LASER VISION CENTERS INC, S-3/A, 1996-07-15

LASER VISION CENTERS INC
S-3/A, 1996-07-15
ADVERTISING AGENCIES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1996

REGISTRATION NO. 333-05207
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 2

FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
LASER VISION CENTERS, INC.
(Exact name of registrant in its charter)

DELAWARE 43-1530063
(State of jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)

540 MARYVILLE CENTRE DRIVE, SUITE 200
ST. LOUIS, MISSOURI 63141
(314) 434-6900
(Address and telephone number of principal executive offices and intended
principal place of business.)

ROBERT W. MAY, ESQ.
540 MARYVILLE CENTRE DRIVE, SUITE 200
ST. LOUIS, MISSOURI 63141
(314) 434-6900
(Name, address and telephone number of agent for service)

With copies to:

JAMES R. DANKENBRING, ESQ. CRAIG E. DAUCHY, ESQ.
DANKENBRING, GREIMAN, OSTERHOLT & COOLEY GODWARD CASTRO HUDDLESON & TATUM
HOFFMANN, P.C. 3000 SAND HILL ROAD, BUILDING 3
7733 FORSYTH BOULEVARD, SUITE 810 SUITE 230
ST. LOUIS, MISSOURI 63105 MENLO PARK, CALIFORNIA 94025
(314) 863-7733 (415) 843-5000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as possible following the effectiveness of this Registration
Statement

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

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 plan, 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(A), MAY DETERMINE.

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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, DATED JULY 15, 1996

2,500,000 SHARES

LASER VISION LOGO

COMMON STOCK

The 2,500,000 shares of common stock, par value $0.01 per share (the
"Common Stock"), offered hereby (this "Offering") are being offered by Laser
Vision Centers, Inc. (the "Company"). The Common Stock has been approved for
quotation on the Nasdaq National Market under the symbol "LVCI" upon
consummation of this Offering. The Common Stock is currently traded on the
over-the-counter market through Nasdaq under the symbol "LVCI" and on the Boston
Stock Exchange under the symbol "LVS." On June 17, 1996, the last reported sale
price of the Common Stock by Nasdaq was $13 per share. See "Price Range of
Common Stock and Dividend Policy."

FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE "RISK FACTORS" ON PAGES 6 TO 12.
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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
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS* COMPANY+
<S> <C> <C> <C>
Per Share................................. $ $ $
Total++................................... $ $ $
</TABLE>

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* The Company and certain stockholders of the Company (the "Selling
Stockholders") have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

+ Before deducting expenses of this Offering payable by the Company estimated to
be $320,000.

++ The Company and the Selling Stockholders have granted the Underwriters a
30-day option to purchase up to 375,000 additional shares of Common Stock on
the same terms per share solely to cover over-allotments, if any. If such
option is exercised in full, the total price to public will be $ ,
the total underwriting discounts and commission will be $ , the
total proceeds to the Company will be $ and the total proceeds to
the Selling Stockholders will be $ . See "Underwriting."
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The Common Stock is being offered by the Underwriters as set forth under
"Underwriting" herein. It is expected that the delivery of certificates therefor
will be made at the offices of Dillon, Read & Co. Inc., New York, New York on or
about , 1996. The Underwriters include:

DILLON, READ & CO. INC. A.G. EDWARDS & SONS, INC.

The date of this Prospectus is , 1996
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[MAPS SHOWING CURRENT AND PROPOSED LASER VISION CENTERS]

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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

LASERVISION(R), LASERVISION CENTERS AND DESIGN(R), LASERVISION CENTERS(R)
LASERVISION CENTER(R) and MobilExcimer(R) are registered service marks of the
Company. This prospectus also includes trademarks of companies other than the
Company.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors," the consolidated financial statements and
notes thereto appearing elsewhere in this Prospectus and the documents
incorporated by reference herein. Unless otherwise indicated, all information in
this Prospectus assumes no exercise of the Underwriters' over-allotment option.
See "Underwriting".

THE COMPANY

Laser Vision Centers, Inc. is the world's largest provider of access to
excimer lasers and related services for the treatment of refractive vision
disorders and has 30 lasers currently in use in the United States, Canada and
Europe. The Company is also the world's only operator of mobile excimer laser
systems. The excimer laser can be used to treat refractive vision disorders such
as nearsightedness and astigmatism to eliminate or reduce the need for
corrective lenses. LaserVision Centers(R) operate on a shared-access model,
giving individual or group ophthalmic practices use of excimer laser technology
without investment risk or maintenance requirements, thereby allowing optimal
use of the excimer laser equipment. In addition, the Company provides a broad
range of professional services, including physician and staff training,
technical support services and maintenance and, through its MarketVision and
MedSource divisions, advertising and marketing programs and services.

The Company has operated excimer laser centers in Canada and Europe since
1991 and 1993, respectively. Following the recent approval of the excimer laser
technology by the United States Food and Drug Administration ("FDA") to treat
certain refractive vision disorders, the Company began developing centers in the
United States. The Company currently operates 14 centers in the United States,
with plans to open additional centers. The Company currently provides excimer
lasers and related services to fixed-site centers in the United States, Canada,
the United Kingdom, Finland, Greece, Sweden and Ireland and operates the
MobilExcimer(R) in Canada and the United Kingdom. In the United States,
fixed-site laser centers are operated in conjunction with Columbia Healthcare
Corporation ("Columbia Healthcare"), formerly Columbia/HCA, or by the Company
independently or through joint ventures.

Photorefractive keratectomy ("PRK") involves the use of an excimer laser to
reshape the cornea, thereby adjusting its refractive power, which in turn
eliminates or reduces the need for corrective lenses. The excimer laser can also
be used to treat a number of pathological superficial corneal disorders in a
procedure called phototherapeutic keratectomy ("PTK"). Two manufacturers, VISX,
Incorporated ("VISX") and Summit Technology, Inc. ("Summit"), recently received
FDA approval for use of their excimer lasers to perform PRK procedures for low
to moderate myopia and PTK procedures. In addition to such procedures, excimer
lasers can also be used to perform a procedure known as laser in situ
keratomileusis ("LASIK"), which may be more predictable in treating high myopia,
but which has not been specifically approved in the United States by the FDA.

An industry source estimates that 145 million people in the United States
currently use eyeglasses and/or contact lenses to correct refractive vision
disorders. Of these individuals, an estimated 66 million suffer from
nearsightedness, with approximately 60% of nearsighted persons estimated to have
vision disorders within the criteria currently approved by the FDA for treatment
with excimer lasers. The Company estimates that approximately one-fourth of all
sufferers of nearsightedness also experience astigmatism and an additional 23
million people in the United States suffer from astigmatism but do not
experience nearsightedness. According to industry sources, consumers in the
United States spent approximately $13 billion on eyeglasses, contact lenses and
other corrective lenses in 1994. The Company believes that excimer laser surgery
will make it possible for many of these people to eliminate or reduce their
reliance on corrective lenses. In particular, the Company believes that many of
the approximately 26 million contact lens users in the United States will be
particularly receptive to laser surgery because they have already chosen to use
an alternative to eyeglasses for vision correction.

In anticipation of the FDA's approval of the excimer laser to perform PRK
procedures, the Company developed a relationship with Columbia Healthcare
whereby the Company would become the

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primary provider of excimer lasers to Columbia Healthcare ambulatory surgery
centers. Since 1992, the Company has had an option to provide excimer laser
surgery equipment, training and services to Columbia Healthcare once the excimer
laser technology was approved by the FDA. In December 1994, this mutually
exclusive agreement was revised to expand the number of potential sites to
include all of the approximately 130 Columbia Healthcare ambulatory surgery
centers in 27 states nationwide. To date, the Company is operating 12 centers
pursuant to this agreement.

In addition to operating fixed-site centers, the Company has developed a
proprietary MobilExcimer system, which is a self-contained mobile refractive
laser surgery center duplicating all of the equipment and services typically
found in a fixed-site location. The Company has entered into a mutually
exclusive agreement with Calumet Coach Company, the world's leading manufacturer
of mobile medical systems, to build the MobilExcimer. This proprietary system
gives the Company flexibility that the Company believes is not currently
available to its competitors and is intended to help the Company achieve broader
penetration of both domestic and international markets. The Company plans to use
the MobilExcimer to provide laser access and related services to communities
where the Company's potential patient base is insufficient to sustain a
fixed-site center, thereby enhancing the Company's ability to expand quickly
into multiple markets. In June 1996 the Company submitted an application for
premarket approval ("PMA") with the FDA for use of the excimer laser for
treatment of low to moderate myopia, which is the first step in seeking approval
for the MobilExcimer.

The Company's growth strategy includes: (i) increasing market penetration
through a combination of fixed-site laser centers operated in conjunction with
Columbia Healthcare, by the Company independently or as joint ventures and
expanding the use of its MobilExcimer system; (ii) targeting efforts toward
specific markets and key demographic groups within those markets; (iii)
promoting development of physician alliances with the goal of maximizing excimer
laser usage; (iv) expanding its presence worldwide through complementary
acquisitions of other laser providers as well as acquisitions of related and
ancillary businesses; and (v) solidifying and expanding its existing strategic
alliances with health care providers, equipment manufacturers, major employers
and managed care providers and other third party payors.

MarketVision and MedSource comprise the Company's ophthalmic marketing
divisions. Both MarketVision and MedSource, which the Company acquired effective
February 1996, provide marketing services designed to increase opthalmic
surgical volume. MarketVision operates as an advertising and marketing agency,
while MedSource provides services more directly related to planning, training
and consulting.

Risk factors which should be considered carefully in evaluating an
investment in the Common Stock include the absence of profitable operations, the
uncertainty of market acceptance of excimer laser surgery, competition, the
Company's dependence on limited sources of excimer lasers, government
regulation, the uncertainty of FDA approval of the MobilExcimer, the lack of
long-term follow-up data and undetermined medical risks with respect to the
effect of excimer laser surgery, product liability and professional liability,
the Company's ability to manage its growth and its dependence on current
management, the possible need for additional financing and the volatility of the
price of the Common Stock.

Except for the historical information contained herein, the discussion in
this Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the sections entitled "Risk
Factors" and "Business -- Government Regulation," as well as those discussed
elsewhere in this Prospectus and any documents incorporated herein by reference.

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THE OFFERING

Common Stock Offered by the Company... 2,500,000 shares

Common Stock Outstanding after this
Offering.............................. 11,265,984 shares(1)(2)

Use of Proceeds....................... For purchases of equipment, opening
of new centers, expansion of
marketing activities, working
capital, business acquisitions and
other general corporate purposes. See
"Use of Proceeds."

Nasdaq Over-the-Counter Market
Symbol................................ LVCI

Proposed Nasdaq National Market
Symbol................................ LVCI

SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------------------------------
1992 1993 1994 1995 1996
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................... $ 936 $ 1,180 $ 2,106 $ 3,311 $ 3,918
Cost of revenues........................... 600 868 1,768 3,375 4,240
Operating expenses......................... 930 1,495 2,238 3,144 8,894(3)
Loss from operations....................... (594) (1,183) (1,900) (3,208) (9,216)
Net loss................................... (559) (1,235) (2,210) (3,297) (8,803)
Net loss per share......................... $(0.25) $ (0.48) $ (0.66) $ (0.82) $ (1.75)(4)
Weighted average number of shares of Common
Stock outstanding........................ 2,270 2,567 3,356 4,001 5,278
</TABLE>

<TABLE>
<CAPTION>
APRIL 30, 1996
-----------------------
AS
ACTUAL ADJUSTED(1)
-------- -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................. $ 12,672 $ 42,821
Working capital....................................................... 10,002 40,151
Total assets.......................................................... 28,913 59,062
Non-current liabilities............................................... 1,763 1,763
Convertible preferred stock with mandatory redemption provision in
2005................................................................ 14,539 --
Accumulated deficit................................................... (16,442) (16,442)
Stockholders' equity.................................................. 7,453 52,141
</TABLE>

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(1) As adjusted to reflect (a) the sale by the Company of 2,500,000 shares of
Common Stock offered hereby and the application of the estimated net
proceeds therefrom and (b) the conversion of the 141,000 issued and
outstanding shares of the Company's Convertible Preferred Stock into
2,349,991 shares of Common Stock upon consummation of this Offering.

(2) Does not include 39,150 shares of Common Stock reserved for issuance upon
exercise of the Company's Class C and D Warrants, 24,500 shares reserved for
issuance upon exercise of the Company's Class E Warrants, 434,485 shares
reserved for issuance upon exercise of outstanding stock options under the
Company's Incentive and Non-Qualified Stock Option Plans, 46,888 shares
reserved for issuance upon exercise of warrants issued to the placement
agent in the Company's 1993 offering of Common Stock, 901,250 shares
reserved for issuance upon exercise of outstanding Non-Qualified Warrants
and 435,000 shares reserved for issuance upon exercise of other unregistered
warrants outstanding as of April 30, 1996. See Note 12 of Notes to
Consolidated Financial Statements.

(3) Includes $3,063,000 non-cash charge for fixed asset impairment. See Note 4
of Notes to Consolidated Financial Statements.

(4) Includes $439,000 of dividends accrued on the Company's Convertible
Preferred Stock. See Note 5 of Notes to Consolidated Financial Statements.

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RISK FACTORS

In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Common Stock.

ABSENCE OF PROFITABLE OPERATIONS

The Company commenced operations in 1989 and has recorded net losses from
its LaserVision Centers division in every year since inception. The accumulated
deficit as of April 30, 1996 was approximately $16.4 million. The Company
anticipates continued losses from operations due to expenditures required to
support its U.S. expansion. There can be no assurance that the Company will be
able to achieve profitability, or that, if achieved, profitability will be
sustained. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

UNCERTAINTY OF MARKET ACCEPTANCE

The Company believes that its profitability and growth will depend upon
broad acceptance of PRK in the United States and key international markets
targeted by the Company. There can be no assurance that PRK will be accepted by
either the ophthalmic community or the general population as an alternative to
existing methods of treating refractive vision disorders. To date, PRK has not
achieved sufficient market acceptance in Europe or Canada for the Company to
sustain profitable operations, and there can be no assurance that PRK will
obtain sufficient market acceptance in the U.S. to achieve profitable
operations. Currently, patients are charged approximately $1,500 to $2,200 per
eye for the procedure. The acceptance of PRK may be affected adversely by its
cost, concerns relating to its safety and efficacy, general resistance to
surgery, the effectiveness of alternative methods of correcting refractive
vision disorders, the lack of long-term follow-up data, the possibility of
unknown side effects and the lack of third-party reimbursement for the
procedure. Many consumers may choose not to have PRK procedures performed due to
the availability of nonsurgical methods for vision correction. Any future
reported adverse events or other unfavorable publicity involving patient
outcomes from use of PRK systems could also adversely affect acceptance of the
procedure. Market acceptance could also be affected by the ability of the
Company and other participants in the PRK market to train a broad population of
ophthalmologists in the procedure. Promotional efforts by suppliers of products
or procedures which are alternatives to PRK procedures, including eyeglasses and
contact lenses, may also adversely affect the market acceptance of PRK. The
failure of PRK to achieve broad market acceptance would have a material adverse
effect on the Company's business, financial condition and results of operations.

COMPETITION

The market for providing access to excimer lasers is subject to
increasingly intense competition. The Company competes with several other
companies, including at least one manufacturer of laser equipment, in providing
access to excimer lasers in the United States and internationally. Summit, one
of two suppliers of laser equipment to the Company, has indicated it will open
approximately 20 laser centers in the United States during 1996. Other companies
are currently in the process of gaining FDA approval for their lasers and these
companies may elect to enter the laser center business. Other non-manufacturing
companies which have indicated they intend to operate or already operate laser
centers in the United States are: Beacon Laser Centers, Inc., Global Vision,
Inc., LCA Vision, Inc., Sight Resources, Inc., Sterling Vision, Inc., The Laser
Centre (TLC) and 20/20 Laser Centers, Inc. The Company will also compete with
laser centers operated by local operators in certain markets. There can be no
assurance that any reduction in per procedure fees that may result from
increased competition will be compensated for by an increase in procedure
volume.

The procedures offered by the Company's LaserVision Centers also compete
with other present forms of treatment for refractive disorders, including
eyeglasses, contact lenses, refractive surgery, corneal transplants and other
technologies currently under development. The Company expects that

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companies which have developed or are developing new technologies or products,
as well as other companies (including established and newly formed companies)
may attempt to develop new products directly competitive with the excimer lasers
that are to be utilized by the Company or could introduce new or enhanced
products with features which render the equipment to be used by the Company
obsolete or less marketable. The ability of the Company to compete successfully
will depend in large part on its ability to adapt to technological changes and
advances in the treatment of refractive vision disorders. There can be no
assurance that, as the market for excimer laser surgery and other treatments of
eye disorders develops, the Company's equipment will not become obsolete, and if
this occurs, that the Company will be able to secure new equipment to allow it
to compete effectively.

The advertising and marketing businesses in which the Company's
MarketVision and MedSource divisions are engaged are highly competitive. Clients
have the freedom to move from one advertising agency to another with comparative
ease since the relationships normally can be terminated on short notice. The
MarketVision and MedSource divisions compete with several national and regional
ophthalmic specialty marketing companies, as well as national and local
advertising agencies which may handle diverse client activities. MarketVision
and MedSource may be hampered by their affiliation with LaserVision Centers in
that some customers may consider them competitors which could adversely affect
the ability of these divisions to continue to attract outside business.

DEPENDENCE ON LIMITED SOURCES OF LASERS

The Company is dependent on VISX and Summit to provide the excimer lasers
it needs for operations. VISX and Summit are currently the only manufacturers of
excimer lasers that have FDA approval to sell such lasers for use in performing
PRK and PTK procedures. Neither company has experience manufacturing its laser
in large-scale, commercial quantities. There can be no assurance that VISX and
Summit will supply lasers in the amounts or at the times needed by the Company
now or in the future or that other disruptions in supply will not occur. See
"Business -- Suppliers."

GOVERNMENT REGULATION

The manufacturing, labeling, distribution and marketing of medical devices
such as the excimer lasers to which the Company provides access are subject to
extensive and rigorous government regulation in the United States by the FDA.
The excimer lasers to which the Company provides access have been approved by
the FDA for certain uses.

Once FDA approval is obtained, manufacturers are subject to continuing FDA
obligations. Medical devices are required to be manufactured in accordance with
regulations setting forth current Good Manufacturing Practices, which require
that devices be manufactured and records be maintained in a prescribed manner
with respect to manufacturing, testing and control activities. It is the FDA's
view that with respect to excimer lasers, users, as well as manufacturers are
required to comply with FDA requirements with respect to labeling and promotion.
Failure to comply with applicable FDA requirements could subject laser
manufacturers and the Company to enforcement action, including product seizures,
recalls, withdrawal of approvals, and civil and criminal penalties, any one or
more of which could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, clearances or
approvals could be withdrawn in appropriate circumstances. Failure of the
Company or its principal suppliers to comply with regulatory requirements, or
any adverse regulatory action could have a material adverse effect on the
Company's business, financial condition and results of operations.

There are currently two manufacturers, VISX and Summit, that have received
FDA approval to market excimer lasers for PRK for low to moderate myopia
(nearsightedness) and for PTK. Lack of timely FDA approval for use of PRK for
other indications, such as astigmatism and hyperopia, could have a material
adverse effect on the Company's planned expansion in the United States market.
The process of obtaining FDA approval of medical devices is time consuming and
expensive, and there can be no assurance that any approval sought will be
granted or that FDA review will not involve delays.

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Even after regulatory clearance is obtained, approval of medical devices is
subject to review. Discovery of problems, violations of the Radiation Control
for Health and Safety Act or future legislative or administrative action in the
United States or elsewhere may adversely affect the manufacturers' ability to
retain regulatory approval of any such equipment. Furthermore, the failure of
VISX, Summit or any other manufacturers that supply excimer lasers to the
Company to comply with applicable federal, state, or foreign regulatory
requirements, or any adverse regulatory action against such manufacturers, could
limit the supply of lasers or limit the ability of the Company to use the
lasers. The inability of the Company to obtain lasers for sale or use in the
United States or elsewhere due to lack of regulatory approval, or otherwise,
could prevent the Company from establishing or maintaining LaserVision Centers
and MobilExcimers, which would have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business --
Government Regulation."

Medical device laws and regulations are also in effect in many of the
countries in which the Company currently conducts or may in the future conduct
business outside the U.S. These range from comprehensive device approval
requirements to requests for product data or certifications. The number and
scope of these requirements are increasing. International regulatory
requirements vary by country and there can be no assurance that the
manufacturers of the excimer lasers to which the Company provides access will
receive additional international regulatory approvals. Failure to receive such
approvals in, or meet the requirements of, any country could prevent the Company
from operating in that country, which could have a material adverse effect on
the Company's business, financial condition and results of operations. Medical
device laws and regulations are also in effect in some states in which the
Company currently conducts or may in the future conduct business. State and
foreign medical device laws and regulations could have a material adverse effect
on the Company's business, financial condition and results of operation.

UNCERTAINTY OF FDA APPROVAL OF MOBILEXCIMER

Certain FDA officials have advised the Company that they believe that
excimer lasers are not approved for use in the MobilExcimer, and that such
approval would be required before the Company could operate the MobilExcimer in
the United States. The MobilExcimer system has not been approved for use in the
United States by the FDA. In June 1996, the Company submitted a PMA application
with the FDA for the use of the excimer laser for treatment of low to moderate
myopia, which is the first step in seeking approval for the MobilExcimer.
Pursuant to an agreement with VISX entered into in May 1996, this PMA
application incorporates the information contained in the PMA applications filed
with and approved by the FDA for use of VISX excimer lasers for PRK and PTK. If
its PMA application is approved, the Company intends to submit a supplement to
this PMA application to obtain FDA approval for use of the excimer laser on the
MobilExcimer. The process of obtaining a PMA and/or approval of a PMA supplement
can be lengthy, expensive and uncertain. It is uncertain when, if ever, the FDA
will approve excimer lasers for mobile use.

If the FDA approves the excimer laser for use on the MobilExcimer,
postmarket restrictions, possible loss of approval or other FDA enforcement
action, need for non-U.S. approvals and/or state and local restrictions may
apply. See "Risk Factors -- Government Regulation."

The Company believes that FDA approval for the use of an excimer laser on a
mobile unit may not be necessary. Although the Company has no present plans to
do so, the Company may decide to operate the MobilExcimer without FDA approval.
If the Company were to operate MobilExcimer units in the United States without
first receiving FDA approval, the FDA is likely to take enforcement action
against the Company, which action could have a material adverse effect on the
Company's business, financial condition and results of operations. See "Business
- -- Government Regulation."

LACK OF LONG-TERM FOLLOW-UP DATA; UNDETERMINED MEDICAL RISKS

Concerns with respect to the safety and efficacy of PRK include
predictability and stability of results. Potential complications and side
effects include: post-operative discomfort; corneal haze during

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healing (an increase in the light scattering properties of the cornea);
glare/halos (undesirable visual sensations produced by bright lights); decreases
in contrast sensitivity; temporary increases in intraocular pressure in reaction
to procedure medication; modest fluctuations in refractive capabilities during
healing; modest decreases in best corrected vision (i.e., with corrective
lenses); unintended over- or under-corrections; regression of effect; disorders
of corneal healing; corneal scars; corneal ulcers and induced astigmatism. The
procedure involves the removal of "Bowman's layer," an intermediate layer
between the epithelium (outer corneal layer) and the stroma (middle corneal
layer). Although clinical studies conducted to date have demonstrated no
significant adverse reactions to excimer laser removal of Bowman's layer, it is
unclear what effect this will ultimately have on the patient. There can be no
assurance that long-term follow-up data will not reveal additional complications
that may have a material adverse effect on acceptance of PRK which in turn would
have a material adverse effect on the Company's business, financial conditions
and results of operations. Concern over the safety of PRK or other procedures
could in turn adversely affect market acceptance of PRK or result in adverse
regulatory action, including product recalls, any of which could have a material
adverse effect on the Company's business, financial condition and results of
operations.

PRODUCT LIABILITY AND PROFESSIONAL LIABILITY

Inherent in the use of human health care devices is the potentially
significant risk of physical injury to patients which could result in product
liability or other claims based upon injuries or alleged injuries associated
with a defect in the product's performance, which may not become evident for a
number of years. Therefore, the operation of any LaserVision Center and the use
of refractive laser equipment may result in substantial claims against the
Company by patients who allege they were injured as a result of surgical
procedures using the refractive laser equipment. The Company has "umbrella"
product and professional liability insurance in the amounts of $1.0 million
(aggregate and per occurrence), but primarily relies and intends to continue to
rely on physicians' professional liability insurance policies and manufacturers'
insurance policies for product liability coverage. The Company requires its
center operators to maintain certain levels of professional liability insurance,
and the agreements between the Company and its center operators contain certain
cross indemnification provisions. There can be no assurance, however, that
physician users will carry sufficient insurance and a partially or completely
uninsured successful claim against the Company could have a material adverse
effect on the Company's business, financial condition and results of operations.

MANAGEMENT OF GROWTH

The Company's net revenues have increased in each of the last four fiscal
years. While the Company has increased its expense levels to support its recent
and expected growth, including the hiring of additional personnel, there can be
no assurance that the Company's revenue growth can be sustained. To accommodate
its recent growth, the Company will need to implement a variety of new or
expanded business and financial systems, procedures and controls, including the
improvement of its accounting, marketing and other internal management systems.
There can be no assurance that the implementation of such systems, procedures
and controls can be completed successfully, or without disruption of the
Company's operations. Continued expansion of the Company could significantly
strain the Company's management, financial and other resources. In addition, the
Company has hired and will be required to hire in the future substantial numbers
of new employees, particularly personnel to support its MobilExcimer operations.
There can be no assurance that the Company's systems, procedures, controls and
staffing will be adequate to support the Company's operations. Failure to manage
the Company's growth effectively could have a material adverse effect on the
Company's business, financial condition and results of operations.

DEPENDENCE UPON MANAGEMENT

The future success of the Company is dependent in part on its ability to
recruit and retain certain key personnel, including John J. Klobnak, Chief
Executive Officer and Chairman of the Board. The loss

9
<PAGE> 11

of the services of certain members of management, or other key personnel, could
have a material adverse effect on the Company. The Company is the beneficiary of
key-man life insurance policies ranging from $500,000 to $1.0 million on certain
members of management, but there can be no assurance that the benefits under
these policies will be sufficient to compensate the Company for the loss of the
services of any of such persons.

POSSIBLE NEED FOR ADDITIONAL FINANCING

Although the Company anticipates that the net proceeds of this Offering and
its cash flow from its operations will be sufficient to fund the Company's
operations, including its proposed expansion, during the next 24 months, there
can be no assurance that the Company will not require additional financing prior
to the end of such period. In any event, the Company expects to require
additional financing after such period. The Company's future liquidity and
capital requirements will depend on numerous factors, many of which are outside
the control of the Company. Future financings may result in the issuance of
senior securities or in dilution to the holders of the Common Stock. Any such
financing, if required, may not be available on satisfactory terms or at all.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

VOLATILITY OF STOCK PRICE

The market price of the Common Stock has historically been subject to
substantial price volatility. Such volatility may recur in the future due to
overall market conditions or business specific factors such as the Company's
ability to effectively penetrate the market, new technological innovations and
products, changes in government regulations, developments with respect to patent
or proprietary rights, public concerns with regard to safety and efficacy of
various medical procedures, the issuance of new or changed stock market analyst
reports and recommendations, the Company's ability to meet analysts' projections
and fluctuations in the Company's financial results. In addition, the Common
Stock could experience extreme fluctuations in market price which are wholly
unrelated to the operating performance of the Company.

QUARTERLY FLUCTUATIONS IN OPERATING RESULTS

Results of operations have varied and may continue to fluctuate
significantly from quarter to quarter and will depend upon numerous factors,
including: (i) the opening and closing of centers; (ii) the purchase of
additional lasers and other equipment; (iii) competition and (iv) seasonal
factors. Historically, the Company's third quarter results have reflected fewer
procedures due to holiday schedules and less available disposable income to pay
for elective surgery such as PRK. Due to such past and future quarterly
fluctuations in operating results, quarter-to-quarter comparisons of the
Company's operating results are not necessarily meaningful and should not be
relied upon as indications of likely future performance or annual operating
results.

SHARES ELIGIBLE FOR FUTURE SALE

As of April 30, 1996, options issued pursuant to the Company's Incentive
and Non-Qualified Stock Option Plans to purchase up to 434,485 shares of Common
Stock exercisable over the next several years were outstanding at prices ranging
from $3.00 to $16.625. As of April 30, 1996, non-qualified warrants issued to
employees and consultants to purchase up to 901,250 shares of Common Stock
exercisable over the next several years at prices ranging from $5.00 to $12.625
were outstanding. As of April 30, 1996, Class C, D and E warrants and certain
warrants issued to underwriters in connection with the Company's 1993 public
offering to purchase an aggregate of 110,538 shares of Common Stock exercisable
over the next several years at prices ranging from $5.00 to $7.25 were
outstanding. The shares of Common Stock issuable upon exercise of the foregoing
options and warrants have been registered and will be freely tradeable upon
exercise.

10
<PAGE> 12

As of April 30, 1996, additional warrants to purchase 435,000 shares of
Common Stock issued to employees, directors and consultants of the Company and
exercisable over the next several years at prices ranging from $5.25 to $9.00
were outstanding. The shares of Common Stock issuable upon exercise of these
warrants are not registered and may be sold only if registered under the
Securities Act or sold in accordance with an applicable exemption from
registration, such as Rule 144 or Rule 701. Upon consummation of this Offering,
2,349,991 shares of Common Stock will be issued upon conversion of all
outstanding shares of Convertible Preferred Stock. The shares of Common Stock
issuable upon conversion of the Convertible Preferred Stock have not been
registered; however, holders of Convertible Preferred Stock have the right to
require such shares to be registered within 180 days of the consummation of this
Offering.

As of April 30, 1996, 1,881,273 shares of Common Stock were reserved for
issuance upon exercise of such warrants and options. Upon consummation of this
Offering, there will be 11,265,984 shares of Common Stock outstanding, assuming
no exercise of warrants or options after April 30, 1996. Of these outstanding
shares, 8,420,749 will be freely tradeable without restriction under the
Securities Act unless held by affiliates.

EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS; PREFERRED STOCK

The Company's Amended Certificate of Incorporation authorizes the issuance
of "blank check" preferred stock with such designations, rights and preferences
as may be determined from time to time by the Board of Directors. Accordingly,
the Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of
the Common Stock, thus making it difficult for a third party to obtain voting
control of the Company. In the event of issuance, the preferred stock could be
utilized, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company.

The Company currently has authorized 180,000 shares of its Convertible
Preferred Stock, of which 141,000 shares were issued in October 1995 for an
aggregate consideration of $14.1 million. Upon consummation of this Offering,
all of these outstanding shares of Convertible Preferred Stock will be converted
into 2,349,991 shares of Common Stock. The Company currently does not intend to
issue any additional shares of its Convertible Preferred Stock.

The Company's Amended Certificate of Incorporation includes certain
anti-takeover provisions designed to make the Company a less attractive target
for an acquisition of control by an outsider that does not have the support of
the Company's Board of Directors. These provisions include requirements that
certain business combinations involving persons owning beneficially at least 10%
of the Company's shares be approved by both an 80% vote of all outstanding
shares and also a majority vote of all outstanding shares not owned beneficially
by persons involved in such business combinations. These provisions may
discourage a third party from attempting to acquire control of the Company and
may lower the price that an investor may be willing to pay for shares of the
Common Stock.

ABSENCE OF DIVIDENDS

The Company has never declared or paid any cash dividends and anticipates
that for the foreseeable future it will follow a policy of not declaring
dividends and instead retaining earnings, if any, for use in its business.

INTELLECTUAL PROPERTY/PROPRIETARY TECHNOLOGY

11
<PAGE> 13

competitive advantage in the marketplace and could be important to the success
of the Company. There can be no assurance that one or all of these registrations
will not be challenged, invalidated or circumvented in the future. The Company
is currently involved in two legal proceedings which could result in an adverse
impact on its rights to certain of such registrations. Litigation regarding
intellectual property is common and there can be no assurance that the Company's
service mark registrations and patent will significantly protect the Company's
intellectual property. The defense and prosecution of intellectual property
proceedings is costly and involves substantial commitments of management time.
Failure to successfully defend the Company's rights with respect to its
intellectual property could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business -- Legal
Proceedings."

FOREIGN EXCHANGE RATES AND CURRENCY CONTROLS

The Company expects that a declining percentage of its revenues will be
earned outside of the U.S. and will be in currencies other than the U.S. dollar
during at least the next few years. Fluctuations in the exchange rate between
the U.S. dollar and foreign currencies, especially the U.K. pound, Canadian
dollar and Swedish krona, could adversely affect the operations of the Company
in the short term. In addition, the U.S. or foreign governments could impose
currency controls which would limit, or prohibit, the Company's access to funds
remitted outside the U.S.

THE COMPANY

The Company is incorporated in Delaware. The Company's principal executive
offices are located at 540 Maryville Centre Drive, Suite 200, St. Louis,
Missouri 63141, and its telephone number is (314) 434-6900. The Company
maintains an Internet home page at www.laservision.com. All references to the
Company refer to the Company and its subsidiaries unless the context otherwise
indicates.

USE OF PROCEEDS

The net proceeds to the Company from the sale of 2,500,000 shares of Common
Stock offered hereby, at an assumed public offering price of $13 per share and
after deducting estimated underwriting discounts and commissions and offering
expenses, are estimated to be $30.1 million (or $34.7 million if the
Underwriters' over-allotment option is exercised in full).

The Company expects to use the net proceeds of this Offering for purchases
of equipment, opening of new centers, expansion of marketing activities, working
capital, business acquisitions and other general corporate purposes. Although
the Company may use a portion of the net proceeds to acquire complementary
businesses, products or technologies, the Company has no current agreements or
understandings with respect to any such transactions. Pending such uses, the
Company intends to invest such net proceeds in short-term, investment-grade,
interest-bearing securities.

12
<PAGE> 14

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

Since April 3, 1991, the Common Stock has been traded on the
over-the-counter market through Nasdaq under the symbol "LVCI" and on the Boston
Stock Exchange under the symbol "LVS."

The following table sets forth, for the periods indicated, the high and low
bid prices of the Common Stock as reported on the over-the-counter market
through Nasdaq.

<TABLE>
<CAPTION>
PRICE RANGE OF
COMMON STOCK
-------------------------
HIGH LOW
------ -------
<S> <C> <C>
Fiscal Year Ended April 30, 1994
1st Quarter................................................................ $ 5 3/4 $ 4 3/4
2nd Quarter................................................................ 5 7/8 4
3rd Quarter................................................................ 5 3/4 4
4th Quarter................................................................ 6 7/8 5 5/8
Fiscal Year Ended April 30, 1995
1st Quarter................................................................ $ 6 $ 5 3/8
2nd Quarter................................................................ 8 5 1/4
3rd Quarter................................................................ 8 7 5/8
4th Quarter................................................................ 8 1/2 7
Fiscal Year Ended April 30, 1996
1st Quarter................................................................ $ 8 1/2
$ 7 7/8
2nd Quarter................................................................ 15 7/8 8 1/2
3rd Quarter................................................................ 16 5/8 11 3/8
4th Quarter................................................................ 15 1/4 12 3/8
Fiscal Year Ending April 30, 1997
1st Quarter (through July 11, 1996)........................................ $14 1/8 $ 8 5/8
</TABLE>

On July 11, 1996, the last reported sale price of the Common Stock on the
over-the-counter market through Nasdaq was $8 7/8 per share. As of such date,
there were approximately 400 holders of record of the Common Stock.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "LVCI" upon consummation of this Offering.

The Company has never declared or paid any cash dividends on its Common
Stock. The Company presently intends to retain any future earnings for use in
its business and does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future.

13
<PAGE> 15

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
April 30, 1996 and as adjusted to reflect (i) the sale of the 2,500,000 shares
of Common Stock offered by the Company hereby (at an assumed public offering
price of $13.00 per share) and the receipt of the estimated net proceeds
therefrom by the Company after deducting the estimated underwriting discounts
and commissions and offering expenses and (ii) the conversion of all issued and
outstanding shares of the Company's Convertible Preferred Stock into Common
Stock upon consummation of this Offering. The table set forth below should be
read in conjunction with the consolidated financial statements, related notes
and other financial information included elsewhere in this Prospectus. See "Use
of Proceeds."

<TABLE>
<CAPTION>
APRIL 30, 1996
-----------------------
(IN THOUSANDS,
EXCEPT SHARE DATA)
AS
ACTUAL ADJUSTED(1)
-------- -----------
<S> <C> <C>
Notes payable and current portion of capitalized lease obligations.... $ 2,325 $ 2,325
========= =========
Non-current capitalized lease obligations............................. 1,375 1,375
Convertible Preferred Stock with Mandatory Redemption Provision in
2005, 180,000 shares authorized, 141,000 issued and outstanding at
$100 par value (none outstanding, as adjusted)...................... 14,539 --
--------- ---------
Stockholders' equity:
Common Stock par value $.01 per share:........................... 64 113
50,000,000 shares authorized, 6,415,993 (11,265,984, as
adjusted) issued and outstanding (2)
Paid-in-capital.................................................. 23,831 68,470
Accumulated deficit.............................................. (16,442) (16,442)
--------- ---------
Total stockholders' equity....................................... 7,453 52,141
--------- ---------
Total capitalization........................................ $ 23,367 $ 53,516
========= =========
</TABLE>

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

(1) As adjusted to reflect (a) the sale by the Company of the 2,500,000 shares
of Common Stock offered hereby and the application of the estimated net
proceeds therefrom and (b) the conversion of the 141,000 issued and
outstanding shares of the Company's Convertible Preferred Stock into
2,349,991 shares of Common Stock upon consummation of this Offering.

14
<PAGE> 16

SELECTED CONSOLIDATED FINANCIAL DATA

The statement of operations data set forth below for the years ended April
30, 1994, 1995 and 1996 and the balance sheet data at April 30, 1995 and 1996
are derived from the respective consolidated financial statements of the Company
audited by Price Waterhouse LLP, independent accountants, which are included
elsewhere in this Prospectus. The statement of operations data set forth below
with respect to the years ended April 30, 1992 and 1993 and the balance sheet
data at April 30, 1992, 1993 and 1994 are derived from audited financial
statements of the Company which are not included in this Prospectus. The data
set forth below should be read in conjunction with the consolidated financial
statements and related notes thereto and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
--------------------------------------------------
1992 1993 1994 1995 1996
------ ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................... $ 936 $ 1,180 $ 2,106 $ 3,311 $ 3,918
Cost of revenues.............................. 600 868 1,768 3,375 4,240
------ ------- ------- ------- -------
Gross profit (loss)........................... 336 312 338 (64) (322)
------ ------- ------- ------- -------
Operating expenses:
General and administrative.................. 489 605 695 1,002 2,356
Salaries and related expenses............... 347 514 902 1,285 2,329
Depreciation and amortization............... 69 122 250 283 230
Selling and marketing expenses.............. 25 254 391 574 916
Fixed asset impairment provision............ -- -- -- -- 3,063
------ ------- ------- ------- -------
Total operating expenses...................... 930 1,495 2,238 3,144 8,894
------ ------- ------- ------- -------
Loss from operations.......................... (594) (1,183) (1,900) (3,208) (9,216)
------ ------- ------- ------- -------
Other income (expense):
Interest and other income..................... 84 35 21 37 437
Interest expense.............................. (49) (87) (156) (242) (216)
Minority interest in net loss of
subsidiaries................................ -- -- -- 116 192
Provision for loss on advance................. -- -- (175) -- --
------ ------- ------- ------- -------
Other income (expense) net.................... 35 (52) (310) (89) 413
------ ------- ------- ------- -------
Net loss...................................... $ (559) $(1,235) $(2,210) $(3,297) $(8,803)
====== ======= ======= ======= =======
Net loss per share............................ $(0.25) $ (0.48) $ (0.66) $ (0.82) $ (1.75)
====== ======= ======= ======= =======
Weighted average number of shares of Common
Stock outstanding........................... 2,270 2,567 3,356 4,001 5,278
====== ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
APRIL 30,
---------------------------------------------------
1992 1993 1994 1995 1996
------ ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................... $ 719 $ 787 $ 706 $ 2,126 $ 12,672
Working capital (deficit).................... 643 673 (244) (1,301) 10,002
Total assets................................. 4,442 4,356 9,135 11,318 28,913
Non-current liabilities...................... 603 736 2,900 791 1,763
Convertible preferred stock with mandatory
redemption provision in 2005............... -- -- -- -- 14,539
Accumulated deficit.......................... (897) (2,132) (4,342) (7,639) (16,442)
Stockholders' equity......................... 2,964 2,829 4,594 6,349 7,453
</TABLE>

15
<PAGE> 17

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

Except for the historical information contained herein, the discussion in
this Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the sections entitled "Risk
Factors" and "Business -- Government Regulation" as well as those discussed
elsewhere in this Prospectus and any documents incorporated herein by reference.

BACKGROUND

The Company was incorporated in Delaware in 1988 and initially provided
medical advertising and marketing services in the United States, primarily to
ophthalmologists. By 1991, the Company had shifted its strategic emphasis to the
emerging ophthalmic technology based on the use of excimer lasers for PRK and
acquired an excimer laser for use in a clinical center as part of clinical
trials with respect to the safety and efficacy of PRK.

Subsequent to the purchase of its first laser, the Company determined that
FDA approval for PRK in the United States would require a lengthier process than
was originally anticipated. As a result, the Company decided to enter the
international market for excimer laser surgery where regulatory restrictions
were much less prohibitive. Between late 1991 and mid-1992, the Company acquired
three commercial excimer laser centers in Canada and began developing the first
MobilExcimer unit. In July 1993, the Company opened a fourth Canadian center and
purchased six excimer lasers installed in Europe. In April 1994, the Company
acquired eight additional lasers installed in Europe. The first PRK procedure on
a MobilExcimer system was performed in Ontario, Canada in September 1994.

In anticipation of the FDA's approval of the excimer laser to perform PRK
procedures, in December 1994 the Company restated its agreement with Columbia
Healthcare pursuant to which the Company became the primary provider of excimer
lasers to Columbia Healthcare ambulatory surgery centers. In addition, by the
fall of 1995, the Company extended testing of its MobilExcimer system to
England, opened two European centers (including a Company-owned center with an
improved excimer laser system), acquired an additional MobilExcimer unit and
selected Dr. Richard Lindstrom as the Company's Medical Director.

In August 1995, the Company acquired Vision Correction, Inc., an excimer
laser access provider, for Common Stock with a value of approximately $650,000.
In October 1995 and March 1996, the FDA approved the use of the excimer lasers
manufactured by Summit and VISX, respectively, for performing PRK procedures for
low to moderate myopia, making it possible for the Company to begin providing
ophthalmologists access to lasers in the United States. In early 1996, the
Company acquired MedSource, a marketing services company, to complement its
existing marketing operations for cash and Common Stock with a combined value of
approximately $300,000. During April 1996, the Company purchased assets from a
former competitor to expand its European operations for a purchase price of
approximately $300,000, including cash and assumed liabilities. In the fiscal
year ended April 30, 1996, the Company opened six LaserVision Centers in the
United States and closed five international fixed-site centers which are now
serviced by a MobilExcimer.

Due to recent improvements in excimer laser technology, international
market conditions and the resulting operational considerations, the Company
believes that the recorded carrying value of certain of its international
fixed-site assets exceeded their estimated fair values. Accordingly, the Company
recorded a non-cash impairment charge of approximately $3.1 million in the
fourth quarter of fiscal 1996. See Note 4 to Consolidated Financial Statements.

16
<PAGE> 18

CENTERS IN OPERATION

The following table shows the number of centers which the Company operated
as of the dates indicated.

<TABLE>
<CAPTION>
APRIL 30,
------------------------------------------------------------- JUNE 15,
CENTERS WITH LASERS 1992 1993 1994 1995 1996 1996
- --------------------------------------- --------- --------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
International, Fixed................... 1 3 18 20 15 13
International, Mobile.................. - - 1 1 2 2
Domestic, Fixed........................ 1 1 1 1 6 14
-- -- -- -- -- --
Total Centers........................ 2 4 20 22 23 29
== == == == == ==
</TABLE>

RESULTS OF OPERATIONS

Fiscal Year ended April 30, 1996 Compared to Fiscal Year ended April 30, 1995

During the year ended April 30, 1996, the Company expanded its relationship
with Columbia Healthcare in the U.S. through the opening of five centers at
Columbia Healthcare facilities, extended operation of its MobilExcimer system
into a European market, opened two European centers, including a Company owned
center with an improved excimer laser system, began performing commercial PRK
procedures in the U.S. market, completed three acquisitions (one mobile laser
service related, one expanding European operations and one expanding U.S.
marketing capabilities) and closed five international fixed-site centers which
are now served by the MobilExcimer.

Revenues. Total revenues increased to $3,918,000 for the year ended April
30, 1996 from $3,311,000 for the year ended April 30, 1995, or an increase of
18%.

Revenues for the LaserVision Centers division increased slightly to
$2,484,000 for the year ended April 30, 1996 from $2,478,000 for the year ended
April 30, 1995. The slight increase in revenues is attributable to a $273,000
increase in U.S. revenues and a $22,000 increase in Canadian revenues, offset by
a $289,000 decrease in European revenues. The increase in U.S. revenues for the
LaserVision Centers division is attributable primarily to the increased number
of centers in operation and procedures performed in the U.S. The decreased
European revenues primarily related to a decreased number of fixed-site centers
and per procedure price fluctuations in Europe.

Revenues for the MarketVision division increased to $1,434,000 for the year
ended April 30, 1996 from $833,000 for the year ended April 30, 1995, or an
increase of 72%. The $601,000 increase in MarketVision division revenues
reflects the acquisition of MedSource in February 1996 and increased fees and
commissions earned through the division's marketing and advertising activities.

During the year ended April 30, 1996, revenues from the LaserVision Centers
division represented 63% of total revenues versus 75% for the year ended April
30, 1995. Revenues from the MarketVision division represented 37% of total
revenues during the year ended April 30, 1996 versus 25% for the year ended
April 30, 1995.

Costs of Revenues/Gross Profit (Loss). Cost of revenues increased to
$4,240,000 for the year ended April 30, 1996 from $3,375,000 for the year ended
April 30, 1995. This increase was primarily due to an increase in depreciation
to $1,973,000 from $1,589,000 in these respective periods due to the increased
inventory of lasers and other medical equipment.

Excluding laser and medical equipment depreciation, all other costs of
revenues increased by $481,000. This increase, when combined with the revenue
increase, resulted in these other costs of revenues increasing from 54% of total
revenues for the year ended April 30, 1995 to 58% of total revenues for the year
ended April 30, 1996. This $481,000 increase was primarily due to a $275,000
increase in MarketVision costs associated with the increase in MarketVision
revenues and a $206,000 increase in total costs of excimer laser maintenance,
gasses and optics on higher volumes of PRK procedures and new centers.

17
<PAGE> 19

Total gross profit decreased to a loss of $322,000 for the year ended April
30, 1996 from a loss of $64,000 for the year ended April 30, 1995. The variable
gross profit, excluding depreciation, increased to $1,651,000 from $1,525,000,
primarily because MarketVision costs of revenue are variable costs of revenue.

Operating Expenses. General and administrative expenses increased to
$2,356,000 for the year ended April 30, 1996 from $1,002,000 for the year ended
April 30, 1995 due to a $429,000 increase in legal and professional fees, an
$85,000 increase in the provision for bad debt, a $226,000 increase in the costs
associated with developing the U.S. market and $107,000 of expenses associated
with opening a new center in Europe, a $68,000 increase in insurance expenses
and an increase of $439,000 in other general and administrative expenses.

The increase in salaries and related expenses to $2,329,000 for the year
ended April 30, 1996 from $1,285,000 for the year ended April 30, 1995 was due
to an increase of $770,000 attributable to an increased number of employees,
salary adjustments and the related payroll taxes and fringe benefits, and an
increase of $274,000 due to the executive incentive compensation program.

Depreciation and amortization decreased by $53,000 for the year ended April
30, 1996 primarily due to the elimination of the amortization of previously
deferred franchise costs of $175,000, partially offset by increased amortization
of goodwill related to acquisitions of $89,000 and a net increase in
depreciation of $33,000.

The increase in selling and marketing expenses was due to an increase of
$85,000 due to the promotion of the MobilExcimer, a $36,000 increase in European
advertising program costs and $221,000 in initial development costs for the U.S.
market.

The $3,063,000 fixed asset impairment provision was a non-cash expense, as
previously discussed.

Loss from Operations. The LaserVision Centers division's loss from
operations increased to $9,357,000 for the year ended April 30, 1996 from
$3,242,000 for the year ended April 30, 1995, primarily due to the provision for
fixed asset impairment as discussed previously, increased costs related to
commencing U.S. operations, a $311,000 increase in total depreciation and
amortization expenses, a $356,000 increase in variable costs of revenue and a
$5,358,000 increase in operating costs. The MarketVision division's income from
operations increased to $141,000 for the year ended April 30, 1996 from $34,000
for the year ended April 30, 1995 primarily as a result of the gross profit
related to increased volume.

The domestic loss from operations increased to $3,695,000 for the year
ended April 30, 1996 from $1,707,000 for the year ended April 30, 1995 due to a
$425,000 increase in professional and legal fees, a $216,000 increase in the
loss from U.S. laser operations, a $121,000 increase in travel costs, a $581,000
increase in payroll and a $645,000 increase in other corporate overhead.

The Canadian loss from operations increased to $1,350,000 for the year
ended April 30, 1996 from $409,000 for the year ended April 30, 1995 primarily
due to the write-down of lasers and related medical equipment of $637,000 and an
increase in the loss on operations of the mobile laser of $195,000.

The European loss from operations increased to $4,312,000 for the year
ended April 30, 1996 from $1,126,000 for the year ended April 30, 1995 due to
the write-down of lasers and related medical equipment of $2,426,000, a $529,000
decrease in gross profit due to declining revenues and increased depreciation
and a $231,000 increase in overhead expenses.

Other Income (Expense). Other income (expense) increased to a net income of
$413,000 during the year ended April 30, 1996 from a net expense of $89,000
during the year ended April 30, 1995. This favorable variance was due to an
increase of $400,000 in interest income, a $76,000 increase in the minority
interest in the net loss of a subsidiary and a decrease of $26,000 in interest
expense.

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Fiscal Year ended April 30, 1995 Compared to Fiscal Year Ended April 30, 1994

The Company's operating results for the years ended April 30, 1995 and
April 30, 1994 are not readily comparable due to significant expansion. The
LaserVision Centers division's operating results for the year ended April 30,
1995 included the operation of a center in Montreal for twelve months, 13
European installations for a full year and three European centers for an average
of nine months. The LaserVision Centers division operating results for the year
ended April 30, 1994 included the operation of a center in Montreal for 9.5
months, six European installations for an average of nine months and eight
European installations for one month. Both fiscal years included the operations
of the St. Catharines and Vancouver centers for a full year. Two international
centers which were open throughout fiscal 1994 were closed during most of fiscal
1995. During fiscal 1995, three European centers were acquired and testing of a
larger MobilExcimer trailer was successfully begun in Canada with Calumet Coach
Company.

Revenues. Total revenues increased to $3,311,000 for the year ended April
30, 1995 from $2,106,000 for the year ended April 30, 1994, or an increase of
57%.

Revenues for the LaserVision Centers division increased to $2,478,000 for
the year ended April 30, 1995 from $1,517,000 for the year ended April 30, 1994,
or an increase of 63%. The $961,000 increase in revenues is attributable
primarily to a $113,000 increase in Canadian revenues and an $856,000 increase
in European revenues. The increase in Canadian revenues for the LaserVision
Centers division is attributable primarily to an increased number of procedures
at both the Company's Vancouver and Montreal centers. The increased European
revenues related to a full year of revenue from thirteen centers acquired during
the year ended April 30, 1994 and the three centers opened during the year ended
April 30, 1995. The costs of relocation of one European center partially offset
this increase.

Revenues for the MarketVision division increased to $833,000 for the year
ended April 30, 1995 from $589,000 for the year ended April 30, 1994, or an
increase of 41%. The $244,000 increase reflected the addition of several
domestic ophthalmic advertising clients which had implemented cataract and/or
refractive vision correction marketing awareness programs.

During the year ended April 30, 1995, revenues from the LaserVision Centers
division represented 75% of total revenues versus 72% for the year ended April
30, 1994. Revenues from the MarketVision division represented 25% of total
revenues during the year ended April 30, 1995 versus 28% for the year ended
April 30, 1994.

Cost of Revenues/Gross Profit. Cost of revenues increased to $3,375,000 for
the year ended April 30, 1995 from $1,768,000 for the year ended April 30, 1994.
This increase included a $620,000 increase in excimer laser and medical
equipment depreciation to $1,589,000 during the year ended April 30, 1995 from
$969,000 during the year ended April 30, 1994. This non-cash expense reflects
the increase in the number of European excimer lasers operated for the full year
ended April 30, 1995 and the purchase of additional medical equipment.

Excluding laser and medical equipment depreciation, all other costs of
revenues increased by $987,000. This increase, when combined with the revenue
increase, resulted in these other costs of revenues increasing from 38% of total
revenues for the year ended April 30, 1994 to 54% of total revenues for the year
ended April 30, 1995. This $987,000 increase was primarily due to a $221,000
increase in medical professional fees for Company-owned laser centers, a
$542,000 increase in total costs of excimer laser maintenance, gasses and optics
on higher volumes of PRK procedures and new centers and a $224,000 increase in
MarketVision costs associated with the $244,000 increase in MarketVision
revenues.

Total gross profit decreased to a loss of $64,000 for the year ended April
30, 1995 from $338,000 for the year ended April 30, 1994. The variable gross
profit, excluding depreciation and a $175,000 non-cash provision for loss
relating to an advance of funds in 1991 to an Italian company, increased to
$1,525,000 from $1,307,000, primarily because medical professional fees and
MarketVision costs of revenue are variable costs of revenue.

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<PAGE> 21

Operating Expenses. Operating expenses increased to $3,144,000 for the year
ended April 30, 1995 from $2,238,000 for the year ended April 30, 1994. General
and administrative expenses increased by $307,000 due to a $156,000 increase in
European and U.S. professional fees (primarily for new centers and tradename
protection), a $31,000 increase in insurance expenses, a $89,000 increase
associated with laser relocation costs and a $31,000 increase in travel costs
primarily associated with the Columbia Healthcare agreement.

The increase in salaries and related expenses to $1,002,000 for the year
ended April 30, 1995 from $695,000 for the year ended April 30, 1994 was
primarily due to an increase of $175,000 as a result of the hiring of new
employees in St. Louis, Canada and England, salary increases and higher
commissions on increased MarketVision revenues and a $208,000 increase due to
the executive incentive compensation program tied to the Company's stock price.

Depreciation and amortization increased by $33,000 due to the amortization
of previously deferred franchise costs of $159,000 and the increased
amortization of certain trademark costs, depreciation of new mobile equipment
and depreciation of European furniture and leasehold improvements totalling
$13,000, which were partially offset by a $139,000 decrease in depreciation of
the clinical laser.

Selling and marketing expenses increased by $183,000 primarily due to a
$100,000 increase in radio and newspaper advertising expenses for the European
centers, a $53,000 increase in European travel costs and $39,000 associated with
the initial promotion of the new MobilExcimer system. Lower radio and newspaper
advertising in western Canada partially offset these increases.

Loss from Operations. The LaserVision Centers division's loss from
operations increased to $3,242,000 for the year ended April 30, 1995 from
$1,870,000 for the year ended April 30, 1994, primarily due to a $655,000
increase in total depreciation and amortization expenses, a $398,000 increase in
variable costs of revenue and a $1,280,000 increase in operating costs which
were partially offset by a $961,000 increase in revenue. The MarketVision
division generated a $34,000 operating profit for the year ended April 30, 1995
versus a $30,000 operating loss for the year ended April 30, 1994, primarily due
to lower bad debt expenses and the gross profit on increased revenues.

The domestic loss from operations increased to $1,707,000 for the year
ended April 30, 1995 from $850,000 for the year ended April 30, 1994, primarily
due to a $264,000 increase in salaries, a $159,000 increase in franchise
amortization and a $434,000 increase in other corporate office expenses.

The Canadian loss from operations decreased by $201,000 to $409,000 for the
year ended April 30, 1995 from $610,000 for the year ended April 30, 1994. This
improvement was primarily due to increased gross profit of $159,000.

The European loss from operations increased to $1,126,000 for the year
ended April 30, 1995 from $410,000 for the year ended April 30, 1994 due to a
$221,000 decrease in gross profit, a $145,000 increase in payroll, a $175,000
increase in professional fees, and a $175,000 net increase in other expenses.

Other Income (Expense). Other expense decreased to $89,000 for the year
ended April 30, 1995 from $310,000 for the year ended April 30, 1994. Interest
expense increased to $242,000 for the year ended April 30, 1995 from $156,000
for the year ended April 30, 1994. This increase was primarily due to a $196,000
increase in imputed (non-cash) interest expense on European laser purchases and
was partially offset by a $110,000 decrease in European and other interest
expense. The $116,000 income from minority interest in net loss of subsidiary
for the year ended April 30, 1995 relates to one of the Company's new European
operations. The $175,000 non-cash provision for loss on advance for the year
ended April 30, 1994 relates to an advance of funds in 1991 to an Italian
company.

INFLATION

The Company's operations have not been, nor are they expected to be,
materially affected by inflation.

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LIQUIDITY AND CAPITAL RESOURCES

Since the completion of its initial public offering in April 1991, the
Company's primary sources of liquidity have consisted of financing from the sale
of Common Stock and Convertible Preferred Stock, revenues from marketing and
laser access services provided to ophthalmic physicians and leases. At April 30,
1996, the Company had $12,672,000 of cash and cash equivalents compared with
$2,126,000 at April 30, 1995. At April 30, 1996, the Company had working capital
of $8,802,000 compared with a working capital deficit of $1,301,000 at April 30,
1995. The ratio of current assets to current liabilities at April 30, 1996 was
2.71 to one, compared to 0.69 to one at April 30, 1995.

Cash Flows from Operating Activities. Net cash used for operating
activities was $2,879,000 for fiscal 1996 and was $1,017,000 and $899,000 for
fiscal 1995 and 1994, respectively. The cash flows used for operating activities
during fiscal 1996 primarily represent the net loss incurred in this period less
depreciation, amortization and fixed asset impairment and an accrual for one
laser. The cash flows used for operating activities in fiscal 1995 and 1994
primarily represent the net loss incurred in these periods less depreciation and
amortization.

Cash Flows from Investing Activities. Net cash used for investing
activities was $7,847,000 during fiscal 1996 and $1,227,000 and $2,468,000 for
fiscal 1995 and 1994, respectively, and was primarily due to the acquisition of
equipment, equipment deposits and acquisitions. The increase in acquisitions of
equipment in fiscal 1996 is primarily due to expansion into the U.S. market and
continued growth in the European market.

Cash Flows from Financing Activities. Net cash provided by financing
activities during fiscal 1996 was $21,272,000 and was primarily due to proceeds
received from a private placement of the Company's Convertible Preferred Stock
with a provision for mandatory redemption in 2005 and the exercise of warrants.
Net cash provided by financing activities for fiscal 1995 was $3,664,000 and was
primarily due to proceeds from the exercise of warrants and private stock
offerings offset by the repayment of certain notes payable and capitalized lease
obligations. For fiscal 1994, net cash provided by financing activities was
$3,286,000 and was primarily due to proceeds received from the exercise of
warrants and private stock offerings.

The Company anticipates that its current cash and cash equivalents,
together with the proceeds of this Offering, will be sufficient to fund
operating expenses for the next 12 months, including any capital expenditures
not financed by leasing. Effective May 30, 1996, the Company agreed to purchase
three new excimer lasers and one used excimer laser primarily for use in Europe
for a total of $1.7 million due during the first half of fiscal 1997. At April
30, 1996, the Company has agreed to purchase twelve VISX excimer lasers
(approximate purchase price of $6 million) and has an option to purchase twenty
more (approximate purchase price of $10 million). The Company is also
negotiating to assume the lease obligations for up to three excimer lasers. The
Company does not anticipate that it will need to seek additional financing to
fund operating expenses for the next 24 months, but may elect to finance laser
acquisitions through leasing alternatives. The Company expects to continue to
fund future operations and mobile development costs from existing cash and cash
equivalents, revenues received from providing laser access and market services,
the exercise of stock options and warrants and future financing as required.
There can be no assurance that capital will be available when needed or, if
available, that the terms for obtaining such funds will be favorable to the
Company.

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BUSINESS

The Company is the world's largest provider of access to excimer lasers and
related services for the treatment of refractive vision disorders and has 30
lasers currently in use in the United States, Canada and Europe. The Company is
also the world's only operator of mobile excimer laser systems. The excimer
laser can be used to treat refractive vision disorders such as nearsightedness
and astigmatism to eliminate or reduce the need for corrective lenses.
LaserVision Centers operate on a shared-access model, giving individual or group
ophthalmic practices use of excimer laser technology without investment risk or
maintenance requirements, thereby allowing optimal use of the excimer laser
equipment. In addition, the Company provides a broad range of professional
services, including physician and staff training, technical support services and
maintenance and, through its MarketVision and MedSource divisions, advertising
and marketing programs and services.

The Company has operated excimer laser centers in Canada and Europe since
1991 and 1993, respectively. Following the recent approval of the excimer laser
technology by the FDA to treat certain refractive vision disorders, the Company
began developing centers in the United States. The Company currently operates 14
centers in the United States, with plans to open additional centers. The Company
currently provides excimer lasers and related services to fixed-site centers in
the United States, Canada, the United Kingdom, Finland, Greece, Sweden and
Ireland and operates the MobilExcimer in Canada and the United Kingdom. In the
United States, fixed-site laser centers are operated in conjunction with
Columbia Healthcare or by the Company independently or through joint ventures.

In anticipation of the FDA's approval of the excimer laser to perform PRK
procedures, the Company developed a relationship with Columbia Healthcare
whereby the Company would become the primary provider of excimer lasers to
Columbia Healthcare ambulatory surgery centers. Since 1992, the Company has had
an option to provide excimer laser surgery equipment, training and services to
Columbia Healthcare once the excimer laser technology was approved by the FDA.
In December 1994, this mutually exclusive agreement was revised to expand the
number of potential sites to include all of the approximately 130 Columbia
Healthcare ambulatory surgery centers in 27 states nationwide. To date, the
Company is operating 12 centers pursuant to this agreement.

In addition to operating fixed-site centers, the Company has developed a
proprietary MobilExcimer system, which is a self-contained mobile refractive
laser surgery center duplicating all of the equipment and services typically
found in a fixed-site location. The Company has entered into a mutually
exclusive agreement with Calumet Coach Company, the world's leading manufacturer
of mobile medical systems, to build the MobilExcimer. This proprietary system
gives the Company flexibility which the Company believes is not currently
available to its competitors and is intended to help the Company achieve broader
penetration of both domestic and international markets. The Company plans to use
the MobilExcimer to provide laser access and related services to communities
where the Company's potential patient base is insufficient to sustain a
fixed-site center, thereby enhancing the Company's ability to expand quickly
into multiple markets. The Company recently submitted an application for PMA
with the FDA for use of the excimer laser for treatment of low to moderate
myopia, which is the first step in seeking approval for the MobilExcimer laser
system.

Currently, the Company provides access to 28 fixed-site lasers -- 12 in
Europe, 1 in Canada and 15 in the United States. The Company also has two mobile
systems in operation, one in Europe and one in Canada. The Company continues to
explore opportunities to expand both its domestic and international operations.

VISION DISORDERS

The human eye is approximately 25 millimeters in diameter and functions
much like a camera, incorporating a lens system which focuses light (the cornea
and the lens), a variable aperture system which regulates the amount of light
passing through the eye (the iris) and film which records the image (the
retina). Light from a distant object passes through the cornea, iris, and lens,
which focus the light on the retina. The retina contains light sensitive
receptors which transmit the image through the optic

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nerve to the brain. Seventy-five percent of the focusing power of the eye is
provided by the curvature of the corneal surface.

Two major categories of vision disorders are refractive and pathological
disorders. Refractive disorders result from an inability of the optic system to
properly focus images on the retina. Nearsightedness (myopia), farsightedness
(hyperopia) and astigmatism are the most common refractive disorders. The amount
of refraction is dependent on the shape (specifically, the curvature) of the
cornea. If the curvature is not correct, the cornea cannot properly focus the
light passing through it onto the retina, and the individual will perceive a
blurred image.

Currently eyeglasses or contact lenses are most often used to treat
refractive disorders. They may also be treated by several surgical techniques
such as radial keratotomy ("RK"). RK is a surgical procedure used to correct
myopia in which an ophthalmologist uses a scalpel to make a series of cuts
approximately 400 to 450 microns deep in a radial configuration around the
periphery of the cornea. The healing of the incisions causes a flattening of the
cornea and corrects small to moderate amounts of myopia. Other techniques in use
are keratomileusis, which involves freezing the cornea and reshaping it, and
automated lamellar keratoplasty ("ALK"), which involves using a microkeratone to
remove microscopic amounts of corneal tissue.

Another major category of vision problems is pathological disorders.
Traumatic, congenital and pathological sources cause defects in the cornea which
result in restricted vision. A typical medical alternative for treatment of
these conditions is a corneal transplant which involves major surgery and is
dependent on the availability of a suitable donor cornea and on the individual
surgeon's skill and experience. Corneal transplants frequently produce irregular
corneal surfaces which compromise the patient's vision. Another major concern
regarding corneal transplantation involves the possibility of transmission of
viruses that could infect the patient.

An industry source estimates that 145 million people in the United States
currently use eyeglasses and/or contact lenses to correct refractive vision
disorders. Of these individuals, an estimated 66 million suffer from
nearsightedness, with approximately 60% of nearsighted persons estimated to have
vision disorders within the criteria currently approved by the FDA for treatment
with excimer lasers. The Company estimates that approximately one-fourth of all
sufferers of nearsightedness also experience astigmatism and an additional 23
million people in the United States suffer from astigmatism but do not
experience nearsightedness. According to industry sources, consumers in the
United States spent approximately $13 billion on eyeglasses, contact lenses and
other corrective lenses in 1994. The Company believes that excimer laser surgery
will make it possible for many of these people to eliminate or reduce their
reliance on corrective lenses. In particular, the Company believes that many of
the approximately 26 million contact lenses users in the United States will be
particularly receptive to laser surgery as they have already chosen to use an
alternative to eyeglasses for vision correction.

Industry sources estimate that 200,000 RK procedures were performed in the
United States in 1994. Because RK is a manual procedure and is not performed
with a computer-controlled device, it is highly dependent on the surgical skill
of the ophthalmologist performing the procedure. In addition, because RK
involves incisions into the corneal tissue, it weakens the structure of the
cornea which can have adverse consequences as patients age. Furthermore, RK has
never undergone a controlled clinical study under an FDA protocol because no
medical devices, other than a scalpel, are used in the procedure. The Company
believes, based on currently available follow-up data and market trends in
countries where laser surgery is commercially available, that more people will
seek vision correction through laser surgery than through RK because PRK
involves reduced surgical risk, does not weaken the corneal tissue, is less
invasive and is less dependent on the ophthalmologist's skill.

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EXCIMER LASER SURGERY

An excimer laser emits energy in an extremely short pulse lasting only
several billionths of a second. High energy ultraviolet photons produced by the
excimer laser create a "non-thermal" process known as ablation which does not
heat adjacent tissue. The excimer laser can be used to treat refractive vision
disorders such as nearsightedness and astigmatism in the PRK procedure. PRK
involves using the excimer laser to resculpt the cornea. This adjusts the amount
of refraction which in turn eliminates or reduces the need for corrective
lenses. The excimer laser can also be used to treat a number of pathological
superficial corneal disorders in a procedure called PTK. Excimer lasers
manufactured by VISX and Summit have been approved for treatment of low to
moderate myopia, and VISX is currently in the process of pursuing FDA approval
for use of its laser for the treatment of astigmatism. Excimer lasers can also
be used to perform a procedure known as LASIK in which an ophthalmologist uses a
microkeratone to open a flap on the surface of the cornea. Laser energy is then
used to ablate corneal cells on the exposed surface to improve the person's
visual acuity, and the flap is then folded back into place. LASIK may be more
predictable in treating high levels of myopia, but has not been specifically
approved in the United States by the FDA.

Excimer lasers are designed to reshape or sculpt the cornea to correct
common visual problems such as nearsightedness and astigmatism by changing the
curvature of the cornea, and therefore, the focusing power of the eye. The
laser's functions are controlled by a computer based work station. The physician
enters the patient data into the system's computer, which makes the calculations
necessary for a precise corneal correction. After a verification procedure, the
physician cleans and aligns the eye, initiates the treatment and visually
monitors the eye during surgery. The procedure lasts approximately 15 or 20
minutes and generally requires less than 40 seconds of laser time. The natural
protective cover of the cornea, called the epithelium, typically regrows in 24
to 72 hours to recreate a smooth optical surface over the laser modified
curvature of the cornea.

Some potential medical risks have been identified in connection with the
use of PRK surgery and there may be other risks which will not be known until
the procedure has been widely used and monitored. Potential complications and
side effects include: post-operative discomfort; corneal haze during healing (an
increase in the light scattering properties of the cornea); glare/halos
(undesirable visual sensations produced by bright lights); decreases in contrast
sensitivity; temporary increases in intraocular pressure in reaction to
procedure medication; modest fluctuations in refractive capabilities during
healing; modest decreases in best corrected vision (i.e., with corrective
lenses); unintended over- or under-corrections; regression of effect; disorders
of corneal healing; corneal scars; corneal ulcers and induced astigmatism.

BUSINESS STRATEGY

The Company's goal is to retain its leadership position as the world's
largest provider of access to excimer lasers and related services for ophthalmic
surgery. In order to achieve this goal, the Company will expand its
relationships with eyecare practitioners through its shared-access model, which
allows individual or group ophthalmic practices use of excimer laser technology
without investment risk or maintenance requirements. Shared access also allows
optimal use of the excimer laser systems, thereby maximizing Company revenues.

The Company's growth strategy combines the following important elements:

- Increase Market Penetration. The Company intends to increase its market
penetration by using a combination of fixed-site laser centers operated by the
Company or as joint ventures, including through its agreement with the
Ambulatory Surgery Division of Columbia Healthcare, and expanded use of the
MobilExcimer system.

- Columbia Healthcare. The Company intends to capitalize upon its
agreement with the Ambulatory Surgery Division of Columbia Healthcare, the
world's largest for-profit health care provider with approximately 130
ambulatory surgery centers in 27 states, by establishing additional

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LaserVision Centers at Columbia Healthcare facilities and maximizing the
number of patients treated at each operating LaserVision Center. The
Company's access to the Columbia Healthcare network positions the Company
to establish additional LaserVision Centers more quickly than would be
possible through the establishment of independent centers. The Company
plans to have more than 20 LaserVision Centers operating in Columbia
Healthcare facilities by mid-1997, and intends to continue its evaluation
of the remaining Columbia Healthcare facilities to determine which of these
facilities would be appropriate for the establishment of additional
LaserVision Centers or which of these centers could be more effectively
served by the Company's MobilExcimers. In addition to providing access to a
large number of ambulatory surgery centers, Columbia Healthcare has over
850 affiliated ophthalmologists and is the single largest provider of
ophthalmic procedures in the United States, performing more than 130,000
procedures annually (approximately 10% of all eye surgeries in the United
States in 1995). Columbia Healthcare's affiliated ophthalmologists can
provide the Company with a large potential patient base to which the
Company can market its laser surgery services.

- MobilExcimer System. The Company believes that it is currently the
only company that has developed and is operating a mobile system for the
excimer laser. This proprietary system gives the Company flexibility that
the Company believes is not currently available to its competitors and is
intended to help the Company achieve broader penetration of both domestic
and international markets. The Company plans to use the MobilExcimer to
provide laser access and related services to communities where the
Company's potential patient base is insufficient to sustain a fixed-site
center, thereby enhancing the Company's ability to expand quickly into
multiple markets. The Company expects that the MobilExcimer will help meet
the expected demand for the procedure, while giving both doctors and
patients accessibility to laser surgery without the need for extended
travel. The Company has entered into a mutually exclusive agreement with
Calumet Coach Company ("Calumet"), the world's leading manufacturer of
mobile medical systems, to build the MobilExcimer. The Company currently
operates two mobile units, one each in Europe and Canada. The Company
anticipates that the consolidation of excimer laser surgery centers taking
place in Europe and Canada will present further opportunities for its
MobilExcimer.

The MobilExcimer system has not been approved for use in the United States
by the FDA. In June 1996, the Company submitted a PMA application with the
FDA for the use of VISX's excimer laser system for treatment of low to
moderate myopia, which is the first step in seeking approval for the
MobilExcimer. Pursuant to an agreement with VISX entered into in May 1996,
this PMA application incorporates the information contained in the PMA
applications filed with and approved by the FDA for use of VISX excimer
lasers for PRK and PTK. If its PMA application is approved, the Company
intends to submit a supplement to this PMA application to request FDA
approval for use of the excimer laser on the MobilExcimer. See "Risk
Factors -- Uncertainty of FDA Approval of MobilExcimer."

- Other Laser Centers. The Company intends to establish additional
fixed-site LaserVision Centers in areas not served by Columbia Healthcare.
These centers may be Company owned and operated, such as the Company's
center in St. Louis, or owned and operated by a joint venture or
partnership with a health care facility provider, such as the Company's
center at the Phillips Eye Institute in Minneapolis.

- Utilize Targeted Marketing. The Company intends to use the knowledge
gained through operating LaserVision Centers in Canada and Europe and the
marketing expertise of MarketVision and MedSource to identify and market to
selected geographic areas. While the international division continues to offer
considerable growth opportunities for the Company, management believes the
greatest growth market for PRK lies in the United States. Utilizing its
marketing expertise, the Company intends to identify demographic groups within
selected geographic areas which represent the most likely candidates for excimer
laser surgery. After identifying candidates for excimer laser surgery, the
Company will continue to provide "value added" services to ophthalmologists and
other health care

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providers by referring and helping to process prospective patients from the
initial point of inquiry through surgery.

- Promote Alliances With Physicians. A key element of the Company's
shared-access model is the promotion of alliances with physicians within a
community to maximize laser usage and resulting revenues. Through these
alliances, the Company attracts ophthalmologists who are not able or willing to
purchase, finance and maintain a laser. The Company continues to work with the
physicians after a center is opened by providing technical support and training
as well as sales and marketing expertise. By providing these services, the
Company goes beyond providing laser access and actively works with the
physicians to increase the number of consumer inquiries and to turn such
inquiries into procedures performed.

- Grow Through Acquisitions. The Company seeks to expand its presence
worldwide through complementary acquisitions of other laser operators, including
direct competitors, as well as acquisitions of businesses that provide related
equipment or services. The Company expects to take advantage of ongoing market
consolidation in Europe through strategic acquisitions of competitors. In
addition, the Company believes that the emerging market for the Company's
services in the United States will initially be fragmented, as it was in Europe,
and may subsequently offer consolidation opportunities.

- Expand Strategic Relationships. The Company intends to solidify and
expand its existing strategic alliances with health care providers, equipment
manufacturers, major employers, managed care providers and other third party
payors in order to provide the Company access to a larger patient base.

OPERATION OF LASER CENTERS

The Company provides access to excimer lasers and related services for
ophthalmological surgery, collecting a fee for each procedure performed by
independent ophthalmologists. Currently, patients are charged approximately
$1,500 to $2,200 per eye for the procedure. The Company's fee ranges from
approximately $400 to $1,000 per procedure, depending on the services provided
by the Company. The Company provides access to excimer lasers and related
services through fixed-site laser centers and its MobilExcimer system. The
Company currently provides excimer lasers and related services to fixed-site
centers in the United States, Canada, the United Kingdom, Finland, Greece,
Sweden and Ireland and operates the MobilExcimer in Canada and the United
Kingdom. In the United States, fixed-site laser centers are operated in
conjunction with Columbia Healthcare or by the Company independently or through
joint ventures.

COLUMBIA HEALTHCARE

The majority of the Company's currently operating or planned U.S. laser
centers will operate in selected Columbia Healthcare ambulatory surgery centers.
The Company's agreement with Columbia Healthcare provides the Company with the
exclusive right to provide excimer laser equipment and related services
(marketing, technical support and service) to Columbia Healthcare ambulatory
surgery centers. The Company and Columbia Healthcare jointly determine which
surgery centers and physician users will be served with excimer lasers
(fixed-site or mobile) through a comprehensive business planning process. This
process takes into account such factors as market demographics, the number of
potential physician users, projected case volume and competition.

Under the agreement with Columbia Healthcare, the Company provides either
the VISX or Summit excimer laser, as specified by the physician users. In some
cases, the Company may also provide other equipment such as a corneal
topographer. In addition, the Company provides physician and staff training,
technical support services and maintenance of the laser, as well as marketing
support. Marketing support includes advertising and promotional materials for
the center as well as for physician users who elect to participate in a
center-level marketing plan. Columbia Healthcare provides space in its facility
to accommodate the laser in an appropriate setting, staff to handle inquiries,
surgical and support staff and surgical disposables. Typically, the facility and
equipment portions of the surgical fee are collected by the Columbia Healthcare
center on the date of treatment and the Company

26
<PAGE> 28

is paid monthly for treatments performed during the previous month. The Company
and Columbia Healthcare each receive a fixed fee for the equipment and services
provided, with the Company receiving a net fee of $450 to $850 per procedure
depending on the services provided.

Currently, the Company provides lasers and related services to 12 Columbia
Healthcare facilities located in 10 states. By mid-1997, the Company plans to
open approximately 10 additional LaserVision Centers at Columbia Healthcare
facilities, although there can be no assurance that such number of centers will
be opened. The Company will continue to evaluate the remaining Columbia
Healthcare facilities to determine which would be appropriate for fixed-site
lasers or the use of the MobilExcimer.

MOBILEXCIMER

The MobilExcimer is a self-contained mobile refractive laser surgery
center, containing a laser and other equipment identical to that typically found
in a fixed-site location. The mobile unit is designed to offer excimer laser
access to ophthalmologists practicing in communities where the Company's
potential patient base is insufficient to support a fixed-site laser surgery
facility. Depending on such factors as case volume and distances between sites,
a MobilExcimer unit can serve up to five sites per week. The Company intends to
implement logistical and routing systems to coordinate use of the MobilExcimer
units in a manner that will maximize utilization of capacity and service to
patients. Because the Company will provide more services and convenient access
and location, it is anticipated that procedures performed with the MobilExcimer
will typically generate higher fees per procedure than those performed at
fixed-site LaserVision Centers. Currently, these fees are expected to range from
approximately $800 to $1,000 per procedure.

The Company has entered into a mutually exclusive agreement with Calumet,
the world's leading manufacturer of mobile medical systems, which provides that
Calumet will produce and the Company will purchase a minimum of four
MobilExcimers units per year (up to an aggregate of 13) from the date of FDA
approval of the MobilExcimer through mid-1999. So long as minimum orders are
maintained, Calumet has agreed not to produce mobile laser surgery vehicles for
entities other than the Company. This agreement provides the Company with a
reliable source of supply from Calumet, which currently manufactures more than
60 percent of the mobile medical systems being used in the United States.

The mobile units are larger than many fixed laser surgery sites, with a
movable exterior wall allowing the MobilExcimer to expand in size upon reaching
its destination. The unit has electrical systems that are adaptable for use in
the U.S., Canada and Europe. The MobilExcimer can operate with port electrical
hookups or an internal generator, either of which are supported by an
uninterruptible power supply. The units utilize the Company's patented
MobilExcimer mounting system which allows the delicate internal systems of the
excimer laser to withstand the rigors associated with mobile operation.

The first PRK procedure in a MobilExcimer was performed in September 1994
by a Canadian ophthalmologist under the supervision of Dr. Stephen Trokel, the
developer of the PRK procedure using the excimer laser. The Company currently
operates two mobile units, one serving more than ten sites in Europe and the
other serving five sites in Canada. The MobilExcimer system has not been
approved for use in the United States by the FDA. In June 1996, the Company
submitted a PMA application with the FDA for the use of VISX's excimer laser
system for treatment of low to moderate myopia, which is the first step in
seeking approval for the MobilExcimer. Pursuant to an agreement with VISX
entered into in May 1996, this PMA application incorporates the information
contained in the PMA applications filed with and approved by the FDA for use of
VISX excimer lasers for PRK and PTK procedures. If its PMA application is
approved, the Company intends to submit a supplement to this PMA application to
obtain FDA approval for use of the excimer laser on the MobilExcimer. It is
uncertain when, if ever, the FDA will approve excimer lasers for mobile use. See
"Risk Factors -- Uncertainty of FDA Approval of MobilExcimer."

27
<PAGE> 29

The Company believes that the MobilExcimer will provide logistical
flexibility in the developing market for PRK. The MobilExcimer will allow the
Company to service locations that will not currently support the installation of
a fixed-site laser. Over time, the volumes at such locations may grow to be
sufficient to support a fixed-site center. Conversely, the volumes at an
existing fixed-site center may fall. Due to the flexibility of its MobilExcimer,
the Company will be in a position to move a laser from a fixed-site center to a
more attractive location while continuing service to the existing location with
the MobilExcimer.

OTHER LASER CENTERS

U.S. Centers. In addition to its affiliation with Columbia Healthcare, the
Company intends to open additional fixed-site centers in areas which are not
served by Columbia Healthcare ambulatory surgery centers. The Company currently
has two U.S. centers that are not associated with Columbia Healthcare: the
Company's LaserVision Center in St. Louis, which is wholly owned and operated by
the Company, and the center at the Phillips Eye Institute in Minneapolis, which
is owned and operated by a joint venture between the Company and the facility
provider. The Company intends to open three additional independent fixed-site
centers in the United States by the end of 1996, although there can be no
assurance that such number of centers will be opened. These additional centers
will be owned and operated either by the Company or by a joint venture or
partnership with other entities. The services the Company provides to these
centers are virtually identical to those provided to centers located at Columbia
Healthcare facilities. Sites are selected based on a number of criteria, such as
the number of physicians who indicate a substantial interest in using the
center, the historical surgical volumes of these physicians, demographic
factors, the results of market research and local media costs. The Company
receives a net fee of $500 to $940 per PRK procedure performed at these centers,
depending on the services provided by the Company.

Canadian Center. The Company currently owns and operates a LaserVision
Center located in Montreal, Quebec. The Company complements the Montreal site by
employing its Canadian MobilExcimer unit to serve five additional locations in
Canada which the Company believes are not suitable for the investment required
for a fixed site. The Company receives a net fee of $500 to $950 (U.S.) per
procedure performed at Canadian centers, depending on the services provided by
the Company.

European Centers. The Company provides access to 12 fixed-site excimer
lasers in Europe. The Company operates one center through a joint venture. The
remaining lasers and related services are provided to other entities pursuant to
leases and associated contracts. The Company has continued to consolidate
operations in Europe and has redeployed the lasers from several fixed-site
centers which were not cost effective to operate as fixed-site centers. The
MobilExcimer system operating in Europe has enabled the Company to continue to
serve the markets formerly served by the centers which were closed, while
simultaneously reducing the fixed operating costs attributable to these markets.
The Company has also recently acquired two fixed-site centers formerly operated
by New Image Laser Centers, along with a database with the names of 17,000
potential patients for the two new centers. The Company receives a net fee of
$400 to $950 (U.S.) per European laser surgery procedure, depending on the
services provided by the Company.

SUPPLIERS

The current cost of an excimer laser ranges from $475,000 to $525,000, plus
sales tax, as well as $250 per U.S. PRK procedure to be paid to a partnership
between VISX and Summit which owns certain patent rights with respect to the
excimer laser. In addition, the Company will be required to pay an annual
royalty fee of approximately $44,000 to VISX with respect to any additional
lasers operated in Canada. The purchase price includes a one or two year
warranty on all parts except the optics (mirror and glass components) which
carry a 30-day warranty. Annual maintenance and service fees are paid by the
Company and are estimated at $40,000 to $60,000 per year, but will vary with
usage.

28
<PAGE> 30

The Company currently has an available base of 34 excimer lasers worldwide,
comprised of 29 VISX and 5 Summit lasers. The Company has the flexibility to
utilize either manufacturer, depending on the preference of physician users at
each center. The Company has ordered 10 additional excimer lasers from VISX and
has an agreement to purchase up to 12 additional units from Summit. The Company
also has an option to purchase 20 additional VISX lasers.

MARKETVISION AND MEDSOURCE

MarketVision and MedSource comprise the Company's ophthalmic marketing
divisions. Both MarketVision and MedSource, which the Company acquired effective
February 1996, provide marketing services designed to increase ophthalmic
surgical volume. MarketVision operates as an advertising and marketing agency,
while MedSource provides services more directly related to planning, training
and consulting.

MarketVision and MedSource derive income from several sources. Revenue is
realized from commissions earned from placing print and broadcasting media,
retainer fees for various services and mark-ups on direct mail and related
collateral materials. While both entities enjoy their own clientele, both are
involved in administering the marketing of the Company's LaserVision Centers.

MARKETING

The degree to which PRK, PTK and the Company's LaserVision Centers can
penetrate the potential market for vision correction will depend on a variety of
factors including, but not limited to, medical and public acceptance of these
procedures and alternative technologies. None of these factors is under the
immediate control of the Company nor is any predictable at this time.

The Company's regional managers identify potential physician users through
professional meetings and direct marketing efforts, including printed materials
and personal contact. The Company directs its patient marketing efforts at three
potential patient sources: the ophthalmologist's patient base, other eyecare and
medical professionals' patient base and consumers as a whole.

- Ophthalmologist's Patient Base. The Company works with
ophthalmologists who have indicated an interest in using the center to
communicate with existing patients. Strategies include direct mailings with
information related to PRK, collateral and point of purchase materials to
reach patients during office visits and video tape presentations which can
be used to educate patients about PRK.

- Other Eyecare and Medical Professionals' Patient Base. The Company
works to form alliances between its ophthalmic surgeons and optometrists.
These referral networks are valuable in referring optometric patients to a
LaserVision Center. The Company helps to form these referral networks by
offering training for the optometrists, who are then able to provide
pre-operative screenings as well as post-surgical co-management of their
patients. The Company also provides its physician users with marketing
materials designed to foster these referrals and help generate patients.

- Consumers. The Company begins planning a center's marketing program
before the laser is shipped by analyzing available media for the targeted
demographic group. The marketing program consists of advertising and public
relations. Public relations efforts attempt to place news stories in
various media which will highlight the opening of the center and the
availability of PRK in the market. The Company utilizes radio, print,
television and direct mail to disseminate its message to prospective
patients. Prospective patients then respond to a toll free number
(888-LaserVision) and the calls are answered by Company representatives who
qualify the prospective patients and record the prospective patients' names
and related information into a computer system which can be used for
subsequent mailing lists. The representative makes an appointment with a
local center or surgeon to determine whether the prospective patient is a
candidate for the surgery. Based on its experience operating centers
internationally and providing marketing services to refractive surgeons,
the Company believes that the conversion level is higher when calls are
received and processed by a central system. Prospective patients are routed
to exams and given educational

29
<PAGE> 31

materials about PRK. If the prospective patient elects not to proceed to
surgery following the exam process, the prospective patient's name is
placed on a follow-up list and additional materials are sent to the
prospective patient over a defined period of time.

COMPETITION

LaserVision Centers. The market for access to excimer lasers is highly
competitive. The Company competes with several other companies, including at
least one manufacturer of laser equipment, in providing access to excimer lasers
in the United States and internationally. Summit, one of two suppliers of laser
equipment to the Company, has indicated it will open approximately 20 laser
centers in the United States during 1996. Other companies are currently in the
process of gaining FDA approval for their lasers and these companies may elect
to enter the laser center business. Other non-manufacturing companies which have
indicated they intend to operate or already operate laser centers in the United
States are: Beacon Laser Centers, Inc., Global Vision, Inc., LCA Vision, Inc.,
Sight Resources, Inc., Sterling Vision, Inc., The Laser Centre (TLC) and 20/20
Laser Centers, Inc. The Company also competes with laser centers operated by
local operators in certain markets. There can be no assurance that any reduction
in per procedure fees that may result from increased competition will be
compensated for by an increase in procedure volume.

The treatments offered by the Company's LaserVision Centers also compete
with other present forms of treatment for refractive disorders, including
eyeglasses, contact lenses, refractive surgery, corneal transplants and other
technologies currently under development. The Company expects that companies
which have developed or are developing new technologies or products, as well as
other companies (including established and newly formed companies), may attempt
to develop new products directly competitive with the excimer lasers that are to
be utilized by the Company or could introduce new or enhanced products with
features which render the equipment to be used by the Company obsolete or less
marketable. The ability of the Company to compete successfully will depend in
large part on its ability to adapt to technological changes and advances in the
treatment of refractive vision disorders. There can be no assurance that, as the
market for excimer laser surgery and other treatments of eye disorders develops,
the Company's equipment will not become obsolete, and if this occurs, that the
Company will be able to secure new equipment to allow it to compete effectively.

MarketVision and MedSource. The advertising and marketing businesses in
which the Company's MarketVision and MedSource divisions are engaged are highly
competitive. Clients have the freedom to move from one advertising agency to
another with comparative ease since the relationships normally can be terminated
on short notice. MarketVision and MedSource compete with several national and
regional ophthalmic specialty marketing companies, as well as national and local
advertising agencies which may handle diverse client activities. MarketVision
and MedSource may be hampered by their affiliation with LaserVision Centers in
that some customers may consider them competitors which could adversely affect
the ability of these divisions to continue to attract outside business.

PATENTS AND TRADEMARKS

The names LASERVISION(R), LASERVISION CENTERS AND DESIGN(R), LASERVISION
CENTERS(R), LASERVISION CENTER(R) and MobilExcimer(R) are registered U.S.
service marks of the Company. In addition, the Company owns service mark
registrations in a number of foreign countries. The Company has also secured a
patent for the MobilExcimer mounting system. The Company's service marks,
MobilExcimer patent and other proprietary technology may offer the Company a
competitive advantage in the marketplace and could be important to the success
of the Company. There can be no assurance that one or all of these registrations
will not be challenged, invalidated or circumvented in the future. The Company
is currently involved in two legal proceedings which could result in an adverse
impact on its rights to certain of such registrations. Litigation regarding
intellectual property is common and there can be no assurance that the Company's
service mark registrations and patent will significantly protect the Company's
intellectual property. The defense and prosecution of intellectual property
proceedings is costly and involves substantial commitments of

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<PAGE> 32

management time. Failure to defend the Company's rights with respect to its
intellectual property would have a material adverse effect on the Company's
business, financial condition and results of operations. See "Business -- Legal
Proceedings."

GOVERNMENT REGULATION

The manufacturing, labeling, distribution and marketing of medical devices
such as the excimer lasers to which the Company provides access are subject to
extensive and rigorous government regulation in the United States and in certain
other countries. The Federal Food, Drug, and Cosmetic Act requires that medical
devices introduced to the U.S. market, unless exempted by regulation, secure
either an approved PMA application or a premarket notification clearance (known
as a 510(k)). Excimer lasers are required to be the subject of an approved PMA
application.

The manufacturers of the excimer lasers to which the Company provides
access have received approval of their PMA applications for use of their lasers
in PTK and PRK procedures for the treatment of low to moderate myopia. However,
certain FDA officials have advised the Company that they believe that these
lasers are not approved for mobile use, and therefore FDA approval is required
in order to operate the MobilExcimer in the United States. In order to obtain
approval for the MobilExcimer, the Company submitted in June 1996 its own PMA
application for the FDA-approved VISX laser. If such PMA application is
approved, the Company will then submit a supplement to the PMA application to
cover use of the laser in the MobilExcimer. The Company has entered into an
agreement with VISX which allows the Company to reference, in any FDA
applications required for the MobilExcimer, information previously submitted to
the FDA by VISX in support of VISX's PMA applications. There can be no assurance
that the FDA will approve the Company's PMA application for the VISX laser or
its PMA supplement for the MobilExcimer on a timely basis, or at all. Also,
restrictions and limitations imposed by the FDA could adversely affect the
Company's ability to use or promote the MobilExcimer. If approval of the
MobilExcimer is required, delays in receipt of or failure to receive such
approval, or restrictions on the use of the MobilExcimer, could have a material
adverse effect on the Company's business, financial condition and results of
operations.

PMA holders and manufacturers and certain users of medical devices are
subject to continuing FDA obligations. Medical devices are required to be
manufactured in accordance with regulations setting forth current Good
Manufacturing Practices ("GMP"), which require that devices be manufactured and
records be maintained in a prescribed manner with respect to manufacturing,
testing and control activities. It is the FDA's view that with respect to
excimer lasers, users, as well as manufacturers, are required to comply with FDA
requirements with respect to labeling and promotion. The Medical Device
Reporting regulation adopted by the FDA would require that the Company provide
information to the FDA whenever there is evidence to reasonably suggest that one
of its devices may have caused or contributed to a death or serious injury, or
that there has occurred a malfunction that would be likely to cause or
contribute to a death or serious injury if the malfunction were to recur. PMA
holders and manufacturers and certain users of medical devices are subject to
periodic inspections by the FDA. Failure to comply with applicable FDA
requirements could subject the Company to enforcement action, including product
seizures, recalls, withdrawal of approvals, and civil and criminal penalties,
any one or more of which could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, clearances
or approvals could be withdrawn in appropriate circumstances. Failure of the
Company or its principal suppliers to comply with regulatory requirements, or
any adverse regulatory action, could have a material adverse effect on the
Company's business, financial condition and results of operations.

The FDA has promulgated performance standards for lasers. Unless the FDA
approves a variance from such standards, manufacturers of excimer lasers must
comply with such standards as well as with special certification, labeling,
reporting and record keeping requirements. The failure of the Company or its
principal suppliers to comply with these standards could have a material adverse
effect on the Company's business, financial condition and results of operations.

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<PAGE> 33

In addition, federal, state and foreign laws and regulations regarding the
manufacture and marketing of medical devices are subject to change. For example,
the FDA is currently considering significant changes to its GMP and to other
regulations. The Company cannot predict what impact, if any, such changes might
have on its business; however, such changes could have a material adverse impact
on the Company's business, financial condition and results of operations.

There are currently two manufacturers, VISX and Summit, that have received
FDA approval to market excimer lasers for PTK and PRK for low to moderate
myopia. Lack of timely FDA approval for use of PRK for other indications, such
as astigmatism and hyperopia (farsightedness) could have a material adverse
effect on the Company's planned expansion in the United States market.
Furthermore, the failure of these and any other manufacturers that supply
excimer lasers to the Company to comply with applicable federal, state, or
foreign regulatory requirements, or any adverse regulatory action against such
manufacturers, could restrict the supply of lasers or restrict the ability of
the Company to provide access to the lasers. The inability of the Company to
obtain lasers for sale or use in the United States or elsewhere due to lack of
regulatory approval, or otherwise, could prevent the Company from establishing
or maintaining LaserVision Centers and MobilExcimers, which would have a
material adverse effect on the Company's business, financial condition and
results of operations.

EMPLOYEES

The Company currently has 34 employees. Management believes that the
Company's relationship with its employees is satisfactory. As the Company
expands, it expects to add additional employees in technical, marketing and
management positions. The Company does not anticipate any difficulty in hiring
such personnel when needed.

DESCRIPTION OF PROPERTY

The Company currently occupies 9,970 square feet of space in St. Louis
County, Missouri for its corporate headquarters under a lease which expires in
2001. The Company also leases 2,700 square feet of space in St. Louis County,
Missouri for its St. Louis LaserVision Center under a lease which expires in
2001.

LVCI Management (Quebec), Inc., a wholly-owned subsidiary of the Company,
leases approximately 2,200 square feet of space in Montreal, Quebec, Canada,
which houses the Montreal LaserVision Centre. Arnott Laser Vision Centre
Limited, a 50.002% owned subsidiary of the Company's wholly-owned European
subsidiary, leases approximately 3,000 square feet of space on Harley Street in
London, England, which houses the Harley Street LaserVision Centre.

All other lasers operated by the Company are located in centers owned or
leased by other parties. The Company does not have any material lease
obligations associated with such centers.

LEGAL PROCEEDINGS

The Company is a party to the following material legal proceedings:

On October 8, 1993, the Company filed suit in the Circuit Court of St.
Louis County, Missouri, against Laser Vision Centers International SpA ("SpA")
in connection with disputes between the Company and SpA arising out of a
proposed agreement between the parties. On December 17, 1993,

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<PAGE> 34

the court entered judgment by default in the Company's favor: (i) terminating
and rescinding any and all agreements and proposed agreements between the
parties; (ii) for money damages in the amount of $175,000 and (iii) ordering the
return of 275,000 shares of Common Stock which were issued to SpA. In June 1994,
SpA filed a Motion to Vacate the Judgment in the lawsuit. SpA's motion was
denied in April 1995, but SpA has filed an appeal which is pending.

On November 17, 1994, the Company brought suit against LaserVision Centers
West, Inc. ("LVCWI") in the United States District Court for the Eastern
District of Missouri alleging trade mark, service mark and trade name
infringements and other related violations of law. The Company seeks to have
LVCWI enjoined from any further use of marks or names registered to and used by
the Company or any others which are confusingly similar to such marks or names.
In addition, the Company seeks damages, attorney fees and a declaratory judgment
that no agreement exists between the parties. On July 7, 1995, this action was
transferred to the United States District Court for the Central District of
California. The Company intends to vigorously pursue the prosecution of this
suit.

On March 24, 1995, the Company filed suit against 20/20 Laser Centers, Inc.
("20/20") in the United States District Court for the Southern District of
California alleging trade mark, service mark and trade name infringements and
other related violations of law. The various counts in this suit arose from
20/20's use of the marks or names "Laser Vision" and "Laser Vision Correction."
The Company seeks to have 20/20 enjoined from any further use of these marks or
names or any others which are confusingly similar to those registered and used
by the Company. The Company also seeks damages and attorney fees in conjunction
with this action. On June 23, 1995, by stipulated agreement of the parties, this
action was transferred to the United States District Court for the District of
Maryland, Southern Division. 20/20 has counterclaimed for cancellation of the
Company's registered marks LASERVISION, LASERVISION CENTERS AND DESIGN,
LASERVISION CENTER and LASERVISION CENTERS. The Company intends to vigorously
pursue the prosecution of this suit.

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<PAGE> 35

MANAGEMENT

The directors, executive officers and key personnel of the Company, their
positions with the Company, and their ages are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------------------
<S> <C> <C>
John J. Klobnak............... 45 Chairman of the Board and Chief Executive Officer
Alan F. Gillam................ 52 President, Director
Robert W. May................. 49 Vice-Chairman of the Board, General Counsel and
Secretary
B. Charles Bono III........... 48 Executive Vice President, Chief Financial Officer and
Treasurer
James C. Wachtman............. 35 Executive Vice President and Chief Operating Officer --
North America
Frank Bono III................ 45 Vice President of Sales
Dr. Henry Simon............... 65 Director
James M. Garvey............... 48 Director
Richard Lindstrom, M.D........ 49 Director
Steven C. Straus.............. 39 Director
</TABLE>

JOHN J. KLOBNAK. Mr. Klobnak has served as Chairman of the Board and Chief
Executive Officer of the Company since 1993. From 1990 to 1993, Mr. Klobnak
served as the Company's President and Chief Executive Officer. From 1986 to
1990, he served as Chief Operating Officer and subsequently President of
MarketVision, a partnership acquired by the Company upon its inception in 1990.
Prior to 1986, Mr. Klobnak was an advertising and marketing consultant.

ALAN F. GILLAM. Since 1993, Mr. Gillam has served as President and, until
June 1, 1996, as Chief Operating Officer of the Company. From 1991 to 1993, Mr.
Gillam was the International Director of the excimer laser project for Alcon
Surgical, Inc., a division of one of the world's largest eyecare specialty
companies. Prior to 1991, Mr. Gillam was area director for Alcon in Northern
Europe and Africa.

ROBERT W. MAY, ESQ. Mr. May joined the Company as its Vice-Chairman and
General Counsel in September 1993. Prior to joining the Company as a full-time
employee, Mr. May served as Corporate Secretary and a director of the Company
and was a partner in the St. Louis, Missouri law firm of May and Berne, the
former general corporate counsel for the Company, from 1985 until 1993.

B. CHARLES BONO III. Mr. Bono joined the Company as Executive Vice
President, Chief Financial Officer and Treasurer in 1992. From 1980 to 1992, Mr.
Bono was employed by Storz Instrument Company, a global marketer of ophthalmic
devices and pharmaceutical products, serving as Vice President of Finance from
1987 to 1992. He is not related to Frank J. Bono III, Vice President of Sales
for the Company.

JAMES C. WACHTMAN. Mr. Wachtman joined the Company as Chief Operating
Officer -- North American Operations effective May 30, 1996. From 1983 until he
joined the Company, Mr. Wachtman was employed by McGaw, Inc., a manufacturer of
disposables for home infusion, in various positions. Most recently, he served as
Vice President/Operations of CAPS, a hospital pharmacy division of McGaw.

FRANK J. BONO III. Mr. Bono joined the Company in 1990 as Vice President of
Operations. In 1992 he became Vice President of Sales. From 1988 to 1990, Mr.
Bono was a self-employed surgical consultant and manufacturers' representative
for surgical sales and marketing services. He is not related to B. Charles Bono
III, Executive Vice President, Chief Financial Officer and Treasurer of the
Company.

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<PAGE> 36

DR. HENRY SIMON. Dr. Simon has served as a director of the Company since
November 1995. Since 1996, he has served as Chairman and from 1993 to 1996 as
CEO and Managing Partner of Schroder Ventures International Life Sciences
Advisers, a venture capital advisory company. Dr. Simon has served as Chairman
of Mitel, Inc., a manufacturer of telecommunications equipment and Shire
Pharmaceutical Group plc, a British company. Dr. Simon is currently a director
of Chiroscience plc and Micromass in the U.K.

JAMES M. GARVEY. Mr. Garvey has served as a director of the Company since
November 1995. Mr. Garvey serves as Chief Executive Officer and Managing Partner
of Schroder Ventures Life Sciences Advisors, a venture capital advisory company
which he joined in May of 1995. From 1989 to 1995, Mr. Garvey was Director of
Allstate Venture Capital, the $600 million venture capital division of Allstate
Corp. after initially directing Allstate Venture Capital's health care
investment activity. Mr. Garvey is currently a director of Allscrips
Pharmaceutical and J&C Healthcare and has served as director and Chairman of
several public and private healthcare companies.

RICHARD L. LINDSTROM, M.D. Dr. Lindstrom has served as a director of the
Company since November 1995. Since 1979, Dr. Lindstrom has been engaged in the
private practice of ophthalmology and has been the President of Lindstrom,
Samuelson & Hardten Ophthalmology Associates, P.A. since 1989. In 1989, Dr.
Lindstrom founded the Phillips Eye Institute Center for Teaching & Research, a
ophthalmic research and surgical skill education facility, and he currently
serves as the center's Medical Director. Dr. Lindstrom has served as an
Associate Director of the Minnesota Lions Eye Bank since 1987. From 1980 to
1989, he served as a Professor of Ophthalmology at the University of Minnesota.
Dr. Lindstrom received his M.D. and his B.A. and B.S. degrees from the
University of Minnesota.

STEVEN C. STRAUS. Mr. Straus has served as a director of the Company since
January 1996. He currently serves as Senior Vice President of the Ambulatory
Surgery Division of Columbia Healthcare, the world's largest for-profit health
care provider. Mr. Straus was employed in a similar capacity with Medical Care
America, Inc. from 1993 until Medical Care America was merged into Columbia
Healthcare Corporation in 1994. From 1986 to 1993, Mr. Straus held various
positions with Baxter Healthcare Corporation and from 1978 to 1985 was employed
by American Hospital Supply Corporation.

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<PAGE> 37

SELLING STOCKHOLDERS

The following table sets forth certain information with respect to
beneficial ownership of the Common Stock as of July 12, 1996 (after giving
effect to the conversion of the Company's Convertible Preferred Stock into
Common Stock) by each of the Selling Stockholders.

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES
OWNED AFTER BENEFICIALLY
SHARES OFFERING IF OWNED AFTER
BENEFICIALLY OVER-ALLOTMENT OFFERING IF
OWNED PRIOR TO OPTION NOT NUMBER OF OVER-ALLOTMENT
OFFERING(1) EXERCISED SHARES OPTION EXERCISED(1)
NAME AND ADDRESS OF BENEFICIAL ----------------- ----------------- BEING ----------------
OWNER NUMBER PERCENT NUMBER PERCENT OFFERED(1) NUMBER PERCENT
- ---------------------------------- ------- ------- ------- ------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Nasser Menhall.................... 3,883 * 3,883 * 3,883 0 *
c/o Pillar
28 Avenue De Messine
75008 Paris, France
Bio Capital....................... 1,383 * 1,383 * 1,383 0 *
Societe En Commandite
2540 Daniel Johnson Blvd.
Bureau 910
Laval, Quebec H7T 2S3
525 Investments Ltd. ............. 166,666 1.9% 166,666 1.5% 86,666 80,000 *
La Molte Chambres
La Molte St.
St. Helier, Jersey JE1 1BJ
British Channel Islands
</TABLE>

- -------------------------
* Less than 1%.

(1) Includes the number of shares and percentage ownership represented by such
shares determined to be beneficially owned by a person in accordance with
the rules of the Securities and Exchange Commission. The persons named in
this table have sole voting and investment power with respect to all shares
of Common Stock shown as owned by them, subject to community property laws
where applicable.

36
<PAGE> 38

UNDERWRITING

The names of the Underwriters of the shares of Common Stock offered hereby
and the aggregate number of shares which each has severally agreed to purchase
from the Company (subject to the terms and conditions specified in the
Underwriting Agreement) are as follows:

<TABLE>
<CAPTION>
UNDERWRITERS NUMBER OF SHARES
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Dillon, Read & Co. Inc......................................................
A.G. Edwards & Sons, Inc....................................................

---------
Total.................................................................. 2,500,000
=========
</TABLE>

The Managing Underwriters are Dillon, Read & Co. Inc. and A.G. Edwards &
Sons, Inc.

If any shares of Common Stock offered hereby are purchased by the
Underwriters, all such shares will be so purchased. The Underwriting Agreement
contains certain provisions whereby if any Underwriter defaults in its
obligation to purchase such shares and if the aggregate obligations of the
Underwriters so defaulting do not exceed 10% of the shares hereby, the remaining
Underwriters, or some of them, must assume such obligations.

The shares of Common Stock offered hereby are being offered severally by
the Underwriters for sale at the price set forth on the cover page hereof, or at
such price less a concession not to exceed $ per share on sales to
certain dealers. The Underwriters may allow, and such dealers may reallow, a
concession not to exceed $ per share on sales to certain dealers. The
offering of the shares of Common Stock is made for delivery when, as, and if
accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares. After the
shares are released for sale to the public, the public offering price, the
concession and the reallowance may be changed by the Managing Underwriters.

The Company and the Selling Stockholders have granted to the Underwriters
an option to purchase up to an additional 375,000 shares of Common Stock on the
same terms per share. If the Underwriters exercise this option, each of the
Underwriters will have the firm commitment, subject to certain conditions, to
purchase approximately the same proportion of the aggregate shares so purchased
as the number of shares to be purchased by it shown in the above table bears to
the total number of shares in such table. The Underwriters may exercise such
option on or before the thirtieth day from the date of the public offering of
the shares offered hereby and only to cover over-allotments made of the shares
in connection with this Offering.

The Company has agreed that it will not, without the prior written consent
of Dillon, Read & Co. Inc., sell, grant any option to sell, transfer or
otherwise dispose of, directly or indirectly, any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or warrants or
other rights to purchase Common Stock or permit the registration under the Act
of any shares of Common Stock, prior to the expiration of 90 days from the date
of the consummation of this Offering, except for (i) issuances of Common Stock
upon the exercise of outstanding options or warrants issued under the Company's
existing incentive stock option plan, non-qualified stock option plan or
non-qualified warrant plan and (ii) options or warrants granted to employees,
officers and directors of the Company under the Company's existing incentive
stock option plan, non-qualified stock option plan or non-qualified warrant
plan. Each officer and director of the Company and certain stockholders who
beneficially own an aggregate of 3,910,000 shares of Common Stock have agreed
that they will not,

37
<PAGE> 39

without the prior written consent of Dillon, Read & Co. Inc., sell, grant any
option to sell, transfer or otherwise dispose of, directly or indirectly, any
shares of Common Stock or securities convertible into or exchangeable for Common
Stock or warrants or other rights to purchase Common Stock prior to the
expiration of 90 days from the date of the consummation of this Offering.

The Company and the Selling Stockholders have agreed in the Underwriting
Agreement to indemnify the Underwriters against certain civil liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the Underwriters may be required to make in respect thereof.

The Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.

LEGAL MATTERS

The validity of the Common Stock offered hereby and certain other legal
matters will be passed upon for the Company by Dankenbring, Greiman, Osterholt &
Hoffmann, P.C., St. Louis, MO. Certain legal matters in connection with this
Offering will be passed upon for the Underwriters by Cooley Godward Castro
Huddleson & Tatum, Menlo Park, CA.

EXPERTS

The consolidated balance sheets as of April 30, 1996 and 1995 and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the years ended April 30, 1996, 1995 and 1994 included in
this Prospectus and Registration Statement have been audited by Price Waterhouse
LLP, independent accountants, as indicated in their report with respect thereto,
and are included in reliance upon such report given upon the authority of said
firm as experts in auditing and accounting.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by the
Company with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Judiciary Plaza, Washington, D.C. 20549 and at its regional offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 75 Park Place, Room 1228, New York, New York 10007. Copies of
such material may also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.

The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, with respect to the securities offered by
this Prospectus. This Prospectus does not contain all the information set forth
in the Registration Statement and the exhibits and schedules thereto. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement and to the exhibits.
Statements contained in this Prospectus as to the contents of any contract or
other documents referred to in this Prospectus are not necessarily complete,
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference. The Registration Statement
may be inspected without charge at the Commission's principal office and copies
may be obtained upon payment of the prescribed fee at the Public Reference Room
of the Commission at 450 Fifth Street, NW, Washington, DC 20549.

38
<PAGE> 40

INFORMATION INCORPORATED BY REFERENCE

The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference:

(1) The Company's Annual Report on Form 10-KSB for the year ended April 30,
1995.

(2) The amendment to the Company's Annual Report on Form 10-KSB for the
year ended April 30, 1995 filed on July 31, 1995.

(3) The Company's Quarterly Reports on Form 10-QSB for the quarters ended
January 31, 1996, October 31, 1995 and July 31, 1995.

(4) The Company's Current Report on Form 8-K dated April 17, 1996 and filed
with the Commission on May 3, 1996.

(5) The Company's Current Report on Form 8-K dated October 11, 1995 and
filed with the Commission on November 9, 1995.

(6) The Company's Current Report on Form 8-K dated August 1, 1995 and filed
with the Commission on August 24, 1995.

(7) The Company's Current Report on Form 8-K dated April 28, 1995 and filed
with the Commission on May 19, 1995.

(8) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission on
November 5, 1993.

All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this Offering shall be deemed to be
incorporated by reference into this Prospectus and shall be a part hereof from
the date of filing of such reports and documents. Any statement incorporated
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any report or document described above (other than exhibits,
unless such exhibits are specifically incorporated by reference herein).
Requests for such copies should be directed to the Company at its principal
executive offices located at 540 Maryville Centre Drive, Suite 200, St. Louis,
Missouri 63141, telephone (314) 434-6900, attention, Robert W. May.

39
<PAGE> 41

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF PRICE WATERHOUSE LLP....................................................... F-1
FINANCIAL STATEMENTS
Consolidated Balance Sheet......................................................... F-2
Consolidated Statement of Operations............................................... F-3
Consolidated Statement of Changes in Stockholders' Equity.......................... F-4
Consolidated Statement of Cash Flows............................................... F-5
Notes to Consolidated Financial Statements......................................... F-6
</TABLE>

40
<PAGE> 42

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Laser Vision Centers, Inc. and Subsidiaries

In our opinion, the accompanying consolidated balance sheet and related
consolidated statements of operations, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Laser Vision Centers, Inc. and its subsidiaries as of April 30, 1996 and April
30, 1995, and the results of their operations and their cash flows for each of
the three years in the period ended April 30, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

As discussed further in Note 4, effective in the fourth quarter of the year
ended April 30, 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of."

/s/ Price Waterhouse LLP

PRICE WATERHOUSE LLP
St. Louis, Missouri

June 14, 1996

F-1
<PAGE> 43

LASER VISION CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
PRO FORMA
APRIL 30, AT APRIL 30, 1996
--------------------------- (NOTE 5)
1995 1996 (UNAUDITED)
----------- ------------ -----------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................... $ 2,126,000 $ 12,672,000 $ 12,672,000
Accounts receivable, net of allowance of
$157,000 and $286,000, respectively.......... 587,000 805,000 805,000
Prepaid expenses and other current assets....... 164,000 483,000 483,000
Assets held for sale (Note 4)................... -- 1,200,000 1,200,000
----------- ------------ -------------
Total current assets....................... 2,877,000 15,160,000 15,160,000
Property and equipment:
Laser equipment (Notes 4, 6 and 7).............. 9,941,000 9,474,000 9,474,000
Medical equipment (Note 4)...................... 386,000 352,000 352,000
Mobile equipment................................ 508,000 892,000 892,000
Furniture and fixtures.......................... 396,000 1,019,000 1,019,000
----------- ------------ -------------
11,231,000 11,737,000 11,737,000
Less-accumulated depreciation..................... (3,288,000) (1,323,000) (1,323,000)
----------- ------------ -------------
7,943,000 10,414,000 10,414,000
Equipment deposits................................ 80,000 1,765,000 1,765,000
----------- ------------ -------------
Net property and equipment................. 8,023,000 12,179,000 12,179,000
Other assets (Note 2)............................. 418,000 1,574,000 1,574,000
----------- ------------ -------------
Total assets...................................... $11,318,000 $ 28,913,000 $ 28,913,000
=========== ============ =============
LIABILITIES, REDEEMABLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable (Note 6)....... $ 3,013,000 $ 1,858,000 $ 1,858,000
Current portion of obligations under capital
leases (Note 7).............................. 94,000 467,000 467,000
Accounts payable................................ 490,000 870,000 870,000
Accrued liabilities............................. 581,000 1,963,000 1,963,000
----------- ------------ -------------
Total current liabilities.................. 4,178,000 5,158,000 5,158,000
Non-current liabilities:
Notes payable (Note 6).......................... 342,000
Capital lease obligations (Note 7).............. 64,000 1,375,000 1,375,000
Deferred revenue and other...................... 80,000 275,000 275,000
Minority interests (Note 3)..................... 305,000 113,000 113,000
----------- ------------ -------------
791,000 1,763,000 1,763,000
Commitments and contingencies (Notes 9 and 10)
Convertible preferred stock with mandatory
redemption provision in 2005 (Note 5)........... 14,539,000
Stockholders' equity (Notes 11 and 12):
Common stock, par value $.01 per share,
50,000,000 authorized; 4,452,555 and
6,415,993 shares issued and outstanding,
respectively................................. 45,000 64,000 88,000
Paid-in-capital................................. 13,943,000 23,831,000 38,346,000
Accumulated deficit............................. (7,639,000) (16,442,000) (16,442,000)
----------- ------------ -------------
6,349,000 7,453,000 21,992,000
----------- ------------ -------------
Total liabilities, redeemable preferred
stock and stockholders' equity.......... $11,318,000 $ 28,913,000 $ 28,913,000
=========== ============ =============
</TABLE>

See Notes to Consolidated Financial Statements.

F-2
<PAGE> 44

LASER VISION CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED APRIL 30,
-----------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues........................................... $ 2,106,000 $ 3,311,000 $ 3,918,000
Cost of revenues (includes $969,000, $1,589,000 and
$1,973,000 of depreciation, respectively)........ 1,768,000 3,375,000 4,240,000
----------- ----------- -----------
Gross profit (loss)........................... 338,000 (64,000) (322,000)
Operating expense:
General and administrative....................... 695,000 1,002,000 2,356,000
Salaries and related expenses.................... 902,000 1,285,000 2,329,000
Depreciation and amortization.................... 250,000 283,000 230,000
Selling and marketing expenses................... 391,000 574,000 916,000
Fixed asset impairment provision (Note 4)........ -- -- 3,063,000
----------- ----------- -----------
2,238,000 3,144,000 8,894,000
----------- ----------- -----------
Loss from operations.......................... (1,900,000) (3,208,000) (9,216,000)
Other income (expenses):
Interest and other income........................ 21,000 37,000 437,000
Interest expense................................. (156,000) (242,000) (216,000)
Minority interest in net loss of subsidiary (Note
3)............................................ 116,000 192,000
Provision for loss on advance (Note 10).......... (175,000) -- --
----------- ----------- -----------
Net loss...................................... $(2,210,000) $(3,297,000) $(8,803,000)
=========== =========== ===========
Net loss per share (Note 2)................... $ (.66) $ (.82) $ (1.75)
Weighted average number of common shares
outstanding...................................... 3,356,000 4,001,000 5,278,000
</TABLE>

See Notes to Consolidated Financial Statements.

F-3
<PAGE> 45

LASER VISION CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED APRIL 30, 1996

<TABLE>
<CAPTION>
NOTE
COMMON STOCK RECEIVABLE, TOTAL
-------------------- PAID-IN ACCUMULATED COMMON STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT STOCK EQUITY
--------- ------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1993....... 2,913,000 $29,000 $ 6,032,000 $ (2,132,000) $(1,100,000) $ 2,829,000
Issuance of 950,000 units of
common stock and Class F
warrants in public offering
(Note 12), including over
allotment of F warrants to
underwriters.................. 950,000 10,000 3,784,000 3,794,000
Cancellation of 275,000 shares
of common stock (Note 10)..... (275,000) (3,000) (922,000) 1,100,000 175,000
Exercise of Class A warrants.... 1,000 6,000 6,000
Net loss for year ended April
30, 1994...................... -- -- -- (2,210,000) -- (2,210,000)
--------- ------- ----------- ------------ ----------- -----------
Balance at April 30, 1994....... 3,589,000 36,000 8,900,000 (4,342,000) 4,594,000
Exercise of Class A, B and F
warrants...................... 726,955 8,000 4,142,000 4,150,000
Issuance of common stock in
private offering (Note 11).... 125,000 1,000 835,000 836,000
Exercise of incentive and
non-qualified stock options... 11,600 66,000 66,000
Net loss for year ended April
30, 1995...................... -- -- -- (3,297,000) -- (3,297,000)
--------- ------- ----------- ------------ ----------- -----------
Balance at April 30, 1995....... 4,452,555 45,000 13,943,000 (7,639,000) -- 6,349,000
--------- ------- ----------- ------------ ----------- -----------
Exercise of incentive and
non-qualified options......... 100,210 1,000 468,000 469,000
Exercise of C, D, non-qualified,
underwriter and other
warrants...................... 363,294 3,000 2,137,000 2,140,000
Exercise of Class B and F
warrants...................... 1,159,690 12,000 6,910,000 6,922,000
Issuance of common stock in
private offering (Note 11).... 242,218 2,000 1,143,000 1,145,000
Issuance of common stock in
conjunction with acquisitions
(Note 3)...................... 98,026 1,000 911,000 912,000
Costs associated with issuance
of convertible preferred stock
with mandatory redemption
provision..................... (1,242,000) (1,242,000)
Dividends accrued on convertible
preferred stock (Note 5)...... (439,000) (439,000)
Net loss for the year ended
April 30, 1996................ -- -- -- (8,803,000) -- (8,803,000)
--------- ------- ----------- ------------ ----------- -----------
Balance at April 30, 1996....... 6,415,993 $64,000 $23,831,000 $(16,442,000) $ -- $ 7,453,000
========= ======= =========== ============ =========== ===========
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE> 46

LASER VISION CENTER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED APRIL 30,
-----------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating expenses:
Net loss................................................... $(2,210,000) $(3,297,000) $(8,803,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization............................ 1,219,000 1,872,000 2,203,000
Fixed asset impairment................................... 3,063,000
Imputed interest......................................... 16,000 212,000 74,000
Provision for loss on advance............................ 175,000
Provision for uncollectible accounts receivable.......... 66,000 32,000 75,000
Changes in operating assets and liabilities, excluding
the effects of acquisitions:
Increase in accounts receivable........................ (386,000) (52,000)
Increase in prepaid expenses and other current
assets.............................................. (69,000) (92,000) (319,000)
Increase in other assets............................... (94,000) (54,000)
Increase in accounts payable........................... 124,000 138,000 380,000
Increase in accrued liabilities........................ 166,000 328,000 746,000
Decrease in minority interest.......................... -- (116,000) (192,000)
----------- ----------- -----------
Net cash used by operating activities............. (899,000) (1,017,000) (2,879,000)
----------- ----------- -----------
Cash flows from investing activities:
Acquisition of equipment................................... (2,818,000) (1,147,000) (5,993,000)
Equipment deposits......................................... (25,000) (80,000) (1,685,000)
Decrease in restricted cash................................ 375,000
Acquisition of New Image................................... -- -- (169,000)
----------- ----------- -----------
Net cash used by investing activities...................... (2,468,000) (1,227,000) (7,847,000)
=========== =========== ===========
Cash flows from financing activities:
Proceeds from private offering, redeemable preferred....... 14,100,000
Private placement offering costs, redeemable preferred..... (1,117,000)
Proceeds from private offerings, common.................... 4,750,000 903,000 1,220,000
Private placement offering costs, common................... (956,000) (67,000) (75,000)
Net proceeds from exercise of Class A, B and F Warrants.... 6,000 4,150,000 6,922,000
Net proceeds from exercise of other warrants............... 2,140,000
Proceeds from exercise of incentive and nonqualified stock
options.................................................. 66,000 469,000
Payment on notes payable................................... (375,000) (1,305,000) (2,135,000)
Principal payments under capital lease obligations......... (139,000) (83,000) (252,000)
----------- ----------- -----------
Net cash provided by financing activities.................... 3,286,000 3,664,000 21,272,000
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents..................................... (81,000) 1,420,000 10,546,000
Cash and cash equivalents at beginning of year.... 787,000 706,000 2,126,000
----------- ----------- -----------
Cash and cash equivalents at end of year.......... $ 706,000 $ 2,126,000 $12,672,000
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Notes payable issued for laser purchases................... $ 5,914,000 $ 1,359,000 $ 675,000
Capital lease obligations related to laser purchases....... 1,936,000
Accrued dividends and offering costs, private placement
redeemable preferred..................................... 564,000
Acquisitions -- Fair value of assets acquired................ 1,676,000
Liabilities assumed........................................ (595,000)
Common stock issued........................................ (912,000)
-----------
Cash paid.................................................. 169,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest................... $ 140,000 $ 31,000 $ 127,000
</TABLE>

See Notes to Consolidated Financial Statements.

F-5
<PAGE> 47

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF ORGANIZATION

Laser Vision Centers, Inc. (the Company), provides access to excimer lasers
and related services for the treatment of refractive vision disorders and has 30
lasers currently in use in the United States, Canada and Europe. The Company is
the world's only operator of mobile excimer laser systems. The excimer laser can
be used to treat refractive optical disorders such as nearsightedness and
astigmatism to eliminate or reduce the need for corrective lenses. LaserVision
Centers(R) operate on a shared-access model, giving individual or group
ophthalmic practices use of the technology without investment risk or
maintenance requirements and allowing optimal use of the equipment. In addition,
the Company provides a broad range of professional services, including physician
and staff training, technical support services and maintenance and, through its
MarketVision and MedSource divisions, advertising and marketing programs and
services.

Photorefractive keratectomy (PRK) involves the use of an excimer laser to
reshape the cornea, thereby adjusting its refractive power, which in turn
eliminates or reduces the need for corrective lenses. The excimer laser can also
be used to treat a number of pathological superficial corneal disorders in a
procedure called phototherapeutic keratectomy (PTK). Two manufacturers, VISX,
Incorporated (VISX) and Summit Technology, Inc. (Summit) recently received
approval by the United States Food and Drug Administration (FDA) for use of
their excimer lasers to perform PRK for low to moderate myopia and PTK. In
addition to such procedures, excimer lasers can also be used to perform
procedures known as laser in situ keratomileusis (LASIK), which may be more
predictable in treating high levels of myopia, but which has not been
specifically approved in the United States by the FDA.

The Company has operated excimer laser centers in Canada and Europe since
1991 and 1993, respectively. The Company currently provides excimer lasers and
related services to fixed-site centers in Canada, the United Kingdom, Finland,
Greece, Sweden and Ireland and operates the MobilExcimer(R) in Canada and the
United Kingdom. With the recent approval of the excimer laser technology by the
FDA to treat certain refractive vision disorders, the Company currently operates
centers in the United States and plans to continue to open U.S. centers. Risk
factors associated with the successful implementation of the Company's business
strategy include the absence of profitable operations, the uncertainty of market
acceptance of excimer laser surgery, competition, the Company's dependence on
limited sources of excimer lasers, government regulation, the uncertainty of FDA
approval of the MobilExcimer, the lack of long-term follow-up data and
undetermined medical risks with respect to the effect of excimer laser surgery,
product liability and professional liability, the Company's ability to manage
its growth and its dependence on current management and the possible need for
additional financing. In the United States, fixed-site laser centers are
operated in conjunction with Columbia Healthcare Corporation (Columbia
Healthcare), formerly Columbia/HCA, or by the Company independently or through
joint ventures.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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,
disclosure of contingent assets and liabilities, as well as the reported amounts
of revenue and expenses. Actual results could differ from those estimates.

Cash equivalents

The Company considers unrestricted cash, as well as short-term investments
purchased with an original maturity of three months or less, to be cash
equivalents. Cash and cash equivalents included money market funds of $7,903,000
($1,711,000 in 1995) and short term commercial paper of $4,500,000 at April 30,
1996.

F-6
<PAGE> 48

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Credit risk

Financial instruments which potentially subject the Company to
concentrations of credit risks consist principally of funds held in commercial
paper, money market accounts and trade receivables.

As of April 30, 1995 and 1996, the Company has deposited $1,747,000 and
$12,406,000, respectively, in commercial paper and money market accounts at
financial institutions. Management believes the credit risk related to these
funds is limited due to the short-term nature of the accounts.

Management believes the credit risk related to its trade receivables is
limited due to the Company's large number of customers and that its allowance
for doubtful accounts is adequate.

Property and equipment

Property and equipment is stated at cost, or at estimated fair value for
long-lived assets determined to be impaired. Expenditures for repairs and
maintenance are charged to expense as incurred. Depreciation and amortization
are computed utilizing the straight-line method. In the opinion of management,
this method is adequate to allocate the cost of equipment over its estimated
useful lives which range from four to five years. Depreciation for commercial
lasers and other equipment is included in cost of revenues. Depreciation for the
clinical laser and furniture and fixtures is classified as an operating expense.

Impairment of long-lived assets

The Company reviews for the impairment of long-lived assets when events or
changes in circumstances indicate that an asset's carrying value may not be
recoverable. In reviewing for impairment, if the carrying value of an asset is
greater than the sum of the undiscounted projected cash flows attributable to
that asset, an impairment loss is recognized. The impairment loss is based on
the fair value of the asset which is determined based on market prices,
discounted cash flows or the best information available. See Note 4 for the
impairment provision and the adoption of Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of ("SFAS 121").

Other assets

Other assets at April 30 consist of the following:

<TABLE>
<CAPTION>
1995 1996
-------- ----------
<S> <C> <C>
Goodwill, net of $8,000 and $89,000 amortization, respectively (Note
3)................................................................. $242,000 $1,108,000
Tradename and servicemark costs, net of $15,000 and $30,000
amortization, respectively......................................... 167,000 152,000
VCI deposits in escrow (Note 3)...................................... 256,000
Rent deposits and other, net......................................... 9,000 58,000
------- ----------
$418,000 $1,574,000
======= ==========
</TABLE>

The goodwill, tradename and servicemark costs are being amortized over 5 to
15 years.

Revenue

Laser revenues are recognized when the surgical procedures are performed.
Advertising revenues are recognized as earned, upon delivery of print media or
upon broadcast of TV or radio advertisements.

F-7
<PAGE> 49

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Cost of revenues

Cost of revenues include laser and medical equipment depreciation, laser
maintenance including optics and gasses, Pillar Point royalty fees, professional
medical services and medical supplies for the LaserVision Centers division. For
the MarketVision division, cost of revenues includes client media and production
costs which are deferred during production and expensed when the client is
billed. Advertising costs are expensed as incurred and included in selling and
marketing expenses for the LaserVision Centers division.

Deferred revenue

Deferred revenue, included in other assets, relates to funds received from
opthalomologists under agreements with the Company to provide excimer laser
access. When laser training and access are provided and the deposits are
released, the revenue will be recorded.

Minority interests

The minority interests on the consolidated balance sheet relate to a
49.998% interest in a European subsidiary (see Note 3) and a 10% interest in one
Canadian subsidiary.

Income taxes

The Company uses the asset and liability method of accounting for income
taxes. Deferred tax assets and liabilities are recorded based on the difference
between the income tax basis of assets and liabilities and their carrying
amounts for financial reporting purposes.

Foreign Currency Translation

The accounts of the Company's foreign subsidiaries are maintained in their
respective local currencies. The accompanying consolidated financial statements
have been translated and adjusted to reflect U.S. dollars on the bases presented
below.

Assets and liabilities are translated into U.S. dollars at year-end
exchange rates. Income and expense items are translated at average rates of
exchange prevailing during the year. Foreign currency translation adjustments
and transaction gains and losses are immaterial amounts and are included in
earnings currently.

Loss per share

Net loss per common share is based upon the weighted average number of
shares outstanding during the period and includes dividends accrued on the
convertible preferred stock. The calculation excludes common stock equivalent
shares when their inclusion in such calculations would have been antidilutive.

Reclassifications

Certain reclassifications have been made to the prior year consolidated
financial statements to conform to the current year presentation.

3. ACQUISITIONS

Effective April 5, 1996, the Company's European subsidiary acquired certain
assets and assumed certain liabilities of New Image Laser Centres Limited (New
Image) for approximately $169,000 paid upon acquisition and $60,000 which is
payable September 15, 1996. Assets acquired include accounts

F-8
<PAGE> 50

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

receivable, medical equipment, leasehold improvements and furniture and
fixtures. Liabilities assumed include the obligation to provide patient
follow-up exams for treatment commenced prior to the acquisition date. The
acquisition was accounted for in accordance with the purchase method of
accounting; the acquisition cost approximated the fair value of the net assets
acquired and no goodwill has been recorded. The 1996 consolidated financial
statements include the revenues and expenses of New Image from the acquisition
date.

Effective February 1, 1996, the Company acquired the stock of Med-Source,
Inc. (Med Source) for 21,845 shares of the Company's unregistered common stock
issued at the $12.125 market price when the transaction was negotiated, and
$35,000. The acquisition was accounted for in accordance with the purchase
method of accounting; the acquisition cost exceeded the fair value of the net
assets acquired resulting in approximately $282,000 of goodwill. To increase
ophthalmic surgical volumes, Med Source provides marketing services in the areas
of planning, training, and consulting. The April 30, 1996 consolidated financial
statements include all assets and liabilities of Med Source and reflect the
revenues and expenses of Med Source since the acquisition date.

In August 1995, the Company acquired the stock of Vision Correction, Inc.
of Minnesota (VCI) for 76,181 shares of the Company's unregistered common stock
issued at the $8.50 market price. The principal assets acquired were site
agreements with eye centers, clinics and individual doctors in nine states with
respect to access to mobile excimer lasers. The 25 agreements, each of which
required a $10,000 deposit by the eye center, clinic or doctor, require the
Company to provide certain services including regular access to a mobile excimer
laser in return for an agreement by the eye center, clinic or doctor to
exclusively use mobile lasers provided by the Company for all PRK or similar
services. The agreements become effective when the Company gives notice of its
intention to provide access to a mobile excimer laser and continues thereafter
for an initial term of 2 years and on a year to year basis thereafter unless
notice of termination is given. The eye centers, clinics and doctors may
terminate the agreements if the agreements do not become effective on or before
December 31, 1997. The VCI acquisition was accounted for in accordance with the
purchase method of accounting; the acquisition cost exceeded the fair value of
the net assets acquired resulting in the recording of goodwill totaling
$664,000.

Effective November 1, 1994, the Company's European subsidiary acquired a
majority interest of Arnott Laser Vision Centre Limited (currently doing
business as Harley Street Laser Vision Centre "HSLVC") in London, England for
approximately $39,000. The step acquisition of HSLVC was accounted for pursuant
to the purchase method of accounting. HSLVC subsequently acquired approximately
$104,000 of equipment and the existing excimer laser surgery practice from the
minority owners of HSLVC in exchange for a non-interest bearing note of
approximately $354,000, resulting in the recording of goodwill of $250,000. In
June 1995, HSLVC consolidated operations and moved to a new leased facility on
Harley Street in London. As specified in the acquisition agreement, the Company
agreed to purchase a new excimer laser for approximately $500,000 to be used at
the Harley Street facility in exchange for a non-interest bearing note of HSLVC.
The April 30, 1996 and 1995 consolidated financial statements include the
operations of HSLVC since the acquisition date and reflect the equity and other
obligations due to the minority owners as a non-current liability.

4. FIXED ASSET IMPAIRMENT PROVISION

In connection with the Company's continuing evaluation of the
recoverability of its assets, a fixed asset impairment charge of $3,063,000 was
recognized in the fourth quarter of fiscal 1996. This resulted from a
reorganization of the Company's international operations in connection with the
approval by the Food and Drug Administration (FDA) of the Summit laser in
October 1995 and the VISX laser in March 1996, for performance of certain PRK
procedures in the United States. The Company had 22

F-9
<PAGE> 51

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Model B VISX lasers dedicated to its European and Canadian operations as of
February 1, 1996. The intent of the Company had been to move a number of these
lasers to the United States after the FDA approval. The Company also expected
these lasers to be upgradeable to treat hyperopia (farsightedness). However, in
the fourth quarter of fiscal 1996 the Company was informed of VISX's decision
not to upgrade the Model B lasers to treat hyperopia and of its decision to
effectively prohibit the reimporting of Model B lasers. As a result, the Company
was unable to upgrade the international lasers for use in the United States and,
thus, had an excess of international equipment which could not treat hyperopia.

Accordingly, the Company entered into negotiations to sell 10 excess lasers
for $1,200,000, resulting in an impairment provision of $1,350,000. Such lasers
are classified as assets held for sale on the balance sheet at April 30, 1996
and will be sold prior to October 31, 1996.

The Company revised its international business plan in April 1996 to take
into account FDA approval, increased emphasis on activity in the United States,
international market conditions and the market acceptance of PRK procedures to
date. It reduced the number of fixed sites in Europe and Canada, redeployed a
number of lasers and selected a number of sites to be served by mobile lasers.
Because of this significant change in business conditions, the Company assessed
the projected undiscounted future cash flows of the remaining European and
Canadian excimer lasers and related medical equipment and determined that cash
flows were insufficient to recover the carrying value of these assets. As a
result, the Company recorded an additional provision for impairment of
$1,713,000 to record those assets at fair value based upon current market
prices. These assets, with a carrying value of $1,235,000, will continue to be
used in international operations.

The total original cost of the above equipment was $9,542,000 and the
accumulated depreciation at the time of the write-downs was $4,044,000.

Furthermore, the Company implemented SFAS 121 in the fourth quarter and its
adoption had no direct impact on the Company.

5. CONVERTIBLE PREFERRED STOCK WITH MANDATORY REDEMPTION PROVISION IN 2005

The Company's amended Articles of Incorporation authorize the Board of
Directors to issue 1,000,000 shares of preferred stock, at $.01 par value per
share, in one or more series, designated by them as to rights, preferences,
terms and limitations. In fiscal 1995, the Board of Directors authorized the
sale of up to 180,000 shares of convertible preferred stock via a private
placement at a price per share and under terms to be determined. In October
1995, the Company received $14,100,000 from the sale of 141,000 shares of
restricted convertible preferred stock with a mandatory redemption provision in
2005, at the holders' option. The related offering costs of $1,242,000 were
deducted from paid-in-capital. These restricted preferred shares, par value
$100, are convertible into 2,349,991 shares of common stock at a conversion
price of $6 per share, have a stated dividend rate beginning after three years
of 8% (after two years under certain circumstances) and have limited piggy-back
registration rights in the event of any public offering of common stock and
mandatory registration rights after two years. For the year ended April 30,
1996, dividends of $439,000 were accrued and are reflected in the calculation of
net loss per common share. These shares are expected to be converted into
2,349,991 shares of common stock upon consummation of the proposed stock
offering and, in that case, the accrued dividends would not be payable (see Note
14).

F-10
<PAGE> 52

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Pro forma balance sheet at April 30, 1996 has been prepared using the
historical balance sheet at April 30, 1996 and adjusted for the conversion of
the Preferred Stock into 2,349,991 shares of common stock.

6. NOTES PAYABLE

In April and June 1994 and May and July 1995, the Company entered into
agreements to purchase VISX lasers. The purchase agreements required periodic
repayments over eighteen to twenty-four months to the seller, bearing no stated
interest rate (interest was imputed at 6%). At April 30, 1995 and 1996, the
outstanding balances relating to these purchase agreements totaled $3,355,000
and $1,847,000, respectively. Subsequent to April 30, 1996, the Company repaid
the outstanding balance under these purchase agreements.

7. OBLIGATIONS UNDER CAPITAL LEASES

In September 1995, the Company acquired two excimer lasers for use in the
United States. The lasers were financed by five year capital leases requiring
principal payments totaling $1,024,000 and bearing interest at 11% per annum. In
January 1996, the Company acquired two additional excimer lasers for use in the
United States. The lasers were primarily financed by three and one-half year
term capital leases requiring principal payments totaling $912,000 and bearing
interest at 12% per annum.

Future minimum payments under capital leases as of April 30, 1996 are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING
APRIL 30, AMOUNT
------------ ----------
<S> <C>
1997............................................................. $ 643,000
1998............................................................. 571,000
1999............................................................. 571,000
2000............................................................. 364,000
2001............................................................. 87,000
----------
Total minimum lease payments..................................... 2,236,000
Less amount representing interest................................ (394,000)
Less current portion............................................. (467,000)
----------
Long-term portion of obligations under capital leases at 11% to
12%............................................................ $1,375,000
==========
</TABLE>

Assets under capital leases totaled $440,000 and $2,353,000, respectively,
at April 30, 1995 and 1996. Depreciation of leased assets was $122,000, $101,000
and $265,000 for the years ended April 30, 1994, 1995 and 1996, respectively.

8. INCOME TAXES

At April 30, 1996, the Company has net operating loss carryforwards of
approximately $13.3 million available to offset future taxable income, expiring
2006 through 2011. The Company has recorded a deferred tax asset of
approximately $5.3 million with an offsetting valuation allowance at April 30,
1996. For purposes of recording deferred tax assets, no future taxable income is
assumed given the results of operations of the Company to date.

F-11
<PAGE> 53

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of deferred taxes at April 30 are as follows:

<TABLE>
<CAPTION>
1995 1996
----------- -----------
<S> <C> <C>
Net operating loss............................................... $ 3,006,000 $ 5,430,000
Depreciation..................................................... (72,000) (172,000)
Other............................................................ 42,000 59,000
----------- -----------
Net asset........................................................ 2,976,000 5,317,000
Valuation allowance.............................................. (2,976,000) (5,317,000)
----------- -----------
Total deferred taxes........................................ $ -0- $ -0-
=========== ===========
</TABLE>

The components of income tax expense are as follows for the fiscal years
ending April 30:

<TABLE>
<CAPTION>
1994 1995 1996
----- ------- -------
<S> <C> <C> <C>
Computed expected tax benefit.................................... $ 884 $ 1,319 $ 3,521
Impairment provision............................................. (1,225)
Change in valuation allowance.................................... (884) (1,319) (2,341)
Other............................................................ 45
----- ----- -------
Income tax expense............................................. $ -0- $ -0- $ -0-
===== ======= =======
</TABLE>

9. COMMITMENTS AND CONTINGENCIES

Agreements to lease or purchase laser equipment

Effective May 30, 1996, the Company agreed to purchase three new excimer
lasers and one used excimer laser for use primarily in Europe for a total of
$1.7 million due during the first half of fiscal 1997. At April 30, 1996, the
Company has agreed to purchase twelve VISX excimer lasers (approximate purchase
price of $6 million) and has an option to purchase twenty more (approximate
purchase price of $10 million). The Company is also negotiating to assume the
lease obligations for up to three excimer lasers.

Employment agreements

During fiscal 1996, the Company entered into three-year contracts with four
officers of the Company provide for base salaries and the potential payment of
certain bonuses. During fiscal 1994, 1995 and 1996, $62,000, $208,000 and
$449,000, respectively, were provided for these bonuses which were tied to the
price of the Company's common stock. Six other key employees have employment
contracts for one year to eighteen month periods.

Operating leases

The Company has office and laser center lease agreements in St. Louis,
Minneapolis, Montreal, London, Edinburgh and Solihull. The respective leases
commenced in 1993, 1994 and 1996 and shall

F-12
<PAGE> 54

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

end in 1998, 2000 and 2001. Approximate future minimum rental payments under the
leases are as follows.

<TABLE>
<CAPTION>
YEAR ENDING MINIMUM RENTAL
APRIL 30, PAYMENTS
------------ --------------
<S> <C>
1997........................................................... $370,000
1998........................................................... 297,000
1999........................................................... 270,000
2000........................................................... 243,000
2001........................................................... 168,000
</TABLE>

Related rental expenses totaled $71,000, $98,000 and $184,000 for the years
ended April 30, 1994, 1995 and 1996, respectively.

Claims

During fiscal 1992, the Company hired an investor relations consulting firm
and agreed to issue the firm 100,000 to 150,000 warrants to purchase the
Company's common stock at $5.00 per share. Due to failure to perform and breach
of contract, the Company filed a claim against the firm during fiscal 1993 to
rescind the contract, void the warrants and recover fees and expenses. The
disputed warrants are not included in Note 12 of these consolidated financial
statements. Management does not expect this claim, currently in the trial
preparation process, to have a material adverse effect upon the Company's future
results of operations, liquidity or financial condition.

10. LEGAL PROCEEDINGS

The Company is party to the following legal proceedings:

On October 8, 1993, the Company filed suit in the Circuit Court of St.
Louis County, Missouri, against Laser Vision Centers International SpA (SpA) in
connection with disputes between Company and SpA arising out of a proposed
agreement between the parties. On December 17, 1993, the court entered judgment
by default in the Company's favor: (i) terminating and rescinding any and all
agreements and proposed agreements between the parties; (ii) for money damages
in the amount of $175,000 and (iii) ordering the return of 275,000 shares of
common stock which was issued to SpA. Accordingly, in the year ended April 30,
1994, the Company recorded a $175,000 provision for loss on the advance and the
cancellation of the 275,000 shares of common stock and related note receivable,
common stock. In June 1994, SpA filed a Motion to Vacate the Judgment in the
lawsuit. SpA's motion was denied in April 1995, but SpA has filed an appeal
which is currently awaiting a ruling from the Missouri Court of Appeals.

On November 17, 1994, the Company brought suit against LaserVision Centers
West, Inc. (LVCWI) in the United States District Court for the Eastern District
of Missouri alleging trade mark, service mark and trade name infringements and
other related violations of law. The Company seeks to have LVCWI enjoined from
any further use of these marks or names or any others which are confusingly
similar to those registered to and used by the Company. In addition, the Company
seeks damages, attorney fees and a declaratory judgment that no agreement exists
between the parties. LVCWI has counterclaimed against the Company for breach of
contract. On July 7, 1995, this action was transferred to the United States
District Court for the Central District of California. The case is in the final
stages of discovery. The Company intends to vigorously pursue the prosecution of
this suit.

On March 24, 1995, the Company filed suit against 20/20 Laser Centers, Inc.
(20/20) in the United States District Court for the Southern District of
California alleging trade mark, service mark

F-13
<PAGE> 55

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and trade name infringements and other related violations of law. The various
counts in this suit arose from 20/20's use of the marks or name "Laser Vision"
and "Laser Vision Correction." The Company seeks to have 20/20 enjoined from any
further use of these marks or names or any others which are confusingly similar
to those registered and used by the Company. The Company also seeks damages and
attorney fees in conjunction with this action. On June 23, 1995, by stipulated
agreement of the parties, this action was transferred to the United States
District Court for the District of Maryland, Greenbelt Division. 20/20 has
counterclaimed for cancellation of the Company's registered marks LASERVISION,
LASERVISION CENTERS AND DESIGN, LASERVISION CENTER and LASERVISION CENTERS. The
Company intends to vigorously pursue the prosecution of this suit.

Management does not expect these legal proceedings, individually or in the
aggregate, to have a material adverse effect upon the Company's future results
of operations, liquidity or financial condition.

11. CAPITAL STOCK

In November 1993, the Company completed a second public offering for
950,000 units at a price to the public of $5.00 per unit. Each unit consisted of
one share of common stock and one Class F warrant which allows the holder to
purchase one share of common stock for $6.00 on or before April 3, 1995. The
underwriter subsequently exercised its over allotment option and acquired
142,500 Class F warrants bringing the total number of Class F warrants issued to
1,092,500. In connection with this second public offering, the Company sold to
the representative, for $.001 per warrant, underwriter warrants to purchase up
to 95,000 units at $7.25 per unit over a five-year period.

During fiscal 1994, the expiration date for the Class A warrants was
extended to August 1994 and the expiration date for the Class B warrants was
extended to April 1995. In addition, the exercise price for the Class B warrants
was reduced to $6.00 per share. Prior to expiration, a total of 401,220 Class A
warrants were exercised (288,780 Class A warrants expired without being
exercised) and 401,220 Class B warrants were issued. During fiscal 1995, the
expiration date for the Class B warrants and the Class F warrants was extended
to February 6, 1996. All Class B and F warrants were exercised by February 6,
1996 except for 7,295 which expired unexercised.

In September 1994, stockholders approved an increase in the number of
authorized common shares from 10,000,000 to 50,000,000 and an amendment to the
Company's Certificate of Incorporation requiring super majority (80%) approval
of certain business combinations.

In April 1995, the Company sold 125,000 shares of unregistered common stock
to two investors at $7.225 per share, less solicitation and offering costs.
These stockholders also received certain piggyback registration rights and the
option to (1) convert their common shares for any convertible preferred stock
subsequently issued under a private offering or (2) receive additional common
shares at no cost to bring the average price per share down to a $.25 discount
to the conversion price as anti-dilution rights. In May and September 1995, the
Company sold an additional 168,500 shares of unregistered common stock to two
other investors under substantially similar terms. In October 1995, these
investors elected to receive 73,718 additional shares of common stock in
connection with their anti-dilution rights.

12. STOCK OPTIONS AND WARRANTS

The Company has two plans under which stock options may be granted, one
plan under which registered warrants may be granted and also has issued
unregistered warrants. These plans are administered by the Board of Directors
whose Compensation Committee recommends option and warrant grants for officers,
directors and key consultants of the Company.

F-14
<PAGE> 56

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The 1990 Incentive Stock Option Plan (the Option Plan) was approved by
stockholders of the Company on March 5, 1990 and amended by the stockholders on
April 22, 1992 and January 19, 1996. Under the terms of the Option Plan, the
Company has reserved for issuance to key employees and officers of the Company
700,000 shares of common stock. The exercise price may not be less than the
market price of the common stock on the date of grant. Options are nonassignable
and may be exercised only by the employee while employed by the Company or
within three months after termination of employment unless due to death or
disability. Options are exercisable in increments over four years and expire no
later than ten years from the date of the grant. Of the 283,485 options
outstanding as of April 30, 1996, 78,750 were granted to officers and 204,735
were granted to other employees. In May 1996, 10,000 options were granted to a
new officer at $12.50 per share.

The 1990 Non-Qualified Stock Option Plan (the Plan) was approved by the
stockholders of the Company on March 5, 1990, and amended by the stockholders on
April 22, 1992 and January 19, 1996. Under the terms of the Plan, as amended,
the Company has reserved 600,000 shares of common stock for issuance upon
exercise of options granted to outside directors and consultants. At April 30,
1996, the Company had 151,000 options outstanding under the Plan of which
135,000 were issued to a former outside director and 16,000 were issued to
consultants. In May 1996, 80,000 options were issued to the four outside members
of the Board of Directors and the four members of the Company's medical advisory
board (one of whom is also a Board member) at an exercise price of $12.625 per
share, which approximated the fair market value at the date of grant.

Under the 1994 Non-Qualified Warrant Plan, as amended on January 19, 1996,
the Company has reserved 1,500,000 shares of common stock for issuance upon
exercise of registered warrants granted to certain employees, directors and
consultants, of which 104,250 were exercised during fiscal 1996 and 901,250
warrants were outstanding as of April 30, 1996. Such warrants generally vest
ratably over a twenty four month period and are exercisable over a five year
period. During fiscal 1995, 824,500 unregistered warrants were converted to
Non-Qualified Warrants with the same exercise price per share and 120,000
Non-Qualified Warrants were issued to certain consultants, officers and
employees at the market price. During fiscal 1996, 61,000 Non-Qualified Warrants
were issued to a Company officer at $12.625 per share, the market price at the
date of the grant. In May 1996, certain officers (including new officers) and
employees were granted a total of 234,000 warrants at an average market price of
$12.46 per share, which approximated the fair market value at the date of grant.

Of the 435,000 unregistered warrants outstanding as of April 30, 1996,
325,000 were issued to officers, employees and consultants during fiscal 1995 at
$9.00 per share (above the market price). During fiscal 1996, 30,000
unregistered warrants were exercised and 110,000 unregistered warrants were
issued to consultants. In May 1996, 125,000 unregistered warrants were granted
to new officers of the Company at the current market price of $12.50 per share.
Unregistered warrants are exercisable over a five year period and vest at
varying rates ranging from immediately to three years.

F-15
<PAGE> 57

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Information with respect to the above plans is as follows:

<TABLE>
<CAPTION>
1990 1990
INCENTIVE NON-QUALIFIED 1994
STOCK OPTION STOCK OPTION UNREGISTERED NON-QUALIFIED
PLAN PLAN WARRANTS WARRANT PLAN
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Outstanding at April 30, 1993............. 310,045 235,000 -- --
Exchanged ($5.91 to $6.35)................ (217,000) (72,500) 289,500
Granted ($5.00 to $5.50 options; $5.00 to
$7.50 warrants)......................... 92,000 67,000 565,000
Canceled.................................. (4,500) (52,500) -- --
-------- ------- -------- --------
Outstanding at April 30, 1994............. 180,545 177,000 854,500 --
Exercised ($5.00 to $5.75)................ (1,600) (10,000)
Exchanged ($5.00 to $7.50)................ (824,500) 824,500
Granted ($5.38 to $7.75 options; $5.31 to
$9.00 warrants)......................... 109,000 25,000 325,000 120,000
Canceled.................................. (1,250) -- -- --
-------- ------- -------- --------
Outstanding at April 30, 1995............. 286,695 192,000 355,000 944,500
Exercised ($3.00 to $7.75)................ (59,210) (41,000) (30,000) (104,250)
Granted ($12.50 to $16.625 options; $5.25
to $12.625 warrants).................... 59,000 110,000 61,000
Canceled.................................. (3,000) -- -- --
-------- ------- -------- --------
Outstanding at April 30, 1996............. 283,485 151,000 435,000 901,250
======== ======= ======== ========
Average price per share at
April 30,
1994................................. $ 4.41 $ 5.38 $ 5.79 $ --
1995................................. $ 5.62 $ 5.67 $ 8.66 $ 5.89
1996................................. $ 7.42 $ 5.78 $ 8.11 $ 6.40
Exercisable at April 30,
1994................................. 100,545 145,750 363,151 --
1995................................. 165,570 159,500 57,083 737,347
1996................................. 170,235 151,000 239,583 827,041
</TABLE>

The Company also has the following warrants outstanding as of April 30,
1996:

24,000 Class C and 15,150 Class D-Exercisable for one share of common
stock, at a price of $5.00 per share, expire December 24, 1997

24,500 Class E-Exercisable for one share of common stock, at a price
of $5.00 per share, expire January 6, 1998

46,888 Underwriter warrants-Exercisable for one share of common stock,
at a price of $7.25 per share, expire November 9, 1998

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123), which addresses accounting for stock option, purchase
and award plans. SFAS 123 specifies that companies utilize either the "fair
value based method" or the "intrinsic value based method" for valuing stock
options granted. The Company will adopt SFAS 123 as required in fiscal 1997, and
expects to utilize the "intrinsic value based method" for valuing stock options
granted. The Company anticipates that, when adopted, SFAS 123 will not have a
material effect on its financial position or results of operations.

F-16
<PAGE> 58

LASER VISION CENTERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. BUSINESS SEGMENT INFORMATION

After allocating certain corporate expenses and determining the primary
geographic area for mobile equipment, business segment information for the years
ended April 30, 1994, 1995 and 1996 is as follows:

<TABLE>
<CAPTION>
LASERVISION CENTERS DIVISION
---------------------------------------
FOREIGN
------------------------- MARKETVISION
DOMESTIC CANADA EUROPE DIVISION TOTAL
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED APRIL 30, 1994
Revenues............................. $ 20,000 $ 808,000 $ 689,000 $ 589,000 $ 2,106,000
----------- ----------- ----------- ------------ -----------
Loss from operations................. $ (850,000) $ (610,000) $ (410,000) $ (30,000) $(1,900,000)
----------- ----------- ----------- ------------ -----------
Interest/other income................ 21,000
Interest expense..................... (156,000)
Loss on advance...................... (175,000)
-----------
Net loss........................... $(2,210,000)
-----------
Identifiable assets.................. $ 1,446,000 $ 1,497,000 $ 6,025,000 $ 167,000 $ 9,135,000
----------- ----------- ----------- ------------ -----------
Capital expenditures................. $ 27,000 $ 142,000 $ 5,914,000 $ -- $ 6,083,000
----------- ----------- ----------- ------------ -----------
Depreciation and amortization........ $ 224,000 $ 466,000 $ 527,000 $ 2,000 $ 1,219,000
----------- ----------- ----------- ------------ -----------
YEAR ENDED APRIL 30, 1995
Revenues............................. $ 12,000 $ 921,000 $ 1,545,000 $ 833,000 $ 3,311,000
----------- ----------- ----------- ------------ -----------
Income (loss) from operations........ $(1,707,000) $ (409,000) $(1,126,000) $ 34,000 $(3,208,000)
----------- ----------- ----------- ------------ -----------
Minority interest in net loss of
subsidiary......................... 116,000
Interest/other income................ 37,000
Interest expense..................... (242,000)
-----------
Net loss........................... $(3,297,000)
-----------
Identifiable assets.................. $ 2,613,000 $ 1,741,000 $ 6,767,000 $ 197,000 $11,318,000
----------- ----------- ----------- ------------ -----------
Capital expenditures................. $ 371,000 $ 508,000 $ 1,627,000 $ -- $ 2,506,000
----------- ----------- ----------- ------------ -----------
Depreciation and amortization........ $ 236,000 $ 388,000 $ 1,248,000 $ -- $ 1,872,000
----------- ----------- ----------- ------------ -----------
YEAR ENDED APRIL 30, 1996
Revenues............................. $ 286,000 $ 943,000 $ 1,255,000 $ 1,434,000 $ 3,918,000
----------- ----------- ----------- ------------ -----------
Income (loss) from operations........ $(3,695,000) $(1,350,000) ($4,312,000) $ 141,000 $(9,216,000)
----------- ----------- ----------- ------------ -----------
Minority interest in net loss of
subsidiary......................... 192,000
Interest/other income................ 437,000
Interest expense..................... (216,000)
-----------
Net loss........................... $(8,803,000)
Identifiable assets.................. $23,667,000 $ 561,000 $ 4,027,000 $ 658,000 $28,913,000
----------- ----------- ----------- ------------ -----------
Capital expenditures................. $ 7,213,000 $ 426,000 $ 981,000 $ 7,000 $ 8,604,000
----------- ----------- ----------- ------------ -----------
Depreciation and amortization........ $ 285,000 $ 467,000 $ 1,430,000 $ 20,000 $ 2,203,000
----------- ----------- ----------- ------------ -----------
</TABLE>

14. PROPOSED STOCK OFFERING

On June 5, 1996, the Company filed a Form S-3 Registration Statement with
the Securities and Exchange Commission, pursuant to which the Company intends to
sell 2,500,000 to 2,875,000 shares of the Company's common stock.

F-17
<PAGE> 59

[PHOTO OF LASERVISION CENTER]

[PHOTO OF MOBILEXCIMER]
<PAGE> 60

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

NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY SHARES OF COMMON STOCK IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 6
The Company............................ 12
Use of Proceeds........................ 12
Price Range of Common Stock and
Dividend Policy...................... 13
Capitalization......................... 14
Selected Consolidated Financial Data... 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 16
Business............................... 22
Management............................. 34
Selling Stockholders................... 36
Underwriting........................... 37
Legal Matters.......................... 38
Experts................................ 38
Available Information.................. 38
Information Incorporated by
Reference............................ 39
Index to Consolidated Financial
Statements........................... 40
</TABLE>

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

[LASER VISION LOGO]

-------------------------
2,500,000 SHARES
COMMON STOCK

PROSPECTUS

, 1996

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

DILLON, READ & CO. INC.

A.G. EDWARDS & SONS, INC.

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 61

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale of
common stock being registered hereunder:

<TABLE>
<S> <C>
Registration fees.................................................. $ 10,781
Blue Sky and Nasdaq National Market fees and expense............... $ 60,000
Printing cost...................................................... $ 80,000
Transfer agent fees................................................ $ 5,000
Legal fees and expenses............................................ $ 75,000
Accounting fees and expenses....................................... $ 35,000
Miscellaneous...................................................... $ 43,092
NASD filing fee.................................................... $ 3,627
Nasdaq listing fee................................................. $ 7,500
--------
Total............................................................ $320,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 6 of the Company's Certificate of Incorporation provides for
indemnification of the officers and directors of the Company to the fullest
extent permitted by the laws of the State of Delaware.

Section 145 of the General Corporation Law of the State of Delaware
provides generally and in pertinent part that a Delaware corporation may
indemnify its directors and officers against expenses, judgment, fines and
settlements actually and reasonably incurred by them in connection with any
civil suit or action, except actions by or in the right of the corporation, or
in connection with any administrative or investigative proceedings if, in
connection with the matters in issue, they acted in good faith and in a manner
they reasonably believed to be in, or not opposed to, the best interests of the
company and in connection with any criminal suit or proceeding, if in connection
with the matters in issue, they had no reasonably cause to believe their conduct
was unlawful. Section 145 further permits a Delaware corporation to grant its
directors and officers additional rights of indemnification through bylaw
provisions and otherwise and to purchase indemnity insurance on behalf of its
directors and officer.

The Registrant maintains a policy of insurance under which the directors
and officers of the Registrant are insured, subject to the limits of the policy,
against certain losses arising from claims made against such directors and
officers by reason of any acts or omissions covered under such policy in their
respective capacities as directors or officers.

The Underwriting Agreement filed as Exhibit 1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act, or otherwise.

II-2
<PAGE> 62

ITEM 16. EXHIBITS

<TABLE>
<S> <C>
1* Underwriting Agreement
4.1*** Specimen Stock Certificate.
5.1** Opinion of Dankenbring, Greiman, Osterholt & Hoffmann, P.C. with respect to the
shares being registered.
10.1**** Licensing Agreement with VISX Incorporated dated May 8, 1996.
23.1** Consent of Price Waterhouse LLP to include their report on the consolidated
financial statements for the years ended April 30, 1994, 1995 and 1996.
23.2** Consent of Dankenbring, Greiman, Osterholt & Hoffmann, P.C. to use its opinion
letter filed herewith (contained in Opinion Letter at Exhibit 5.1)
24.1***** Power of Attorney executed by the Company's officers and directors appointing
John J. Klobnak and Robert W. May as attorney's-in-fact
27.1**** Financial Data Schedule
</TABLE>

- -------------------------
* To be filed by amendment.

** Filed herewith.

*** Incorporated by reference from Registration Statement No. 33-33843
effective on April 3, 1991.

**** Previously filed.

***** See page II-4 of Amendment No. 1 to Form S-3 filed June 19, 1996.

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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.

The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement 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.

For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of Prospectus filed as part of the
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.

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.

II-3
<PAGE> 63

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the County of St. Louis, Missouri on the 12th day of July,
1996.

LASER VISION CENTERS, INC.

By: /s/ JOHN J. KLOBNAK

------------------------------------
John J. Klobnak, Chief Executive
and Chairman of the Board of
Directors

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------- ----------------------------------------- --------------
<S> <C> <C>
JOHN J. KLOBNAK Chief Executive Officer and Chairman of
the Board of Directors
ALAN F. GILLAM President and Director
B. CHARLES BONO, III Executive Vice President,
Principal Accounting Officer,
Chief Financial Officer and Treasurer
ROBERT W. MAY Vice-Chairman of the Board, General
Counsel and Secretary
RICHARD L. LINDSTROM, M.D. Director
DR. HENRY SIMON Director
JAMES M. GARVEY Director
STEVEN C. STRAUS Director
</TABLE>

By /S/ JOHN J. KLOBNAK

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

John J. Klobnak,
Individually and as
Attorney-in-fact

July 12, 1996

II-4

<PAGE> 1

EXHIBIT 5.1

July 12, 1996

Board of Directors
Laser Vision Centers, Inc.
540 Maryville Dr.
Suite 200
St. Louis, MO 63141

Gentlemen:

We have acted as Securities Counsel for Laser Vision Centers, Inc. (the
"Company") with respect to the Registration Statement on Form S-3 (the
"Registration Statement"), filed by the Company with the Securities and Exchange
Commission for the purpose of registering under the Securities Act of 1933, as
amended, up to 2,875,000 shares of Common Stock, par value $.01 per share (the
"Common Stock").

We have examined corporate records of the Company, laws and regulations and
other information we have deemed relevant, including the Company's charter,
by-laws and certificates received from state officials and from officers of the
Company. In delivering this opinion, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to the originals of all documents submitted to us as certified,
photostatic or conformed copies and the correctness of statements submitted to
us by officers of the Company.

Based solely on the foregoing, we are of the opinion that:

1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.

2. The Common Stock, if and when issued and paid for in accordance
with the terms of the Underwriting Agreement among the Company,
Dillon, Read & Co., Inc. and A.G. Edwards & Sons, Inc., will be
legally issued, fully paid and nonassessable.

We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under the caption "Legal Opinions" in the
Prospectus which is a part of the Registration Statement.

Very truly yours,

/s/Dankenbring, Greiman,
Osterholt & Hoffmann, P.C.

Dankenbring, Greiman,
Osterholt & Hoffmann, P.C.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of our report dated June 14, 1996, relating
to the consolidated financial statements of LaserVision Centers, Inc. and
Subsidiaries, which appears in such Prospectus. We also consent to the
references to us under the headings "Experts" and "Selected Consolidated
Financial Data" in such Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected Consolidated
Financial Data."

/s/ Price Waterhouse LLP

Price Waterhouse LLP

St. Louis, Missouri

July 12, 1996

<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-30-1996 APR-30-1995
<PERIOD-START> MAY-01-1995 MAY-01-1994
<PERIOD-END> APR-30-1996 APR-30-1995
<CASH> 12,672,000 2,126,000
<SECURITIES> 0 0
<RECEIVABLES> 805,000 587,000
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 15,160,000 2,877,000
<PP&E> 11,737,000 11,231,000
<DEPRECIATION> (1,323,000) (3,288,000)
<TOTAL-ASSETS> 28,913,000 11,318,000
<CURRENT-LIABILITIES> 5,158,000 4,178,000
<BONDS> 1,375,000 406,000
<COMMON> 64,000 45,000
14,539,000 0
0 0
<OTHER-SE> 7,389,000 6,304,000
<TOTAL-LIABILITY-AND-EQUITY> 28,913,000 11,318,000
<SALES> 3,918,000 3,311,000
<TOTAL-REVENUES> 3,918,000 3,311,000
<CGS> 4,240,000 3,375,000
<TOTAL-COSTS> 4,240,000 3,375,000
<OTHER-EXPENSES> 8,894,000 3,144,000
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 216,000 242,000
<INCOME-PRETAX> (8,803,000) (3,297,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (8,803,000) (3,297,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (8,803,000) (3,297,000)
<EPS-PRIMARY> (1.75) (.82)
<EPS-DILUTED> 0 0

</TABLE>