of million shares of Common Stock offered by
    the Company hereby at an initial public offering price of $11.00 per share
    and the application of the estimated net proceeds therefrom. See "Use of
    Proceeds."
 
                                        4
<PAGE>   8
 
                                  RISK FACTORS
 
     This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act").
Also, documents subsequently filed by the Company with the Securities and
Exchange Commission (the "Commission") will contain forward-looking statements.
Such forward-looking statements are based on the beliefs of the Company's
management as well as on assumptions made by and information currently available
to the Company at the time such statements were made. When used in this
Prospectus, the words "anticipate," "believe," "estimate," "expect," "intends"
and similar expressions, as they relate to the Company are intended to identify
forward-looking statements. Actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors set
forth below, the matters set forth or incorporated in the Prospectus generally
and certain economic and business factors, some of which may be beyond the
control of the Company. The Company cautions the reader, however, that the risk
factors described below may not be exhaustive. In analyzing an investment in the
Common Stock offered hereby, prospective investors should carefully consider,
along with the other matters referred to herein, the risk factors described
below.
 
RISKS RELATED TO RAPID GROWTH AND LIMITED OPERATING HISTORY
 
     Since its formation in February 1995, the Company has experienced rapid
growth, with net sales increasing from approximately $588,000 for the eleven
month period ending December 1995 to $14.1 million in the first nine months of
1997. The Company's ability to compete effectively and to manage future growth,
if any, will require the Company to continue to improve its financial and
management controls, reporting systems and procedures on a timely basis and to
expand, train and manage its employee base. It is anticipated that additional
experienced management will need to be added to meet the demands of expanded
operations. There can be no assurance that such additional management will be
attracted and retained, or that the existing and new management will be able to
implement such systems effectively or on a timely basis or to manage future
expansion successfully. The failure or inability to do so could have a material
adverse affect on the Company's business, financial condition and results of
operations.
 
     The Company has a limited operating history. The Company was formed in
February 1995 as the successor to the business founded by the Company's Vice
President of Operations in March 1991. As a result, there is only limited
financial information and operating information available for a potential
investor to evaluate an investment in the Common Stock. As the Company expands
its operations to meet the anticipated demand for its products, there can be no
assurance that the Company will be able to realize or sustain such growth or
that the Company will remain profitable in the future.
 
RISKS RELATED TO REGULATORY ENVIRONMENT
 
     The sale and delivery of contact lenses is generally governed by state laws
and regulations. The Company sells to customers in nearly all 50 states and each
sale is likely to be subject to the laws of the state where the customer is
located. The laws and regulations relating to the delivery and sale of contact
lenses vary from state to state, but can generally be classified into five
categories: (i) laws that require contact lenses to be dispensed only pursuant
to a valid prescription; (ii) laws that require the dispenser to be licensed by
the state as an optometrist, ophthalmologist or other professional authorized to
dispense lenses; (iii) laws that require lenses be dispensed only in a
face-to-face transaction; (iv) laws with requirements that are unclear or do not
specifically address the sale and delivery of contact lenses; and (v) laws that
the Company believes place no restrictions on the dispensing of replacement
contact lenses. Many of the states requiring that contact lenses be dispensed in
face-to-face meetings or by a person licensed by such state to dispense lenses
also require that lenses only be dispensed pursuant to a valid prescription.
 
     The Company's operating practice is to attempt to obtain a valid
prescription from each of its customers or his/her eye care practitioner. If the
Company is unable to obtain a copy of or verify the customer's prescription, it
is the Company's practice to ship the lenses to the customer, based on the
information that the customer has provided. In addition, neither the Company nor
any of its employees is a licensed or registered dispenser of contact lenses in
any state other than California. For the nine months ended September 30, 1997,
the Company
 
                                        5
<PAGE>   9
 
estimates that approximately one-third of its net sales were made in compliance
with applicable state laws and regulations. Any action brought against the
Company based on its failure to comply with applicable state laws and
regulations could result in significant fines to the Company, the Company being
prohibited from making sales in a particular state and/or the Company being
required to comply with such laws. Such required compliance could result in: (i)
increased costs to the Company; (ii) the loss of a substantial portion of the
Company's customers for whom the Company is unable to obtain or verify their
prescription; and (iii) the inability to sell to customers at all in a
particular state if the Company cannot comply with such state's laws. The
occurrence of any of the above results could have a material adverse effect on
the Company's ability to sell contact lenses and to continue to operate
profitably. Furthermore, there can be no assurance that states will not enact or
impose laws or regulations that prohibit mail order dispensing of contact lenses
or otherwise impair the Company's ability to sell contact lenses and continue to
operate profitably. See "Business--Government Regulation."
 
RISKS RELATED TO SUPPLY ARRANGEMENTS
 
     Historically, substantially all of the major manufacturers of contact
lenses have refused to sell lenses directly to direct marketers, including the
Company, and have sought to prohibit their distributors from doing so. As a
result, the Company currently purchases a substantial portion of its products
from unauthorized distributors, such as large optical retail chains with excess
inventory. The Company is aware that at least one large manufacturer of contact
lenses has begun to put tracking codes on its products in an effort to identify
distributors who are selling to direct marketers. The Company is not an
authorized dealer for the majority of the products which it sells. In addition,
the price the Company pays for certain of its products is sometimes higher than
that paid by eye care practitioners, retail chains and mass merchandisers, who
are able to buy directly from the manufacturers. Furthermore, in order to help
ensure adequate supply, the Company generally carries a higher level of
inventory than if it were able to purchase directly from contact lens
manufacturers. There can be no assurance that the Company will be able to obtain
sufficient quantities of contact lenses at competitive prices in the future to
meet the existing or anticipated demand for its products. Any such inability
would have a material adverse effect on the Company's business, financial
condition and results of operations.
 
     The Company purchased from a single distributor approximately 27%, 40% and
32% of its contact lens inventory in 1995, 1996 and the first nine months of
1997, respectively. In the event that this supplier could no longer supply the
Company with contact lenses, there can be no assurance that the Company could
secure other adequate sources of supply, or that such supply could be obtained
on terms as favorable to the Company as its current supply, which could
adversely affect the Company by increasing its costs or, in the event adequate
replacement supply can not be secured, reducing its net sales.
 
DEPENDENCE ON TELEPHONE AND MANAGEMENT INFORMATION SYSTEMS
 
     The Company's success depends, in part, on its ability to provide prompt,
accurate and complete service to its customers on a competitive basis, and to
purchase and promote products, manage inventory, ship products, manage sales and
marketing and maintain efficient operations through its telephone and
proprietary management information systems. A significant disruption in its
telephone or management information systems could adversely affect the Company's
relations with its customers and its ability to manage its operations. From time
to time, the Company has experienced temporary interruptions in its telephone
service as a result of the technical problems experienced by its long-distance
carrier. There can be no assurance that similar interruptions will not occur in
the future. Furthermore, there can be no assurance that extended or repeated
reliance on the Company's back-up computer and telephone systems would not have
a material adverse effect on the Company's business, financial condition and
results of operations.
 
RISKS RELATED TO COMPETITION AND INDUSTRY DYNAMICS
 
     The retail sale of contact lenses is a highly competitive and fragmented
industry. The Company's principal competitors include ophthalmologists and
optometrists in private practice and retail chain stores, which the Company
believes collectively accounted for approximately 70% of all contact lens sales
in 1996. The Company also competes with national optical chains, such as Cole
National Corporation, LensCrafters and National Vision Association and mass
merchandisers, such as Wal-Mart, Sam's and Costco, which the Company believes
accounted for approximately 25% of all contact lens sales in 1996. The Company
also competes with other direct
 
                                        6
<PAGE>   10
 
marketers of contact lenses, one of which is larger than the Company. The
Company may face increased competition in the future from new entrants in the
direct marketing business, which may include national optical chains and mass
merchandisers, some of which may have significantly greater resources than the
Company. In addition, many of the Company's competitors, including most eye care
practitioners, national optical chains and mass merchandisers, have direct
supply arrangements with contact lens manufacturers, which in some cases affords
such competitors with better pricing terms and access to supply. In light of
such intense competition, there can be no assurance that the Company will be
able to maintain its current market position or realize its anticipated growth.
 
     The Company also encounters competition from manufacturers of eyeglasses
and from alternative technologies, such as surgical refractive procedures
(including new refractive laser procedures such as PRK, or photo refractive
keratectomy, and LASIK, or laser in situ keratomileusis). If surgical refractive
procedures become increasingly accepted as an effective and safe technique for
permanent vision correction, they could substantially reduce the demand for
contact lenses by enabling patients to avoid the ongoing cost and inconvenience
of contact lenses. Accordingly, there can be no assurance that these procedures,
or other alternative technologies that may be developed in the future, will not
cause a substantial decline in the number of contact lens wearers and thus have
a material adverse effect on the Company's business, financial condition and
results of operations.
 
DEPENDENCE ON KEY EXECUTIVES
 
     The Company is dependent to a large degree on the services of its senior
management team, particularly Jonathan C. Coon and John F. Nichols, the
Company's President and Vice President, Operations, respectively. Prior to the
completion of the Offering, Messrs. Coon and Nichols will enter into employment
agreements with the Company. The loss of any of its key executives could have a
material adverse effect on the Company. The Company's ability to manage its
anticipated growth will depend on its ability to identify, hire and retain
highly skilled management and technical personnel. Competition for such
personnel is intense. As a result, there can be no assurance that the Company
will be successful in attracting and retaining such personnel, and the failure
to attract such personnel could have a material adverse affect on the Company's
business, financial condition and results of operations. See "Management."
 
CONTROL BY PRINCIPAL STOCKHOLDERS
 
     Upon completion of the Offering, the Existing Stockholders will own
3,941,818 shares of Common Stock and control approximately 64% of the aggregate
voting power of the Company, which will allow such stockholders, in the event
that they act together, to control substantially all actions taken by the
stockholders of the Company, including the election of directors. Such
concentration of ownership could also have the effect of delaying, deterring or
preventing a change in control of the Company that might otherwise be beneficial
to stockholders and may also discourage acquisition bids for the Company and
limit the amount certain investors may be willing to pay for shares of the
Common Stock. See "Management," and "Principal and Selling Stockholders."
 
RISKS RELATED TO TECHNOLOGICAL CHANGES IN DIRECT MARKETING INDUSTRY
 
     The Company expects that the direct marketing industry will be affected by
technological changes in marketing methods, such as on-line catalogs and
Internet shopping. The Company believes its success will depend, in part, on its
ability to adapt to new technologies and to respond to competitors' actions in
these areas. Adapting to new technologies could require significant capital
expenditures by the Company. There can be no assurance that the Company will
remain competitive in response to such technological changes.
 
INTELLECTUAL PROPERTY MATTERS
 
     The Company believes that a large portion of its success is attributable to
the competitive advantage it enjoys as a result of its toll-free telephone
number (1-800 CONTACTS). Under applicable rules and regulations of the FCC, the
Company does not have and cannot acquire any property rights to this telephone
number. There can be no assurance that the Company will be able to retain the
use of the 1-800 CONTACTS telephone number. The loss of the right to use the
1-800 CONTACTS number would have a material adverse effect on the Company's
business, financial condition and results of operations.
 
                                        7
<PAGE>   11
 
COST OF POSTAGE AND SHIPPING
 
     The Company ships its products to customers by United States mail and other
overnight delivery and surface services. The Company generally invoices the
costs of delivery and parcel shipments directly to customers as separate
shipping and handling charges. Any increases in shipping rates or postal rates
(paid by the Company to deliver its advertising) could have an adverse effect on
the Company's operating results as the Company may not be able to effectively
pass such increases on to its customers. The United States Postal Service has
recently requested approval for an increase in postal rates which would average
4.5% for all domestic services, which, if approved, is expected to be effective
in June 1998. Similarly, strikes or other service interruptions by such shippers
could adversely affect the Company's ability to market or deliver its products
on a timely basis. See "Business--Customers and Marketing."
 
STATE SALES TAX COLLECTION
 
     At present, the Company does not collect sales or other similar taxes in
respect of sales and shipments of its products. However, various states have
sought to impose state sales tax collection obligations on out-of-state direct
marketing companies such as the Company. A successful assertion by one or more
states that the Company should have collected or be collecting sales taxes on
the sale of its products could result in additional costs and administrative
expenses to the Company and corresponding price increases to its customers,
which could adversely affect the Company's business, financial condition and
results of operations.
 
PRODUCT LIABILITY EXPOSURE
 
     The Company faces an inherent risk of exposure to product liability claims
in the event that the use of the products it sells results in personal injury.
Although the Company has not experienced any losses due to product liability
claims, there can be no assurance that it will not experience such losses in the
future. The Company maintains insurance against product liability claims, but
there can be no assurance that such coverage will be adequate to cover any
liabilities that the Company may incur, or that such insurance will continue to
be available on terms acceptable to the Company. A successful claim brought
against the Company in excess of available insurance coverage, or any claim that
results in significant adverse publicity against the Company, could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Legal Proceedings."
 
ABSENCE OF PRIOR PUBLIC MARKET; SUBSTANTIAL DILUTION
 
     Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price of the Common Stock will be determined
by negotiations among the Company and the Representatives (as defined herein)
and may not be indicative of the market price for shares of the Common Stock
after the Offering. For a description of factors considered in determining the
initial public offering price, see "Underwriting." There can be no assurance
that an active trading market for the Common Stock will develop or if developed,
that such market will be sustained. The market price for shares of the Common
Stock is likely to be volatile and may be significantly affected by such factors
as quarter-to-quarter variations in the Company's results of operations, news
announcements, changes in general market conditions for contact lenses,
regulatory actions, adverse publicity regarding the Company or the industry in
general, changes in financial estimates by securities analysts and other
factors. In addition, broad market fluctuation and general economic and
political conditions may adversely affect the market price of the Common Stock,
regardless of the Company's actual performance. There can be no assurance that
the market price of the Common Stock will not decline below the initial public
offering price.
 
     Because the initial public offering price is substantially higher than the
book value per share of Common Stock, purchasers of the Common Stock in the
Offering will be subject to immediate and substantial dilution. In addition,
pursuant to certain provisions of the Company's restated certificate of
incorporation (the "Restated Certificate"), the Company has the authority to
issue additional shares of Common Stock and shares of one or more series of
voting Preferred Stock. The issuance of such shares could result in the dilution
of voting power of the shares of Common Stock purchased in the Offering. See
"Dilution" and "Description of Capital Stock."
 
                                        8
<PAGE>   12
 
ABSENCE OF DIVIDENDS
 
     Following the completion of this Offering, the Company intends to retain
all future earnings for use in its business and, therefore, does not anticipate
paying any cash dividends on the Common Stock in the foreseeable future. See
"Dividend Policy."
 
POTENTIAL ADVERSE IMPACT FROM SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon completion of the Offering, the Company expects to have 6,141,818
shares of Common Stock outstanding. Of these shares, the 2,200,000 shares of
Common Stock (2,530,000 shares if the Underwriters' overallotment option is
exercised in full) sold in the Offering will be freely tradeable without
restriction under the Securities Act, except any such shares which may be
acquired by an "affiliate" of the Company. Subject to certain 180-day "lock up"
agreements described herein, approximately 3,941,818 shares of Common Stock will
be eligible for sale in the public market, subject to compliance with the resale
volume limitations and other restrictions of Rule 144 under the Securities Act,
beginning 90 days after the date of this Prospectus. Future sales of the shares
of Common Stock held by the Existing Stockholders could have a material adverse
effect on the price of the Common Stock. See "Shares Eligible for Future Sale."
 
ANTI-TAKEOVER PROVISIONS COULD DELAY OR PREVENT A CHANGE IN CONTROL
 
     Certain provisions of the Restated Certificate and the Company's by-laws
(the "By-laws") may inhibit changes in control of the Company not approved by
the Company's Board of Directors. These provisions include: (i) a classified
Board of Directors; (ii) a prohibition on stockholder action through written
consents; (iii) a requirement that special meetings of stockholders be called
only by the Board of Directors; (iv) advance notice requirements for stockholder
proposals and nominations; (v) limitations on the ability of stockholders to
amend, alter or repeal the By-laws; and (vi) the authority of the Board of
Directors to issue without stockholder approval preferred stock with such terms
as the Board of Directors may determine. The Company will also be afforded the
protections of Section 203 of the Delaware General Corporation Law, which could
have similar effects. See "Description of Capital Stock."
 
FORWARD-LOOKING STATEMENTS
 
     This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-looking
statements include statements regarding the Company's marketing plans,
expectations concerning growth in the market, certain financial projections and
the planned use of proceeds. Actual results could differ from those projected in
any forward-looking statements. The forward-looking statements are made as of
the date of this Prospectus and the Company assumes no obligation to update such
forward-looking statements, or to update the reasons why actual results may
differ from those projected in the forward-looking statements. Numerous factors,
including without limitation factors mentioned in this Risk Factors section,
many of which are beyond the control of management of the Company, could cause
future results to differ substantially from those contemplated in such
forward-looking statements.
 
                                        9
<PAGE>   13
 
                                  THE COMPANY
 
     The Company was incorporated under the laws of the State of Utah in
February 1995 and will be reincorporated under the laws of the State of Delaware
prior to completion of the Offering. The Company is the successor to the
business founded by the Company's Vice President of Operations in March 1991.
The Company's principal executive office is located at 13751 South Wadsworth
Park Drive, Suite D-140, Draper, Utah 84020 and its telephone number is (801)
572-8225.
 
                             S CORPORATION MATTERS
 
     Since its inception, the Company has been a corporation subject to taxation
under Subchapter S of the Internal Revenue Code of 1986, as amended. As a
result, the taxable income of the Company has been taxed, for Federal (and some
state) income tax purposes, directly to the Company's stockholders rather than
to the Company.
 
     On the closing date of this Offering, the Company will elect to terminate
its S corporation status. As a result, the Company's earnings through the date
of termination of the Company's S corporation status generally will be taxed for
federal and state income tax purposes directly to the Existing Stockholders who
were the only stockholders of the Company prior to the closing of this Offering.
Subsequent to the termination of its S corporation status, the Company will be
subject to federal and state income taxes on its earnings.
 
     Effective the day preceding the closing date of this Offering, the Company
will declare a distribution to the Existing Stockholders in an amount equal to
the Company's retained earnings from its formation through the date immediately
preceding the date of termination of the Company's S corporation status (the "S
Corporation Distribution"). If the Company's S corporation status had terminated
as of September 30, 1997, the amount of the S Corporation Distribution would
have been approximately $535,479 (net of notes receivable due from stockholders
of the Company). The actual amount of the S Corporation Distribution is
estimated to be approximately $0.9 million, reflecting undistributed earnings
through the date preceding the anticipated closing date of this Offering (net of
notes receivable due from stockholders of the Company). It is currently
anticipated that the S Corporation Distribution will be funded out of the net
proceeds of this Offering. See "Use of Proceeds" and "Certain Transactions."
 
     Purchasers of Common Stock in this Offering will not receive any of the S
Corporation Distribution.
 
     Immediately prior to the consummation of the Offering, the Existing
Stockholders and the Company intend to enter into an S corporation termination,
tax allocation and indemnification agreement (the "Agreement for Distribution of
Retained Earnings and Tax Indemnification") relating to the S Corporation
Distribution to such stockholders and indemnification arrangements among such
stockholders and the Company for certain tax liabilities.
 
     Upon termination of its S Corporation status, the Company will become
subject to income taxation and in connection therewith, the Company will record
deferred income taxes in accordance with SFAS 109. If the Company's S
Corporation status had been terminated at September 30, 1997, the amount of the
charge to earnings would have been approximately $587,000.
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the Offering (after deducting
applicable underwriting discounts and estimated expenses payable by the Company)
are estimated to be approximately $18.9 million (assuming an initial public
offering price of $11.00 per share). The Company expects to use: (i)
approximately $10.0 million to fund additional sales and marketing activities;
(ii) approximately $3.0 million to increase inventory; (iii) approximately $2.6
million for the repayment of debt; (iv) approximately $0.9 million to fund the S
Corporation Distribution; (v) $1.9 million to exercise an option to purchase
442,651 shares of Common Stock from an existing stockholder of the Company; and
(vi) any remaining net proceeds for general corporate purposes, including
working capital. The anticipated uses of the net proceeds are subject to change
due to the
 
                                       10
<PAGE>   14
 
actual circumstances of operating the Company's business. Pending such uses, the
Company currently plans to invest the net proceeds in investment grade,
short-term, interest-bearing securities. See "Certain Transactions."
 
     Approximately $1.6 million of the indebtedness expected to be repaid by the
Company out of the net proceeds of the Offering was borrowed from a stockholder
of the Company pursuant to a line of credit and two promissory notes, all of
which bear interest at the prime interest rate plus 2%. The line of credit
provides for maximum borrowings of $250,000 and matures in February 1999.
Initial borrowings under the two promissory notes were $250,000 and $1.1 million
and such promissory notes mature in September 1998 and July 1998, respectively.
The remainder of the indebtedness being repaid was incurred under the Credit
Facility (as defined), which bears interest at the lender's prime interest rate
plus 1.5% and matures on July 31, 1998.
 
     The Company will not receive any of the proceeds from the sale of the
shares by the Selling Stockholder.
 
                                DIVIDEND POLICY
 
     The Company anticipates that all of its future earnings will be retained to
finance the expansion of its business and, subsequent to the payment of the S
Corporation Distribution, does not anticipate paying any cash dividends on the
Common Stock in the foreseeable future. Any future determination to pay
dividends will be at the discretion of the Company's Board of Directors and will
depend upon, among other factors, the Company's results of operations, financial
condition, capital requirements and contractual restrictions. In addition, the
Credit Facility (as defined) prohibits the Company from paying any cash
dividends on the Common Stock after the termination of the Company's S
corporation status.
 
                                       11
<PAGE>   15
 
                                 CAPITALIZATION
 
     The following table sets forth: (i) the actual capitalization of the
Company as of September 30, 1997; (ii) the pro forma capitalization of the
Company as of such date, giving effect to the payment of the S Corporation
Distribution and the recording of approximately $587,000 of deferred income tax
liabilities resulting from the termination of S corporation status; and (iii)
such pro forma capitalization, as adjusted to give effect to the sale by the
Company of 1,925,000 shares of Common Stock pursuant to the Offering, assuming
an initial public offering price of $11.00 per share and the application of the
net proceeds to the Company therefrom as described under "Use of Proceeds." This
table should be read in conjunction with the financial statements of the Company
and notes thereto included elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                    SEPTEMBER 30, 1997
                                                         ----------------------------------------
                                                                                       PRO FORMA
                                                           ACTUAL       PRO FORMA     AS ADJUSTED
                                                         ----------     ---------     -----------
<S>                                                      <C>            <C>           <C>
Long-term debt, less current portion...................  $  320,099     $ 320,099     $        --
                                                         ----------     ---------     -----------
Stockholders' equity:
  Preferred Stock, $0.01 par value, 1,000,000 shares
     authorized, no shares issued or outstanding.......          --            --              --
  Common Stock, $0.01 par value, 20,000,000 shares
     authorized; 4,659,469 shares issued on an actual
     and a pro forma basis; and 6,584,469 shares issued
     on a pro forma as adjusted basis (1)(2)...........      46,595        46,595          65,845
  Additional paid-in capital...........................      93,688        93,688      19,017,188
  Retained earnings (deficit)..........................   1,045,954      (586,742)       (586,742)
  Notes receivable from stockholders...................    (510,475)           --              --
  Treasury stock, 442,651 shares at cost (3)...........          --            --      (1,900,000)
                                                         ----------     ---------     -----------
     Total stockholders' equity (deficit)..............     675,762      (446,459)     16,596,291
                                                         ----------     ---------     -----------
          Total capitalization.........................  $  995,861     $(126,360)    $16,596,291
                                                         ==========     =========     ===========
</TABLE>
 
- ---------------
 
(1) Assuming an initial public offering price of $11.00 per share (the mid-point
    of the range set forth on the cover page of this Prospectus), less the
    Underwriters' discount and the estimated expenses of the Offering.
 
(2) Does not include 139,161 shares of Common Stock issuable upon the exercise
    of outstanding options granted to certain members of management or an
    additional 310,000 shares of Common Stock available for future issuance
    under the Stock Option Plan (as defined). See "Management -- Incentive Stock
    Option Plan."
 
(3) Reflects the repurchase of an aggregate of 442,651 shares of Common Stock by
    the Company from an existing stockholder of the Company for $1.9 million.
    See "Certain Transactions."
 
                                       12
<PAGE>   16
 
                                    DILUTION
 
     As of September 30, 1997, the pro forma deficit in the Company's net
tangible book value was approximately $560,000, or $0.13 per share after giving
effect to (i) the payment of the S Corporation Distribution and (ii) the
recording of approximately $587,000 of deferred income tax liabilities resulting
from the termination of the S corporation election. After giving effect to the
Offering and the application of the net proceeds therefrom as set forth under
"Use of Proceeds," the pro forma net tangible book value of the Company as of
September 30, 1997, would be $16.5 million or $2.68 per share. This represents
an immediate increase in net tangible book value per share of $2.81 per share to
the Existing Stockholders and an immediate dilution of $8.32 per share to new
investors. The following table illustrates this per share dilution:
 
<TABLE>
    <S>                                                                  <C>        <C>
    Assumed initial public offering price per share....................             $11.00
    Pro forma net tangible book value per share before the
      Offering(1)......................................................  $(0.12)
    Increase per share attributable to payments by new investors.......    2.80
                                                                         ------
    Adjusted pro forma net tangible book value per share after the
      Offering.........................................................               2.68
                                                                                    ------
    Dilution per share to new investors(2).............................             $ 8.32
                                                                                    ======
</TABLE>
 
- ---------------
 
(1) The Company's pro forma deficit in net tangible book value per share of
    Common Stock is determined by dividing the Company's deficit in tangible net
    worth at September 30, 1997 of $560,000 by the aggregate number of shares of
    Common Stock outstanding.
 
(2) Dilution is determined by subtracting pro forma, as adjusted, net tangible
    book value per share after the Offering from the initial public offering
    price per share.
 
     The following table summarizes, on a pro forma basis, as of September 30,
1997, the difference between the Existing Stockholders and the new investors
with respect to the number of shares of Common Stock purchased (or to be
purchased) from the Company, the total consideration paid (or to be paid) and
the average price per share paid (or to be paid) by the Existing Stockholders
and new investors, at an assumed initial public offering price of $11.00 per
share, before deducting the estimated offering expenses and underwriting
discounts and commissions:
 
<TABLE>
<CAPTION>
                                        SHARES PURCHASED        TOTAL CONSIDERATION        AVERAGE
                                       -------------------     ----------------------       PRICE
                                        NUMBER     PERCENT        AMOUNT      PERCENT     PER SHARE
                                       ---------   -------     ------------   -------     ---------
    <S>                                <C>         <C>         <C>            <C>         <C>
    Existing Stockholders(3).........  4,216,818     68.7%     $    140,283      0.7%      $  0.03
    New investors(4).................  1,925,000     31.3        21,175,000     99.3         11.00
                                       ---------    -----      ------------    -----
    Total............................  6,141,818    100.0%     $ 21,315,283    100.0%
                                       =========    =====      ============    =====
</TABLE>
 
- ---------------
 
(3) Does not include 139,161 shares of Common Stock issuable upon the exercise
    of outstanding options granted to certain members of management or an
    additional 310,000 shares of Common Stock available for future issuance
    under the Stock Option Plan (as defined). See "Management -- Incentive Stock
    Option Plan."
 
(4) Sales of Common Stock by the Selling Stockholder in the Offering will reduce
    the number of shares held by the Existing Stockholders to 3,941,818, or
    approximately 64% of the outstanding Common Stock after the Offering, and
    will increase the number of shares held by new investors to 2,200,000 shares
    of Common Stock, or approximately 36% of the outstanding Common Stock after
    the Offering.
 
                                       13
<PAGE>   17
 
                  SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
 
     The financial data for the year ended December 31, 1994 and the one month
period ended January 1, 1995 are derived from the audited consolidated financial
statements of the Predecessor. The financial data for the eleven month period
ended December 31, 1995, the year ended December 31, 1996 and the nine months
ended September 30, 1997 have been derived from the audited financial statements
of the Company, which are included as part of this Prospectus. The financial
data for the nine months ended September 30, 1996 has been derived from the
unaudited financial statements of the Company, which, in the opinion of
management, reflect all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation thereof. Results for the nine
months ended September 30, 1997 are not necessarily indicative of results for
the full year. The selected financial data below should be read in conjunction
with the financial statements and the notes thereto of the Predecessor and the
Company included elsewhere in this Prospectus and "Management's Discussion and
Analysis of Results of Operations and Financial Condition."
 
<TABLE>
<CAPTION>
                                                                                    COMPANY
                                      PREDECESSOR(1)         ------------------------------------------------------
                                --------------------------                                       NINE MONTHS
                                    YEAR        ONE MONTH    FEBRUARY 1,        YEAR                ENDED
                                   ENDED          ENDED        1995 TO         ENDED            SEPTEMBER 30,
                                DECEMBER 31,   JANUARY 31,   DECEMBER 31,   DECEMBER 31,   ------------------------
                                    1994          1995           1995           1996          1996         1997
                                ------------   -----------   ------------   ------------   ----------   -----------
                                                                                           (UNAUDITED)
<S>                             <C>            <C>           <C>            <C>            <C>          <C>
STATEMENT OF OPERATIONS DATA:
Net sales.....................    $212,584       $21,552       $587,918      $3,628,296    $1,857,878   $14,144,835
Costs of sales................     117,236        13,069        355,466       2,215,306     1,034,280     9,452,813
                                  --------       -------       --------      ----------    ----------   -----------
Gross profit..................      95,258         8,483        232,452       1,412,990       823,598     4,692,022
Selling, general and
  administrative expenses.....      78,584         9,369        317,898       1,041,312       554,776     3,858,856
                                  --------       -------       --------      ----------    ----------   -----------
Income (loss) from
  operations..................      16,674          (886)       (85,446)        371,678       268,822       833,166
Other expenses, net...........          --            --         (9,105)        (23,315)      (15,109)      (41,024)
                                  --------       -------       --------      ----------    ----------   -----------
Net income (loss)(2)..........    $ 16,674       $  (886)      $(94,551)     $  348,363    $  253,713   $   792,142
                                  ========       =======       ========      ==========    ==========   ===========
PRO FORMA STATEMENT OF
  OPERATIONS DATA:
Pro forma (provision) benefit
  for income taxes............                                 $ 36,402      $ (134,120)   $  (97,680)  $  (304,975)
Pro forma net income
  (loss)(3)...................                                  (58,149)        214,243       156,033       487,167
                                                               ========      ==========    ==========   ===========
Pro forma net income per
  common share(4).............                                               $     0.05                 $      0.10
                                                                             ==========                 ===========
Pro forma weighted average
  common shares
  outstanding(4)..............                                                4,663,528                   4,729,490
                                                                             ==========                 ===========
BALANCE SHEET DATA (AT THE END
  OF PERIOD):
Working capital (deficit).....                                 $(12,093)     $ (204,080)   $ (114,709)  $(1,425,259)
Total assets..................                                  243,845       1,156,646       740,913     5,760,772
Total debt (including current
  portion)....................                                  207,864         370,705       251,931     2,341,992
Stockholders' equity
  (deficit)...................                                  (28,412)        146,359      (158,893)      675,762
</TABLE>
 
- ---------------
(1) The historical financial and operating data of the Predecessor was derived
    from the historical financial and operating data of the Discount Lens Club.
 
(2) For all periods indicated, the Company has operated as an S corporation and
    has not been subject to federal and certain state income taxes.
 
(3) Pro forma net income reflects historical net income less pro forma income
    taxes. Pro forma income taxes are provided at an assumed 38.5% effective
    income tax rate, as if the Company had been a C corporation rather than an S
    corporation for the above periods. Prior to the closing of this Offering,
    the Company's S corporation status will terminate; at that date, the Company
    will record a non-recurring, non-cash charge to earnings to recognize
    deferred income taxes in accordance with SFAS 109. See "S Corporation
    Matters."
 
(4) Pro forma net income per share is based on the weighted average shares of
    Common Stock and Common Stock equivalents outstanding, including actual
    shares outstanding and shares deemed to be outstanding. The shares deemed to
    be outstanding represent the number of shares being offered by the Company
    hereby sufficient to fund an assumed S corporation distribution of
    approximately $535,479 at September 30, 1997 or approximately $6,076 at
    December 31, 1996 (based on the amount of retained earnings at such dates,
    net of notes receivable due from stockholders of the Company of $510,475).
    Common Stock equivalents were determined using the treasury stock method.
 
                                       14
<PAGE>   18
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
     The following discussion and analysis should be read in conjunction with
"Selected Historical and Pro Forma Financial Data" and the Company's financial
statements and notes thereto included elsewhere in this Prospectus.
 
OVERVIEW
 
     The Company is a leading and rapidly growing direct marketer of replacement
contact lenses. The Company was formed in February 1995 and is the successor to
the mail order business founded by the Company's Vice President of Operations in
March 1991. Since its formation, the Company has experienced significant growth
in revenues and net income. The Company's net sales have grown rapidly, from
$609,470 in 1995 to $3.6 million in 1996, an increase of 495%. For the nine
months ended September 30, 1997, the Company generated net sales of
approximately $14.1 million, as compared to approximately $1.9 million for the
nine months ended September 30, 1996, an increase of 661%.
 
     During 1995, 1996 and the first nine months of fiscal 1997, the Company
hired additional management personnel and invested significant resources in
infrastructure improvements such as expanded operating facilities, enhanced
telecommunications equipment and upgrading its proprietary management
information system to support its customer service and marketing programs. Key
components of the infrastructure investment consisted of expanded operating
facilities, a new, higher capacity telephone switch and the purchase of software
and corresponding hardware upgrades to the Company's proprietary management
information system.
 
     Quarter-to-quarter comparisons are impacted by the timing of the mailing of
the Company's advertisements. Approximately 40% of the revenue related to a
particular mailing is generated within 60 to 90 days after such mailing. The
Company engages in an ongoing mailing campaign. The volume of mailings may vary
in different quarters and from year-to-year depending on the Company's
assessment of prevailing market opportunities.
 
     The Company has operated as an S corporation and, as a result has not been
subject to federal or certain state income taxes. Prior to the consummation of
this Offering, the Company will become subject to federal and state income taxes
and will recognize an estimated non-recurring, non-cash charge to earnings to
record deferred income taxes for the tax effect of cumulative temporary
differences between financial and tax reporting. If the Company's S corporation
status had been terminated at September 30, 1997 the amount of this charge to
earnings would have been approximately $587,000. See "S Corporation Matters."
 
     The Company sells a variety of brands of contact lenses, all with varying
gross margins. Accordingly, the Company's overall gross margin is affected by
its product mix. Historically, the Company's overall gross margin has been
positively impacted by the sale of manufacturers' promotional products, which
the Company is generally able to sell at higher gross margins than the Company's
other products. The recent rapid growth in the Company's net sales has resulted
in these sales representing a smaller percentage of the Company's overall sales.
As a result, the Company's overall gross margin has decreased in recent periods.
Gross margins on specific products, however, have remained relatively constant
over such periods. The Company's overall gross margin over the last three
quarters has remained relatively constant.
 
                                       15
<PAGE>   19
 
RESULTS OF OPERATIONS
 
     The following table presents the Company's results of operations expressed
as a percentage of net sales:
 
<TABLE>
<CAPTION>
                                                 PREDECESSOR     COMBINED            THE COMPANY
                                                 -----------     --------     -------------------------
                                                                                          NINE MONTHS
                                                                                             ENDED
                                                      YEAR ENDED DECEMBER 31,            SEPTEMBER 30,
                                                 ----------------------------------     ---------------
                                                   1994(1)       1995(2)      1996      1996      1997
                                                 -----------     --------     -----     -----     -----
<S>                                              <C>             <C>          <C>       <C>       <C>
Net sales....................................       100.0%         100.0%     100.0%    100.0%    100.0%
Cost of sales................................        55.2           60.5       61.1      55.7      66.8
                                                   ------         ------      ------    ------    ------
Gross profit.................................        44.8           39.5       38.9      44.3      33.2
Selling, general and administrative
  expenses...................................        37.0           53.7       28.7      29.8      27.3
                                                   ------         ------      ------    ------    ------
Income (loss) from continuing operations.....         7.8         (14.2)       10.2      14.5       5.9
Other (expense) income, net..................         0.0           (1.5)      (0.6)     (0.8)     (0.3)
                                                   ------         ------      ------    ------    ------
Net income (loss)............................         7.8%         (15.7)%      9.6%     13.7%      5.6%
                                                   ======         ======      ======    ======    ======
</TABLE>
 
- ---------------
 
(1) The results of operations for the year ended December 31, 1994 were prepared
    based on the historical results of the Discount Lens Club for such period.
 
(2) The combined results of operations for the year ended December 31, 1995 were
    prepared based on the combined historical results of (i) the Company for the
    eleven month period from February 1,1995 through December 31, 1995 and (ii)
    the combined historical results of operations of the Discount Lens Club for
    the one month period ending January 31, 1995.
 
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996.
 
     Net sales. Net sales for the nine months ended September 30, 1997 increased
$12.2 million, or approximately 661%, to $14.1 million from $1.9 million for the
nine months ended September 30, 1996. This increase was primarily attributable
to higher sales volumes due to additional sales and marketing activities.
 
     Gross profit. Gross profit for the nine months ended September 30, 1997
increased $3.9 million, or approximately 470%, to $4.7 million from $823,598 in
the comparable 1996 period. Gross profit margin decreased to 33.2% for the nine
months ended September 30, 1997 from 44.3% in the comparable period. The
Company's gross profit margin for the nine months ended September 30, 1996 was
positively impacted by the sale of manufacturers' promotional products, which
generally have higher margins.
 
     Selling, general and administrative expenses. Selling, general and
administrative expenses for the nine months ended September 30, 1997 increased
by $3.3 million, or approximately 596%, to $3.9 million from $554,776 for the
nine months ended September 30, 1996 due to the increase in sales and marketing
activity and the related increase in expenditures necessary to support the
increased sales. As a percentage of net sales, selling, general and
administrative expenses decreased to 27.3% in the 1997 period from 29.8% in the
1996 period. This savings is largely due to the fixed nature of many such
expenses.
 
     Income from operations. Income from operations for the nine months ended
September 30, 1997 increased by $564,344 to $833,166 from $268,822 for the nine
months ended September 30, 1996. This increase was primarily attributable to
increased product sales.
 
     Other (expense) income, net. Other (expense) income for the nine months
ended September 30, 1997 decreased by $25,915 to $(41,024) from $(15,109) for
the nine months ended September 30, 1996. This decrease was primarily
attributable to an increase in interest expense due to increased borrowings by
the Company from one of its stockholders and under the Credit Facility.
 
                                       16
<PAGE>   20
 
YEAR ENDED DECEMBER 31, 1996 COMPARED TO COMBINED YEAR ENDED DECEMBER 31, 1995
 
     Net sales. Net sales for the year ended December 31, 1996 increased by $3.0
million, or approximately 495%, to $3.6 million from $609,470 for the combined
year ended December 31, 1995. This increase was primarily attributable to higher
sales volumes due to increased sales and marketing activities.
 
     Gross profit. Gross profit in 1996 increased by $1.2 million, or
approximately 486%, to $1.4 million from $240,935 in 1995. Gross profit margin
decreased to 38.9% in 1996 from 39.5% in the prior year. This decrease was
attributable to a change in product mix.
 
     Selling, general and administrative expenses. Selling, general and
administrative expenses for the year ended December 31, 1996 increased by
$714,045, or 218%, to $1.0 million from $327,267 for the comparable period in
1995. This increase was the result of the increase in sales and marketing
activity and the related increase in expenditures necessary to support the
increased sales. As a percentage of net sales, selling, general and
administrative expenses decreased to 28.7% in 1996 from 53.7% in 1995. This
reduction was due to increased leverage of management and other overhead.
 
     Income from operations. Income from operations for the year ended December
31, 1996 increased by $458,010 to $371,678 from $(86,332) for the year ended
December 31, 1995. This increase was due to increased product sales.
 
     Other (expense) income, net. Other (expense) income for the year ended
December 31, 1996 decreased by $14,210 to $(23,315) from $(9,105) for the year
ended December 31, 1995. This decrease was primarily attributable to an increase
in interest expense due to increased borrowings by the Company from a
stockholder of the Company.
 
COMBINED YEAR ENDED DECEMBER 31, 1995 COMPARED TO PREDECESSOR YEAR ENDED
DECEMBER 31, 1994
 
     Net sales. Net sales for the year ended December 31, 1995 increased
$396,886 , or 187%, to $609,470 from $212,584 in the year ended December 31,
1994. This growth resulted from the acquisition of the 1-800 CONTACTS telephone
number and increased sales and marketing activities.
 
     Gross Profit. Gross profit in 1995 increased $145,677 to $240,935 from
$95,258 in 1994. Gross profit margin decreased to 39.5% in 1995 from 44.8% in
1994 primarily as a result of a change in product mix.
 
     Selling, general and administrative expenses. Selling, general and
administrative expenses for the year ended December 31, 1995 increased by
$248,683, or 316%, to $327,267 from $78,584 the prior year due to the increase
in sales and marketing activity and the related increase in expenditures
necessary to support the increased sales. As a percentage of net sales, selling,
general and administrative expenses increased to 53.7% in 1995 from 37.0% in
1994. This increase was due to the increases in sales and marketing activities
and overhead.
 
     Income from operations. Income from operations for the year ended December
31, 1995 decreased $103,006 to $(86,332) from $16,674 in 1994. The decrease is
attributable to an increase in marketing expenditures.
 
     Other (expense) income, net. Other (expense) income for the year ended
December 31, 1995 decreased $9,105 to $(9,105) from $0 in the year ended
December 31, 1994. This decrease was primarily attributable to interest expense
associated with borrowings by the Company.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company has historically funded its growth through a combination of
funds generated from operations and borrowings. Working capital requirements
generally precede the realization of sales on a monthly basis. The Company uses
funds generated from operations and borrowings to increase inventory levels in
anticipation of future sales realization. The Company's supply arrangements
generally require the Company to pay cash upon delivery of inventory. As a
result, the Company is generally unable to rely on standard trade credit
arrangements in purchasing its inventory, which would ordinarily permit the net
amount due to be paid within 30 days of shipment of ordered merchandise. In
addition, in order to help ensure sufficient supply, the Company generally
 
                                       17
<PAGE>   21
 
carries a higher level of inventory than if it were able to purchase directly
from contact lens manufacturers. See "Risk Factors -- Risks Related to Supply
Arrangements."
 
     Net cash provided by (used in) operating activities was $(91,051) and
$114,275 in 1995 and 1996, respectively. For the first nine months of fiscal
1997, net cash provided by (used in) operations was $(1,025,551) versus $102,737
in the comparable period in fiscal 1996.
 
     Net cash provided by (used in) investing activities, principally related to
capital expenditures for infrastructure improvements, was approximately,
$(46,690), $(408,584) and $(689,734) in 1995, 1996 and the first nine months of
fiscal 1997, respectively.
 
     Net cash provided by (used in) financing activities for fiscal 1995, 1996
and the first nine months of 1997 was $139,917, $291,384 and $1,715,285,
respectively.
 
     Capital expenditures for infrastructure improvements such as expanded
operating facilities, upgrades in telecommunications and management information
systems were $32,546 in 1995, $174,992 in 1996 and $344,432 in the first nine
months of fiscal 1997. The Company presently anticipates that capital
expenditures in the fourth quarter of fiscal 1997 and 1998 will be approximately
$300,000.
 
     Immediately prior to the consummation of the Offering, the Company will
make the S Corporation Distribution to the Existing Stockholders. Based on the
present estimate of the closing date, the Company estimates that the S
Corporation Distribution will be approximately $0.9 million (net of notes
receivable due from stockholders of the Company) and will be paid from a portion
of the net proceeds of the Offering. The Agreement for Distribution of Retained
Earnings and Tax Indemnification will provide for indemnification of the Company
and the Existing Stockholders which could result in payments to or from the
Company following the consummation of this Offering. See "S Corporation
Matters."
 
     In August 1997, the Company established a revolving credit facility to
provide for working capital borrowings and other corporate purposes (the "Credit
Facility"). The Credit Facility currently provides for borrowings of up to $1.0
million, has a scheduled maturity on July 31, 1998 and bears interest at a
floating rate equal to the lender's prime interest rate plus 1.5% (10% at
September 30, 1997). As of September 30, 1997, outstanding borrowings under the
Credit Facility totaled $651,107. The Credit Facility is secured by
substantially all of the Company's assets and contains financial covenants
customary for this type of financing. The Company anticipates that it will amend
the Credit Facility to provide for borrowings of up to $1.5 million prior to
completion of the Offering.
 
     The Company believes that its available cash after this Offering, together
with cash flow from operations, will be sufficient to support current operations
and future growth at least through fiscal 1998. The Company may be required to
seek additional sources of funds for accelerated growth or continued growth
after that point, and there can be no assurance that such funds will be
available on satisfactory terms. Failure to obtain such financing could delay or
prevent the Company's planned growth, which could adversely affect the Company's
business, financial condition and results of operations.
 
     As a result of state regulatory requirements, the Company's liquidity,
capital resources and results of operations may be negatively impacted in the
future if the Company incurs increased costs or fines, is prohibited from
selling its products in a particular State(s) or experiences losses of a
substantial portion of the Company's customers for whom the Company is unable to
obtain or verify a prescription due to the enforcement of requirements by state
regulatory agencies. See "Risk Factors -- Risks Associated with Regulatory
Environment."
 
SEASONALITY
 
     The Company does not believe that seasonality has had a material effect on
the Company's operations for the three years ended December 31, 1996.
 
                                       18
<PAGE>   22
 
INFLATION
 
     The Company does not believe that inflation has had a material effect on
the Company's operations for the three years ended December 31, 1996.
 
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 
     In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS No. 128") was issued. This statement specifies the
computations, presentation and disclosure requirements for earnings per share
("EPS") for financial statements issued for all periods ending after December
15, 1997. Early adoption is prohibited and upon adoption, all prior period EPS
data presented must be restated. SFAS No. 128 simplifies the standards for
computing EPS in comparison to APB Opinion No. 15 and replaces the presentations
of Primary EPS and Fully Diluted EPS with a presentation of Basic EPS and
Diluted EPS. The Company believes that SFAS No. 128 will not have a material
impact when adopted.
 
                                       19
<PAGE>   23
 
                                    BUSINESS
 
OVERVIEW
 
     The Company is a leading and rapidly growing direct marketer of replacement
contact lenses. Through its easy-to-remember, toll-free telephone number, "1-800
CONTACTS" (1-800-266-8228), the Company sells substantially all of the most
popular brands of contact lenses, including those manufactured by Johnson &
Johnson, CIBA Vision, Wesley Jessen/Barnes-Hind, Bausch & Lomb and CooperVision.
The Company's high volume, cost-efficient operations, supported by its
proprietary management information system, enable it to offer its products at
competitive prices while delivering a high level of customer service. As a
result of its extensive inventory, the Company is generally able to ship
approximately 80% of its orders within 24 hours of receipt. The Company believes
that it offers consumers an attractive alternative for obtaining replacement
contact lenses in terms of price, convenience and speed of delivery. The
Company's net sales have grown rapidly, from $609,470 in 1995 to $3.6 million in
1996, an increase of 495%. For the nine months ended September 30, 1997, the
Company generated net sales of approximately $14.1 million, as compared to
approximately $1.9 million for the nine months ended September 30, 1996, an
increase of 661%.
 
     The Company markets its products through a national advertising campaign.
As compared to other direct marketers of replacement contact lenses, the Company
believes that its toll-free telephone number, 1-800 CONTACTS, affords it a
significant competitive advantage in generating consumer awareness and repeat
business. The Company believes, based upon an independent source, that "vanity"
numbers, like 1-800 CONTACTS, generate higher response rates than traditional
1-800 numbers. After the Company first began using the 1-800 CONTACTS number in
July 1995, net sales per advertising dollar increased by over 20%. The Company
believes its marketing strategy, combined with the higher response rates
attributable to the 1-800 CONTACTS telephone number, allows the Company to
acquire new customers at a lower average cost per customer. The Company spent
approximately $3.4 million (including the capitalized portion thereof), on
advertising in the nine months ended September 30, 1997, and plans to use a
significant portion of the net proceeds from this Offering to increase its sales
and marketing activities. The Company's experience has been that increases in
advertising expenditures have had a direct and immediate impact on the growth of
net sales. The Company believes that the planned increase in advertising
activities will enable it to attract significant numbers of new customers.
 
     The Company's sales and marketing efforts, combined with its focus on
delivering a high level of customer service, have built a loyal customer base.
Historically, each $1.00 of sales to new customers has generated approximately
$0.78 of reorder sales within 12 months. During September 1997, approximately
$641,000 of the Company's net sales were to repeat customers, compared to net
sales to repeat customers of approximately $76,000 in September 1996. The
Company's proprietary management information system creates a customer profile
containing prescription information, address and payment history, which allows a
repeat sale to the customer to be made in approximately one-third the time of a
sale to a new customer. The ease of placing additional orders is convenient for
the customer and is more profitable to the Company due to the lower costs
associated with repeat sales as compared to initial sales. The Company believes
that as more wearers switch to disposable lenses, its ability to attract and
retain its customers will play an integral role in the Company's continued
growth.
 
INDUSTRY OVERVIEW
 
     Industry analysts estimate that over 50% of the United States' population
needs some form of corrective eyewear and that there are nearly 154 million
people in the United States who currently use some form of corrective eyewear.
Contact lenses have become a convenient, cost effective alternative to
eyeglasses and the number of contact lens wearers is expected to increase as
technology further improves the convenience, comfort and fit of contact lenses.
As a result, the contact lens market is large and growing. In 1996, sales of
contact lenses in the United States totaled approximately $2.5 billion and,
according to industry analysts, the U.S. market for contact lenses is expected
to grow approximately 10% per year through the year 2000. This growth is due
largely to the shift in the contact lens market away from traditional soft
lenses, which generally are replaced on an annual basis, to disposable lenses,
which are replaced on a daily, weekly, or bi-weekly basis. Since 1991, the
number of contact lens wearers in the United States has increased by 4.2% per
year while expenditures per wearer have
 
                                       20
<PAGE>   24
 
increased by 6.5% per year as conventional users have shifted to more costly
specialty and disposable lenses. While the market for hard contact lenses has
been relatively flat since 1991 with approximately 6 million U.S. wearers, the
number of people wearing soft contact lenses has grown at a compound annual
growth rate of 5.9% since that time.
 
     Traditionally, contact lenses were almost exclusively sold to consumers by
either ophthalmologists or optometrists (referred to herein collectively as "eye
care practitioners"). Eye care practitioners would typically supply a patient
with his or her initial pair of contact lenses in connection with providing the
patient an eye examination and all replacement lenses, regardless of whether the
patient was given or required another eye examination. Because the initial
fitting of contact lenses requires a prescription written by an eye care
practitioner, the initial sale of contact lenses still takes place primarily in
this manner. Over the last decade, however, a number of alternative sellers of
replacement contact lenses have emerged, including direct marketers. The Company
estimates that direct marketers accounted for approximately 5% of contact lens
sales in the United States during 1996.
 
     The Company believes that increased consumer awareness of the benefits of
the direct marketing of contact lenses will lead to further growth of direct
marketing. Purchasing replacement contact lenses from a direct marketer offers
the convenience of shopping at home, rapid home delivery, quick and easy
telephone ordering and competitive pricing. In addition, the growth in
popularity of disposable contact lenses, which require patients to purchase
replacement lenses more frequently, has contributed to the growth of the direct
marketing channel. The direct marketing industry continues to grow as many
retail customers have migrated towards the convenience and service offered by
home shopping and the Company expects the direct marketing segment of the
contact lens industry to grow in tandem with the growth in the direct marketing
industry as a whole.
 
     Historically, sales of contact lenses by direct marketers have been impeded
by eye care practitioners and contact lens manufacturers. Many eye care
practitioners have been reluctant to provide patients with a copy of their
prescription or to release such information to direct marketers upon request,
thereby prohibiting such patients from purchasing lenses from a direct marketer.
In addition, substantially all of the major manufacturers of contact lenses have
historically refused to sell contact lenses directly to direct marketing
companies and have sought to prohibit their distributors from doing so. These
traditional barriers to the direct marketing of contact lenses may be reduced or
eliminated in the future. The Federal Trade Commission (the "FTC") has recently
solicitated comments regarding whether eye care practitioners should be required
to release contact lens prescriptions to their patients. In addition, the
Attorneys General for 28 states have joined in a lawsuit against the major
contact lens manufacturers and certain eye care practitioners and their trade
associations alleging that the manufacturers' policy not to sell to direct
marketers was adopted in conspiracy with eye care practitioners to eliminate
alternative channels of trade from the contact lens market. See "--Government
Regulation," and "--Purchasing and Principal Suppliers."
 
COMPETITIVE STRENGTHS
 
     The Company attributes its success in the direct marketing segment of the
contact lens industry and its significant opportunities for growth to several
competitive strengths, including the following:
 
     - 1-800 CONTACTS Telephone Number.  The Company believes that its
       easy-to-remember, toll-free telephone number, 1-800 CONTACTS, affords it
       a significant competitive advantage over other direct marketers of
       contact lenses in its ability to generate consumer awareness in a
       cost-effective manner. The Company believes, based upon an independent
       source, that "vanity" numbers, like 1-800 CONTACTS, generate higher
       response rates than traditional 1-800 numbers. After the Company first
       began using the 1-800 CONTACTS number in July 1995, net sales per
       advertising dollar increased by over 20%. The Company believes that it
       enjoys a higher customer retention rate and higher response rate due in
       large part to the top-of-the-mind awareness generated by the 1-800
       CONTACTS telephone number.
 
     - Proprietary Management Information System.  The Company believes that the
       operating efficiency resulting from its proprietary management
       information system gives it a significant competitive advantage over
       other direct marketers. The Company believes this system is largely
       responsible for average sales per
 
                                       21
<PAGE>   25
 
       employee being approximately three to five times higher than its largest
       direct marketing competitor. The Company believes that this system is
       capable of supporting the Company's anticipated sales growth in the
       foreseeable future.
 
     - Customer Service.  The Company believes that it provides better customer
       service to replacement lens purchasers than traditional contact lens
       distributors. Delivering high quality, consistent customer service has
       been a cornerstone of the Company's strategy since its inception. The
       Company's teleservice agents are trained to provide efficient and
       accurate order entry and are able to provide each customer with real time
       product availability information and the estimated delivery date for
       their lenses. In addition, the Company's teleservice agents are trained
       and authorized to handle all customer service issues, including accepting
       product returns and issuing refunds, if appropriate. The Company believes
       that consistently providing every customer with prompt and courteous
       service throughout their relationship with the Company increases the
       Company's ability to attract and retain customers.
 
     - Extensive Inventory; Convenient, Rapid Delivery.  The Company stocks a
       large inventory of lenses from which it can ship approximately 80% of its
       orders within 24 hours and intends to use a portion of the net proceeds
       from the Offering to invest in additional inventory. Customers generally
       receive their lenses from the Company in one to five business days after
       shipping, depending on whether the customer chooses standard delivery or
       pays an additional charge for delivery by an overnight courier. The
       Company believes that its extensive inventory allows it to deliver lenses
       to a customer quicker, on average, than eye care practitioners or optical
       chains, which generally have smaller inventories and place orders for
       lenses on a less frequent basis than the Company. In addition, lenses
       ordered from the Company are delivered directly to the home or office of
       the customer; a service which most eye care practitioners, optical chains
       and discount stores do not offer.
 
     - Competitive Pricing.  The Company believes that its high volume,
       cost-efficient operations allow it to maintain a pricing advantage over
       many of the traditional contact lens providers. The Company believes that
       its prices are generally 25% lower than prices typically charged by eye
       care practitioners and comparable to those charged by large retail
       optical chains and mass merchandisers, who generally do not offer the
       convenience of telephone ordering and home delivery. Unlike many of its
       competitors, the Company does not charge any membership fees for its
       services and instead relies upon its customer service and rapid delivery
       to retain customers.
 
GROWTH STRATEGY
 
     The Company believes that it has significant opportunities to attract and
retain new customers and increase sales through several strategic initiatives,
including the following:
 
     - Expand Sales and Marketing Activities.  Following the Offering, the
       Company plans to significantly expand its sales and marketing activities
       to attract new customers and increase sales to existing customers. The
       Company has spent approximately $3.4 million (including the capitalized
       portion thereof) for advertising in the first nine months of 1997, an
       increase of approximately 609% from the same period in 1996. The Company
       has traditionally marketed its products through direct mail, cooperative
       mailings and free standing inserts in newspapers. Following the Offering,
       the Company intends to increase the frequency of these activities and to
       begin advertising in media it has not previously utilized, including
       magazines, traditional newspaper advertisements, radio and television.
       The Company's experience has been that increases in advertising
       expenditures have had a direct and immediate impact on the growth of net
       sales. Based primarily on response rates attributable to the 1-800
       CONTACTS telephone number, the Company believes that increasing its sales
       and marketing activities will allow it to attract significant numbers of
       new customers.
 
     - Continue to Deliver High Level of Customer Service.  The Company has
       built a loyal customer base due largely to its focus on delivering a high
       level of customer service. Historically, each $1.00 of sales to new
       customers has generated $0.78 of reorder sales within 12 months.
       Approximately $641,000 of the Company's sales in September 1997 were to
       repeat customers, compared to sales to repeat customers of
 
                                       22
<PAGE>   26
 
approximately $76,000 in September 1996. The Company expects its sales to repeat
customers to continue to grow as the contact lens market continues to shift
towards disposable lenses, and consumers increase the frequency with which they
      replace their lenses. The Company believes that the key to retaining its
      customers is to provide a competitive price and convenient delivery while
      providing superior customer service. The Company expends significant
      resources to train its teleservice agents not only to provide accurate
      product information and efficient order entry, but also to handle all
      customer service issues, including product returns and refunds, if
      appropriate. The Company's proprietary management information system
      creates a customer profile containing prescription information, address
      and payment information which allows a sale to a repeat customer to be
      made in approximately one-third the time of a sale to a new customer. The
      shorter call duration of a repeat order is more convenient for the
      customer and more profitable for the Company.
 
     - Leverage Existing Infrastructure.  To support anticipated growth, the
       Company has expended considerable resources in establishing its
       infrastructure. The Company believes that its current proprietary
       management information and telecommunication systems and its operating
       and distribution facilities have the capacity to handle the Company's
       contemplated sales growth for the foreseeable future with minimal
       additional capital expenditures. As a result, the Company believes that
       it has the opportunity to improve its operating margins by leveraging its
       existing infrastructure through increased sales.
 
     - Capitalize on Favorable Industry Trends.  According to industry analysts,
       the number of soft contact lens wearers in the United States has
       increased from 19 million in 1990 to over 25 million in 1996 and are
       projected to increase by approximately 5% annually through the year 2000
       as soft contact lenses continue to gain popularity and the number of
       14-to-25 year olds (the prime age group for new lens wearers) increases.
       Growth in the contact lens industry is also attributable to the ongoing
       shift among wearers of conventional lenses to more frequently replaced
       disposable lenses. Direct marketing is well suited to provide a cost
       effective, convenient way to replace disposable lenses. The Company
       believes that sales by direct marketers account for approximately 5% of
       all contact lens sales in the United States, but account for
       approximately 10% of all disposable contact lens sales in the United
       States. The Company believes that it provides the most convenient way for
       consumers to replace their lenses and that the Company's business will
       continue to grow in tandem with the disposable lens market.
 
PRODUCT OFFERINGS
 
     Contact lenses can be divided into two categories: soft lenses, which
represent approximately 80% of U.S. wearers, and hard lenses (primarily rigid
gas permeable ("RGP")), which represent approximately 20% of U.S. wearers. There
are three principal wearing regimes for soft contact lenses: conventional,
disposable and planned replacement. Conventional lenses are designed to be worn
indefinitely, but are typically replaced after 12 to 24 months. Disposable soft
contact lenses were introduced in the late 1980s based on the concept that
changing lenses on a more regular basis was important to comfort, convenience,
maintaining healthy eyes and patient compliance. Disposable lenses are changed
as often as daily and up to every two weeks, depending on the product. Planned
replacement lenses are designed to be changed as often as every two weeks and up
to every three months and currently represent a small portion of the overall
soft lens market.
 
     The Company is a direct marketer of replacement contact lenses and does not
manufacture contact lenses nor provide eye examinations or related services to
its customers. The Company offers substantially all of the soft and hard contact
lenses produced by the leading contact lens manufacturers, including Johnson &
Johnson, CIBA Vision, Wesley Jessen/Barnes-Hind, Bausch & Lomb and CooperVision.
The Company stocks a large inventory of lenses from which it can ship
approximately 80% of its orders within 24 hours and intends to use a portion of
the net proceeds of the Offering to invest in additional inventory. The Company
believes that its ability to maintain a large inventory of contact lenses
provides it with a competitive advantage over eye care practitioners, optical
chains and discount stores and serves as an effective barrier of entry to
potential entrants in the direct marketing of contact lenses.
 
     In July 1997, the Company was approved as an authorized distributor of CIBA
Vision. For the nine months ended September 30, 1997, approximately 23% of the
Company's sales were derived from the sales of products
 
                                       23
<PAGE>   27
 
manufactured by CIBA Vision. The Company's products are delivered in the same
sterile, safety sealed containers in which the lenses were packaged by the
manufacturer. From time to time, the Company purchases contact lenses that were
labeled as "samples" by the manufacturer. Such lenses are sometimes offered by
the Company to customers as part of promotional programs at reduced prices.
 
CUSTOMERS AND MARKETING
 
     The Company's customers are located principally throughout the United
States. The percentage of the Company's customers that are located in each state
is approximately equal to the percentage of the United States' population which
resides in such state, with the largest concentration of the Company's customers
residing in California. During the nine months ending September 30, 1997, the
Company shipped approximately 165,000 orders, as compared to approximately
21,000 orders during the same period in 1996, an increase of approximately 686%.
The Company strives to deliver a high level of customer service in an effort to
establish a loyal customer base.
 
     The Company utilizes a focused, closely managed and monitored marketing
strategy. The Company continually researches and analyzes new ways in which to
advertise the Company's products. After identifying an attractive potential new
advertisement or advertising medium, the Company commits to such advertising for
an initial test period. The response generated by such advertising is monitored
and analyzed by the Company, and a decision to commit significant resources to a
particular advertisement or advertising medium is made only if the Company is
satisfied with the response rates it has generated. After the initial testing
period, the Company continues to closely monitor its advertising in order to
identify and react to trends in consumer response patterns and adjust its
marketing strategy accordingly.
 
     The majority of contact lens wearers are between the ages of 18 and 39. In
addition, 65% of all contact lens wearers are women and contact lens wearers
generally have higher incomes than eyeglass wearers. The Company is able to
target its advertising to lens wearers in these key demographic groups, as well
as certain other persons based on other important demographics, through its
national advertising campaign utilizing various types of print media, including
direct and cooperative mailings and free standing inserts.
 
     Direct-Mailing. The Company uses direct-mail to advertise its products to
selected groups of consumers. The Company utilizes mailing lists obtained from
both private and public sources to target its advertisements specifically to
contact lens wearers.
 
     Cooperative Mailings. The Company advertises its products in cooperative
mail programs sponsored by the leading cooperative mail companies in the United
States. This advertising medium permits the Company to target consumers in
specific zip codes according to age, income and other important demographics.
 
     Free Standing Inserts. From time to time, the Company advertises its
products through free standing inserts, which are typically glossy
advertisements included inside the comic section of the Sunday paper. The
Company uses this advertising medium due to its ability to reach a large
audience in a cost-effective manner. The Company utilizes these inserts to
supplement its direct and cooperative mailing programs.
 
     Following the Offering, the Company plans to significantly expand its sales
and marketing activities to attract new customers and increase sales to existing
customers. The Company plans to increase its use of direct mailings, cooperative
mailings and free standing inserts, as well as begin advertising in mediums not
previously utilized, including magazines, traditional newspaper advertisements,
radio and television.
 
     During the first month after the Company acquired and activated the 1-800
CONTACTS telephone number, the Company generated approximately 2,000 calls and
$38,000 in additional sales without advertising the number. As a result of the
proliferation of 1-800 numbers in recent years, the Company believes that it
continues to receive new business from customers who simply call 1-800 CONTACTS
as a result of their expectation that a contact lens seller will use such a
number. In addition, the Company believes that it benefits from the advertising
of other direct marketers as a result of customers forgetting the competitors
telephone number and contacting the Company instead.
 
                                       24
<PAGE>   28
 
     The Company also markets its products through its website on the Internet.
Although sales generated by its website have been immaterial to date, the
Company believes that the Internet offers an attractive opportunity to increase
sales in a cost-effective manner. The Company expects to contribute additional
resources to upgrading its website in an effort to increase revenues generated
from its website. The Company's website is located at www.1800contacts.com. The
Company's website and the information contained therein shall not be deemed to
be a part of this Prospectus.
 
MANAGEMENT INFORMATION SYSTEM
 
     The Company has developed a proprietary management information system that
integrates the Company's order entry and order fulfillment operations. The
Company believes that this system enables it to operate efficiently and provide
enhanced customer service. The key features of this management information
system are its ability to: (i) continually monitor and track the Company's
inventory levels; (ii) rapidly process credit card orders; (iii) increase the
speed of the shipping process with integrated and automated shipping functions;
and (iv) increase accuracy through the scanning of each order prior to shipment
to ensure it contains the correct lenses and the correct quantity of lenses.
 
     The management information system provides the Company's teleservice agents
with real-time product availability information through a point-to-point
satellite connection with the Company's shipping facilities, which information
is immediately updated as lenses are shipped. The management information system
also has an integrated direct connection for processing credit card payments
which allows the agent to charge the customer's card and ensure that a valid
card number and authorization have been received in approximately six to fifteen
seconds while the agent is on the phone with the customer. Teleservice agents
also have access to records of all prior contact with a customer, including the
customer's address, prescription information, order history and payment history
and notes of any prior contact with the customer made by phone, fax or mail.
Based on product availability provided by the management information system, the
teleservice agent provides the customer with an estimated date of delivery of
their lenses. If a customer's order will not be shipped by the promised delivery
date, the management information system notifies the agent who entered the
order, and any information explaining the delay, and the agent then contacts the
customer to inform them of the delay.
 
     After an order has been entered into the management information system by a
teleservice agent, it is sent to the Company's shipping facility via a
point-to-point satellite connection. After the shipping facility receives the
order, the invoice for the order is printed. The invoice for each order contains
the type and quantity of the lenses, as well as a shipping label for the order.
Tracking, manifesting, billing and other shipping functions are integrated into
the Company's management information system so that all necessary bar codes and
tracking information for shipment via independent couriers is printed directly
on the Company's shipping label, and separate labeling or a separate computer is
not needed to ship packages via independent couriers.
 
     After the invoice for an order is printed at the Company's shipping
facility, the order is pulled from inventory and scanned to ensure that the
prescription and quantity of each item matches the order in the Company's
management information system. Audible notices inform the shipping agent of any
errors in the order. After the order has been scanned for accuracy, the
management information system updates the Company's inventory level, the order
is placed in a box produced by the Company's automated box folder and is sent to
an automatic sealer. After the package leaves the sealer, another scanner reads
the bar code on the shipping label to determine which method of shipment is
being used, adds the package to the appropriate carrier's manifest and directs
the appropriate hydraulic diverter to push the package into the appropriate
carrier's shipping bin. The Company's automated packaging system is capable of
folding, moving, scanning, sealing and shipping over 10,000 orders during a
twelve hour shift.
 
     The Company has installed a battery powered back-up system capable of
supporting its entire call center, computer room, and phone switch. This system
is further supported by a generator capable of supporting the Company's entire
operation for a period of five days. All critical data is simultaneously written
to a series of back-up drives throughout the day and at the end of the day the
Company's data is transmitted by satellite to an offsite location. There can be
no assurance that the Company's back-up system will sufficient to prevent an
interruption in the Company's operations in the event of disruption in the
Company's management information
 
                                       25
<PAGE>   29
 
system and an extended disruption in the management information system could
adversely affect the Company's business, financial condition and results of
operations.
 
OPERATIONS
 
     The primary components of the Company's operations include its
teleservices, order entry and customer service and distribution and fulfillment.
 
     Teleservices, Order Entry and Customer Service.  The Company provides its
customers with toll-free telephone access to its teleservice agents. The
Company's call center operates from 6:30 a.m. to 6:30 p.m. (MST) Monday through
Friday and 8:00 a.m. to 3:30 p.m. (MST) on Saturday. During non-business hours,
a recorded message informs customers of the Company's hours of operations. The
Company's orders are received by phone, mail, facsimile and electronic mail.
Teleservice agents process orders directly into the Company's proprietary
management information system, which provides customer order history and
information, product specifications, product availability, expected shipping
date and order number. Teleservice agents are provided with a sales script and
are trained to provide information about promotional items. Additionally,
teleservice agents are trained to provide customer service and are authorized to
resolve all customer service issues, including accepting returns and issuing
refunds, as appropriate. For the first nine months of 1997, the total of
customer returns, exchanges and customer service credits was approximately 1.7%
of gross sales.
 
     The Company believes its customers are particularly sensitive to the way
merchants and salespeople communicate with them. The Company strives to hire
energetic, service-oriented teleservice agents who can understand and relate to
customers. Teleservice agents participate in a training program, which includes
a mentor system for working with more experienced personnel. After training,
teleservice agents are monitored to review performance and are re-trained
periodically.
 
     The Company recently installed a new telephone system. In its current
facility, the Company has the capacity to handle up to 19,000 calls per day. The
Company believes that it processes telephone orders on average in less time than
its competitors, which allows each teleservice agent to handle a greater number
of orders per day.
 
     The laws in most states require that contact lenses be sold pursuant to a
valid prescription. The Company's operating practice is to attempt to obtain a
valid prescription from each of its customers or his/her eyecare practitioner.
Customers may mail a copy of their prescription with their order or send it to
the Company via facsimile. Upon receipt of a prescription from a patient, the
prescription is filed by the Company and the prescription information, including
the expiration date, is entered into the Company's proprietary management
information system. If the Company is unable to obtain a copy of or verify the
customer's prescription, it is the Company's practice to ship the lenses to the
customer, based on the information that the customer has provided. See "Risk
Factors -- Risks Related to Regulatory Environment."
 
     Distribution and Fulfillment.  Approximately 80% of the Company's orders
are shipped within 24 hours. Customers generally receive orders within one to
five business days after shipping, depending upon the method of delivery chosen
by the customer. A shipping and handling fee is charged on each customer order,
except those orders received by mail with an enclosed check. Customers have the
option of having their order delivered by overnight courier for an additional
$4.00 charge. The Company's management information system automatically
determines the anticipated delivery date for each order.
 
     The Company uses an integrated packing and shipping system via an on-line
connection to the Company's management information system. This system monitors
the in-stock status of each item ordered, processes the order and generates
warehouse selection tickets and packing slips for order fulfillment operations.
The Company's management information system is specifically designed with a
number of quality control features to help ensure the accuracy of each order.
 
                                       26
<PAGE>   30
 
PURCHASING AND PRINCIPAL SUPPLIERS
 
     Historically, substantially all of the major manufacturers of contact
lenses have refused to sell lenses directly to direct marketers, including the
Company, and have sought to prohibit their distributors from doing so. As a
result, the Company currently purchases a substantial portion of its products
from the gray market. The Company is aware that at least one large manufacturer
of contact lenses has begun to put tracking codes on its products in an effort
to identify distributors who are selling to direct marketers. In June 1994, the
Attorney General for the State of Florida, acting on behalf of disposable
contact lens consumers in that State, filed an anti-trust action against Johnson
& Johnson, CIBA Vision, Bausch & Lomb and certain eye care practitioners and
their trade associations alleging, among other things, that the contact lens
manufacturers' policy not to sell to mail order distributors and others was
adopted in conspiracy with eye care practitioners as the result of pressure by
eye care practitioners in order to eliminate alternative channels of trade from
the disposable lens market (the "Florida Action").
 
     In December 1996, the Attorney General for the State of New York, on behalf
of itself and the Attorney Generals for approximately 21 other States, filed a
substantially similar action naming three major manufacturers of soft contact
lenses as well as several optometrists and their trade associations as
defendants (the "New York Action"). Six additional States have joined the New
York Action since it was filed and the Florida Action and the New York Action
have been consolidated and are currently pending in the United States District
Court for the Eastern District of New York (the "Attorney General Action").
Based upon public filings made in the Attorney General Action, the Company
believes that one defendant, CIBA Vision Corporation, has entered into a
proposed settlement agreement pursuant to which it has agreed to pay $5 million
into a settlement fund, agreed to provide rebates and coupons to consumers and
agreed to begin to sell soft contact lenses to direct marketers. Since this
settlement agreement was announced, the Company has become an authorized
distributor of CIBA Vision's contact lenses and can purchase such lenses at
wholesale level prices.
 
     As a result of the manufacturers' refusal to sell to direct marketers,
other than with respect to CIBA Vision products, the Company is not an
authorized dealer for any of the products which it sells. In addition, the price
which the Company pays for certain of its products is sometimes higher than
those paid by eye care practitioners, retail chains and mass merchandisers, who
are able to buy directly from the manufacturers of such lenses. Although the
Company has been able to obtain most contact lens brands at competitive prices
in sufficient quantities on a regular basis, there can be no assurance that the
Company will not encounter difficulties in the future, particularly in light of
the Company's anticipated growth. The inability of the Company to obtain
sufficient quantities of contact lenses at competitive prices would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Risk Factors -- Risks Related to Supply
Arrangements."
 
     Although the Company seeks to reduce its reliance on any one supplier by
establishing relationships with a number of distributors and other sources, the
Company purchased from a single distributor approximately 27%, 40% and 32% of
its contact lens inventory in 1995, 1996 and the first nine months of 1997,
respectively. The Company continually seeks to establish new relationships with
potential suppliers in order to be able to obtain adequate inventory at
competitive prices.
 
COMPETITION
 
     The retail sale of contact lenses is a highly competitive and fragmented
industry. Traditionally, contact lenses were almost exclusively sold to
customers by eye care practitioners in connection with providing them an eye
examination. Competition for patients and the revenue related to providing them
contact lenses significantly increased as optical chains and large discount
retailers began providing optical services and has further intensified with the
entry of direct marketers such as the Company. The Company believes that the eye
care profession suffers from a surplus of eye care practitioners, and that the
resulting competitive pressure has been exacerbated by the increased prevalence
of retail optical chains, mass merchandisers and direct marketers. Consequently,
the competition amongst eye care practitioners to acquire customers and the
competition to provide replacement lenses to such customers has intensified.
 
                                       27
<PAGE>   31
 
     The Company's principal competitors include ophthalmologists and
optometrists in private practice, which collectively accounted for approximately
70% of all contact lens sales in 1996. The Company also competes with national
optical chains, such as Cole National Corporation, LensCrafters and National
Vision Association and mass merchandisers, such as Wal-Mart, Sam's and Costco,
which accounted for approximately 25% of all contact lens sales in 1996. The
Company also competes with other mail-order contact lens distributors, one of
which is larger than the Company. The Company may face increased competition in
the future from new entrants in the direct marketing business, which may include
national optical chains and mass merchandisers, some of which may have
significantly greater resources than the Company.
 
     The Company believes that many of its competitors, including most eye care
practitioners, national optical chains and mass merchandisers, have direct
supply arrangements with contact lens manufacturers, which in some cases affords
such competitors with better pricing terms and access to supply. In addition,
some of the competitors are significantly larger and have significantly greater
resources than the Company. The Company believes that the principal basis of
competition in the industry include price, product availability, customer
service and consumer awareness.
 
GOVERNMENT REGULATION
 
     Federal Regulation.  Contact lenses are regulated by the FDA as "medical
devices." The FDA classifies medical devices as Class I, Class II or Class III
and regulates them to varying degrees, with Class I medical devices subject to
the least amount of regulation and Class III medical devices subject to the most
stringent regulations. These regulations generally apply only to manufacturers
of contact lenses, and therefore do not directly impact the Company. Federal
regulations also require the labels on "medical devices" to contain adequate
instructions for their safe and proper use. However, there is an exemption from
this requirement for medical devices the use of which is not safe except under
the supervision of a practitioner licensed by law to direct the use of such
device. Devices which fall in this exception must contain as part of their
labeling the statement "Caution: Federal law restricts this device to sale by or
on the order of          ," the blank to be filled in with the word physician or
other practitioner authorized by the law of the state in which the practitioner
practices to use or order the use of the device. The Company believes that this
exception is often misconstrued as being a federal requirement that the device
be sold only pursuant to a prescription. The FDA considers contact lenses to
qualify for this labeling exemption, however, there is no federal law that
requires that contact lenses be sold only pursuant to a prescription.
 
     State Regulation.  Because there is no applicable federal law that
regulates the distribution of contact lenses, the sale and delivery of contact
lenses to the consumer is subject to state laws and regulations. The Company
sells to customers in almost all of the 50 states and each sale is likely to be
subject to the laws of the state where the customer is located. The laws and
regulations governing the sale and delivery of contact lenses vary from state to
state, but generally can be classified in five categories: (i) laws that require
contact lenses only be dispensed pursuant to a prescription; (ii) laws that
require the dispenser to be licensed by the state as an optometrist,
ophthalmologist or other professional authorized to dispense lenses; (iii) laws
that require lenses be dispensed only in a face-to-face transaction; (iv) laws
with requirements that are unclear or does not specifically address the sale and
delivery of contact lenses; and (v) laws that the Company believes place no
restrictions on the dispensing of replacement contact lenses. Many of the states
requiring that contacts be dispensed in face-to-face meetings or by a person
licensed by such state to dispense lenses also require that lenses only be
dispensed pursuant to a valid prescription.
 
     The laws and regulations in a significant number of states, including most
of the states wherein a large portion of the Company's sales are concentrated,
require that contact lenses only be sold to a consumer pursuant to a valid
prescription. In some states, satisfying this prescription requirement obligates
the dispenser only to verify the customer's prescription with the customer's
prescriber, while other states specifically require that a written prescription
be obtained before providing the lenses to the customer. The Company's operating
practice is to attempt to obtain a valid prescription from each of its customers
or his/her eyecare practitioner. If the customer does not have a copy of his/her
prescription, the Company attempts to contact the customer's doctor to obtain a
copy of, or verify the customer's prescription. If the Company is unable to
obtain a copy of or verify the customer's prescription, it is the Company's
practice to complete the sale and ship the the lenses to the customer
 
                                       28
<PAGE>   32
 
based on the prescription information provided by the customer. The Company
retains copies of the written prescriptions that it receives and maintains
records of its communications with the customer's prescriber.
 
     The Company's ability to comply with state laws and regulations requiring a
valid prescription is hampered because the Company's customers are often unable
to get a copy of their prescription. The Company believes that optometrists,
ophthalmologists and other contact lens prescribers have historically refused to
release copies of a patient's contact lens prescription to the patient. In
addition, such providers have refused to release or verify prescriptions at the
request of mail order companies. Federal law requires prescribers to release
prescriptions for eyeglasses to a patient, but the issue of whether or not a
prescriber must release a contact lens prescription to the patient, or at the
patients request, is currently governed by state law. There are approximately 22
states that require contact lens prescribers to release the prescriptions for
contact lenses to the patient. However, even in states with a mandatory release
law, the Company believes that many prescribers continue to refuse to release
prescriptions to their patients or to mail order contact lens distributors,
including the Company.
 
     In addition to requiring a valid prescription, a substantial number of
states also require that contact lenses only be dispensed by a person licensed
to do so under that state's laws. A dispenser may be required to be licensed as
an optometrist, ophthalmologist, optician, ophthalmic dispenser or contact lens
dispenser, depending on which state the customer is located in. Neither the
Company nor any of its employees is a licensed or registered dispenser of
contact lenses in any state other than California. The laws in a small number of
states effectively prohibit the sale of contacts through the mail by requiring
that a person licensed under that state's law to dispense contacts be in
personal attendance at the place of sale. In addition, there are several states
in which the laws and regulations do not specifically address the issue of who
may dispense contact lenses or are unclear with respect to the requirements for
dispensing lenses. Generally, these laws are older and were written before mail
order and other distributors began selling contact lenses. Lastly, the Company
believes that the laws in a small number of states do not require that
replacement contact lenses be dispensed pursuant to a prescription or only by a
professional licensed in such state.
 
     For the nine months ended September 30, 1997, the Company estimates that
approximately one-third of its net sales were made in compliance with applicable
state laws and regulations. Any action brought against the Company based on its
failure to comply with applicable state laws and regulations could result in
significant fines to the Company, the Company being prohibited from making sales
in a particular state and/or the Company being required to comply with such
laws. Such required compliance could result in: (i) increased costs to the
Company; (ii) the loss of a substantial portion of the Company's customers for
whom the Company is unable to obtain or verify their prescription; and (iii) the
inability to sell to customers at all in a particular state if the Company
cannot comply with such state's laws. The occurrence of any of the above results
could have a material adverse effect on the Company's ability to sell contact
lenses and to continue to operate profitably. Furthermore, there can be no
assurance that states will not enact or impose laws or regulations that prohibit
mail order dispensing of contact lenses or otherwise impair the Company's
ability to sell contact lenses and continue to operate profitably.
 
     An FTC rule adopted in 1978 requires eye care practitioners to provide
their patients with a copy of their eyeglass prescription (the "Prescription
Release Rule"). The Prescription Release Rule was adopted based on a finding by
the FTC that consumers were being deterred from comparison shopping for
eyeglasses because eye care practitioners refused to release prescriptions. In
April 1997, the FTC published a request for comments regarding the Prescription
Release Rule with respect to whether the rule should be expanded to require the
release of contact lens prescriptions, whether consumers have historically been
able to get their contact lens prescriptions upon request and whether the
refusal to release contact lens prescriptions has benefits justifying such
refusal. The FTC undertook a similar review in 1985 and again in 1995, both
times concluding that the rule should not be expanded to require the release of
contact lens prescriptions. The deadline for submitting comments to the FTC was
September 2, 1997.
 
     In June 1997, the Company received notice from the Georgia State Board of
Dispensing Opticians (the "Georgia Board") that the Georgia Board considers
sales by the Company in Georgia to be in violation of Georgia law, which
requires face-to-face delivery of contact lenses. However, the Georgia Board
recommended that no action be taken at that time, but reserved the right to
pursue future violations by the Company. In November 1997, the Company received
notice from the New Mexico Board of Optometry (the "New Mexico
 
                                       29
<PAGE>   33
 
Board") that the New Mexico Board considers sales by the Company in New Mexico
to be in violation of New Mexico law and ordering the Company to cease and
desist selling contact lenses in New Mexico. The Company has not taken any
actions in response to such notices. The Company has never been subject to any
proceedings brought by any state to force the Company to comply with such
state's laws or to fine the Company for failure to comply with such laws.
 
INTELLECTUAL PROPERTY
 
     The Company conducts its business under the trade name and service marks
"1-800 CONTACTS." The Company has taken steps to register and protect these
marks and believes that such marks have significant value and are an important
factor in the marketing of its products. The Company leases certain assets,
including the right to use the 1-800 CONTACTS telephone number, from an
individual pursuant to a non-cancelable lease. The lease expires in June 2000,
at which time the Company has the option to purchase such assets for $17,500.
However, under applicable FCC rules and regulations, the Company does not have
and cannot acquire any property rights to the telephone number. The Company does
not expect to lose the right to use the 1-800 CONTACTS number, however, there
can be no assurance in this regard. The loss of the right to use the 1-800
CONTACTS number would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company has
obtained the rights to 1-888 CONTACTS and the cellular and international
equivalents for the 1-800 CONTACTS phone number, however, like the 1-800
CONTACTS number, the Company does not have and cannot acquire any property
rights in these telephone numbers. See "Risk Factors -- Intellectual Property
Matters."
 
PROPERTIES
 
     All of the Company's management and telephone operations are conducted
through 5,600 square feet of leased space located in Draper, Utah, a suburb of
Salt Lake City. The lease relating to this facility expires in 2002. The Company
intends to relocate to a new and expanded facility located adjacent to its
existing facility in May 1998 and the Company's current landlord has agreed to
release the Company from its current lease without significant penalty. The new
facility is expected to consist of 23,000 square feet. The lease on the new
facility is expected to be for a term of approximately seven years.
 
     As of November 1, 1997, the Company began utilizing approximately 4,500
square feet of leased warehouse space. This warehouse facility is located
approximately two miles from the Company's operations facilities. The lease
relating to this facility expires in January 1998, and is renewable at the
Company's option for two additional six month periods.
 
LEGAL PROCEEDINGS
 
     The Company is, from time to time, a party to claims and litigation that
arise in the normal course of business. Management believes that the ultimate
outcome of these claims and litigation will not have a material adverse effect
on the financial position or results of operations of the Company.
 
EMPLOYEES
 
     As of September 30, 1997, the Company employed 47 persons, of which 31 were
engaged in sales related activities, 12 were engaged in distribution related
activities and 4 were engaged in administrative and accounting functions. None
of the Company's employees is covered by a collective bargaining agreement. The
Company believes its relationship with its employees to be good.
 
                                       30
<PAGE>   34
 
                                   MANAGEMENT
 
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
 
     The following table sets forth certain information with respect to the
Directors, executive officers and certain key employees of the Company.
 
<TABLE>
<CAPTION>
    NAME                                     AGE   POSITION
    ---------------------------------------  ---   ---------------------------------------
    <S>                                      <C>   <C>
    Jonathan C. Coon.......................  27    President and Director
    John F. Nichols........................  37    Vice President, Operations and Director
    Scott S. Tanner........................  37    Chief Financial Officer and Director
    Robert G. Hunter.......................  30    Controller
    Craig A. Heesch........................  33    Manager, Network Administration
    S. Todd Witzel.........................  26    Manager, Management Information Systems
    Donald A. Yacktman.....................  52    Director
    Stephen A. Yacktman....................  27    Director
</TABLE>
 
     JONATHAN C. COON is a co-founder of the Company and currently serves as
President of the Company and Director. Mr. Coon received his Bachelor's Degree
from Brigham Young University in 1994 and has substantially completed studies
for an MBA at Brigham Young University. Mr. Coon has five years of experience in
the contact lens industry.
 
     JOHN F. NICHOLS is a co-founder of the Company and currently serves as Vice
President, Operations and Director. Mr. Nichols is a certified optician in the
State of California and was the owner of the Discount Lens Club from 1991 until
February 1995. Mr. Nichols worked with Bausch & Lomb as a Senior Sales
Representative from 1989 to 1991.
 
     SCOTT S. TANNER has served as the Chief Financial Officer and a Director of
the Company since November 1997. Prior to joining the Company, Mr. Tanner served
as the Chief Financial Officer of Country Club Foods, Inc., a Utah-based snack
food manufacturer and distributor, from 1995 to 1997. Prior thereto, Mr. Tanner
served in various management positions at Apple Computer, Inc. from 1988 to 1995
and worked at Peat, Marwick & Mitchell & Co. in San Francisco from 1984 to 1986.
Mr. Tanner received a Bachelor's Degree from Stanford University and a MBA from
Harvard University. Mr. Tanner served as an executive officer of Country Club
Foods, Inc. at the time it filed a voluntary petition under chapter 11 of the
United States Bankruptcy Code in November 1995.
 
     ROBERT G. HUNTER has served as the Controller of the Company since November
1997. Prior to joining the Company, Mr. Hunter served as an auditor with
Hawkins, Cloward & Simister LC from November 1993 to 1997 and with Arthur
Andersen LLP from April 1992 to November 1993. Mr. Hunter is a Certified Public
Accountant. Mr. Hunter graduated summa cum laude with a Bachelor's Degree from
Brigham Young University, where he also earned a Masters of Accountancy Degree.
 
     CRAIG A. HEESCH has served as the Company's Network Administrator since
November 1997. From February 1997 through November 1997, Mr. Heesch was retained
as a consultant to the Company. From 1993 through 1997, Mr. Heesch owned and
operated a computer consulting business, was an authorized Novell reseller and
is a certified Novell technician. Mr. Heesch received a Bachelor's Degree in
Computer Science from the University of Utah.
 
     S. TODD WITZEL has served as the Company's Manager, Management Information
Systems since October 1996. Prior to joining the Company, Mr. Witzel worked for
Access Software as a programmer, where he helped develop Access' management
information systems, from 1994 to 1996.
 
     DONALD A. YACKTMAN has served as a Director of the Company since February
1996. Mr. Yacktman is the President and Chief Investment Officer of Yacktman
Asset Management Co., which manages approximately $1.6 billion, including more
than $1 billion in two equity mutual funds. Prior to founding his own firm, Mr.
Yacktman
 
                                       31
<PAGE>   35
 
served as the senior portfolio manager with Selected Financial Services, Inc.
from April 1982 until March 1992 and was a portfolio manager and a partner with
Stein Roe & Farnham from 1974 to 1982. Mr. Yacktman was named "Portfolio Manager
of the Year" by Morningstar in 1991 and has been featured in articles in several
newspapers and magazines and is a frequent guest on radio and television
investment programs. Mr. Yacktman holds a Bachelor's Degree, magna cum laude in
economics from the University of Utah and an MBA with distinction from Harvard
University.
 
     STEPHEN A. YACKTMAN has served as a Director of the Company since February
1996. Mr. Yacktman is currently a Vice President at Yacktman Asset Management
Co. where he has been employed since 1993. Mr. Yacktman's responsibilities
include portfolio management, stock analysis and trading. Mr. Yacktman holds a
Bachelor's Degree in economics and an MBA from Brigham Young University.
 
     Directors of the Company are currently elected annually by its stockholders
to serve during the ensuing year or until their respective successors are duly
elected and qualified. Executive officers of the Company are duly elected by the
Board of Directors to serve until their respective successors are elected and
qualified. Donald A. Yacktman is Stephen A. Yacktman's father. There are no
other family relationships between any of the Directors or executive officers of
the Company.
 
     The Company anticipates that two additional Directors not otherwise
affiliated with the Company or any of its stockholders will be elected by the
Board of Directors following the completion of the Offering. Prior to the
completion of the Offering, the Board of Directors will be divided into three
classes, as nearly equal in number as possible, with each Director serving a
three year term and one class being elected at each year's annual meeting of
stockholders. Mr. Scott Tanner and one of the additional directors anticipated
to be appointed by the Board of Directors will be in the class of directors
whose term expires at the 1998 annual meeting of the Company's stockholders. Mr.
Stephen Yacktman and one of the additional directors anticipated to be appointed
by the Board of Directors following the Offering will be in the class of
directors whose term expires at the 1999 annual meeting of the Company's
stockholders. Messrs. Coon, Nichols and Donald Yacktman will be in the class of
directors whose term expires at the 2000 annual meeting of the Company's
stockholders. At each annual meeting of the Company's stockholders, successors
to the class of directors whose term expires at such meeting will be elected to
serve for three year terms and until their respective successors are elected and
qualified.
 
EXECUTIVE COMPENSATION
 
     The following table sets forth information concerning the compensation paid
or accrued for the year ended December 31, 1996 to the Company's President (the
"Named Executives"). None of the Company's executive officers earned more than
$100,000 in compensation during the year ended December 31, 1996.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                              ANNUAL COMPENSATION
                                                             ----------------------
                NAME AND PRINCIPAL POSITION                  YEAR         SALARY($)
- -----------------------------------------------------------  ----         ---------
<S>                                                          <C>          <C>
Jonathan C. Coon
  President(a).............................................  1996          $ 37,417
</TABLE>
 
- ---------------
 
(a) Mr. Coon's salary was increased to $80,000 per annum effective February 1,
    1996 and to $120,000 per annum effective June 1, 1997.
 
EMPLOYMENT AGREEMENTS
 
     Prior to the completion of the Offering, Mr. Coon and Mr. Nichols will
enter into employment agreements with the Company (each, an "Employment
Agreement"), pursuant to which Mr. Coon will agree to serve as the President of
the Company for a period of three years and Mr. Nichols will serve as Vice
President, Operations of the Company for a period of three years. Pursuant to
their respective Employment Agreement, Mr. Coon and Mr. Nichols will receive (i)
an annual base salary equal to at least $120,000 and $120,000, respectively,
(ii) an annual bonus up to 50% of their annual base salary (upon the Company
achieving certain operating targets) and (iii) certain fringe benefits. If Mr.
Coon's or Mr. Nichols' employment is terminated for any reason prior to the
 
                                       32
<PAGE>   36
 
termination of such agreement other than for Cause (as defined therein) or their
resignation, they will be entitled to receive their base salary and fringe
benefits for 12 months following such termination in addition to 50% of their
bonus for the year in which their employment was terminated if the termination
is during the first six months of the year or 100% if such termination was
during the last six months of the year. Mr. Coon and Mr. Nichols have agreed not
to compete with the Company for a period of two years following their
termination of employment with the Company and not to disclose any confidential
information at any time without the prior written consent of the Company.
 
     The Company has also entered into three-year employment agreements with
each of Messrs. Tanner, Hunter, Heesch and Witzel in November 1997. Such
employment agreements have terms substantially similar to those of Messrs. Coon
and Nichols described above.
 
DIRECTOR COMPENSATION
 
     Directors of the Company currently do not receive a salary or an annual
retainer for their services. The Company expects, however, that new non-employee
Directors not otherwise affiliated with the Company or its stockholders will be
paid an annual cash retainer of $10,000 and will be reimbursed for all
reasonable expenses incurred in attending Board meetings.
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
     The Company currently has no committees of its Board of Directors. Upon the
selection and election of qualified independent directors, the Board of
Directors expects to establish both an audit committee and a compensation
committee, all of which is expected to occur within 90 days from the date of
this Prospectus.
 
     Once created, the audit committee will be responsible for making
recommendations to the Board of Directors regarding the selection of independent
auditors, reviewing the results and scope of the audit and other services
provided by the Company's independent accountants and reviewing and evaluating
the Company's audit and control functions.
 
     The compensation committee will make recommendations regarding the
Company's employee stock option plan and decisions concerning salaries and
incentive compensation for executive officers, key employees and consultants of
the Company.
 
     The Board of Directors may also create other committees, including an
executive committee and a nominating committee.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION
 
     The Company currently does not have a compensation committee. The
compensation arrangements for Mr. Coon was established by Mr. Donald Yacktman
pursuant to an arrangement established at the time of Mr. Yacktman's investment
in the Company.
 
STOCK OPTIONS
 
     As of the date of this Prospectus, the Company has granted options to
purchase an aggregate of 139,161 shares of Common Stock to certain members of
management. Such options vest in three equal installments beginning on the first
anniversary of the grant date and have an average exercise price of $8.22 per
share (assuming an initial public offering price of $11.00 per share). The
options have a term of ten years. In the event that the optionee ceases to be
employed by the Company for any reason (i) any portion of the option that was
not vested at that time will expire and (ii) any portion of the option that was
vested will expire 90 days after such termination date. Under such option
agreements, the Company has the right to repurchase at fair market value the
shares of Common Stock issuable upon the exercise of such options (the "Option
Shares") in the event the optionee ceases to be employed by the Company. In
addition, the option agreements: (i) restrict the transfer of the Option Shares,
subject to certain exceptions and (ii) require each optionee to consent to a
sale of the Company approved by the holders of a majority of the shares of
Common Stock held by the Existing Stockholders. The
 
                                       33
<PAGE>   37
 
repurchase right and foregoing restrictions terminate upon an initial public
offering in which the Company receives net proceeds of at least $10.0 million.
 
INCENTIVE STOCK OPTION PLAN
 
     Prior to the completion of this Offering, the Company will establish the
1-800 CONTACTS, INC. Incentive Stock Option Plan (the "Stock Option Plan"). A
maximum of 310,000 shares of Common Stock, subject to adjustment, have been
initially authorized for the granting of stock options under the Stock Option
Plan. To date, no options have been granted pursuant to the Stock Option Plan.
Options granted under the Stock Option Plan may be either "incentive stock
options," which qualify for special tax treatment under the Internal Revenue
Code, or nonqualified stock options. The purposes of the Stock Option Plan are
to advance the interests of the Company and stockholders by providing Company
employees with an additional incentive to continue their efforts on behalf of
the Company, as well as to attract to the Company people of experience and
ability. The Stock Option Plan is intended to comply with Rule 16b-3 of the
Exchange Act.
 
     It is expected that all officers, directors and other employees of the
Company or its subsidiaries will be eligible to participate under the Stock
Option Plan, as deemed appropriate by the Compensation Committee of the Board of
Directors. Eligible employees will not pay any cash consideration to the Company
to receive the options. The Stock Option Plan will be administered by the
Compensation Committee of the Board of Directors. The exercise price for
incentive stock options must be no less than the fair market value of the Common
Stock on the date of grant. The exercise price of nonqualified stock options is
not subject to any limitation based upon the then current market value of the
Common Stock. Options will expire no later than the tenth anniversary of the
date of grant. An option holder will be able to exercise options from time to
time, subject to vesting. Options will vest immediately upon death or disability
of a participant and upon certain change of control events. Upon termination for
cause or at will by the Company, the unvested portion of the options will be
forfeited. Subject to the above conditions, the exercise price, duration of the
options and vesting provisions will be set by the Compensation Committee of the
Board of Directors in its discretion.
 
                                       34
<PAGE>   38
 
                       PRINCIPAL AND SELLING STOCKHOLDERS
 
     The table below sets forth certain information regarding the equity
ownership of the Company (a) as of November 25, 1997 and (b) immediately
following the Offering by: (i) each person or entity who beneficially owns five
percent or more of the Common Stock; (ii) each Director and the Named Executive;
(iii) all Directors and executive officers of the Company as a group; and (iv)
Jonathan C. Coon (the "Selling Stockholder"). Unless otherwise stated, each of
the persons named in the table has sole voting and investment power with respect
to the securities beneficially owned by it or him as set forth opposite its or
his name. Beneficial ownership of the Common Stock listed in the table has been
determined in accordance with the applicable rules and regulations promulgated
under the Exchange Act.
 
<TABLE>
<CAPTION>
                                          SHARES BENEFICIALLY                     SHARES BENEFICIALLY
                                          OWNED PRIOR TO THE                             OWNED
                                               OFFERING                          AFTER THE OFFERING(1)
                                         ---------------------      NUMBER       ---------------------
                                          NUMBER                   OF SHARES      NUMBER
NAME AND ADDRESS OF BENEFICIAL OWNER     OF SHARES     PERCENT      OFFERED      OF SHARES     PERCENT
- -------------------------------------    ---------     -------     ---------     ---------     -------
<S>                                      <C>           <C>         <C>           <C>           <C>
Jonathan C. Coon(2)(3)...............    2,789,469       66.2%       275,000     2,514,469      40.9%
John F. Nichols(2)...................      931,894       22.1         --           931,894       15.2
Donald A. Yacktman(4)(5).............      256,477        6.1         --           256,477        4.2
Stephen A. Yacktman(5)...............      232,766        5.5         --           232,766        3.8
Scott S. Tanner......................       --           --           --                --
All Directors and executive officers
  as a group (5 persons).............    4,210,587       99.9        275,000     3,935,587       64.1
</TABLE>
 
- ---------------
 
*  Represents less than one percent.
 
(1) Assumes no exercise of the Underwriters' over-allotment option and does not
    give effect to any purchases, if any, by such persons named in the table in
    the Offering.
 
(2) The address of such person is the executive offices of the Company.
 
(3) Includes: (i) 931,894 shares of Common Stock that Mr. Coon will acquire from
    Mr. Nichols for an aggregate of $1.5 million upon the exercise of a stock
    option granted to Mr. Coon from Mr. Nichols in February 1996 and (ii) an
    aggregate of 92,775 shares held by Mr. Coon's children.
 
(4) Reflects the exercise of an option by the Company to repurchase an aggregate
    of 442,651 shares of Common Stock held by such stockholder for approximately
    $1.9 million. The Company will exercise such option upon completion of the
    Offering. See "Use of Proceeds" and "Certain Transactions."
 
(5) The address of such person is c/o Yacktman Asset Management Co., 303 West
    Madison Street, Chicago, Illinois 60606.
 
                              CERTAIN TRANSACTIONS
 
LOANS TO EXECUTIVE OFFICERS
 
     As of September 30, 1997, the Company had outstanding loans to Messrs. Coon
and Nichols, each an executive officer of the Company, an aggregate of $304,016
and $206,459, respectively, evidenced by a promissory note due on demand. The
note provides for the payment of interest calculated at a rate equal to the
prime rate (8.5% at September 30, 1997). These loans will be repaid in
connection with the S Corporation Distribution. See "S Corporation Matters."
 
LOANS FROM CERTAIN STOCKHOLDERS
 
     In February 1996, the Company entered into a credit agreement with Mr.
Donald Yacktman, a Director of the Company, that provides for maximum borrowings
of $250,000. This loan bears interest at the prime interest rate plus 2%,
matures in February 1999 and, if not repaid in full by February 1999, may be
converted into 15% of the Company's Common Stock at the option of Mr. Yacktman.
 
                                       35
<PAGE>   39
 
     In May 1997, Mr. Yacktman subsequently loaned an additional $250,000 to the
Company, which was repaid prior to September 30, 1997. Also in May 1997, the
Company borrowed $600,000 from Mr. Yacktman under a short-term promissory note
due in November 1997. In July 1997, the Company repaid $100,000 under such note
and refinanced the remaining $500,000 and borrowed an additional $600,000 from
Mr. Yacktman under a new short-term promissory note. The new short-term
unsecured promissory note bears interest at the prime interest rate plus 2% and
matures on July 30, 1998. In consideration for entering into this note, the
Company agreed to modify the option that it holds to repurchase a portion of the
Common Stock held by Mr. Yacktman. Under the revised terms of the option, the
Company has the right to repurchase an aggregate of 442,651 of Mr. Yacktman's
shares for $1.9 million.
 
     In September 1997, the Company borrowed $250,000 from Mr. Yacktman under a
short-term unsecured promissory note. This note accrues interest at the prime
interest rate plus 2% and is due in September 1998. In addition, for every month
that this note remains outstanding a fee of $5,000 is added to the outstanding
balance.
 
     During the first nine months of 1997 and the year ended December 31, 1996,
the Company's largest outstanding indebtedness to Mr. Yacktman was approximately
$1.6 million and $305,000, respectively. All of the Company's outstanding
indebtedness to Mr. Yacktman will be repaid out of the net proceeds of the
Offering. See "Use of Proceeds."
 
REPURCHASE OF STOCK FROM FORMER DIRECTOR
 
     In February 1996, the Company redeemed all shares of the Company's Common
Stock then held by Mr. Steve Gibson, a former Director of the Company, which
shares represented twenty percent of the Company's Common Stock then
outstanding. The purchase price of such redeemed shares was $240,000 in cash.
Mr. Gibson resigned as a Director of the Company in February 1996.
 
TAX INDEMNIFICATION AGREEMENT
 
     Prior to completion of the Offering, the Company will enter into the
Agreement for Distribution of Retained Earnings and Tax Indemnification with the
Existing Stockholders. The Agreement for Distribution of Retained Earnings and
Tax Indemnification will provide for, among other things, the indemnification of
the Existing Stockholders for any losses or liabilities with respect to any
additional taxes (including interest, penalties and legal fees) and the
repayment to the Company of amounts received as refunds, resulting from the
Company's operations during the period in which it was an S Corporation. No
amounts are currently payable, or anticipated to be payable, or receivable or
anticipated to be receivable under the Agreement for Distribution of Retained
Earnings and Tax Indemnification.
 
S CORPORATION DISTRIBUTION
 
     Effective February 1, 1995, the Company elected to be treated as an S
corporation for federal income tax purposes. As a result, for the period the
Company was an S corporation, the Company paid no federal income tax. Taxable
income of the Company was taxable to its Existing Stockholders. The Company will
terminate its S corporation status prior to the closing of the sale of shares
offered hereby and will distribute to the Existing Stockholders the balance of
its previously undistributed earnings through that date. The purchasers of
shares in this Offering will not receive any of these distributions. See "S
Corporation Matters."
 
STOCK REPURCHASE OPTION
 
     In connection with Mr. Donald Yacktman's investment in the Company in
February 1996, the Company was granted an option, exercisable at any time prior
to February 1, 2001, to repurchase an aggregate of 465,947 shares of Common
Stock held by Mr. Donald Yacktman (10% percent of the Company's outstanding
Common Stock prior to the Offering), at an aggregate purchase price of $2.0
million. In connection with entering in to a promissory note with Mr. Donald
Yacktman in July 1997, the Company canceled a portion of this option and the
number of shares now subject to repurchase by the Company pursuant to the option
is 442,651 (9.5% of the Company's outstanding Common Stock prior to the
Offering), at an aggregate purchase price of $1.9 million. The Company expects
to exercise this option concurrently with the completion of the Offering. See
"Use of Proceeds."
 
                                       36
<PAGE>   40
 
                          DESCRIPTION OF CAPITAL STOCK
 
GENERAL MATTERS
 
     At the time of the Offering, the total amount of authorized capital stock
of the Company will consist of 20,000,000 shares of Common Stock, par value
$0.01 per share, and 1,000,000 shares of preferred stock, par value $0.01 per
share (the "Serial Preferred Stock"). Upon completion of the Offering, 6,141,818
shares of Common Stock will be issued and outstanding (6,471,818 shares if the
Underwriters' over-allotment is exercised in full) and no shares of Serial
Preferred Stock will be issued and outstanding. The discussion herein describes
the Company's capital stock, the Restated Certificate and By-laws as anticipated
to be in effect upon consummation of the Offering. The following summary of
certain provisions of the Company's capital stock describes all material
provisions of, but does not purport to be complete and is subject to, and
qualified in its entirety by, the Restated Certificate and the By-laws of the
Company that are included as exhibits to the Registration Statement of which
this Prospectus forms a part and by the provisions of applicable law.
 
     The Restated Certificate and By-laws will contain certain provisions that
are intended to enhance the likelihood of continuity and stability in the
composition of the Board of Directors and which may have the effect of delaying,
deferring or preventing a future takeover or change in control of the Company
unless such takeover or change in control is approved by the Board of Directors.
 
COMMON STOCK
 
     The issued and outstanding shares of Common Stock are, and the shares of
Common Stock being offered by the Company will be upon payment therefor, validly
issued, fully paid and nonassessable. Subject to the prior rights of the holders
of any Serial Preferred Stock, the holders of outstanding shares of Common Stock
are entitled to receive dividends out of assets legally available therefor at
such time and in such amounts as the Board of Directors may from time to time
determine. See "Dividend Policy." The shares of Common Stock are not convertible
and the holders thereof have no preemptive or subscription rights to purchase
any securities of the Company. Upon liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive pro rata the
assets of the Company which are legally available for distribution, after
payment of all debts and other liabilities and subject to the prior rights of
any holders of Serial Preferred Stock then outstanding. Each outstanding share
of Common Stock is entitled to one vote on all matters submitted to a vote of
stockholders. There is no cumulative voting.
 
     The Company has applied to have the Common Stock approved for inclusion in
Nasdaq National Market under the symbol "CTAC."
 
SERIAL PREFERRED STOCK
 
     The Company's Board of Directors may, without further action by the
Company's stockholders, from time to time, direct the issuance of shares of
Serial Preferred Stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series. Satisfaction of any dividend
preferences of outstanding shares of Serial Preferred Stock would reduce the
amount of funds available for the payment of dividends on shares of Common
Stock. Holders of shares of Serial Preferred Stock may be entitled to receive a
preference payment in the event of any liquidation, dissolution or winding-up of
the Company before any payment is made to the holders of shares of Common Stock.
Under certain circumstances, the issuance of shares of Serial Preferred Stock
may render more difficult or tend to discourage a merger, tender offer or proxy
contest, the assumption of control by a holder of a large block of the Company's
securities or the removal of incumbent management. Upon the affirmative vote of
a majority of the total number of directors then in office, the Board of
Directors of the Company, without stockholder approval, may issue shares of
Serial Preferred Stock with voting and conversion rights which could adversely
affect the holders of shares of Common Stock. Upon consummation of the Offering,
there will be no shares of Serial Preferred Stock outstanding, and the Company
has no present intention to issue any shares of Serial Preferred Stock.
 
                                       37
<PAGE>   41
 
CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS
 
     The Restated Certificate provides for the Board of Directors to be divided
into three classes, as nearly equal in number as possible, serving staggered
terms. Approximately one-third of the Board of Directors will be elected each
year. See "Management." Under the Delaware General Corporation Law, directors
serving on a classified board can only be removed for cause. The provision for a
classified board could prevent a party who acquires control of a majority of the
outstanding voting stock from obtaining control of the Board of Directors until
the second annual stockholders meeting following the date the acquiror obtains
the controlling stock interest. The classified board provision could have the
effect of discouraging a potential acquiror from making a tender offer or
otherwise attempting to obtain control of the Company and could increase the
likelihood that incumbent directors will retain their positions.
 
     The Restated Certificate provides that stockholder action can be taken only
at an annual or special meeting of stockholders and cannot be taken by written
consent in lieu of a meeting. The Restated Certificate and the By-laws provides
that, except as otherwise required by law, special meetings of the stockholders
can only be called pursuant to a resolution adopted by a majority of the Board
of Directors or by the Chief Executive Officer of the Company. Stockholders will
not be permitted to call a special meeting or to require the Board of Directors
to call a special meeting.
 
     The By-laws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of stockholders of the Company, including
proposed nominations of persons for election to the Board of Directors.
 
     Stockholders at an annual meeting may only consider proposals or
nominations specified in the notice of meeting or brought before the meeting by
or at the direction of the Board of Directors or by a stockholder who was a
stockholder of record on the record date for the meeting, who is entitled to
vote at the meeting and who has given to the Company's Secretary timely written
notice, in proper form, of the stockholder's intention to bring that business
before the meeting. Although the By-laws do not give the Board of Directors the
power to approve or disapprove stockholder nominations of candidates or
proposals regarding other business to be conducted at a special or annual
meeting, the By-laws may have the effect of precluding the conduct of certain
business at a meeting if the proper procedures are not followed or may
discourage or defer a potential acquiror from conducting a solicitation of
proxies to elect its own slate of directors or otherwise attempting to obtain
control of the Company.
 
     The Restated Certificate and By-laws provide that the affirmative vote of
holders of at least 80% of the total votes eligible to be cast in the election
of directors is required to amend, alter, change or repeal certain of their
provisions. This requirement of a super-majority vote to approve amendments to
the Restated Certificate and By-laws could enable a minority of the Company's
stockholders to exercise veto power over any such amendments.
 
CERTAIN PROVISIONS OF DELAWARE LAW
 
     Following the consummation of the Offering, the Company will be subject to
the "Business Combination" provisions of the Delaware General Corporation Law.
In general, such provisions prohibit a publicly held Delaware corporation from
engaging in various "business combination" transactions with any "interested
stockholder" for a period of three years after the date of the transaction which
the person became an "interested stockholder," unless (i) the transaction is
approved by the Board of Directors prior to the date the "interested
stockholder" obtained such status; (ii) upon consummation of the transaction
which resulted in the stockholder becoming an "interested stockholder," the
"interested stockholder," owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those shares owned by
(a) persons who are directors and also officers and (b) employee stock plans in
which employee participants do not have the right to determine confidentially
whether shares held subject to the plan will be tendered in a tender or exchange
offer; or (iii) on or subsequent to such date the "business combination" is
approved by the Board of Directors and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the "interested stockholder." A
"business combination" is defined to include mergers, asset sales and other
transactions resulting in financial benefit to a stockholder. In general, an
"interested stockholder" is a
 
                                       38
<PAGE>   42
 
Person who, together with affiliates and associates, owns (or within three
years, did own) 15% or more of a corporation's voting stock. The statute could
prohibit or delay mergers or other takeover or change in control attempts with
respect to the Company and, accordingly, may discourage attempts to acquire the
Company.
 
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
 
     The Restated Certificate limits the liability of Directors to the fullest
extent permitted by the Delaware General Corporation Law. In addition, the
Restated Certificate will provide that the Company shall indemnify Directors and
officers of the Company to the fullest extent permitted by such law. The Company
anticipates entering into indemnification agreements with its current Directors
and executive officers prior to the completion of the Offering and any new
Directors or executive officers following such time.
 
TRANSFER AGENT AND REGISTRAR
 
     The Transfer Agent and Registrar for the Common Stock is          .
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Prior to the Offering there has been no market for the Common Stock of the
Company. The Company can make no predictions as to the effect, if any, that
sales of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of significant amounts
of the Common Stock in the public market, or the perception that such sales may
occur, could adversely affect prevailing market prices. See "Risk
Factors--Shares Eligible for Future Sale."
 
     Upon completion of the Offering, the Company expects to have 6,141,818
shares of Common Stock outstanding. Of the shares outstanding after the
Offering, the 2,200,000 shares of Common Stock (2,530,000 shares if the
Underwriters' over-allotment is exercised in full) sold in the Offering will be
freely tradeable without restriction under the Securities Act, except for any
such shares which may be acquired by an "affiliate" of the Company (an
"Affiliate"), as that term is defined in Rule 144 promulgated under the
Securities Act ("Rule 144"), which shares will be subject to the volume
limitations and other restrictions of Rule 144 described below. An aggregate of
3,941,818 shares of Common Stock held by Existing Stockholders of the Company
upon completion of the Offering will be "restricted securities" (as that phrase
is defined in Rule 144) and may not be resold in the absence of registration
under the Securities Act or pursuant to an exemption from such registration,
including among others, the exemption provided by Rule 144 under the Securities
Act.
 
     In general, under Rule 144 as currently in effect, beginning ninety days
after the date of this Prospectus, if a period of at least one year has elapsed
since the later of the date the "restricted securities" were acquired from the
Company or the date they were acquired from an Affiliate, then the holder of
such restricted securities (including an Affiliate) is entitled to sell in the
public market a number of shares within any three-month period that does not
exceed the greater of 1% of the then outstanding shares of the Common Stock
(approximately 61,418 shares immediately after the Offering) or the average
weekly reported volume of trading of the Common Stock on the Nasdaq National
Market during the four calendar weeks preceding such sale. Under Rule 144, the
holder may only sell such shares through "brokers' transactions" or in
transactions directly with a "market maker" (as such terms are defined in Rule
144). Sales under Rule 144 are also subject to certain requirements regarding
providing notice of such sales and the availability of current public
information concerning the Company. Affiliates may sell shares not constituting
restricted shares in accordance with the foregoing volume limitations and other
requirements but without regard to the one-year holding period. Under Rule
144(k), if a period of at least two years has elapsed between the later of the
date restricted securities were acquired from the Company or the date they were
acquired from an Affiliate, as applicable, a holder of such restricted
securities who is not an Affiliate at the time of the sale and has not been an
Affiliate for at least three months prior to the sale would be entitled to sell
the shares in the public market without regard to the volume limitations and
other restrictions described above. Beginning 90 days after the date of this
Prospectus, approximately 3,941,818 shares of Common Stock will be eligible for
sale in the public market pursuant to Rule 144, subject to the volume
limitations and other restrictions described above.
 
                                       39
<PAGE>   43
 
     Notwithstanding the foregoing, the Company's executive officers, Directors
and the Existing Stockholders, who own in aggregate approximately 3,941,818
shares of Common Stock have agreed that, without the prior consent of the
Representatives (as defined), they will not (i) directly or indirectly, sell,
offer to sell, grant any option for the sale of or otherwise dispose of any
shares of Common Stock or securities or rights convertible into or exercisable
or exchangeable for Common Stock (except through gifts to persons who agree in
writing to be bound by such restrictions) or (ii) make any demand for or
exercise any right with respect to the registration of any Common Stock or other
such securities, for a period of 180 days after the date of this Prospectus,
other than (i) the sale to the Underwriters of the shares of Common Stock under
the Underwriting Agreement (as defined) or (ii) the issuance by the Company of
shares of Common Stock upon the exercise of an options sold or granted pursuant
to an existing benefit plan of the Company and outstanding on the date of this
Prospectus.
 
                                       40
<PAGE>   44
 
                                  UNDERWRITING
 
     Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement") among the Company and the Selling Stockholder and
each of the Underwriters named below, the Company and the Selling Stockholder
have agreed to sell to the Underwriters, and each of the Underwriters severally
and not jointly has agreed to purchase from the Company and the Selling
Stockholder, the number of shares of Common Stock set forth opposite its name
below.
 
<TABLE>
<CAPTION>
    UNDERWRITER                                                            NUMBER OF SHARES
    ---------------------------------------------------------------------  ----------------
    <S>                                                                    <C>
    McDonald & Company Securities, Inc...................................
    Morgan Keegan & Company, Inc.........................................
                                                                               ---------
              Total......................................................      2,200,000
                                                                               =========
</TABLE>
 
     McDonald & Company Securities, Inc. and Morgan Keegan & Company, Inc. are
acting as representatives (the "Representatives") of the several Underwriters.
 
     The Underwriting Agreement provides that the obligation of the several
Underwriters to pay for and accept delivery of the shares of Common Stock are
subject to the approval of certain legal matters by counsel and to certain other
conditions. The Underwriters are obligated to take and pay for all shares of the
Common Stock offered hereby (other than those covered by the over-allotment
option described below) if any such shares are taken.
 
     The Underwriters propose initially to offer the shares of Common Stock
directly to the public at the initial public offering price set forth on the
cover page hereof and to certain dealers at a price that represents a concession
not in excess of $          per share of Common Stock under the public offering
price. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $          per share of Common Stock to the other Underwriters
or to certain other dealers. The public offering price and the other selling
terms may be changed by the Representatives of the initial public offering.
 
     The Company has granted to the Underwriters an option, exercisable at any
time during the 30-day period from the date of this Prospectus, to purchase up
to an aggregate of 330,000 additional shares of Common Stock at the public
offering price set forth on the cover page hereof less underwriting discount.
The Underwriters may exercise such option to purchase additional shares solely
for the purpose of covering over-allotments, if any, incurred in connection with
the sale of the Common Stock offered hereby. To the extent such option is
exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase a number of additional shares proportionate to such
Underwriter's initial amount reflected in the preceding table.
 
     Prior to this Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock has been
determined by negotiation between the Company and the Representatives. Among the
factors considered in determining the public offering price were the history of,
and the prospects for, the Company's business and the industry in which it
competes, an assessment of the Company's management, its past and present
operations, its past and present earnings and the trend of such earnings, the
prospects for earnings of the Company, the present state of the Company's
development, the general condition of the securities markets at the time of the
Offering and the price-earnings ratios and market price of securities of
comparable companies at the time of the Offering. 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 subsequent to the Offering at or above the
initial public offering price.
 
     The Company and the Selling Stockholder have agreed to indemnify the
several Underwriters against certain liabilities, including certain liabilities
under the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
 
     The Underwriters have informed the Company that they do not expect to
confirm sales of any accounts over which they exercise discretionary authority.
 
                                       41
<PAGE>   45
 
     At the request of the Company, the Underwriters have reserved up to
          shares of Common Stock for sale at the initial public offering price
to Directors, officers, certain employees and business associates of the
Company. The number of shares of Common Stock available to the general public
will be reduced to the extent these persons purchase the reserved shares. Any
reserved shares of Common Stock that are not so purchased by such employees at
the closing of the Offering will be offered by the Underwriters to the general
public on the same term as the other shares in the Offering.
 
     The Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the securities in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Underwriters to reclaim a selling concession from a
syndicate member when the securities originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short
positions. Such stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the securities to be higher than it would
otherwise be in the absence of such transactions.
 
     Neither the Company nor the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
 
     The Company and its executive officers, Directors and the Existing
Stockholders have agreed that, without the prior consent of the Representatives,
they will not (i) directly or indirectly, sell, offer to sell, grant any option
for the sale of or otherwise dispose of any shares of Common Stock or securities
or rights convertible into or exercisable or exchangeable for Common Stock
(except through gifts to persons who agree in writing to be bound by such
restrictions) or (ii) make any demand for or exercise any right with respect to
the registration of any Common Stock or other such securities, for a period of
180 days after the date of this Prospectus, other than (a) the sale to the
Underwriters of the shares of Common Stock under the Underwriting Agreement or
(b) the issuance by the Company of shares of Common Stock upon the exercise of
an options sold or granted pursuant to an existing benefit plan of the Company
and outstanding on the date of this Prospectus.
 
                                    EXPERTS
 
     The financial statements of the Company and the Predecessor included in
this Prospectus and elsewhere in the Registration Statement to the extent and
for the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
 
                                 LEGAL MATTERS
 
     The validity of the Common Stock offered hereby will be passed upon for the
Company by Kirkland & Ellis, Chicago, Illinois (a partnership which includes
professional corporations). Certain legal matters will be passed upon for the
Underwriters by Squire, Sanders & Dempsey L.L.P., Cleveland, Ohio.
 
                                       42
<PAGE>   46
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Commission a Registration Statement (of
which this Prospectus is a part and which term shall encompass any amendments
thereto) on Form S-1 pursuant to the Securities Act with respect to the Common
Stock being offered in the Offering. This Prospectus does not contain all the
information set forth in the Registration Statement and the exhibits and
schedules thereto, certain portions of which are omitted as permitted by the
rules and regulations of the Commission. Statements made in this Prospectus as
to the contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to any such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference. For
further information about the Company and the securities offered hereby,
reference is made to the Registration Statement and to the financial statements,
schedules and exhibits filed as a part thereof.
 
     Upon completion of the Offering, the Company will be subject to the
informational requirements of the Exchange Act, and, in accordance therewith,
will file reports and other information with the Commission. The Registration
Statement, the exhibits and schedules forming a part thereof and the reports and
other information filed by the Company with the Commission in accordance with
the Exchange Act may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the following regional offices of the
Commission: Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material or any part thereof may also be obtained by
mail from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549 at prescribed rates or accessed electronically by
means of the Commission's home page on the Internet at http://www.sec.gov.
 
     The Company intends to furnish its stockholders with annual reports
containing audited financial statements and to make available quarterly reports
containing unaudited summary financial information for the first three fiscal
quarters of each fiscal year.
 
                                       43
<PAGE>   47
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
THE COMPANY
Report of Independent Public Accountants..............................................   F-2
Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997................   F-3
Statements of Operations for the eleven months ended December 31, 1995, the year ended
  December 31, 1996 and the nine months ended September 30, 1996 (unaudited) and
  1997................................................................................   F-5
Statements of Stockholders' Equity (Deficit) for the eleven months ended December 31,
  1995, the year ended December 31, 1996 and the nine months ended September 30,
  1997................................................................................   F-6
Statements of Cash Flows for the eleven months ended December 31, 1995, the year ended
  December 31, 1996 and the nine months ended September 30, 1996 (unaudited) and
  1997................................................................................   F-7
Notes to Financial Statements.........................................................   F-9
 
PREDECESSOR
Report of Independent Public Accountants..............................................  F-18
Statements of Operations and Owner's Capital for the year ended
  December 31, 1994 and the one month period ended January 31, 1995...................  F-19
Statements of Cash Flows for the year ended December 31, 1994 and
  the one month period ended January 31, 1995.........................................  F-20
Notes to Financial Statements.........................................................  F-21
</TABLE>
 
                                       F-1
<PAGE>   48
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
TO 1-800 CONTACTS, INC.:
 
     We have audited the accompanying balance sheets of 1-800 CONTACTS, Inc. (a
Utah S Corporation) as of December 31, 1995 and 1996 and September 30, 1997 and
the related statements of operations, stockholders' equity (deficit) and cash
flows for the period from inception (February 1, 1995) to December 31, 1995, for
the year ended December 31, 1996 and for the nine months ended September 30,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of 1-800 CONTACTS, Inc. as of
December 31, 1995 and 1996 and September 30, 1997, and the results of its
operations and its cash flows for the period from inception (February 1, 1995)
to December 31, 1995, for the year ended December 31, 1996 and for the nine
months ended September 30, 1997 in conformity with generally accepted accounting
principles.
 
ARTHUR ANDERSEN LLP
 
Salt Lake City, Utah
  November 7, 1997
 
                                       F-2
<PAGE>   49
 
                              1-800 CONTACTS, INC.
 
                                 BALANCE SHEETS
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         -----------------------     SEPTEMBER 30,
                                                           1995          1996            1997
                                                         --------     ----------     -------------
<S>                                                      <C>          <C>            <C>
CURRENT ASSETS:
  Cash.................................................  $  2,925     $       --      $        --
  Inventories..........................................    89,518        475,410        3,212,680
  Prepaid expenses and other...........................       600          9,023          126,972
                                                         --------     ----------       ----------
     Total current assets..............................    93,043        484,433        3,339,652
                                                         --------     ----------       ----------
DEFERRED ADVERTISING COSTS.............................        --        394,297        1,625,963
                                                         --------     ----------       ----------
PROPERTY AND EQUIPMENT, at cost:
  Office and computer equipment........................    47,166        217,212          495,250
  Leasehold improvements...............................        --             --           66,394
                                                         --------     ----------       ----------
                                                           47,166        217,212          561,644
  Less -- accumulated depreciation and amortization....    (6,774)       (25,617)         (99,763)
                                                         --------     ----------       ----------
     Net property and equipment........................    40,392        191,595          461,881
                                                         --------     ----------       ----------
OTHER ASSETS...........................................   110,410         86,321          333,276
                                                         --------     ----------       ----------
     Total assets......................................  $243,845     $1,156,646      $ 5,760,772
                                                         ========     ==========       ==========
</TABLE>
 
                 The accompanying notes to financial statements
                 are an integral part of these balance sheets.
 
                                       F-3
<PAGE>   50
 
                              1-800 CONTACTS, INC.
 
                                 BALANCE SHEETS
 
                      LIABILITIES AND STOCKHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         -----------------------     SEPTEMBER 30,
                                                           1995          1996            1997
                                                         --------     ----------     -------------
<S>                                                      <C>          <C>            <C>
CURRENT LIABILITIES:
  Line of credit.......................................  $     --     $       --      $   651,107
  Current portion of capital lease obligation..........       442         17,731           20,786
  Current portion of long-term debt....................    20,301         31,200               --
  Notes payable to stockholders........................    20,000             --        1,350,000
  Accounts payable.....................................    50,066        471,294        2,341,272
  Accrued liabilities..................................     9,368         63,800          242,186
  Unearned revenue.....................................     4,959         35,945          159,560
  Bank overdraft.......................................        --         68,543               --
                                                         --------     ----------       ----------
     Total current liabilities.........................   105,136        688,513        4,764,911
                                                         --------     ----------       ----------
LONG-TERM LIABILITIES:
  Notes payable to stockholders........................        --        205,000          243,788
  Long-term debt, less current portion.................    57,287         24,671               --
  Capital lease obligation, less current portion.......   109,834         92,103           76,311
                                                         --------     ----------       ----------
     Total long-term liabilities.......................   167,121        321,774          320,099
                                                         --------     ----------       ----------
COMMITMENTS AND CONTINGENCIES (Notes 1 and 5)
 
STOCKHOLDERS' EQUITY (DEFICIT):
  Common stock, $0.01 par value, 20,000,000 shares
     authorized, 4,659,469 shares issued and
     outstanding.......................................    46,595         46,595           46,595
  Additional paid-in capital...........................    33,688         93,688           93,688
  Retained earnings (deficit)..........................   (94,551)       253,812        1,045,954
  Notes receivable from stockholders...................   (14,144)      (247,736)        (510,475)
                                                         --------     ----------       ----------
     Total stockholders' equity (deficit)..............   (28,412)       146,359          675,762
                                                         --------     ----------       ----------
     Total liabilities and stockholders' equity........  $243,845     $1,156,646      $ 5,760,772
                                                         ========     ==========       ==========
</TABLE>
 
                 The accompanying notes to financial statements
                 are an integral part of these balance sheets.
 
                                       F-4
<PAGE>   51
 
                              1-800 CONTACTS, INC.
 
                            STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                             FEBRUARY 1,                            NINE MONTHS
                                               1995 TO        YEAR ENDED        ENDED SEPTEMBER 30,
                                             DECEMBER 31,    DECEMBER 31,    -------------------------
                                                 1995            1996           1996          1997
                                             ------------    ------------    ----------    -----------
                                                                             (UNAUDITED)
<S>                                          <C>             <C>             <C>           <C>
NET SALES..................................   $  587,918      $3,628,296     $1,857,878    $14,144,835
COST OF GOODS SOLD.........................      355,466       2,215,306      1,034,280      9,452,813
                                                --------      ----------     ----------     ----------
     Gross profit..........................      232,452       1,412,990        823,598      4,692,022
SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES.................................      317,898       1,041,312        554,776      3,858,856
                                                --------      ----------     ----------     ----------
INCOME (LOSS) FROM OPERATIONS..............      (85,446)        371,678        268,822        833,166
                                                --------      ----------     ----------     ----------
OTHER (EXPENSE) INCOME:
  Interest expense.........................       (9,105)        (26,175)       (14,466)       (78,486)
  Other, net...............................           --           2,860           (643)        37,462
                                                --------      ----------     ----------     ----------
     Total other, net......................       (9,105)        (23,315)       (15,109)       (41,024)
                                                --------      ----------     ----------     ----------
NET INCOME (LOSS)..........................   $  (94,551)     $  348,363     $  253,713    $   792,142
                                                ========      ==========     ==========     ==========
PRO FORMA INFORMATION (unaudited)
  Income before pro forma (provision)
     benefit for income taxes..............   $  (94,551)     $  348,363     $  253,713    $   792,142
  (Provision) benefit for income taxes.....       36,402        (134,120)       (97,680)      (304,975)
                                                --------      ----------     ----------     ----------
PRO FORMA NET INCOME (LOSS)................   $  (58,149)     $  214,243     $  156,033    $   487,167
                                                ========      ==========     ==========     ==========
PRO FORMA NET INCOME PER COMMON SHARE......                   $     0.05                   $      0.10
                                                              ==========                    ==========
PRO FORMA WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING..............................                    4,663,528                     4,729,490
                                                              ==========                    ==========
</TABLE>
 
                 The accompanying notes to financial statements
                   are an integral part of these statements.
 
                                       F-5
<PAGE>   52
 
                              1-800 CONTACTS, INC.
 
                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 
<TABLE>
<CAPTION>
                                                                                             NOTES
                                         COMMON STOCK         ADDITIONAL     RETAINED      RECEIVABLE
                                     ---------------------     PAID-IN       EARNINGS         FROM
                                       SHARES      AMOUNT      CAPITAL      (DEFICIT)     STOCKHOLDERS     TOTAL
                                     ----------    -------    ----------    ----------    ------------    --------
<S>                                  <C>           <C>        <C>           <C>           <C>             <C>
  Initial capitalization...........   4,141,750    $41,418    $   11,365    $       --     $       --     $ 52,783
  Sale of common stock.............     517,719      5,177        22,323            --             --       27,500
  Advances to stockholders.........          --         --            --            --        (14,144)     (14,144)
  Net loss.........................          --         --            --       (94,551)            --      (94,551)
                                      ---------    --------    ---------    ----------      ---------     --------
BALANCE, December 31, 1995.........   4,659,469     46,595        33,688       (94,551)       (14,144)     (28,412)
  Repurchase of common stock.......    (931,894)    (9,319)     (230,681)           --             --     (240,000)
  Sale of common stock.............     931,894      9,319       290,681            --             --      300,000
  Advances to stockholders.........          --         --            --            --       (233,592)    (233,592)
  Net income.......................          --         --            --       348,363             --      348,363
                                      ---------    --------    ---------    ----------      ---------     --------
BALANCE, December 31, 1996.........   4,659,469     46,595        93,688       253,812       (247,736)     146,359
  Advances to stockholders.........          --         --            --            --       (262,739)    (262,739)
  Net income.......................          --         --            --       792,142             --      792,142
                                      ---------    --------    ---------    ----------      ---------     --------
BALANCE, September 30, 1997........   4,659,469    $46,595    $   93,688    $1,045,954     $ (510,475)    $675,762
                                      =========    ========    =========    ==========      =========     ========
</TABLE>
 
                 The accompanying notes to financial statements
                   are an integral part of these statements.
 
                                       F-6
<PAGE>   53
 
                              1-800 CONTACTS, INC.
 
                            STATEMENTS OF CASH FLOWS
 
                          INCREASE (DECREASE) IN CASH
 
<TABLE>
<CAPTION>
                                              FEBRUARY 1,                           NINE MONTHS
                                                1995 TO        YEAR ENDED       ENDED SEPTEMBER 30,
                                              DECEMBER 31,    DECEMBER 31,    ------------------------
                                                  1995            1996          1996          1997
                                              ------------    ------------    ---------    -----------
                                                                              (UNAUDITED)
<S>                                           <C>             <C>             <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).........................    $(94,551)      $  348,363     $ 253,713    $   792,142
  Adjustments to reconcile net income (loss)
     to net cash provided by (used in)
     operating activities:
  Depreciation and amortization.............      16,811           46,044        32,083         97,213
  Loss on retirement of fixed assets........          --            1,834           325             --
  Changes in operating assets and
     liabilities:
     Inventories............................     (78,455)        (385,892)     (166,108)    (2,737,270)
     Prepaid expenses and other.............       1,500           (8,423)      (12,657)      (117,949)
     Deferred advertising costs.............          --         (394,297)     (270,315)    (1,231,666)
     Accounts payable.......................      50,066          421,228       221,954      1,869,978
     Accrued liabilities....................       9,368           54,432        21,150        178,386
     Unearned revenue.......................       4,959           30,986        22,592        123,615
                                                --------        ---------     ---------    -----------
       Net cash provided by (used in)
          operating activities..............     (90,302)         114,275       102,737     (1,025,551)
                                                --------        ---------     ---------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Net increase in notes receivable from
     stockholders...........................     (14,144)        (233,592)     (126,408)      (262,739)
  Purchase of property and equipment........     (32,546)        (174,992)      (56,824)      (344,432)
  Deposits on equipment.....................          --               --            --        (32,563)
  Purchase of intangible assets.............          --               --            --        (50,000)
                                                --------        ---------     ---------    -----------
       Net cash used in investing
          Activities........................     (46,690)        (408,584)     (183,232)      (689,734)
                                                --------        ---------     ---------    -----------
</TABLE>
 
                 The accompanying notes to financial statements
                   are an integral part of these statements.
 
                                       F-7
<PAGE>   54
 
                              1-800 CONTACTS, INC.
 
                            STATEMENTS OF CASH FLOWS
 
                          INCREASE (DECREASE) IN CASH
 
<TABLE>
<CAPTION>
                                               FEBRUARY 1,                           NINE MONTHS
                                                 1995 TO        YEAR ENDED       ENDED SEPTEMBER 30,
                                               DECEMBER 31,    DECEMBER 31,    -----------------------
                                                   1995            1996          1996          1997
                                               ------------    ------------    ---------    ----------
                                                                               (UNAUDITED)
<S>                                            <C>             <C>             <C>          <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Sale of common stock.......................   $   52,500      $  300,000     $ 300,000    $       --
  Stock repurchase...........................           --        (240,000)     (240,000)           --
  Stock offering costs.......................           --              --            --      (187,459)
  Net borrowings on line of credit...........           --              --            --       651,107
  Borrowings from stockholders...............       25,000         365,000        80,000     1,800,000
  Payments on notes payable to
     stockholders............................       (5,000)       (180,000)      (20,000)     (411,212)
  Proceeds from issuance of long-term debt...       86,000              --            --            --
  Principal payments on long-term debt.......       (8,412)        (21,717)      (15,606)      (55,871)
  Principal payments on capital lease
     obligation..............................      (10,171)           (442)         (327)      (12,737)
  Bank overdraft.............................           --          68,543            --       (68,543)
                                                ----------      ----------     ---------    ----------
     Net cash provided by financing
       activities............................      139,917         291,384       104,067     1,715,285
                                                ----------      ----------     ---------    ----------
NET INCREASE (DECREASE) IN CASH..............        2,925          (2,925)       23,572            --
CASH AT BEGINNING OF PERIOD..................           --           2,925         2,925            --
                                                ----------      ----------     ---------    ----------
CASH AT END OF PERIOD........................   $    2,925      $       --     $  26,497    $       --
                                                ==========      ==========     =========    ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for interest.....................   $    4,276      $   18,984     $  14,466    $   22,552
</TABLE>
 
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
 
During the period ended December 31, 1995, the Company entered into a capital
lease for a toll-free telephone number totaling $120,447.
 
Upon inception of the Company, the stockholders contributed furniture and
equipment, inventory and supplies totaling $14,620, $11,063 and $2,100,
respectively.
 
                 The accompanying notes to financial statements
                   are an integral part of these statements.
 
                                       F-8
<PAGE>   55
 
                              1-800 CONTACTS, INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
NOTE 1. NATURE OF OPERATIONS AND ORGANIZATION OF BUSINESS
 
     1-800 CONTACTS, Inc., (the "Company") was incorporated in state of Utah in
February 1995. The Company is a direct marketer of replacement contact lenses in
the United States. The Company sells contact lenses primarily through its
toll-free telephone number.
 
  REGULATORY COMPLIANCE
 
     The sale and delivery of contact lenses is generally governed by state laws
and regulations. The Company sells to customers in nearly all 50 states and each
sale is likely to be subject to the laws of the state where the customer is
located. The laws and regulations relating to the delivery and sale of contact
lenses vary from state to state, but can generally be classified into five
categories: (i) laws that require contact lenses only be dispensed pursuant to a
valid prescription, (ii) laws that require the dispenser to be licensed by the
state as an optometrist, ophthalmologist or other professional authorized to
dispense lenses, (iii) laws that require lenses be dispensed only in a
face-to-face transaction, (iv) laws with requirements that are unclear or do not
specifically address the sale and delivery of contact lenses; and (v) laws that
the Company believes place no restrictions on the dispensing of replacement
contact lenses. The Company's operating practice is to attempt to obtain a
prescription from its customers or his/her eye care practitioner. If the
customer does not have a copy of his/her prescription, the Company attempts to
contact the customer's doctor to obtain a copy of, or verify the customer's
prescription. If the Company is unable to obtain a copy of, or verify the
customer's prescription, it is the Company's practice to complete the sale and
ship the lenses to the customer, based on the prescription information provided
by the customer. As a result, certain sales made by the Company violate the
applicable statute or regulation in the state in which the customer is located.
Any action brought against the Company based on its violation of such state laws
and regulations could result in fines to the Company and/or the required
compliance with such laws. Such required compliance could result in (i)
increased costs to the Company, (ii) the loss of a substantial portion of the
Company's customers for whom the Company is unable to obtain or verify their
prescription and (iii) the inability to sell to customers at all in a particular
state if the Company cannot comply with such state's laws. The occurrence of any
of the above results could have a material adverse effect on the Company's
ability to sell contact lenses and continue to operate profitably. Furthermore,
there can be no assurance that states will not enact or impose laws or
regulations that prohibit mail order dispensing of contact lenses or otherwise
impair the Company's ability to sell contact lenses and continue to operate
profitably.
 
  SOURCES OF SUPPLY
 
     Historically, substantially all of the major manufacturers of contact
lenses have refused to sell lenses directly to direct marketers, including the
Company, and have sought to prohibit their distributors from doing so. As a
result, the Company currently purchases a substantial portion of its products
from unauthorized distributors, such as large optical retail chains with excess
inventory. The Company is aware that at least one large manufacturer of contact
lenses has begun to put tracking codes on its products in an effort to identify
distributors who are selling to direct marketers. The Company is not an
authorized dealer for the majority of the products which it sells. In addition,
the price the Company pays for certain of its products is sometimes higher than
that paid by eye care practitioners, retail chains and mass merchandisers, who
are able to buy directly from the manufacturers. There can be no assurance that
the Company will be able to obtain sufficient quantities of contact lenses at
competitive prices in the future to meet the existing or anticipated demand for
its products. Any such inability would have a material adverse effect on the
Company's business, financial position and results of operations.
 
     Although the Company seeks to reduce its reliance on any one supplier by
establishing relationships with a number of distributors and other sources, the
Company purchased from a single distributor approximately 40 percent and 32
percent of its contact lens inventory in 1996 and the first nine months of 1997,
respectively. The Company continually seeks to establish new relationships with
potential suppliers in order to be able to obtain adequate inventory at
competitive prices. In the event that this supplier could no longer supply the
Company with
 
                                       F-9
<PAGE>   56
 
                              1-800 CONTACTS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
contact lenses, there can be no assurance that the Company could secure other
adequate sources of supply, or that such supply could be obtained on terms no
less favorable to the Company than its current supply, which could adversely
affect the Company by increasing its costs or, in the event adequate replacement
supply cannot be secured, reducing its net sales.
 
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  REVENUE RECOGNITION
 
     Sales are recognized at the time of shipment to the customer. Payment for
the product is generally received prior to shipment. As a result, unearned
revenue represents amounts received from customers for which shipment has not
occurred. Shipping and handling fees are included as part of net sales. The
related freight costs associated with shipping products to customers are
included as a component of cost of goods sold.
 
  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 as of 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.
 
  INVENTORIES
 
     Inventories consist of contact lenses and are recorded at the lower of cost
(using the first-in, first-out method) or market.
 
  PROPERTY AND EQUIPMENT
 
     Property and equipment are stated at cost and depreciated using the
straight-line method over their estimated useful lives ranging from three to
seven years. Leasehold improvements are amortized over the term of the lease.
Major additions and improvements are capitalized, while costs for minor
replacements, maintenance and repairs that do not increase the useful life of an
asset are expensed as incurred. Upon retirement or other disposition of property
and equipment, the cost and related accumulated depreciation or amortization are
removed from the accounts. The resulting gain or loss is reflected in income.
 
  ADVERTISING COSTS
 
     The Company capitalizes certain direct-mail advertising costs and amortizes
those costs over the period for which the revenues are generated in accordance
with Statement of Position ("SOP") 93-7. Based upon the Company's historical
direct-response information, the Company capitalizes direct-mail advertising
costs on a cost-pool-by-cost-pool approach and amortizes those costs over a 12
month period. Approximately 73 percent of capitalized costs are amortized over
the first six months after the advertisement. The Company recorded amortization
expense of approximately $420,300, $185,600 and $2,113,600 for the year ended
December 31, 1996 and the nine months ended September 30, 1996 and 1997,
respectively.
 
     Revenue patterns in the future may be significantly different than those
currently estimated based upon factors such as regulatory action, economic
changes in customers, demographics, an inability to obtain supply adequate to
fulfill orders and other factors which could result in the impairment of
capitalized costs. In that event, the Company may be required to write off some
or all of the capitalized costs and or revise its amortization practices.
 
                                      F-10
<PAGE>   57
 
                              1-800 CONTACTS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The Company expenses all other advertising costs when the advertising takes
place. These advertising costs totalled approximately $106,339, $47,800, $21,900
and $45,200 for the periods ended December 31, 1995 and 1996 and for the nine
months ended September 30, 1996 and 1997, respectively.
 
  OTHER ASSETS
 
     Other assets consist of the following:
 
<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                        --------------------    SEPTEMBER 30,
                                                          1995        1996          1997
                                                        --------    --------    -------------
     <S>                                                <C>         <C>         <C>
     Intangible assets................................  $120,447    $120,447      $ 170,447
     Deferred offering costs..........................        --          --        187,459
     Deposits.........................................        --          --         32,563
                                                        --------    --------      ---------
                                                         120,447     120,447        390,469
     Accumulated amortization.........................   (10,037)    (34,126)       (57,193)
                                                        --------    --------      ---------
                                                        $110,410    $ 86,321      $ 333,276
                                                        ========    ========      =========
</TABLE>
 
     Intangible assets consist of amounts paid to secure the rights to the
Company's telephone number and internet address. These costs are amortized over
an estimated life of 5 years. The Company has contractual rights customary to
the industry to use its telephone and internet address. However, under
applicable rules and regulations of the Federal Communications Commission, the
Company does not have and cannot acquire any property rights to the telephone
number. The Company does not expect to lose the right to use the number,
however, there can be no assurance in this regard and such loss would have a
material adverse effect on the Company's results of operations.
 
  FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The Company's financial instruments consist mainly of cash, short-term
payables, borrowings under a credit line and notes payable. The Company believes
that the carrying amounts approximate fair value.
 
  LONG-LIVED ASSETS
 
     The Company accounts for the impairment of long-lived assets in accordance
with Statement of Financial Accounting Standard ("SFAS") No. 121. This statement
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets.
 
  INCOME TAXES
 
     The Company has elected, for federal and state income tax purposes, to
include their taxable income with that of its shareholders (an S Corporation
election). Accordingly, the Company makes no provision for income taxes.
 
     The S Corporation status of the Company will terminate upon consummation of
the offering and the Company will become subject to corporate income taxes (see
Note 9). Upon termination of the Company's S Corporation status, the Company
will recognize deferred income tax assets and liabilities in accordance with
SFAS No. 109, "Accounting for Income Taxes." The resulting adjustment will be
recorded as a deferred income tax provision or benefit for the period in which
the change in status is effective. Had the Company become a C
 
                                      F-11
<PAGE>   58
 
                              1-800 CONTACTS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
corporation as of September 30, 1997, a provision for deferred income taxes of
approximately $586,742 would have been recorded, arising from the following
temporary differences:
 
<TABLE>
          <S>                                                              <C>
          Deferred advertising costs.....................................  $606,484
          Other..........................................................   (19,742)
                                                                           --------
                                                                           $586,742
                                                                           ========
</TABLE>
 
  UNAUDITED INTERIM FINANCIAL DATA
 
     The accompanying unaudited statements of operations and cash flows for the
nine months ended September 30, 1996 have been prepared in accordance with
generally accepted accounting principles for interim financial information. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
 
  STOCK-BASED COMPENSATION
 
     The Company accounts for its stock option grants under Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees" and provides the pro forma footnote disclosures required by SFAS No.
123, "Accounting for Stock Based Compensation."
 
  RECENT ACCOUNTING PRONOUNCEMENT
 
     In February 1997, SFAS No. 128, "Earnings per Share" was issued. This
statement specifies the computations, presentation and disclosure requirements
for earnings per share ("EPS") for financial statements issued for all periods
ending after December 15, 1997. Early adoption is prohibited and upon adoption,
all prior period EPS data presented must be restated. SFAS No. 128 simplifies
the standards for computing EPS in comparison to APB Opinion No. 15 and replaces
the presentations of Primary EPS and Fully Diluted EPS with a presentation of
Basic EPS and Diluted EPS. The Company believes that SFAS No. 128 will not have
a material impact when adopted.
 
NOTE 3. LINE OF CREDIT AND LONG-TERM DEBT
 
  LINE OF CREDIT
 
     In August 1997 (subsequently amended on October 1, 1997), the Company
entered into a line of credit agreement with a bank providing for borrowings
equal to the lesser of $1,000,000 or 50 percent of eligible inventory.
Borrowings under the agreement bear interest at the bank's prime rate plus 1.5
percent (10 percent at September 30, 1997) and are secured by substantially all
assets of the Company and guaranteed by two stockholders of the Company. The
agreement expires on July 31, 1998. As of September 30, 1997, outstanding
borrowings under the agreement totalled $651,107, which includes checks that had
been disbursed to vendors but not presented to the bank for clearance. Upon
presentment to the bank, the outstanding checks will be funded by the line of
credit. At October 1, 1997, the Company had $348,893 available under the line of
credit.
 
     The agreement contains various affirmative and negative covenants which
require, among other things, restrictions on capital expenditures, restrictions
on additional debt, quarterly pre-tax income, maintenance of working capital and
restrictions on distributions and changes in ownership. The Company was not in
compliance with certain covenants that were subsequently waived by the bank.
 
                                      F-12
<PAGE>   59
 
                              1-800 CONTACTS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  LONG-TERM DEBT
 
     The Company's long-term debt consists of the following as of December 31,
1995 and 1996 (all amounts were paid in full as of September 30, 1997):
 
<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                                       ------------------
                                                                        1995       1996
                                                                       -------    -------
     <S>                                                               <C>        <C>
     Note payable to a municipality, interest at 9 percent, paid in
       full during 1997..............................................  $35,067    $22,447
     Note payable to a bank, interest at the bank's prime rate plus
       2.25 percent, paid in full during 1997........................   42,521     33,424
                                                                       -------    -------
                                                                        77,588     55,871
     Less current maturities.........................................  (20,301)   (31,200)
                                                                       -------    -------
                                                                       $57,287    $24,671
                                                                       =======    =======
</TABLE>
 
NOTE 4. NOTES PAYABLE TO STOCKHOLDERS
 
  LONG TERM
 
     In February 1996, the Company entered into a credit agreement with a
stockholder that provides for maximum borrowings of $250,000. The borrowings
accrue interest at the prime rate plus 2 percent (10.5 percent at September 30,
1997). As of December 31, 1996 and September 30, 1997, outstanding borrowings
totalled $205,000 and $243,788, respectively. The agreement matures in February
1999 at which time all unpaid principal and interest is due. In the event of
default by the Company, the stockholder has the right to convert the $250,000
into 698,920 shares of common stock or the applicable proportionate number of
shares for unpaid amounts outstanding less than $250,000.
 
  SHORT TERM
 
     In May 1997, the Company borrowed $250,000 from a stockholder that was
repaid prior to September 30, 1997.
 
     In May 1997, the Company borrowed $600,000 from a stockholder under a
short-term promissory note. The note accrued interest at the prime rate plus 2
percent and was due in November 1997. In July 1997, the Company repaid $100,000
on the note and refinanced the remaining $500,000 plus borrowed an additional
$600,000 from the stockholder under a new short-term promissory note. The total
$1,100,000 unsecured note payable accrues interest at prime plus 2 percent (10.5
percent at September 30, 1997) and is due July 30, 1998. As consideration for
entering into this note, the Company agreed to modify the option it holds to
repurchase the stockholder's common stock. Under the revised terms of the
option, the Company has the right to repurchase 442,651 shares of the
stockholder's common stock for $1,900,000.
 
     In September 1997, the Company borrowed $250,000 from a stockholder under a
short-term, unsecured promissory note. The note accrues interest at prime plus 2
percent (10.5 percent at September 30, 1997) and is due in September 1998. In
addition, for every month the note is outstanding a fee of $5,000 is added to
the outstanding balance and expensed as additional interest.
 
     In October 1995, the Company borrowed $25,000 from a stockholder, which
bore interest at 10.75 percent and was repaid in full in February 1996.
 
     As of September 30, 1997, accrued interest on stockholder notes payable
totalled $60,991 and is included in the caption "accrued liabilities" in the
accompanying balance sheet.
 
                                      F-13
<PAGE>   60
 
                              1-800 CONTACTS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 5. COMMITMENTS AND CONTINGENCIES
 
  LEGAL AND REGULATORY MATTERS
 
     From time to time the Company is involved in legal matters generally
incidental to its business. It is the opinion of management, after discussions
with legal counsel, that the ultimate dispositions of these matters will not
have a material impact on the financial condition, liquidity or results of
operations of the Company.
 
     See Note 1 for a discussion of regulatory matters.
 
  CAPITAL LEASE OBLIGATION
 
     The Company leases the rights to use its telephone number from an
individual under a capital lease arrangement. At the end of the lease, the
Company has the option to purchase the interest in the telephone number for
$17,500. The minimum future lease payments under the capital lease as of
September 30, 1997 are as follows:
 
<TABLE>
<CAPTION>
       YEAR ENDING SEPTEMBER 30,             AMOUNT
- ----------------------------------------    --------
<S>                                         <C>
            1998........................    $ 30,000
            1999........................      40,000
            2000........................      42,000
            2001........................       3,500
                                            --------
Total minimum lease payments............     115,500
Less amount representing interest.......     (18,403)
                                            --------
Present value of minimum lease
  payments..............................      97,097
Less current portion....................     (20,786)
                                            --------
Capital lease obligations, excluding
  current portion.......................    $ 76,311
                                            ========
</TABLE>
 
  OPERATING LEASES
 
     The Company leases office and warehouse facilities and certain equipment
under noncancelable operating leases. Lease expense for the periods ended
December 31, 1995 and 1996 and the nine months ended September 30, 1996 and 1997
totalled approximately $14,500, $30,900, $15,500 and $67,500, respectively. In
November 1997, the Company agreed to occupy office space in a facility currently
under construction. The owner of the new facility is the same as the lessor on
the existing facility and has agreed to allow the Company to cancel its existing
lease by paying a fee estimated to be no greater than $39,000. The new lease
commitment is estimated to commence in May, 1998. Future minimum lease payments
under noncancelable operating leases are as follows (including expense under the
new lease):
 
<TABLE>
<CAPTION>
       YEAR ENDING SEPTEMBER 30,              AMOUNT
- ----------------------------------------    ----------
<S>                                         <C>
                    1998................    $  183,530
                    1999................       388,492
                    2000................       402,292
                    2001................       416,092
                    2002................       427,696
                    Thereafter..........     1,200,600
                                            ----------
                                            $3,018,702
                                            ==========
</TABLE>
 
                                      F-14
<PAGE>   61
 
                              1-800 CONTACTS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  SALES TAX
 
     The Company's direct mail business is located, and all of its operations
are conducted, in the state of Utah. At present, the Company does not collect
sales or other similar taxes. However, various states have sought to impose
state sales tax collection obligations on out-of-state mail-order companies,
such as the Company. The U.S. Supreme Court has held that the various states,
absent Congressional legislation, may not impose tax collection obligations on
an out-of-state mail order company whose only contacts with the taxing state are
the distribution of advertising materials through the mail, and whose subsequent
delivery of purchased goods is by mail or interstate common carriers. The
Company has not received an assessment from any state. The Company anticipates
that any legislative changes, if adopted, would be applied on a prospective
basis.
 
  ADVERTISING COMMITMENTS
 
     The Company has entered into certain noncancelable commitments with
cooperative mail companies that will require the Company to pay approximately
$3,751,000 for direct mail services through December 31, 1998.
 
NOTE 6. COMMON STOCK TRANSACTIONS
 
     The Company was organized in February 1995 and 4,141,750 shares of common
stock were issued for consideration of $25,000 in cash and contributed assets of
$27,783. During 1995, the Company issued 517,719 shares of common stock to an
existing stockholder for $27,500 in cash.
 
     In February 1996, the Company repurchased 931,894 shares of its outstanding
common stock for $240,000 in cash. Concurrently with the purchase, the Company
sold these shares to new stockholders for $300,000 in cash. The Company has the
right to repurchase 442,651 of these shares for $1,900,000 prior to February 1,
2001 (see Note 4).
 
NOTE 7.  STOCK OPTIONS
 
     In October 1996 and June 1997, the Company granted nonqualified stock
options to purchase 47,986 and 4,799 shares of common stock to two key employees
at an exercise price of $3.22 and $8.16 per share, respectively. The options
vest equally over a three-year period following the grant date and expire ten
years after the date of grant.
 
     The Company accounts for its stock option grants under APB No. 25. Since
options have been granted at not less than the fair market value on the date of
grant, no compensation expense has been recognized for the stock options
granted. Had compensation cost for option grants been determined consistent with
SFAS No. 123, the Company's net income per common share, on a pro forma basis,
would be the same (as rounded) as reported herein.
 
NOTE 8.  RELATED PARTY TRANSACTIONS
 
     During 1995, 1996 and 1997, the Company made aggregate loans to two
stockholders totaling $14,144, $226,331 and $238,698, respectively. The loans
are unsecured, bear interest at the prime rate (8.5 percent at September 30,
1997) and are due on demand. Interest income on the loans totalled $7,261 and
$24,041 for the year ended December 31, 1996 and the nine months ended September
30, 1997, respectively and is included in the outstanding balance of the notes
receivable. As of December 31, 1995 and 1996 and September 30, 1997, notes
receivable from stockholders totalled $14,144, $247,736 and $510,475,
respectively. The Company anticipates making equity distributions to the
stockholders sufficient to allow for their repayment on these notes. As a
result, these notes have been classified as a reduction in stockholders' equity
in the accompanying financial statements.
 
     See note 4 for a discussion of other related party transactions.
 
                                      F-15
<PAGE>   62
 
                              1-800 CONTACTS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 9.  SUBSEQUENT EVENTS
 
  STOCK SPLIT AND CHANGE IN AUTHORIZED COMMON STOCK
 
     In connection with the filing of the Form S-1 Registration Statement, the
Board of Directors and stockholders approved a 414.175 for 1 stock split and a
change in the authorized common stock to 20,000,000 shares at $0.01 par value
per share. This stock split and change in authorized common stock have been
retroactively reflected in the accompanying financial statements.
 
  STOCK OPTIONS AND STOCK OPTION PLAN
 
     In November 1997, the Company granted nonqualified stock options to
purchase 86,376 shares of common stock at the initial public offering price to
three key employees. These options vest over a three year period and expire in
ten years.
 
     In connection with the filing of a Form S-1 Registration Statement, the
Company will establish a nonqualified and incentive stock option plan. The plan
provides for the issuance of a maximum of 310,000 shares of common stock to
officers, directors, consultants and other key employees. Incentive stock
options and nonqualified options will be granted at not less than 100 percent of
the fair market value of the underlying common stock on the date of grant.
 
  DISTRIBUTIONS TO STOCKHOLDERS
 
     Prior to the consummation of the offering, the Company will enter into an
agreement for distribution of retained earnings and tax indemnification with the
existing stockholders. Pursuant to the agreement, an S Corporation distribution
estimated to be approximately $900,000 (net of notes receivable due from
stockholders of the Company) will be distributed in the form of a promissory
note issued by the Company. The note will be paid in full promptly after the
closing of the offering. The agreement will provide for, among other things, the
indemnification of the existing stockholders for any losses or liabilities with
respect to any additional taxes (including interest, penalties and legal fees)
and the repayment to the Company of amounts received as refunds, resulting from
the Company's operations during the period in which is was an S Corporation. No
amounts are currently payable, or anticipated to be payable, or receivable, or
anticipated to be receivable under the agreement. that the existing stockholders
will be indemnified by the Company with respect to federal and state income tax
liabilities as result of an adjustment to the Company's taxable income which
increases the tax liability to the existing stockholders for taxable periods
ending prior to the termination of the S corporation status. In addition, the
existing stockholders will indemnify the Company with respect to any federal and
state tax liabilities as a result of an adjustment which decreases the existing
stockholders' tax liability for taxable periods ending prior to the termination
of the Company's S corporation status and correspondingly increases the tax
liability of the Company for a taxable period commencing on or after the
termination of the Company's S corporation status.
 
NOTE 10.  UNAUDITED PRO FORMA INFORMATION
 
  BALANCE SHEET INFORMATION
 
     The following unaudited pro forma summary balance sheet information gives
effect as of September 30, 1997, to a distribution of $1,045,954, which
represents the retained earnings at that date, the repayment of notes receivable
due from stockholders of $510,475 as of September 30, 1997, and the recording of
an estimated
 
                                      F-16
<PAGE>   63
 
                              1-800 CONTACTS, INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
deferred income tax liability of $586,742 that would be recorded if the Company
terminated its S corporation status at that date.
 
<TABLE>
<CAPTION>
                                                                  ACTUAL           PRO FORMA
                                                               SEPTEMBER 30,     SEPTEMBER 30,
                                                                   1997              1997
                                                               -------------     -------------
     <S>                                                       <C>               <C>
     Current assets..........................................   $ 3,339,652       $ 3,339,652
     Total assets............................................     5,760,772         5,760,772
     Current liabilities.....................................     4,764,911         5,300,390
     Long-term liabilities...................................       320,099           906,841
     Total stockholders' equity (deficit)....................       675,762          (446,459)
</TABLE>
 
  INCOME STATEMENT INFORMATION
 
     The unaudited pro form a net income presents the pro forma effects on
historical net income adjusted for pro forma provision for income taxes. The pro
forma provision for income taxes has been determined assuming the Company had
been taxed as a C corporation for federal and state income tax purposes using an
effective income tax rate of 38.5 percent for all periods.
 
     The pro forma net income per common share is based on the weighted average
shares of common stock and common stock equivalents outstanding. The shares
deemed to be outstanding include the number of shares being offered by the
Company sufficient to fund an assumed S corporation distribution of
approximately $6,076 at December 31, 1996 and $535,479 at September 30, 1997
(based on the amount of retained earnings at such dates net of notes receivable
due from stockholders).
 
                                      F-17
<PAGE>   64
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To Discount Lens Club:
 
     We have audited the accompanying statements of operations and owner's
capital and cash flows of Discount Lens Club (a California sole proprietorship)
for the year ended December 31, 1994 and the one month ended January 31, 1995.
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 results of operations and the related cash flows
of Discount Lens Club for the year ended December 31, 1994 and the one month
ended January 31, 1995, in conformity with generally accepted accounting
principles.
 
ARTHUR ANDERSEN LLP
 
Salt Lake City, Utah
  August 13, 1997
 
                                      F-18
<PAGE>   65
 
                               DISCOUNT LENS CLUB
 
                  STATEMENTS OF OPERATIONS AND OWNER'S CAPITAL
 
<TABLE>
<CAPTION>
                                                                                        ONE-MONTH
                                                                        YEAR ENDED        ENDED
                                                                       DECEMBER 31,    JANUARY 31,
                                                                           1994           1995
                                                                       ------------    -----------
<S>                                                                    <C>             <C>
NET SALES............................................................    $212,584        $21,552
COST OF GOODS SOLD...................................................     117,326         13,069
                                                                         --------        -------
  Gross profit.......................................................      95,258          8,483
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.........................      78,584          9,369
                                                                         --------        -------
NET INCOME (LOSS)....................................................      16,674           (886)
OWNER'S CAPITAL, beginning of period.................................      18,046         22,818
DISTRIBUTIONS........................................................     (11,902)          (900)
                                                                         --------        -------
OWNER'S CAPITAL, end of period.......................................    $ 22,818        $21,032
                                                                         ========        =======
</TABLE>
 
                 The accompanying notes to financial statements
                 are an integral part of these balance sheets.
 
                                      F-19
<PAGE>   66
 
                               DISCOUNT LENS CLUB
 
                            STATEMENTS OF CASH FLOWS
 
                          INCREASE (DECREASE) IN CASH
 
<TABLE>
<CAPTION>
                                                                                        ONE MONTH
                                                                        YEAR ENDED        ENDED
                                                                       DECEMBER 31,    JANUARY 31,
                                                                           1994           1995
                                                                       ------------    -----------
<S>                                                                    <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)..................................................    $ 16,674        $  (886)
     Adjustments to reconcile net income (loss) to net cash provided
      by (used in) operating activities:
     Depreciation....................................................       1,200            100
     Changes in operating assets and liabilities:
     Inventories.....................................................        (200)           137
     Accrued liabilities.............................................         150           (100)
                                                                         --------        -------
     Net cash provided by (used in) operating activities.............      17,824           (749)
                                                                         --------        -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Distributions to sole proprietor...................................     (11,902)          (900)
                                                                         --------        -------
NET INCREASE (DECREASE) IN CASH......................................       5,922         (1,649)
CASH AT BEGINNING OF PERIOD..........................................          81          6,003
                                                                         --------        -------
CASH AT END OF PERIOD................................................    $  6,003        $ 4,354
                                                                         ========        =======
</TABLE>
 
                 The accompanying notes to financial statements
                 are an integral part of these balance sheets.
 
                                      F-20
<PAGE>   67
 
                               DISCOUNT LENS CLUB
 
                         NOTES TO FINANCIAL STATEMENTS
 
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  NATURE OF OPERATIONS AND ORGANIZATION OF BUSINESS
 
     Discount Lens Club ("DLC"), was formed in the State of California on March
1, 1991. The Company was a direct marketer of replacement contact lenses in the
United States. DLC sold contact lenses primarily by telephone. In February 1995,
DLC ceased operations and contributed certain assets, including mailings lists,
to form 1-800 CONTACTS, Inc.
 
  REVENUE RECOGNITION
 
     Sales were recognized at the time of shipment to the customer.
 
  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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  INCOME TAXES
 
     DLC was formed as a sole proprietorship and includes its income with that
of its sole proprietor. Accordingly, DLC made no provision for income taxes.
 
                                      F-21
<PAGE>   68
 
======================================================
 
  NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THE PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
 
                               ------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                             PAGE
                                             ----
<S>                                          <C>
Prospectus Summary.........................    1
Risk Factors...............................    5
The Company................................   10
S Corporation Matters......................   10
Use of Proceeds............................   10
Dividend Policy............................   11
Capitalization.............................   12
Dilution...................................   13
Selected Historical and Pro Forma Financial
  Data.....................................   14
Management's Discussion and Analysis Of
  Financial Condition and Results of
  Operations...............................   15
Business...................................   20
Management.................................   31
Principal and Selling Stockholders.........   35
Certain Transactions.......................   35
Description of Capital Stock...............   37
Shares Eligible for Future Sale............   39
Underwriting...............................   41
Experts....................................   42
Legal Matters..............................   42
Additional Information.....................   43
Index to Financial Statements..............  F-1
</TABLE>
 
  UNTIL             , 1998 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
 
======================================================
======================================================
 
                                            SHARES
 
                              1-800 CONTACTS, INC.
 
                                  COMMON STOCK
                             ---------------------
 
                                   PROSPECTUS
 
                             ---------------------
 
                               MCDONALD & COMPANY
                                SECURITIES, INC.
 
                         MORGAN KEEGAN & COMPANY, INC.
                               November   , 1998
 
======================================================
<PAGE>   69
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
     The following table sets forth the estimated expenses, to be paid solely by
the Company, of the issuance and distribution of the securities being registered
hereby:
 
<TABLE>
<S>                                                                 <C>
Securities and Exchange Commission registration fee.............         9,200
NASD filing fee.................................................             *
Nasdaq National Market original listing fee.....................             *
Blue Sky fees and expenses (including attorneys' fees and
  expenses).....................................................             *
Printing expenses...............................................             *
Accounting fees and expenses....................................             *
Transfer agent's and Registrar's fees and expenses..............             *
Legal fees and expenses.........................................             *
Miscellaneous expenses..........................................             *
                                                                    ----------
  Total.........................................................             *
                                                                     =========
</TABLE>
 
- ---------------
 
* To be provided by Amendment.
 
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
     The Company is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware ("Section
145") provides that a Delaware corporation may indemnify any persons who are, or
are threatened to be made, parties to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer, director, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
 
     The Company's Certificate of Incorporation and By-laws provide for the
indemnification of Directors and officers of the Company to the fullest extent
permitted by Section 145.
 
     In that regard, the By-laws provide that the Company shall indemnify any
person whom it has the power to indemnify by Section 145 from or against any and
all of the expenses, liabilities or other matters referred to or covered in
Section 145, and such indemnification is not exclusive of other rights to which
such person shall be
 
                                      II-1
<PAGE>   70
 
entitled under any By-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's official capacity for
or in behalf of the Company and/or any subsidiary of the Company and as to
action in another capacity while holding such office and shall continue as to
such person who has ceased to be a director, officer, employee, or agent of the
Company and/or subsidiary of the Company and shall inure to the benefit of the
heirs, executors, and administrators of such person.
 
     The Company expects to enter into indemnification agreements with each of
its executive officers and Directors prior to the completion of the Offering.
 
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
 
     Since its incorporation on February 1, 1995, the Company has issued the
following securities without registration under the Securities Act of 1933, as
amended:
 
     In February 1995, 4,500 shares of Common Stock were issued to Jonathan Coon
for consideration of $5,050, 4,500 shares of Common Stock were issued to John
Nichols for consideration of $22,733 and 1,000 shares of Common Stock were
issued to Steve Gibson for consideration of $25,000. In August 1995, the Company
issued 1,250 shares of Common Stock to Steve Gibson for consideration of $27,500
in cash. In February 1996, the Company repurchased 2,250 shares of its
outstanding Common Stock and subsequently resold 2,250 shares of Common Stock to
Donald and Stephen Yacktman for $300,000 in cash.
 
     The above-described transactions were exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act as transactions
not involving any public offering.
 
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
     (a) Exhibits.
 
<TABLE>
<CAPTION>
      NUMBER                                      DESCRIPTION
    ----------   ------------------------------------------------------------------------------
    <S>          <C>
    *1.1         Form of Underwriting Agreement.
    *3.1(i)      Restated Certificate of Incorporation of the Company.
    *3.1(ii)     By-laws of the Company.
    *4.1         Form of certificate representing shares of Common Stock, $0.01 par value per
                 share.
    *5.1         Opinion of Kirkland & Ellis.
    *10.1        Employment Agreement between the Company and Jonathan Coon.
    *10.2        Employment Agreement between the Company and John Nichols.
    *10.3        1-800 CONTACTS, INC Incentive Stock Option Plan.
    *10.4        Lease between the Company and Draper Land Partnership II, dated September 4,
                 1996, with respect to the Company's current facilities.
    *10.5        Lease between the Company and Draper Land Partnership II, dated November 3,
                 1997, with respect to the Company's new facility.
    *10.6        Lease between the Company and Ron Knight & Co., dated July 14, 1997, with
                 respect to the Company's warehouse.
    *10.7        Revolving Credit Agreement between the Company and Zions First National Bank.
    *10.8        Form of Indemnification Agreement between the Company and its officers and
                 directors.
    *10.9        Form of Agreement for Distribution of Retained Earnings and Tax
                 Indemnification between the Company and the Existing Stockholders.
    *10.10       Lease between the Company and Larry T. Short, dated June 27, 1995, with
                 respect to the 1-800 CONTACTS telephone number.
    *11.1        Statement re Computation of earnings per share.
     23.1        Consent of Arthur Andersen LLP.
</TABLE>
 
                                      II-2
<PAGE>   71
 
<TABLE>
<CAPTION>
      NUMBER                                      DESCRIPTION
    ----------   ------------------------------------------------------------------------------
    <S>          <C>
    *23.2        Consent of Kirkland & Ellis (included in Exhibit 5.1).
     24.1        Power of Attorney (included in signature page).
     27.1        Financial Data Schedule for the year ended December 31, 1996.
     27.2        Financial Data Schedule for the nine months ended September 30, 1997.
</TABLE>
 
- ---------------
 
* To be filed by amendment.
 
(b) Financial Statement Schedules.
 
    All schedules for which provision is made in the applicable accounting
    regulations of the Commission are not required under the related
    instructions, are inapplicable or not material, or the information called
    for thereby is otherwise included in the financial statements and therefore
    have been omitted.
 
ITEM 17. UNDERTAKINGS.
 
     The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as requested by the underwriter to
permit prompt delivery to each purchaser.
 
     The undersigned registrant hereby undertakes:
 
          (1) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this registration statement in reliance upon Rule 430A and contained in
     a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
     (4) 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 the purpose 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.
 
     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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
 
                                      II-3
<PAGE>   72
 
                                   SIGNATURES
 
     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DRAPER, STATE OF UTAH, ON
NOVEMBER 25, 1997.
 
                                          1-800 CONTACTS, INC.
 
                                          BY: /s/     JONATHAN C. COON
                                            ------------------------------------
                                            JONATHAN C. COON
                                            President
 
                               POWER OF ATTORNEY
 
     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jonathan Coon and John Nichols, and each of them,
his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement (and any registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the
Offering which this Registration Statement relates), and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
 
                                    * * * *
 
     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
 
<TABLE>
<CAPTION>
               SIGNATURE                               TITLE                      DATE
- ----------------------------------------    ----------------------------  ---------------------
<S>                                         <C>                           <C>
          /s/ JONATHAN C. COON              President and Director
- ----------------------------------------    (principal executive
            JONATHAN C. COON                officer)                      November 25, 1997
 
          /s/ JOHN F. NICHOLS               Director
- ----------------------------------------
            JOHN F. NICHOLS                                               November 25, 1997
 
          /s/ SCOTT S. TANNER               Chief Financial Officer and
- ----------------------------------------    Director (principal
            SCOTT S. TANNER                 financial officer)            November 25, 1997
 
          /s/ ROBERT G. HUNTER              Controller (principal
- ----------------------------------------    accounting officer)
            ROBERT G. HUNTER                                              November 25, 1997
 
         /s/ DONALD A. YACKTMAN             Director
- ----------------------------------------
           DONALD A. YACKTMAN                                             November 25, 1997
 
        /s/ STEPHEN A. YACKTMAN             Director
- ----------------------------------------
          STEPHEN A. YACKTMAN                                             November 25, 1997
</TABLE>
 
                                      II-4

<PAGE>   1


                                                                    Exhibit 23.1


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the use of our reports 
(and to all references to our Firm) included in or made a part of this 
registration statement.



ARTHUR ANDERSEN LLP


Salt Lake City
November 25, 1997


<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-START>                             JAN-01-1996
<PERIOD-END>                               DEC-31-1996
<CASH>                                               0
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                    475,410
<CURRENT-ASSETS>                               484,433
<PP&E>                                         217,212
<DEPRECIATION>                                  25,617
<TOTAL-ASSETS>                               1,156,646
<CURRENT-LIABILITIES>                          688,513
<BONDS>                                        321,774
                                0
                                          0
<COMMON>                                        46,595
<OTHER-SE>                                      99,764
<TOTAL-LIABILITY-AND-EQUITY>                 1,156,646
<SALES>                                      3,628,296
<TOTAL-REVENUES>                             3,628,296
<CGS>                                        2,215,306
<TOTAL-COSTS>                                3,256,618
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              26,175
<INCOME-PRETAX>                                348,363
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                            348,363
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   348,363
<EPS-PRIMARY>                                        0
<EPS-DILUTED>                                        0
        

</TABLE>

<TABLE> <S> <C>

<ARTICLE> 5
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-START>                             JAN-01-1997
<PERIOD-END>                               SEP-30-1997
<CASH>                                               0
<SECURITIES>                                         0
<RECEIVABLES>                                        0
<ALLOWANCES>                                         0
<INVENTORY>                                  3,212,680
<CURRENT-ASSETS>                             3,339,652
<PP&E>                                         561,644
<DEPRECIATION>                                  99,763
<TOTAL-ASSETS>                               5,760,772
<CURRENT-LIABILITIES>                        4,764,911
<BONDS>                                        320,099
                                0
                                          0
<COMMON>                                        46,595
<OTHER-SE>                                     629,167
<TOTAL-LIABILITY-AND-EQUITY>                 5,760,772
<SALES>                                     14,144,835
<TOTAL-REVENUES>                            14,144,835
<CGS>                                        9,452,813
<TOTAL-COSTS>                               13,311,669
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                              78,486
<INCOME-PRETAX>                                792,142
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                            792,142
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   792,142
<EPS-PRIMARY>                                        0
<EPS-DILUTED>                                        0
        

</TABLE>


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