OCUREST LABORATORIES INC, 424B4, 1996-11-15

OCUREST LABORATORIES INC
424B4, 1996-11-15
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS

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PROSPECTUS

OCUREST LABORATORIES, INC.
1,200,000 UNITS
EACH CONSISTING OF ONE SHARE OF COMMON STOCK
AND ONE CLASS A REDEEMABLE COMMON STOCK PURCHASE WARRANT

This Prospectus relates to the offering (the "Offering") by Ocurest
Laboratories, Inc. (the "Company") of 1,200,000 Units (the "Units"). Each of the
Units consists of one share of Common Stock, $.008 par value (the "Common
Stock"), and one Class A Redeemable Common Stock Purchase Warrant (a "Warrant"
and collectively, the "Warrants"). The Common Stock and Warrants must be
purchased together as Units. The Common Stock and the Warrants comprising the
Units will not be separately tradeable or transferable for a period of six
months commencing on the date of this Prospectus or earlier at the discretion of
RAF Financial Corporation (the "Representative"). See "Description of
Securities--The Units."

Prior to the Offering, there has not been any public market for the
securities of the Company. The initial public offering price of the Units and
the initial exercise price and other terms of the Warrants have been arbitrarily
determined by negotiation between the Company and the Representative, as
representative of the underwriting group (the "Underwriters"). The Units have
been approved for quotation on the NASDAQ Small-Cap Market ("NASDAQ") under the
trading symbol OCULU. Only the Units will be listed for quotation on NASDAQ
until the Common Stock and Warrants become separately tradeable and
transferable. Thereafter, subject to the Company then meeting the NASDAQ
maintenance requirements, the Units will be delisted for quotation on NASDAQ and
only the Common Stock and Warrants will be listed for quotation on NASDAQ.

Each Warrant entitles the registered holder thereof to purchase one share of
Common Stock at an exercise price of $4.80 per share, subject to adjustment in
certain circumstances, at any time commencing on the date the Warrants are
separately tradeable and transferable and ending on November 12, 1999.
Commencing on the date the Warrants are separately tradeable and transferable,
the Warrants are subject to redemption by the Company at $.55 per Warrant at any
time until the end of the second year after the date of this Prospectus and
thereafter at $.75 per Warrant at any time until the end of the third year after
the date of this Prospectus and prior to their expiration, on 30 days' prior
written notice to the holders of Warrants, provided that the daily trading price
per share (as defined beginning on page 39) of Common Stock has been at least
$6.72, subject to adjustment in certain circumstances, for a period of at least
20 consecutive trading days ending within 10 days prior to the date upon which
the notice of redemption is given. Once exercisable, the Warrants shall be
exercisable until the close of the business day preceding the date fixed for
redemption, if any. See "Description of Securities--Warrants."

THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION TO INVESTORS. POTENTIAL PURCHASERS SHOULD NOT
INVEST IN THESE SECURITIES UNLESS THEY CAN AFFORD THE RISK OF LOSING THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" ON PAGE 6 OF THIS PROSPECTUS AND
"DILUTION" ON PAGE 15 OF THIS PROSPECTUS.

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

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

PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS(1) COMPANY(2)
---------- ------------- -----------
Per Unit $ 4.00 $ .40 $ 3.60
Total(3) $4,800,000 $ 480,000 $4,320,000

(FOOTNOTES ON NEXT PAGE)

It is expected that delivery of the certificates representing the Units
will be made at the offices of the Representative on or about November 15, 1996
against payment therefor.

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

RAF
FINANCIAL CORPORATION

The date of this Prospectus is November 12, 1996

<PAGE>

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(1) The Company and certain shareholders of the Company (the "Selling
Shareholders") have also agreed to pay the Representative a non-accountable
expense allowance equal to 3% of the total Price to Public of the Units and
Common Stock sold by them. The Company has not allocated any portion of the
Price to Public to the sale by the Company of the Warrants. The Company has
also agreed to issue to the Representative and its designees for a nominal
consideration, warrants to purchase 120,000 units at an exercise price of
$6.40 per unit (the "Representative's Warrants"). Each unit issuable upon
exercise of the Representative's Warrants consists of one share of Common
Stock and a warrant to purchase one share of Common Stock at $7.68 per
share. The Representative's Warrants and the securities underlying the
Representative's Warrants have been registered under the Securities Act of
1933, as amended (the "Securities Act)") by means of the Registration
Statement of which this Prospectus is a part. Subject to certain limitations
upon exercise of the Warrants, the Company has also agreed to pay the
Representative a solicitation fee equal to 10% of the exercise price of the
Warrants. The Representative has a three year right of first refusal with
respect to future public or private offerings for cash by the Company or any
parent or subsidiaries of the Company. In addition, the Company has agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act. See "Underwriting."

(2) Before deducting expenses of the Offering payable by the Company
estimated at $300,000, excluding the non-accountable expense allowance
described in Note (1) above, and assumes no exercise of the Underwriters'
over-allotment option. See "Use of Proceeds" and "Description of Securities
--Warrants."

(3) The Selling Shareholders have granted to the Underwriters a 30-day option to
purchase up to 180,000, additional shares of Common Stock at $4.00
per share less the Underwriting Discounts solely to cover over-allotments,
if any (the "Over-Allotment Option"). The Company has agreed, for no
additional consideration, to contribute a like number of Warrants toward the
Over-Allotment Option. The Company will not receive any proceeds from the
sale of securities by the Selling Shareholders. If the Over-Allotment Option
is exercised in full, the total Price to Public, Underwriting Discounts, and
Proceeds to Company will be $5,520,000, $552,000 and $4,320,000
respectively. See "Security Ownership of Certain Beneficial Owners and
Management," "Selling Shareholders" and "Underwriting."

THE SECURITIES OFFERED BY THIS PROSPECTUS ARE SUBJECT TO PRIOR SALE. THE
UNDERWRITERS RESERVE THE RIGHT TO WITHDRAW, CANCEL OR MODIFY SUCH OFFER
(WHICH MAY BE DONE ONLY BY FILING AN AMENDMENT TO THE REGISTRATION STATEMENT)
AND TO REJECT ORDERS IN WHOLE OR IN PART FOR THE PURCHASE OF ANY OF THE
COMPANY'S SECURITIES AND TO CANCEL ANY SALE EVEN AFTER THE PURCHASE PRICE HAS
BEEN PAID IF SUCH SALE, IN THE OPINION OF THE UNDERWRITERS, WOULD VIOLATE
FEDERAL OR STATE SECURITIES LAWS OR A RULE OR POLICY OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC. ("NASD").

IN CONNECTION WITH THE OFFERING, THE REPRESENTATIVE MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
UNITS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

<PAGE>

PHOTOGRAPH

Picture of the Company's products. Ocurest Redness Reliever Lubricant and
Ocurest Tears Formula Lubricant. Caption in Picture reads:

Ocurest
Eyecare Made Easy

<PAGE>

PHOTOGRAPH (Photo storyboard consisting of nine small photographs with captions)

Picture of a photo storyboard of one of the Company's 30 second television
commercials. Commercial shows woman using conventional eyedrop dispenser and
then using the Ocurest Delivery System on the bridge of her nose and explaining
how easy the Ocurest Delivery System is to use.

<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES
THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. ALL INFORMATION RELATING TO
SHARES OF COMMON STOCK AND PER SHARE AMOUNTS IN THIS PROSPECTUS HAVE BEEN
ADJUSTED FOR A 1-FOR-4 REVERSE STOCK SPLIT EFFECTED IN MARCH 1994 AND A
1-FOR-2 REVERSE STOCK SPLIT EFFECTED IN JULY 1996.

THE COMPANY

Ocurest Laboratories, Inc. (the "Company") is a marketing company
organized to develop and commercialize new health and personal care products
for the consumer market. The Company's first products consist of two
Ocurest/registered trademark/ eye care products utilizing a patented delivery
system for dispensing ophthalmic drug solutions into the eye (the "Ocurest
Delivery System").

The Company acquired the exclusive worldwide licensing rights to the
Ocurest Delivery System from a then affiliate of the Company in 1991. After
three years of product development, the Company began limited marketing in
late 1994 of two over-the-counter ("OTC") eye drop products packaged in the
delivery system. The products consist of Ocurest Redness Reliever Lubricant
and Ocurest Tears Formula Lubricant (collectively, "Ocurest Eye Drops").
Ocurest Eye Drops utilize ophthalmic drug formulations owned by Bausch & Lomb
Pharmaceutical, Inc. ("Bausch & Lomb") and are manufactured under a supply
agreement with Bausch & Lomb at its pharmaceutical facility in Tampa,
Florida. The Company owns the molds used to produce parts for the Ocurest
Delivery System and the manufacturing equipment which Bausch & Lomb operates
to produce all Ocurest eye care products.

The management of the Company believes that almost all of the worldwide
sales of ophthalmic drug solutions are sold in generic eyedropper dispensers
which can be difficult and messy to use. The Ocurest Delivery System was
designed to rest on the bridge of the nose, thereby stabilizing the dropper
tip directly above the eye so that drops can be applied directly into the
eye, accurately and with no spillage.

The OTC eye care products manufactured for the Company by Bausch & Lomb
contain active ingredients as to which Bausch & Lomb has advised the Company
are recognized as safe and effective by the United States Food & Drug
Administration (the "FDA"). Ocurest Redness Reliever Lubricant contains the
same active ingredients as Visine Moisturizing, a redness reliever lubricant
brand, and Ocurest Tears Formula Lubricant contains the same active
ingredient as Tears Naturale, an artificial tears brand.

Certain aspects of the Ocurest Delivery System are covered by a U.S.
utility patent issued in March 1990 and the shape of the Ocurest Delivery
System is covered by a U.S. design trademark registration issued in July 1995
and a design patent issued in September 1991, all of which have been licensed
to the Company. The Company is also the licensee of patents issued or pending
in a number of other countries.

Ocurest Eye Drops were introduced in Florida with television and magazine
advertising starting in September 1994. In mid-1995, the marketing of Ocurest
Eye Drops was expanded to ten additional southern states with television
advertising starting in July 1995 in the Southeast and September 1995 in the
Southwest.

The Company believes the initial consumer response to Ocurest Eye Drops has
been encouraging and the Company has a planned national marketing program
underway for its product line with television advertising which began in October
1996. As of the date of this Prospectus, retail chains such as Wal-Mart, Target,
Kmart, Walgreens, Revco, Rite Aid, Eckerd, CVS, Osco, Sav-on, Kroger,
Winn-Dixie, Albertson's, A&P, Publix, Grand Union, Pathmark, Stop & Shop, Giant
Food and Fred Meyer

<PAGE>
have ordered Ocurest Eye Drops for retail distribution. The Company intends to
utilize a substantial portion of the net proceeds of the Offering for
advertising and promotion expenses in support of the national marketing of
Ocurest Eye Drops.

The Company was organized under the laws of the State of Florida on April
29, 1991. The Company's office is located at 4400 PGA Boulevard, Palm Beach
Gardens, FL 33410 and its telephone number is (561)-627-8121.

<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Securities offered ..............1,200,000 Units. Each Unit consists of one
share of Common Stock and one Warrant.
Each Warrant entitles the holder thereof to
purchase one share of Common Stock. The
Common Stock and the Warrants must be
purchased together as Units. The Common Stock
and the Warrants comprising the Units will not
be separately tradeable or transferable for a
period of six months commencing on the date of
this Prospectus or earlier at the discretion
of the Representative. See "Description of
Securities" and "Underwriting."(1)

Offering price .................. $4.00 per Unit.

Common Stock to be outstanding
after the Offering ............3,122,674 shares (1,922,674 shares are
outstanding as of the date of this
Prospectus)(2)

Warrants--Number to be outstanding
after the offering ............1,200,000 Warrants (no Warrants are
outstanding as of the date of this
Prospectus)(3)

Exercise price ................ $4.80 per share of Common Stock, subject to
adjustment in certain circumstances. See
"Description of Securities."

Expiration date ............... November 12, 1999

Redemption .................... Commencing on the date the Warrants are
separately tradeable and transferable, the
Warrants are redeemable by the Company at $.55
per Warrant at any time until the end of the
second year after the date of this Prospectus
and thereafter at $.75 at any time until the end
of the third year after the date of this
Prospectus and prior to their expiration, on 30
days' prior written notice to the holders of
Warrants, provided that the daily trading price
per share of Common Stock (as defined
beginning on page 39), has been at least
$6.72, subject to adjustment in certain
circumstances, for a period of at least
20 consecutive trading days ending within 10 days
prior to the date of the notice of redemption.
See "Description of Securities--Warrants."

</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
<S> <C>
Use of Proceeds ................. The Company intends to apply the net proceeds of
the Offering to pay for inventory acquisition
and production equipment, to pay for expenses
relating to national advertising and promotion
of the Company's products, to repay certain
indebtedness and accrued interest and for
general corporate purposes, including working
capital. See "Use of Proceeds."

Risk Factors .................... The securities offered hereby involve a high
degree of risk and immediate substantial
dilution and should not be purchased by
investors who cannot afford the loss of their
entire investment. See "Risk Factors."

NASDAQ Small-Cap
Symbol ........................Units: OCULU(4)(5)
</TABLE>
- -------------

(1) Does not include up to 180,000 additional Warrants that may be sold by the
Company pursuant to the Over-Allotment Option. See "Underwriting."

(2) Does not include a maximum of (a) 1,257,585 shares issuable upon exercise of
outstanding warrants and options, (b) 1,200,000 shares issuable upon
exercise of the Warrants, (c) 240,000 shares issuable upon exercise of the
Representative's Warrants and the warrants included in the units issuable
upon exercise of the Representative's Warrants, and (d) 180,000 shares
issuable upon exercise of the Warrants included in the Over-Allotment
Option. See "Management," "Certain Relationships and Transactions" and
"Underwriting."

(3) Represents the Warrants and does not include any other options or
warrants referred to in Notes (1) and (2) above.

(4) The Common Stock and the Warrants will not be separately tradeable or
transferable for a period of six months commencing on the date of this
Prospectus or earlier at the discretion of the Representative. Until such
time, it is unlikely that any trading market will develop for such
securities. See "Risk Factors."

(5) Subject to the Company then meeting the NASDAQ maintenance requirements,
the Company intends to delist the Units from NASDAQ and to list the
Common Stock and the Warrants on NASDAQ on or about the date the Common
Stock and the Warrants are separately tradeable and transferable.

<PAGE>
RISK FACTORS

THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH
DEGREE OF RISK, INCLUDING, BUT NOT NECESSARILY LIMITED TO THE RISK FACTORS
DESCRIBED BELOW. PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS, AMONG OTHERS, AS WELL AS THE REMAINDER OF THIS
PROSPECTUS, PRIOR TO MAKING AN INVESTMENT IN THE COMPANY.

RISKS RELATING TO THE BUSINESS OF THE COMPANY

LIMITED OPERATING HISTORY; LACK OF PROFITABILITY; WORKING CAPITAL DEFICIENCY

The Company has recently commenced operations, has a limited operating
history, has never earned a profit and at June 30, 1996, its current
liabilities exceeded its current assets by approximately $2 million. During
the six months ended June 30, 1996, the Company incurred a net loss of
approximately $(1) million. Although the Company believes that its estimates of
the capital and resources required for its continued operations are
reasonable, until the Company has a more meaningful operating history, it
will not be possible to determine the accuracy of such estimates. In
formulating its business plan, the Company has relied on its in-market sales
experience since September 1994, results of independent market studies and
the judgment of Management. There can be no assurance that the Company's past
operating history nor the results of the market studies will accurately
reflect the demand for the Company's eye care products or that the Company
will ever be profitable. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business" and "Management."

NEED FOR FINANCING TO CONTINUE AS A GOING CONCERN; REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS

Since the Company's inception, the Company's operations have been
primarily funded through the private placement of equity securities of the
Company. The Company's ability to continue as a going concern is dependent
upon, among other things, the Company's receipt of the net proceeds of the
Offering. On June 30, 1996, the Company had an accumulated deficit and a
negative net worth of approximately $(6) million and $(2.3) million,
respectively. In addition, as of the date hereof the Company is in default on
the repayment of approximately $650,000 of loans, including interest thereon.
Although the Company's financial statements were prepared on a going concern
basis, in the Report of Independent Certified Public Accountants dated March
29, 1996, such accountants expressed substantial doubt about the Company's
ability to continue as a going concern. Furthermore, although the Company
believes that the receipt of the net proceeds of the Offering will satisfy
its capital requirements for a period of at least one year, there can be no
assurance that the Company will not require additional capital or be able to
continue as a going concern. The Company has not obtained any commitments
with respect to any such additional capital and there can be no assurance
that any additional capital will become available to the Company on terms not
unfavorable to the Company, if at all. See "Use of Proceeds," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Experts" and Report of Independent Certified Public Accountants.

CERTAIN RISKS RELATED TO THE OPHTHALMIC DRUG BUSINESS

In addition to being subject to all the risks associated with the creation
of a new business, the Company is subject to certain factors affecting the
OTC ophthalmic drug business generally such as intense competition, necessity
to purchase specialized equipment and varying consumer preferences. There can
be no assurance that the Company will ever be able to operate profitably. See
Note L of Notes to Financial Statements.

REVERSION OF PATENT AND TRADEMARK RIGHTS

The patent and trademark rights of the Company were granted to the Company
by Acorn Laboratories, Inc. ("Acorn"), a then affiliate of the Company. Under
certain circumstances, including a

6
<PAGE>
failure by the Company to make requisite payments to Acorn, the patent and
trademark rights will revert to Acorn. In any such event, the Company will no
longer be able to use the Ocurest Delivery System or market any products
under the name "Ocurest" and, in such event, investors can expect to lose
their entire investment in the Company. See "Business--Patents and
Trademarks" and "Certain Relationships and Transactions."

DEPENDENCE ON A LIMITED NUMBER OF SIGNIFICANT CUSTOMERS

In 1995, three customers accounted for approximately 43%, 13% and 11% of
the Company's net sales, respectively. During the six months ended June 30.
1996, four customers accounted for approximately 13%, 11%, 10% and 9% of the
Company's net sales, respectively. The loss of any of such customers would
have a material adverse effect upon the Company. In the event that the
Company is not successful in marketing its OTC products, investors can expect
to lose their entire investment in the Company.

DEPENDENCE ON CONTRACT MANUFACTURER

Ocurest/registered trademark/ eye care products are formulated, filled and
packaged under contract by Bausch & Lomb Pharmaceutical, Inc. ("Bausch &
Lomb") pursuant to a contract in which Bausch & Lomb agreed to manufacture
the Company's OTC ophthalmic drug solutions in accordance with the Company's
manufacturing specifications. The contract runs until 1999, although it may
be terminated by either party on one year's notice. The contract provides for
minimum annual purchases by the Company. Although, as of the date of this
Prospectus, the Company is in compliance with the purchase requirements,
there can be no assurance that the Company will continue to be in compliance.
If the Company fails to so comply with such requirements and such failure is
not cured during the following six months, Bausch & Lomb may terminate the
contract as of the immediately succeeding March 31. The Company believes that
if Bausch & Lomb were to terminate or not agree to renew the contract, other
contract manufacturers are available to manufacture the Company's eye care
products on substantially similar terms, although there can be no assurance
of the foregoing. In any such event, however, the Company could incur a
significant delay in the production of its products. see "Business--Contract
Manufacturer."

DEPENDENCE ON SINGLE PRODUCT CATEGORY

The Company's future profitability initially depends primarily on the
successful marketing of ophthalmic drug solutions in the Ocurest Delivery
System as an alternative to currently available OTC ophthalmic drug solutions
sold in conventional eye drop dispensers. Should the Company's future
marketing of eye care products be unsuccessful for any reason, investors can
expect to lose their entire investment in the Company. Although the Company
plans to diversify its business through the introduction of new products in
selected health and personal care markets, there can be no assurance that the
Company will be able to discover, develop or successfully commercialize any
such products.

UNCERTAINTY OF CONSUMER ACCEPTANCE FOR OCUREST EYE CARE PRODUCTS

Unless Ocurest OTC eye care products marketed in the Ocurest Delivery
System gain significant consumer acceptance in the national market, the
Company will not be successful and investors can expect to lose their entire
investment in the Company. Although the Company has gained limited in-market
sales experience since September 1994, the Company has encountered and will
continue to encounter strong brand name and price competition in introducing
its products. The Company will be required to incur substantial advertising
and promotion expenses to introduce Ocurest eye care products to consumers,
and there can be no assurance that such products will gain sufficient
consumer acceptance to enable the Company to operate profitably.

DEPENDENCE UPON MANAGEMENT

The success of the Company will, to a significant extent, depend upon the
efforts and availability of its management. The loss of the services of the
Company's Chief Executive Officer may materially

7
<PAGE>
adversely affect the Company's business and prospects unless or until a
suitable successor is retained. The Company's employment agreement with its
Chief Executive Officer permits him to terminate his employment by the
Company for any reason. The Company has no key man life insurance. See
"Management."

BROAD DISCRETION IN ALLOCATION OF A SUBSTANTIAL PORTION OF THE NET PROCEEDS

A significant portion of the net proceeds of the Offering will be
allocated for general corporate purposes at the discretion of the Company's
management. Investors, therefore, will be required to rely on the judgment of
the Company's management in the actual allocation of such portion. See "Use
of Proceeds" and "Management."

MAJORITY OF NET PROCEEDS TO BE UTILIZED FOR THE PAYMENT OF EXISTING INDEBTEDNESS

The Company intends to utilize approximately $2,100,000 (approximately 54%)
of the net proceeds of the Offering for the payment of existing indebtedness.
Included in such indebtedness in an aggregate of $85,000 plus accrued interest
payable to Eric R. Schwarz, an employee and beneficial owner of approximately 6%
of the Company's outstanding Common Stock, and to the spouse of Edmund G.
Vimond, Jr., the Company's Chief Executive Officer, $200,000 payable to Robert
M. Kassenbrock, a beneficial owner of approximately 9% of the Company's
outstanding Common Stock and $200,000, the repayment of which has been
guaranteed by the Company's three executive officers. See "Use of Proceeds,"
"Management," "Security Ownership of Certain Beneficial Owners and Management,"
"Certain Relationships and Transactions" and "Selling Shareholders."

REQUIRED ROYALTY PAYMENTS

Pursuant to an agreement with Acorn, the Company has agreed, contingent
upon the Company achieving certain net income levels, to pay royalties to
Acorn until $9,800,000 has been paid to Acorn. The royalty payments consist
of (a) 4% of (i) net sales of eye drops sold by the Company in the Ocurest
Delivery System; (ii) royalties received by the Company from sales by others
of Rx products; and (iii) the proceeds of licensing and similar arrangements
received by the Company from licensing or similar arrangements in connection
with Rx products and (b) 25% of (i) royalties received by the Company with
respect to sales by others of OTC eye drops in the Ocurest Delivery System
and (ii) the proceeds of any licensing or similar arrangements received by
the Company in connection with OTC products. Furthermore, in the event that
the Company disposes of all or substantially all of its business including
the licenses granted by Acorn, other than through one or more licenses, the
Company must pay to Acorn the greater of $1,250,000 or 10% of the gross
proceeds of such disposition, in which case the Company shall have no further
obligation to Acorn. Other than as set forth in the preceding sentence, the
Company's obligation to Acorn will terminate upon the payment to Acorn of an
aggregate of $10,000,000. Payments required to be made to Acorn could
adversely affect the cash flow of the Company. See "Business--Patents and
Trademarks" and "Certain Relationships and Transactions."

CONFLICT OF INTEREST

All of the equity interest of Acorn is owned by an individual who was the
Chairman of the Company's Board of Directors at the time the original
arrangements between the Company and Acorn were made, his spouse and
daughters. One such daughter, having a 16% equity interest in Acorn, is the
spouse of Larry M. Reid, one of the Company's executive officers. Acorn has
assigned 25% and 15% of its rights to receive royalties from the Company to
Edmund G. Vimond, Jr. and Mr. Reid, two of the Company's executive officers
and directors. Subject to the Company achieving certain minimum levels of net
income, any activity taken to increase the Company's sales at the expense of
profits would benefit those persons having an interest in Acorn. See
"Business--Patents and Trademarks" and "Certain Relationships and
Transactions."

8
<PAGE>
LIMITED PRODUCT LIABILITY INSURANCE

There can be no assurance that the Company will not be named as a
defendant in any litigation arising from the use of the Company's products.
Although the Company's contract supplier has agreed to include the Company as
a named insured on its product liability insurance policy and although the
Company has its own product liability insurance policy with a limit of $2
million, should such litigation ensue and the Company is held liable for
amounts in excess of such insurance coverage, the Company could be rendered
insolvent. In addition, there can be no assurance that product liability
insurance will continue to be available to the Company or that the premiums
therefor will not become prohibitively expensive.

FORMULATIONS ARE NOT UNIQUE

The formulations utilized for the Company's eye care products are not
patented or otherwise protected from duplication by others and are
substantially identical to formulations currently being sold by certain other
companies, many of which are sold under well established brand names.
Accordingly, the Company has no competitive advantage on the basis of the
quality or efficacy of its formulations and therefore, the Company's ability
to effectively compete with such other companies will be dependent upon,
among other things, whether or not consumers accept the characteristics of
the Ocurest Delivery System.

DEPENDENCE UPON TRADEMARKS AND PATENTS

The Company's success is, in part, dependent upon any protection that may
be afforded by the patents issued in connection with the Ocurest Delivery
System and the trademarks relating thereto and the name "Ocurest." There can
be no assurance that such patents or trademarks will actually provide the
Company with any protection from its competitors or that such patents or
trademarks do not infringe upon the rights of others. In the event of such
infringement, the Company would lose any protection otherwise afforded by
such patents or trademarks. In addition, in order for the Company to protect
its patents and trademarks, the Company must identify, contain and prosecute
infringement by others. Trademark and patent litigation entails substantial
legal and other costs. There can be no assurance that the Company will have
the necessary financial resources to defend or prosecute its rights in
connection with any such litigation.

NECESSITY OF COMPLIANCE WITH GOVERNMENTAL REGULATION

The manufacture, contents and labeling of the Company's products must
comply with rules, regulations and standards of the United States Food and
Drug Administration. Although the Company believes that its eye care products
are in compliance with all applicable current FDA requirements, a failure of
the Company or those that manufacture its products to comply with any of the
foregoing could have a material adverse effect on the Company.

INTENSE COMPETITION

Competition in the OTC ophthalmic drug industry is intense. The Company
competes with large, established and well financed companies, including major
corporations which are actively engaged in the manufacture and sale of
products designed to perform the same function as those of the Company. The
brand names of many of such competitors' ophthalmic drug products are well
recognized and established in the marketplace. All of such companies possess
greater financial and human resources than does the Company. Although the
Company is not aware of any technological advances or developments by others
with respect to OTC eye drops or eye drop dispensers, in the event that any
such advances or developments occur, if the Company is not then able to
develop or otherwise acquire technology to produce competitive products, the
Company would be materially adversely affected. See "Business."

9
<PAGE>
GENERAL RISK FACTORS

ABSENCE OF TRADING MARKET

There is not now nor has there ever been any public market for the Units,
the Common Stock or the Warrants. There can be no assurance that any such
market will exist in the future. Should such a market develop, there can be
no assurance that it will remain active or otherwise be sustained. The Common
Stock and the Warrants comprising the Units will not be separately tradeable
or transferable for a period of six months commencing on the date of this
Prospectus or earlier at the discretion of the Representative.

ARBITRARY DETERMINATION OF OFFERING PRICE

Because there has never been a public market for the Units, Common Stock
or Warrants, the public offering price of the Units and the exercise price of
the Warrants have been arbitrarily determined by negotiation between the
Representative and the Company. Such prices bear no relationship to book value,
projected earnings, results of operations, net asset value or any other
objective criteria of value. Purchasers of the Units, Common Stock and Warrants
may therefore be exposed to the extraordinary risk of a decline in the market
price of the securities offered hereby subsequent to the completion of the
Offering should a market develop therefor. See "Underwriting."

NO PRESENT INTENT TO PAY DIVIDENDS

The Company has never declared or paid and does not anticipate declaring
or paying any dividends to its shareholders in the foreseeable future.
Accordingly, any investor who anticipates the need for current dividends from
an investment in the Company should not purchase any of the securities being
offered hereby. See "Description of Securities."

IMMEDIATE AND SUBSTANTIAL DILUTION

The initial public offering price of the Common Stock included in the
Units of $4.00 per share substantially exceeds its book value. Purchasers of
the Common Stock will experience an immediate dilution in the net tangible
book value per share after the offering of $3.10 (approximately 78% of such
initial public offering price). The Company has not allocated any portion of
the initial public offering price of the Units to the Warrants. See "Dilution."

VOTING CONTROL BY PRESENT SHAREHOLDERS BEFORE AND AFTER OFFERING AND CONTROL
BY MANAGEMENT

Following the completion of the Offering, the present shareholders of the
Company will own approximately 62% of the Company's outstanding Common Stock
and, therefore, will be in a position to elect all of the Company's directors
and control the policies and operation of the Company. Accordingly, it can be
anticipated that the Company's present directors will continue to be elected and
thus continue to control the Company for the foreseeable future. Such directors
who are also officers of the Company constitute 50% of the members of the Board
of Directors. Furthermore, during at least the foreseeable future, investors in
the Offering will be unable to elect any non-officer "outside" directors. See
"Management" and "Security Ownership of Certain Beneficial Owners."

ADDITIONAL SECURITIES AVAILABLE FOR ISSUANCE

The Company's Articles of Incorporation, as amended, authorize the issuance
of 25 million shares of Common Stock and five million shares of Preferred Stock
(the "Preferred Stock"). The Common Stock and the Preferred Stock can be issued
by, and the terms of the Preferred Stock, including dividend rights, voting
rights, liquidation preference and conversion rights can generally be determined
by, the Company's Board of Directors without shareholder approval. Any issuance
of the Preferred Stock could adversely affect the rights of the holders of
Common Stock by, among other things, establishing preferential dividends,
liquidation rights or voting powers. Accordingly, shareholders, including those
purchasing the securities offered hereby, will be dependent upon the judgment of

10
<PAGE>

management in connection with the future issuance and sale of shares of the
Company's Common Stock and Preferred Stock, in the event that buyers can be
found therefor. Any future issuances of Common Stock or Preferred Stock would
further dilute the percentage ownership of the Company held by the public
shareholders. Furthermore, the issuance of Preferred Stock could be used to
discourage or prevent efforts to acquire control of the Company through
acquisition of shares of Common Stock. See "Management," "Description of
Securities" and Notes to Financial Statements.

MARKET OVERHANG FROM OPTIONS AND WARRANTS

As of the date of this Prospectus, the Company had outstanding options and
warrants for the purchase of up to 1,257,585 shares of Common Stock at prices
ranging from $.01 to $5.00 per share. The options and warrants expire at
various times until June 2000. In addition, the warrants to be issued to the
Representative will permit the holders thereof to purchase a maximum of
240,000 shares of Common Stock. The holders of such warrants have certain
registration rights under the Securities Act of 1933 (the "Securities Act").
For the life of the outstanding options and warrants and the warrants to be
issued to the Representative, the holders thereof will have the opportunity
to profit from a rise in the market price of the Common Stock. The existence
of such securities may adversely affect the terms on which the Company can
obtain additional financing, and the holders hereof can be expected to
exercise the securities at a time when the Company would, in all likelihood,
be able to obtain additional capital by an offering of its Common Stock on
terms more favorable to the Company than those provided by such warrants. See
"Underwriting" and "Description of Securities."

RESTRICTIONS ON EXERCISE OF THE WARRANTS.

During the period the Warrants are exercisable, holders of the Warrants
will not be permitted to exercise such Warrants unless at the time of the
exercise the registration statement under the Securities Act of which this
Prospectus is a part or a new registration statement is both effective and
current. Although the Company has undertaken to maintain a current and
effective registration statement during the life of the Warrants, there can
be no assurance that it either can or will do so. In addition, a holder of
the Warrants residing in a state in which the underlying Common Stock is
neither registered nor exempt from registration, will not be permitted to
exercise that holder's Warrants. The Company does not intend to advise
holders of the Warrants of their inability to exercise the Warrants other
than in response to a specific written inquiry to the Company. The value of
the Warrants may be greatly reduced if a current registration statement
covering the shares of Common Stock underlying the Warrants is not effective
and current or if such Common Stock is not registered or exempt from
registration in the states in which the holders of the Warrants reside. See
"Description of Securities Warrants."

WARRANTS SUBJECT TO REDEMPTION

Commencing on the date the Warrants are separately tradeable and
transferable, the Warrants are subject to redemption by the Company at $.55
per Warrant at any time until the end of the second year after the date of
this Prospectus and thereafter at $.75 per Warrant at any time until the end
of the third year after the date of this Prospectus and prior to their
expiration, on 30 days' prior written notice to the holders of the Warrants,
provided that the daily trading price per share (as defined on page 39) has been
at least $6.72, subject to adjustment in certain circumstances, for a at least
20 consecutive trading days ending within 10 days prior to the date of the
notice of redemption. Redemption of the Warrants could force the holders to
exercise the Warrants and pay the exercise price at a time when it may be
disadvantageous for the holders to do so, to sell the Warrants at the then
current market price when they might otherwise wish to hold the Warrants, or to
accept the redemption price, which is likely to be substantially less than the
market value of the Warrants at the time of redemption. See "Description of
Securities--Warrants."

SHARES ELIGIBLE FOR PUBLIC SALE

11
<PAGE>

approximately 600,000 of such shares will be eligible for resale under Rule 144
commencing ninety days subsequent to the date of this Prospectus. The remaining
shares will become so eligible at various times between November 1996 and June
1998. In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions specified in such Rule, sales of
"restricted securities" may be made if a minimum of two years has elapsed
between the later of the date of the acquisition of such securities from the
Company or from an affiliate of the Company and any resale thereof in reliance
on Rule 144 for the account of either the initial acquiror or any subsequent
holder. If sales can be made under Rule 144, a seller, including persons whose
securities are required to be aggregated, is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares of the same class or, if the shares are
then quoted on NASDAQ, the average weekly trading volume during the four
calendar weeks preceding the filing of a notice with the Securities and Exchange
Commission (the "Commission"). Where a minimum of three years has elapsed
between the later of the date of the acquisition of restricted securities from
the Company or from an affiliate of the Company and any resale thereof in
reliance on Rule 144 for the account of either the initial acquiror or any
subsequent holder, a person who has not been an affiliate of the Company for at
least the three months immediately preceding the sale is entitled to sell such
securities under Rule 144 without regard to any of the limitations described
above. No prediction can be made as to the effect, if any, that sales of shares
of Common Stock or the availability of such shares for sale will have on the
market prices, if any, prevailing from time to time. Nevertheless, the
possibility that substantial amounts of Common Stock may be sold in the public
market may adversely affect prevailing market prices, if any, for the Common
Stock and Warrants and could impair the Company's ability to raise capital
through the sale of its equity securities. Certain of the Company's shareholders
owning an aggregate of 724,427 shares of Common Stock have agreed not to sell
any of such shares without the consent of the Representative for a period of one
year commencing on the date of this Prospectus. In addition, the Company has
granted certain future registration rights under the Securities Act to the
holders of an aggregate of 133,920 shares of Common Stock and to the holders of
warrants for the purchase of 375,000 shares of Common Stock. See "Selling
Shareholders," "Certain Relationships and Transactions," "Underwriting" and
"Shares Eligible for Future Sale."

NASDAQ MAINTENANCE REQUIREMENTS AND EFFECTS OF POSSIBLE DELISTING; PENNY
STOCK RULES.

Although the Company's Units have been approved for initial listing on
NASDAQ upon notice of issuance of such securities, the Company must continue
to meet certain maintenance requirements in order for such securities to
continue to be listed on NASDAQ. Further, the Company must meet such
maintenance requirements for the Company to be able to list the Company's
Common Stock and Warrants on NASDAQ at such time as they are separately
tradeable and transferable. If the Company's securities are delisted from
NASDAQ, such delisting could restrict investors' interest in the Company's
securities and could materially and adversely affect any trading market and
prices for such securities. In addition, if the Company's securities are
delisted from NASDAQ, and if the Company's net tangible assets do not exceed
$2 million, and if the Company's Common Stock is trading for less than $5.00
per share, then the Company's Common Stock and Warrants would each be
considered a "penny stock" under federal securities law. Additional
regulatory requirements apply to trading by broker-dealers of penny stocks
which could result in the loss of effective trading markets, if any, for the
Company's Common Stock and Warrants.

RESTRICTIONS ON ISSUANCE OF ADDITIONAL SECURITIES

Although the Company's Articles of Incorporation, as amended, authorize the
issuance of additional equity securities, other than with respect to securities
to be sold in connection with the Offering, substantially all of such authorized
securities may not be issued by the Company for a period of three years
subsequent to the date of this Prospectus without the consent of the
Representative. That restriction may preclude the Company from issuing
additional shares of Common Stock or Preferred Stock or securities convertible
or exercisable into Common Stock or Preferred Stock at times when the Company
may believe that it would be advantageous to do so. See "Underwriting."

<PAGE>

RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") and the
Company intends that such forward-looking statements be subject to the safe
harbors for such statements under such sections. The Company's
forward-looking statements include the plans and objectives of management for
future operations, including plans and objectives relating to the Company's
planned national marketing campaign and future economic performance of the
Company. The forward-looking statements and associated risks set forth in
this Prospectus include or relate to: (i) the ability of the Company to
obtain a meaningful degree of consumer acceptance for its products and
proposed products, (ii) the ability of the Company to market its products and
proposed products on a national basis at competitive prices, (iii) the
ability of the Company to develop brand-name recognition for its products and
proposed products, (iv) the ability of the Company to develop and maintain an
effective sales network, (v) success of the Company in forecasting demand for
its products and proposed products, (vi) the ability of the Company to
maintain pricing and thereby maintain adequate profit margins, (vii) the
ability of the Company to achieve adequate intellectual property protection
for the Company's products and proposed products and (viii) the ability of
the Company to obtain and retain sufficient capital for its future
operations.

The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on assumptions that the Company will market and provide
products on a timely basis, that there will be no material adverse
competitive or technological change in conditions in the Company's business,
that demand for the Company's products will significantly increase, that the
Company's Chief Executive Officer will remain employed as such by the
Company, that the Company's forecasts accurately anticipate market demand,
and that there will be no material adverse change in the Company's operations
or business or in governmental regulations affecting the Company or its
suppliers. The foregoing assumptions are based on judgments with respect to,
among other things, future economic, competitive and market conditions, and
future business decisions, all of which are difficult or impossible to
predict accurately and many of which are beyond the Company's control.
Accordingly, although the Company believes that the assumptions underlying
the forward-looking statements are reasonable, any such assumption could
prove to be inaccurate and therefore there can be no assurance that the
results contemplated in forward-looking statements will be realized. In
addition, as disclosed elsewhere in the "Risk Factors" section of this
Prospectus, there are a number of other risks inherent in the Company's
business and operations which could cause the Company's operating results to
vary markedly and adversely from prior results or the results contemplated by
the forward-looking statements. Growth in absolute and relative amounts of
cost of goods sold and selling, general and administrative expenses or the
occurrence of extraordinary events could cause actual results to vary
materially from the results contemplated by the forward-looking statements.
Management decisions, including budgeting, are subjective in many respects
and periodic revisions must be made to reflect actual conditions and business
developments, the impact of which may cause the Company to alter its
marketing, capital investment and other expenditures, which may also
materially adversely affect the Company's results of operations. In light of
significant uncertainties inherent in the forward-looking information
included in this Prospectus, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
Company's objectives or plans will be achieved. See "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."

13
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock included
in the Units offered hereby are estimated to be approximately $3,876,000.

The Company intends to use the net proceeds as follows:

<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE
USE APPROXIMATE AMOUNT OF NET PROCEEDS
--- ------------------- -----------------------
<S> <C> <C>
Purchase of production equipment .......... $ 433,000 11%
National advertising and promotion activities ........... $1,100,000 29%
Repayment of indebtedness and accrued interest .......... $2,100,000 54%
General corporate purposes, including working capital,
payment of accounts payable and possible future
acquisition or licensing of products or technologies
that complement the Company's business ................. $ 243,000 6%
</TABLE>

The indebtedness which the Company intends to repay from the net proceeds was
incurred at various times between October 1994 and October 1996, bears interest
at rates ranging from approximately 10% to 15% per annum and has maturity dates
from November 30, 1995 to the time the Company receives the net proceeds of the
Offering. Included in such indebtedness is an aggregate of $85,000 plus accrued
interest payable to Eric R. Schwarz, an employee and beneficial owner of
approximately 6% of the Company's outstanding Common Stock, and to the spouse of
Edmund G. Vimond, Jr., the Company's Chief Executive Officer and $200,000 plus
accrued interest payable to Robert M. Kassenbrock, a beneficial owner of
approximately 9% of the Company's outstanding Common Stock. The proceeds of the
indebtedness were utilized by the Company for general corporate purposes,
including working capital and advertising and promotion. Included in the
indebtedness to be repaid is $200,000 payable to an advertising agency for
advertising and promotion activities. The repayment of such amount has been
guaranteed by the Company's three executive officers. On the date of this
Prospectus, the Company is in default in the repayment of approximately $650,000
of loans, including interest thereon. See "Security Ownership of Certain
Beneficial Owners and Management," "Certain Relationships and Transactions" and
"Selling Shareholders." The Company believes that the receipt of such net
proceeds will satisfy its capital requirements for a period of at least one
year.

Pending utilization of the net proceeds of the Offering, the Company will
invest such net proceeds in short-term government securities in a
non-discretionary account of the Company with the Representative.

The allocation of the net proceeds of the Offering as set forth above
represents the Company's current estimates based on its proposed plan of
operations and certain assumptions with regard to the Company's proposed plan
of operations as well as certain assumptions regarding industry and general
economic conditions. In the event that the Company's plans change, its
assumptions change or prove to be inaccurate, or the proceeds of the Offering
prove to be insufficient, the Company may find it necessary or advisable to
reallocate proceeds within the above-described categories or to use proceeds
for other purposes or to seek additional financing or curtail or cease its
activities.

14
<PAGE>
DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its Common
Stock nor does the Company anticipate that any such dividends will be paid in
the foreseeable future. The Company intends to apply any earnings it may
realize to the expansion of its business.

DILUTION

The Company had a deficiency in net tangible book value of $(1,139,109) or
$(.59) per share of the Company's Common Stock on June 30, 1996. Net tangible
book value per share is determined by dividing the tangible net worth of the
Company (tangible assets less total liabilities) by the total number of
outstanding shares of Common Stock. After giving effect to the sale of the Units
offered hereby and the receipt of the estimated net proceeds to the Company from
the sale of the Common Stock included in the Units, and assuming no exercise of
the Over-Allotment Option, the Warrants, the Representative's Warrants or
outstanding options and warrants, the pro forma net tangible book value of the
Company at June 30, 1996 would have been $.90 per share, representing an
immediate increase in the net tangible book value of $1.49 per share to existing
shareholders and an immediate dilution to new investors of $(3.10) per share
(approximately 78% of the allocated $4.00 price per share of Common Stock). The
following table illustrates the dilution per share of Common Stock to new
investors purchasing Units in the Offering.

<TABLE>
<CAPTION>
<S> <C> <C>
INITIAL PUBLIC OFFERING PRICE PER SHARE OF COMMON STOCK ...................... $ 4.00
Net tangible book value per share of Common Stock at June 30, 1996 .......... $(.59)
Increase per share of Common Stock attributable to new investors ............ $1.49
---------
Pro forma net tangible book value per share of Common Stock after the
Offering ..................................................................... $ .90
--------
Dilution per share to new investors .......................................... $(3.10)
========
</TABLE>

The following table sets forth on a pro forma basis as of June 30, 1996 the
differences between existing stockholders and new investors with respect to the
number of shares of Common Stock purchased from the Company, the total
consideration paid to the Company and the average price paid per share assuming
no exercise of the Over-Allotment Option.

SHARES PURCHASED TOTAL CONSIDERATION
------------------------ ------------------------ AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing Stockholders 1,922,674 62% $ 5,084,224 51% $2.64
New Investors ........ 1,200,000 38% 4,800,000 49% $4.00
------------ ---------- ------------- ---------- -------------
Total: ............... 3,122,674 100.0% 9,884,224 100.0%
============ ========== ============= ==========
</TABLE>

15
<PAGE>
CAPITALIZATION

The following table sets forth the Company's capitalization as of June 30,
1996 and as of June 30, 1996 as adjusted to reflect the sale by the Company
of 1,200,000 Units and the application of the net proceeds from the sale of
the 1,200,000 shares of Common Stock included therein. See "Use of Proceeds."

<TABLE>
<CAPTION>
AS
ACTUAL(1) ADJUSTED(2)(3)
-------------- ----------------
<S> <C> <C>
Current Liabilities .............................................. $ 3,265,616 $ 1,765,616
Stockholders' Equity
Preferred Stock, $.001 par value, 5,000,000 shares authorized,
no shares issued and outstanding (actual or adjusted) ......... -- --
Common Stock, $.008 par value, 25,000,000 shares authorized;

1,922,674 issued and outstanding (actual) and 3,122,674 shares
issued and outstanding (as adjusted) ......................... 15,381 24,981

Paid-in Capital .................................................. 5,068,843 8,935,243
Accumulated Deficit .............................................. (6,008,941) (6,008,941)
Total Stockholders' Equity (Deficit) ............................. $ (924,717) $ 2,951,283

</TABLE>
- -------------
(1) Par value and number of shares have been adjusted for a 1 for 2 reverse
stock split that occurred in July 1996.

(2) Adjusted to include the 1,200,000 shares of Common Stock offered hereby
by the Company and application of the net proceeds therefrom. See "Use of
Proceeds."

(3) Adjusted for current liabilities to be paid from the net proceeds of the
Offering. See "Use of Proceeds."

16
<PAGE>
SELECTED FINANCIAL DATA

The selected financial data of the Company for the periods set forth below
have been derived from the Company's financial statements included elsewhere
in this Prospectus. The selected financial data should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results
of Operations and the Financial Statements and the related Notes thereto
included elsewhere in this Prospectus. The data for the six months ended June
30, 1995 and 1996 and as of June 30, 1996, is unaudited. In the opinion of
management, all adjustments (consisting of only normal recurring adjustments)
necessary for the fair presentation of financial position, results of
operations and cash flows for the unaudited periods have been made.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 SIX MONTHS ENDED JUNE 30
------------------------------- -----------------------------
1994 1995 1995 1996
--------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales ................................... $ 96,830 $ 687,122 $ 200,384 $ 734,281
Cost of Goods Sold .......................... 139,733 545,175 160,206 443,579
Selling & Marketing Expense ................. 676,079 1,784,102 462,835 639,052
General & Administrative Expense ............ 948,458 964,426 466,548 484,648
Royalty Expense ............................. 3,875 27,885 8,015 29,380
Other Income (Expense) ...................... (18,005) (102,326) (32,552) (148,082)
--------------- --------------- ------------- ---------------
Net Loss .................................... $(1,689,320) $(2,736,792) $(929,778) $(1,010,450)
=============== =============== ============= ===============
Net Loss Per Share .......................... $ (1.16) $ (1.55) $ (.54) $ (.50)
=============== =============== ============= ===============
Supplemental Pro Forma Net Loss(1) .......... $(2,670,192) $ (977,150)
=============== ===============
Supplemental Pro Forma Net Loss Per Share(1) $ (1.40) $ (.37)
=============== ===============
</TABLE>
- -------------
(1) The supplemental pro forma net loss and net loss per share reflect the
issuance of shares necessary to repay certain indebtedness and the
related reduction in interest expense and the net loss. See Note A of
Notes to the Financial Statements.

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
--------------- --------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA
Total Assets .................. $ 1,245,314 $ 1,562,271 $ 2,340,899
Total Liabilities ............. 1,064,007 3,306,311 3,265,616
Common Stock & Paid-in Capital 2,443,006 3,254,451 5,084,224
Accumulated Deficit ........... (2,261,699) (4,998,491) (6,008,941)
Stockholders' Equity (Deficit) $ (181,307) $(1,744,040) $ (924,717)
</TABLE>

17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated, all dollar amounts included in this section of
the Prospectus have been rounded to the nearest thousand.

OVERVIEW

The Company was organized in 1991 to commercialize new consumer products
in the health and personal care industry. For the period from inception
though December 31, 1993, the Company was in a development stage and
accumulated a deficit of $572,000, attributable to developing manufacturing
and marketing plans and paying the cost of professional services. The Company
sells ophthalmic drug solutions in an ophthalmic delivery system in the
non-prescription eye drop market. The Company believes that a similar
delivery system has not been and is not now being marketed by any other
entity. The products sold with the delivery system are the Company's sterile
eye drops in a line of two OTC formulations. The following table sets forth,
for the periods indicated, a review of certain items included in the
Company's statement of operations. Amounts are in thousands (000's).

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED SIX MONTHS ENDED
------------------------ ----------------------
12/31/94 12/31/95 6/30/95 6/30/96
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales ................. $ 97 $ 687 $ 200 $ 734
Costs & Expenses
Cost of Goods Sold ....... 140 545 160 444
Selling & Marketing ..... 676 1,784 462 639
General & Administrative 948 964 467 484
Other Expenses ........... 22 130 41 177
Net Loss .................. $(1,689) $(2,736) $(930) $(1,010)
</TABLE>

In late 1994, the Company began limited marketing of two OTC eye drop
products in the Ocurest Delivery System. In late 1995, the Company expanded
its marketing efforts to ten southern states. In early 1996, the Company
began the process of expanding its brand nationally. For the years ended
December 31, 1994 and 1995, the Company had net losses of $(1,689,000) and
$(2,737,000), respectively, on net sales of $97,000 in 1994 and $687,000 in
1995. Net sales for the six months ended June 30, 1996 were approximately
$734,000 compared with $200,000 for the six months ended June 30, 1995 and,
during such periods, the respective net losses were approximately $(1,010,000)
and $(930,000). While the Company continues its national expansion of its
product line, the Company anticipates that its operations will result in
continuing losses for a minimum of six months following the completion of the
Offering. There can be no assurance that the Company will ever be profitable.

COST OF GOODS SOLD

Cost of goods sold was 144% of net sales in 1994 and 79% of net sales in
1995. The increase of $405,000 in cost of goods sold in 1995 is primarily
attributable to twelve months' of sales in 1995 as compared to six months' of
sales in 1994. For the six months ended June 30, 1996, cost of goods sold was
60% of net sales as compared with 79% of net sales for the six months ended
June 30, 1995. The decrease was primarily attributable to lower per unit
production costs because of an increase in sales of $534,000 during the
latter period. The Company anticipates that product costs and expenses will
continue to decline as a percentage of net sales if the Company gains larger
national distribution.

SELLING AND MARKETING EXPENSES

The Company believes that consumer demand for its products can be
generated through advertising and sales promotion. As a result, the Company
intends to expend substantial amounts of funds in advertising and sales
promotion in 1996 and future years. Selling and marketing expenses in 1994
and 1995 reflect start-up costs associated with the introduction of the
Company's products in Florida, the Company's lead market. Spot TV and
magazine advertising are primarily attributable for

18
<PAGE>
the year to year increase of $1,108,000. The Company also continued to incur
marketing and advertising research costs in 1995 as it monitored the Florida
market. Distribution costs increased in 1995 as sales expanded regionally
from Florida. For the six months ended June 30, 1996 selling and marketing
expenses of $639,000 represented 87% of net sales as compared with $462,000
and 231%, respectively, for the six months ended June 30, 1995. The
percentage decrease was primarily attributable to a substantial reduction in
advertising expenditures per sales dollar due to unavailability of funds.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses include professional services and
administrative expenses associated with legal, accounting and consulting fees
and other expenses incurred in raising capital to finance operations. Such
expenses also include support services for three full time employees and the
related compensation and benefits cost.

General and administrative expenses for 1995 were $964,000 as compared to
$948,000 in 1994 and for the six months ended June 30, 1996, general and
administrative expenses were $485,000 as compared to $467,000 for the same
period in 1995. The Company believes general and administrative expenses will
be substantially higher for the balance of 1996 and all of 1997 as the
Company hires additional personnel necessary to provide the infrastructure to
support the Company's planned continued national distribution of the
Company's product line.

DEPRECIATION

The increase in depreciation reflects the Company's increased investment
in molds, plates, dies and packaging and filling equipment.

INTEREST EXPENSE

Interest expense was nominal through December 1994 as the Company relied
heavily on equity investments to fund operations. Interest expense increased
for 1995 and the first six months of 1996 because the Company increased its
indebtedness as discussed below under "Liquidity and Capital Resources."
Interest expense for the six months ended June 30, 1996 was $148,000.
Management estimates the interest expense for 1996 will be substantially
higher due to increased indebtedness and higher rates of interest.

The Company obtained various loans in 1995 and 1996 and in August 1995 the
Company entered into a factoring and financing agreement to sell its accounts
receivable and its finished goods inventory. The factor has agreed not to
terminate its present arrangements with the Company prior to December 1997. The
Company intends to renegotiate the terms of the factoring arrangements shortly
after its receipt of the net proceeds of the Offering. In the event that the
Company is not able to negotiate more favorable terms, the Company will seek to
obtain financing from other sources, including other factors. There can be no
assurance that the Company will be successful in renegotiating the terms of its
factoring arrangements or secure financing from any other source on terms not
unfavorable to the Company or at all. Certain indebtedness, including accrued
interest thereon, will be repaid from the net proceeds of the Offering. See "Use
of Proceeds."

RESEARCH AND PRODUCT DEVELOPMENT

At such time as the Company deems necessary, the Company intends to make
expenditures for product research and development, including testing and, if
necessary, technical modification to the Ocurest Delivery System. As new
formulas become available to the Company, the Company intends to conduct
appropriate testing.

LIQUIDITY AND CAPITAL RESOURCES

The Company's need for funds has increased from period to period as it has
incurred expenses for, among other things, test marketing, market and
advertising research, engineering and design of manufacturing systems,
applications for domestic and international patent protection and domestic
trademark protection. Since inception, the Company has funded these needs
primarily through private placements of its equity.

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On June 30, 1996, the Company was delinquent in the payment of certain of
its indebtedness including promissory notes issued by the Company in the
aggregate amount of $250,000. The Company intends to repay such promissory
notes and accrued interest thereon from the net proceeds of the Offering. See
"Use of Proceeds."

The Company's working capital and capital requirements will depend on
numerous factors, including growth, if any, of the Company's sales. The Company
currently has a factoring and financing agreement pursuant to which the Company
sells its accounts receivable and finished goods inventory, subject to the right
of the Company to repurchase such accounts receivable and inventory, and pledges
its machinery and equipment to secure a loan. In addition to interest and fees,
the financing agreement requires the Company to pay the factor a management fee
of $5,000 per month. Such agreement may be terminated by the Company at any time
or by the factor commencing in December 1997. In the event that the Company is
not able to negotiate more favorable terms, the Company will seek to obtain
financing from other sources, including other factors. There can be no assurance
that the Company will be successful in renegotiating the terms of its factoring
arrangements or secure financing from any other source on terms not unfavorable
to the Company or at all. The Company has recently borrowed $200,000 from Robert
M. Kassenbrock. See "Certain Relationships and Transactions."

Finished goods inventory increased by $281,000 (56%) at June 30, 1996 as
compared to finished goods inventory at December 31, 1995. The increase was a
result of the Company's planned national marketing program for its product line
with television advertising which it had scheduled to begin in national media in
June 1996 but did not begin until October 1996. It is the Company's policy to
maintain levels of finished goods inventory sufficient to meet sixty days' of
anticipated sales. The Company believes that such policy is consistent with
industry practice. The Company's products bear an expiration date of two years
from the date of manufacture.

The Company has invested $1,057,000 in property and equipment through June
30, 1996. The equipment is specifically suited to the manufacture and
packaging of the Company products. Ownership of the machinery and equipment
allows the Company to directly affect production costs. The Company has
contractual obligations for the acquisition of additional machinery and
equipment amounting to $433,000 to be paid from the net proceeds of the
Offering. The Company believes that the financial resources available to it,
including the net proceeds from the Offering, will be sufficient to finance
its planned operations for at least one year.

The Company believes that the level of financial resources available to it
is an important factor in its ability to achieve the marketing and
distribution objectives for its products as well as in its ability to compete
effectively. Consequently, the Company may seek to raise additional capital
through public or private equity or debt financing in the future. The Company
has made no arrangements to obtain such additional capital and there can be
no assurance that any additional capital will be available to the Company on
terms not unfavorable to the Company, if at all.

The Company's net operating losses for income tax purposes are subject to
certain restrictions on their utilization. The Company has experienced in
1994, and will experience in 1996, changes in ownership under Internal
Revenue Service regulations that will limit the amount of net operating
losses that can be utilized in any given year. If the Company's future
pre-tax profits (if any) in any given year exceed such limitation, cash
payments for such income tax liabilities will have to be made. See Note I of
Notes to Financial Statements.

SUBSEQUENT EVENTS

The dollar amounts and percentages in this paragraph with respect to the
quarter ended September 30, 1996 are based upon preliminary data and are
approximate. The Company's net sales for the nine months ended September 1996
were $1,023,000 compared with $565,000 for the nine months ended September 30,
1995 and during such periods, the respective losses were approximately
$(1,586,000) and $(1,745,000). The Company's net sales during the third quarter
of 1996 of $289,000 were 21% less than the average quarterly sales of $367,000
during the six months ended June 30, 1996, reflecting the fact that most initial
shipments to fill retail shelves nationally were made in the first six months of
1996 rather than the third quarter of 1996. Net sales during the third quarter
of 1996 of $289,000 also were 21% less than net sales of $365,000 during the
third quarter of 1995, reflecting the fact that during the third quarter of 1995
the Company engaged in television advertising in 11 southern states. The Company
did not engage in any television advertising during the third quarter of 1996.
Primarily because of the quarter-to-quarter reduction in advertising
expenditures, the Company's net loss declined 29% from approximately $(815,000)
during the third quarter of 1995 to $(576,000) during the third quarter of 1996.
During the periods discussed, no material changes were made in the Company's
pricing and, consequently, the number of units sold by the Company in each such
period varied proportionately with the changes in net sales during such periods.

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BUSINESS

GENERAL

Ocurest Laboratories, Inc. (the "Company") is a marketing company
organized to develop and commercialize new health and personal care products
for the consumer market. The Company's products consist of two
Ocurest/registered trademark/ eye care products utilizing a patented delivery
system for dispensing ophthalmic drug solutions into the eye (the "Ocurest
Delivery System").

The Company acquired the exclusive worldwide licensing rights to the
Ocurest Delivery System from Acorn, a then affiliate of the Company. After
three years of product development, the Company began limited marketing in
late 1994 of two over-the-counter ("OTC") eye drop products packaged in the
delivery system. See "Business--Patents and Trademarks" and "Certain
Relationships and Transactions."

The Company's initial product development related primarily to
improvements in the Ocurest Delivery System and the development of prototype
models, development of a protocol for testing the stability of product
formulations, and development of various production techniques and operating
standards.

The Company's products consist of Ocurest Redness Reliever Lubricant and
Ocurest Tears Formula Lubricant (collectively, "Ocurest Eye Drops"). Ocurest
Eye Drops utilize ophthalmic drug formulations owned by Bausch & Lomb and are
manufactured under a supply agreement with Bausch & Lomb at its
pharmaceutical facility in Tampa, Florida. The Company owns the molds used to
produce parts for the Ocurest Delivery System and the manufacturing equipment
which Bausch & Lomb operates to produce all Ocurest eye care products.

The OTC eye care products manufactured for the Company by Bausch & Lomb
contain active ingredients as to which Bausch & Lomb has advised the Company
are recognized as safe and effective by the FDA. Ocurest Redness Reliever
Lubricant contains the same active ingredients as Visine Moisturizing, a
redness reliever lubricant brand, and Ocurest Tears Formula Lubricant
contains the same active ingredient as Tears Naturale, an artificial tears
brand.

Certain aspects of the Ocurest Delivery System are covered by a U. S.
utility patent issued in March 1990 and the shape of the Ocurest Delivery
System is covered by a U.S. design trademark registration issued in July 1995
and a design patent issued in September 1991, all of which have been licensed
to the Company. The Company is also the licensee of patents issued or pending
in a number of other countries.

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have ordered Ocurest Eye Drops for retail distribution. The Company intends to
utilize a substantial portion of the net proceeds of the Offering for
advertising and promotion expenses in support of the national marketing of
Ocurest Eye Drops.

In the future, the Company plans to extend marketing of the Ocurest
Delivery System into the prescription drug market. In 1995 the Company
granted Bausch & Lomb an option for an exclusive license to market
prescription ("Rx") ophthalmic drug products in the Ocurest Delivery System.
Bausch & Lomb did not exercise the option prior to its expiration and the
Company extended the option until December 31, 1996 for no additional
consideration. See "Business--Rx Marketing."

The Company has utilized a factor for the financing of its accounts
receivable and inventory. The Company intends to renegotiate the factoring
arrangements shortly after its receipt of the net proceeds of the Offering. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note G of Notes to Financial Statements.

OCUREST DELIVERY SYSTEM

The management of the Company believes that conventional eyedropper
dispensers for OTC and Rx ophthalmic drug solutions are cumbersome devices
that are not easy to use. Because it is often hard to keep an eyedropper
dispenser centered above the eye, it is often difficult to apply drops
directly into the eye and, consequently, the solution often misses the eye
and runs down the cheek of the user. In addition to being messy, drops that
miss the eye in this manner raise a potential drug compliance problem, since
consumers may under-medicate when the prescribed number of drops are not
applied (or over-medicate if too many drops are applied to compensate for
those that miss the eye).

The Ocurest Delivery System was designed to attempt to solve the in-use
problems the management of the Company believes are associated with existing
eyedropper dispensers. The Company believes that the Ocurest Delivery System
is an alternative to conventional eyedropper devices. The Ocurest Delivery
System is shaped like an egg which enables the user to rest it on the bridge
of the nose and angle it 45/degree/ inward toward the eye. In this position,
the dropper tip is stabilized and centered directly above the eye and should
make it easier for the user to apply drops with no messy spillage or waste.
In addition, the Company believes that accurate drug compliance is more
likely to be achieved with the Ocurest Delivery System because it has been
designed to permit metered application of one drop at a time directly into
the eye.

The Ocurest Delivery System is a molded three-piece plastic assembly which
is designed to contain and dispense a maximum of 0.5 fluid ounce of any
liquid ophthalmic drug solution. The three parts consist of a squeeze-bottom
container that holds the solution, a snap-on dropper tip shield that seals
the container to form a unitized dispenser and a single-thread screw-on cap
to protect the contents. All of the parts are made from resins that are
approved by the FDA for pharmaceutical packaging.

OCUREST OTC PRODUCTS

The Company markets two OTC formulations in the Ocurest Delivery System,
consisting of a redness reliever lubricant and an artificial tears lubricant.
The Company's current products consist of Ocurest Redness Reliever Lubricant
and Ocurest Tears Formula Lubricant, both of which use formulations that are
manufactured and owned by Bausch & Lomb. In the future, the Company intends
to expand its product line with the national introduction of two additional
OTC formulations, Ocurest Allergy Relief Formula and Ocurest Lens Rewetting
Agent, that it is planned will use formulations manufactured, but not
necessarily owned, by Bausch & Lomb. There can be no assurance that the
Company will expand its product line or that the Company's existing or
proposed products can be marketed profitably.

The Company's eye care products are packaged in tamper-resistant cartons
that prominently feature the Ocurest brand name and a picture of the product
being used on the front carton panel. The cartons also feature a riser card
that prominently displays a side-by-side comparison of a competitive
dispenser next to the Ocurest Delivery System, accompanied by the following
message:

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"Nobody likes pointy things near their eyes. That's why you may find
pointy eyedroppers difficult to use. Ocurest's new egg-shaped dispenser puts
an end to hit-or-miss, pointy-tip eyedroppers. Just rest it comfortably
across the bridge of your nose. The Ocurest dispenser puts the drops where
you want them. In your eye...not down your cheek."

Each of the Company's eye care products is a sterile, buffered, isotonic
solution formulated to match the natural fluid in the eye. Each formula
contains ingredients generally recognized as safe and effective by the FDA as
published in the Final Monograph for Ophthalmic Drug Products, March 4, 1988.

Ocurest Redness Reliever Lubricant contains tetrahydrozoline Hcl, a
decongestant that relieves redness of the eye, and polyethylene glycol 400, a
demulcent that relieves and protects the eye from minor irritation. The
active ingredients in Ocurest Redness Reliever Lubricant are the same as
those used in the formulations of certain major eye drop manufacturers.
Ocurest Tears Formula Lubricant contains hydroxypropyl methylcellulose, an
active ingredient that moisturizes the eye to relieve dry-eye syndrome and
relieve and protect the eye from minor irritation. The active ingredient in
Ocurest Tears Formula Lubricant is the same as that used in the formulations
of certain major eye drop manufacturers. Although the Company believes that
its products are as effective for their intended purposes as those presently
marketed by the Company's competitors, the successful marketing of its
products is dependent upon widespread acceptance of the Ocurest Delivery
System. There can be no assurance of such acceptance or that any such
potential competitor or others will not develop products or dispensers that
are superior to or are perceived to be superior to or can be manufactured and
sold a at lower cost than those of the Company.

Ocurest Eye Drops were introduced in Florida with the start of advertising
in September 1994. This in-market test was supported by two 13-week flights
of television commercials in 10 TV markets, magazine advertisements in
selected consumer publications and distribution of coupons on three separate
occasions.

Based on market research conducted by the Company, certain adjustments
were made in the Ocurest marketing program, primarily in the areas of
television commercial production, advertising media selection and pricing.
These adjustments were incorporated in the marketing program used to launch
Ocurest Eye Drops in ten additional southern states in mid-1995 and that are
now incorporated in the marketing program being used to launch Ocurest eye
care products nationally.

MANUFACTURING PLAN

OCUREST DELIVERY SYSTEM--The Company utilizes Wheaton Plastic Products,
Inc. ("Wheaton"), a manufacturer of pharmaceutical packaging, to produce all
parts for the Ocurest Delivery System. The Company has agreed to purchase all
of its parts exclusively from Wheaton and Wheaton has agreed to fulfill the
Company's supply requirements at agreed upon prices for each component. Such
prices will be adjusted for price changes in raw materials and other actual
cost increases. The agreement with Wheaton terminates on December 31, 1998
and is subject to the Company's commitment to pay for certain molds and mold
upgrades. The Company believes that if the need arises, the Company can
obtain parts for the Ocurest Delivery System in quantities necessary to
satisfy the Company's needs on terms and conditions not unfavorable to the
Company from other sources.

CONTRACT MANUFACTURING--Parts for the Ocurest Delivery System are
assembled at the time Ocurest eye care products are formulated, filled and
packaged under contract by Bausch & Lomb at its pharmaceutical manufacturing
facility in Tampa, Florida. The Company has purchased, at a cost of
approximately $526,000, specially designed equipment consisting of a
dispenser parts unscrambler, 80-per-minute sterile filling and capping
machine and a dual-head pressure sensitive labeler. In 1994, the equipment
was installed and validated on behalf of the Company at Bausch & Lomb's
manufacturing facility in Tampa where it is maintained and operated
exclusively in the manufacture of eye care

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products in the Ocurest Delivery System. The Company is identified on its
product labels as the distributor of the products. Bausch & Lomb is not
identified.

The Company plans to utilize approximately $433,000 of the net proceeds of
the Offering for additional equipment for its packaging line at the Bausch &
Lomb manufacturing facility and to make final payment on certain multi-cavity
molds. Dependent upon the availability to the Company of an additional amount of
approximately $240,000, the Company's packaging line will be improved to consist
of an automatic neck bander, 100 per minute cartoner, tamper-evident tab sealer,
automatic collator and shrink wrapper and automatic case sealer, at which time
Bausch & Lomb will have the capacity to manufacture approximately 16 million
units a year of eye care products produced in the Ocurest Delivery System. There
can be no assurance that such funds will become available to the Company on
terms not unfavorable to the Company or at all. In 1994, the Company entered
into a Contract Supply Agreement with Bausch & Lomb (the "Supply Agreement")
pursuant to which Bausch & Lomb agreed to manufacture the Company's OTC
ophthalmic drug solutions in accordance with the Company's manufacturing
specifications. The Supply Agreement runs for a period of five years, although
either party may terminate the Supply Agreement on one year's notice. The
Company believes that if Bausch & Lomb were to terminate the Supply Agreement or
not agree to renew the Supply Agreement, other contract manufacturers will be
available to manufacture the Company's eye care products on substantially
similar terms, although there can be no assurance of the foregoing. In any such
event, however, the Company could incur a significant delay in the production of
its products. The Supply Agreement provides for minimum annual purchases by the
Company ranging from 500,000 to 4,000,000 units during the five year term at
designated prices which increase approximately 4% per annum in addition to any
actual cost increases incurred by Bausch & Lomb in excess of the annual
percentage increases. As of the date of this Prospectus, the Company is in
compliance with the purchase requirements. If the Company fails to so comply
with such requirements and such failure is not cured during the following six
months, Bausch & Lomb may terminate the Supply Agreement as of the immediately
succeeding March 31.

WAREHOUSING AND SHIPPING--The Company uses a bonded public warehouse in
Lakeland, Florida, to store its finished goods inventory, fill customer
orders and arrange for shipment by United Parcel Service or other carriers.
The Company believes that, should the need arise, other bonded public
warehouses will be readily available on terms not unfavorable to the Company.

NATIONAL MARKETING PLAN

OTC SELLING AND DISTRIBUTION--The Company began marketing its products to
most of its wholesalers and retailers on a national basis in early 1996 in
anticipation of the start of national advertising. The Company believes that
trade acceptance has been encouraging as indicated by the retailers who have
purchased Ocurest Eye Drops for chainwide distribution, including such chains
as Wal-Mart, Target, Kmart, Walgreens, Revco, Rite Aid, Eckerd, CVS, Osco,
Sav-on, Kroger, Winn-Dixie, Albertson's, A&P, Publix, Grand Union, Pathmark,
Stop & Shop, Giant Food, and Fred Meyer.

The Company sells its products through manufacturer representatives who
call on wholesalers and retail chain customers. These customers represent
drug stores, supermarkets and mass merchants. The balance of annual market
sales are transacted through small grocery stores, convenience stores,
wholesale clubs, military exchanges and optical centers.

The Company distributes its OTC eye care products at trade selling prices
that the Company believes are competitive with the leading brands in the
redness reliever and artificial tears segments of the OTC eye drop market.
The Company believes that its selling and distribution policies are also
competitive with those of other companies in the industry relating to credit
terms, shipping terms, returned and damaged goods and co-operative
promotional programs.

OTC ADVERTISING AND PROMOTION--It is planned that the Company's national
advertising will consist primarily of TV commercials that convey the Ocurest
message in 30, 15 and 10 second lengths. In October 1996, the Company began to
place its TV advertising in programs that the

24
<PAGE>

Company believes reach heavy users of OTC eye drops, skewed toward men and women
50 and under in the case of redness reliever users and women over 50 with
respect to artificial tears. It is planned that the Company's introductory TV
campaign will be reinforced by the use of magazine advertisements in selected
publications that the Company believes will reach heavy eye drop users
effectively. The Company also plans to promote its product line periodically via
the use of coupons distributed in magazine advertisements and free-standing
Sunday newspaper inserts.

RX MARKETING--In 1995, the Company granted Bausch & Lomb an option for an
exclusive license to market Rx ophthalmic drug products in the Ocurest
Delivery System. Bausch & Lomb paid the Company $10,000 for the option which
expired on December 31, 1995. The Company subsequently extended the option
until December 31, 1996 for no further consideration. Bausch & Lomb requested
the extension to allow sufficient time for Bausch & Lomb to evaluate the
potential for marketing selected ophthalmic pharmaceutical products utilizing
the Ocurest Delivery System. In the event Bausch & Lomb exercises its option
to license the Ocurest Delivery System for the domestic market, the parties
have agreed in principal to the structure of royalty payments that will be
made to the Company on Rx products marketed in the Ocurest Delivery System.
There can be no assurance that Bausch & Lomb or any other entity will seek to
utilize the Ocurest Delivery system for Rx preparations.

PRODUCT LIABILITY AND INSURANCE

Users of the Company's products could suffer, or claim to suffer, adverse
effects from the Company's products. The Company carries product liability
insurance of $2 million and, in addition, Bausch & Lomb has agreed to name
the Company as an insured on the product liability insurance policy of Bausch
& Lomb. Such insurance, however, will be subject to deductibles payable by
the Company, and it is possible that it may not apply to or be adequate to
cover all claims. There can be no assurance that any such insurance acquired
directly by the Company will not become prohibitively expensive or otherwise
be unavailable to the Company. Any recovery by a claimant in excess of the
product liability insurance limits could have a material adverse affect on
the Company.

PATENTS AND TRADEMARKS

In October 1991, pursuant to an agreement between the Company and Acorn,
as subsequently amended (the "Acorn Agreement"), Acorn granted to the Company
the exclusive worldwide license to make, use and sell eye drop solutions
contained in the Ocurest Delivery System and claimed in a United States
utility patent held by Acorn (the "Acorn Patent") and certain foreign patents
and patent applications. The Acorn Patent relates to a generally egg-shaped
eye drop dispenser with a nozzle on top of a squeezable hollow body with a
smooth, generally dome-shaped top surface substantially surrounding the
nozzle. The Company is responsible for the prosecution and protection of the
intellectual property licensed to it under the Acorn Agreement, including all
legal fees and other expenses that may be incurred in connection with any
litigation concerning patent or trademark infringement.

Certain aspects of the Ocurest Delivery System are covered in the United
States by utility patent 4,909,801 issued in March 1990 and design patent
D320,083 issued in September 1991 which will remain in force until 2007 and
2005, respectively. The shape of the Ocurest Delivery System represents a
trade dress which is also covered in the United States by a trademark
registration issued in July 1995 that is effective for ten years and is
renewable for successive ten year periods for as long as the mark is in use.
Patents corresponding to the United States utility patent have either
eventuated or are pending in a number of foreign countries.

Under the Acorn Agreement, Acorn also assigned to the Company its rights
in the United States and throughout the rest of the world for the trademark
and trade name "Ocurest." The "Ocurest" trademark was registered in the
United States in June 1988. The registration is effective for ten years and
is renewable for successive ten year periods for as long as the mark is in
use. The Company has no trademark registrations in foreign countries.

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Pursuant to the Acorn Agreement, the Company has paid $200,000 to Acorn to
acquire the worldwide licensing rights to the patents and trademarks and has
agreed to pay royalties with respect to ophthalmic solutions packaged in the
Ocurest Dispenser of (a) 4% of (i) net sales of eye drops sold by the Company
in the Ocurest Delivery System; (ii) royalties received by the Company from
sales by others of Rx products; and (iii) the proceeds of licensing and
similar arrangements received by the Company from licensing or similar
arrangements in connection with Rx products and (b) 25% of (i) royalties
received by the Company with respect to sales by others of OTC eye drops in
the Ocurest Delivery System and (ii) the proceeds of any licensing or similar
arrangements received by the Company in connection with OTC products.
Furthermore, in the event that the Company disposes of all or substantially
all of its business including the licenses granted pursuant to the Acorn
Agreement, other than through one or more licenses, the Company must pay to
Acorn the greater of $1,250,000 or 10% of the gross proceeds of such
disposition, in which case the Company shall have no further obligation to
Acorn. Other than as set forth in the preceding sentence, the Company's
obligation to Acorn will terminate upon the payment to Acorn of an aggregate
of $10,000,000

Acorn has agreed to permit the Company to defer accrued royalty payments
until such time, if any, as the Company realizes net income of at least
$1,000,000 during any four consecutive calendar quarters. The Company is also
permitted to defer 66.7% of accrued royalty payments and 33.3% of accrued
royalty payments until such time, if any, as the Company realizes net income
of at least $1,000,000 and less than $3,000,000 or at least $3,000,000 and
less than $5,000,000, respectively, during any four consecutive calendar
quarters. Notwithstanding the foregoing, the Company is required to pay Acorn
$4,000 per month as advances against accrued and deferred royalties (the
"Acorn Advances").

The Acorn Agreement further provides that the licenses granted under the
Acorn Agreement shall terminate and the Company shall have no further
interest therein upon the (a) filing by the Company of a voluntary petition
of bankruptcy; (b) filing of an involuntary petition of bankruptcy against
the Company provided that such petition is not discharged within 45 days of
the filing thereof; (c) appointment of a receiver or a trustee for all or
substantially all of the assets of the Company; (d) general assignment by the
Company of its assets for the benefit of its creditors; (e) payments due to
Acorn under the Acorn Agreement remaining unpaid subsequent to an applicable
grace period of 45 or 120 days, as the case may be or (f) default by the
Company or its successor or licensees in the performance of any other
material obligation under the Acorn Agreement, which obligation primarily
relates to the Company's requirement to protect the patents and trademarks,
including bearing of the cost thereof, and any such default remains uncured
subsequent to a grace period of 120 days. In the event that the licenses
granted by Acorn are so terminated, investors can expect to lose their entire
investment in the Company.

In order for the Company to protect any of its patents and trademarks, the
Company must identify, contain and prosecute infringement by others. Such
efforts would entail substantial legal and other costs. There can be no
assurance that under such circumstances that the Company would have the
necessary financial resources to prosecute any such infringement.

Acorn has assigned 25% and 15% of its rights to receive royalties from the
Company to the Company's President and Senior Vice President, respectively.
See "Certain Relationships and Transactions."

GOVERNMENTAL REGULATION

OTC ophthalmic drugs are generally recognized as safe and effective, and
not misbranded, if they meet certain conditions set forth by the FDA as
published in the Final Monograph for Ophthalmic Drug Products, March 4, 1988
with regard to active and inactive ingredients, dosage, permitted
combinations of ingredients and labeling, including statement of identity,
indications, warnings and directions for use. Ophthalmic drugs must be
manufactured in accordance with the FDA's Good Manufacturing Practice ("GMP")
regulations. If all of the requirements are met, the formulation may be
marketed without obtaining any specific FDA approval. The Company believes
that compliance with such requirements will not materially adversely affect
the Company's OTC ophthalmic drug business.

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No specific FDA approval is necessary for the Ocurest Delivery System if
the dispenser and its contents meet GMP requirements. The requirements
include regulations to the effect that the Ocurest Delivery System be tested
to show that it is not reactive, additive or absorptive, that stability and
sterility is suitable for the product, that appropriate testing procedures
are developed and followed and that the manufacturing establishment and the
ophthalmic drug products being manufactured are registered with the FDA. The
Company believes that Ocurest Eye Drops packaged in the Ocurest Delivery
System are in compliance with the foregoing.

DEPENDENCY UPON SIGNIFICANT CUSTOMERS

In 1995, three customers accounted for approximately 43%, 13% and 11% of
the Company's net sales, respectively. During the six months ended June 30,
1996, four customers accounted for approximately 13%, 11%, 10% and 9% of the
Company's net sales, respectively. The loss of any of such customers would
have a material adverse effect upon the Company. In the event that the
Company is not successful in marketing its OTC products, investors can expect
to lose their entire investment in the Company. There can be no assurance
that the Company will ever be able to operate profitably. See Note L of Notes
of Financial Statement.

COMPETITION

The Company competes with large and well financed manufacturers of
ophthalmic drugs, all of which have substantially greater resources than does
the Company. The Company's principal competitors are Allergan, Inc., Alcon
Laboratories, Inc., Bausch & Lomb, CibaVision, Inc., Ross Laboratories, Inc.
and Pfizer, Inc. Such companies accounted for approximately 89% of the volume
of OTC eye drop retail sales in the United States in 1995 according to
Information Resources, Inc. These competitors produce such brands as Visine,
Murine Plus and Clear Eyes in the redness reliever segment of the OTC market
and Tears Naturale, Hypotears, Refresh and Moisture Drops in the artificial
tears segment. Because the Company's eye drop formulations contain the same
or similar active ingredients as those used in certain currently available
nationally distributed eye drops, the Company expects to compete primarily on
the basis of the Ocurest Delivery System.

PROPERTY

The Company leases office space in Palm Beach Gardens, Florida. The
Company does not consider such office space material to its business. The
Company believes that other suitable office space is readily available on
terms not unfavorable to the Company.

EMPLOYEES

The Company has four full-time employees, inclusive of its three executive
officers.

27
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information with respect to the
executive officers and directors of the Company. Each director holds such
position until the next annual meeting of the Company's shareholders and
until his respective successor has been elected and qualifies. Any of the
Company's directors may be removed with or without cause at any time by the
vote of the holders of not less than a majority of the Company's then
outstanding Common Stock. Other than as otherwise provided in an employment
agreement, officers are elected annually by the Board of Directors. Any of
the Company's officers may be removed with or without cause at any time by
the Company's Board of Directors although, in such event, the Company may
incur certain liabilities under an applicable employment agreement.

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Edmund G. Vimond, Jr. . 61 Chairman of the Board of Directors, President,
Chief Executive Officer and Director

John F. Carlson ....... 57 Senior Vice President, Chief Financial Officer,
Treasurer and Director

Larry M. Reid ......... 51 Senior Vice President, Chief Administrative Officer,
Secretary and Director

Ralph H. Laffler ...... 76 Director

Robert S. Marker ...... 74 Director

Fred E. Ahlbin ........ 83 Director
</TABLE>

Edmund G. Vimond, Jr., a co-founder of the Company, has been the President
and Chief Executive Officer of the Company since April 1991 and Chairman of
the Board of Directors since September 1994. From 1983 until 1994, Mr. Vimond
was the principal of Edmund Vimond Associates, a business development and
acquisition consulting firm. Mr. Vimond has a marketing and general
management background in the consumer products industry, including previous
positions as President of the Consumer Products Division at Warner-Lambert
Company; Group Vice President of the Domestic Operating Company at Johnson &
Johnson; Group Vice President for Worldwide Consumer Products of American
Cyanamid Company; and President and Chief Executive Officer of R. J. Reynolds
International Tobacco.

John F. Carlson has been a Senior Vice President and the Chief Financial
Officer, the Treasurer and a director of the Company since July 1, 1996. Mr.
Carlson has held management positions in the automotive accessories
industries as President and Chief Executive Officer of Allied Plastics, Inc.
("Allied") from November 1992 to January 1995 and from June 1995 until
joining the Company as General Manager of InterScept Products Corporation. In
April, 1995, Allied filed a petition seeking protection under Chapter 11 of
the Bankruptcy Act. From 1986 to March 1992, Mr. Carlson was the President
and Chief Executive Officer of JWT & Associates, a financial consultant. From
1964 through 1986, Mr. Carlson held senior financial positions with Polygram
Records, Inc., Viacom International, Inc., Worldwide Consumer Products Group
of American Cyanamid Co. and The Mennen Company. In 1989, Mr. Carlson filed a
petition for bankruptcy under Chapter 7 of the Bankruptcy Act. Mr. Carlson is
a member of the Board of Directors of Repro-Med Systems, Inc., a medical
specialties company, the securities of which are publicly traded.

Larry M. Reid, a co-founder of the Company, has been a Senior Vice
President of the Company since July 1, 1996 and the Company's Secretary and a
director of the Company since May 1991. From May 1991 to July 1996, Mr. Reid
was the Company's Executive Vice President, Treasurer and Chief Financial
Officer. Prior thereto, Mr. Reid was a financial consultant.

28
<PAGE>

Fred E. Ahlbin has been a director of the Company since January 1996 and
is the Chairman of the Company's Compensation Committee, Mr. Ahlbin is the
former co-owner and principal of two New England manufacturing companies,
John Ahlbin & Sons and Powerwinch Corporation. Mr. Ahlbin has been retired
since 1976. Mr. Ahlbin currently is Chairman of the Board of Trustees of the
Jupiter Medical Center Foundation and a Trustee of the Jupiter Medical
Center, positions he has held since 1990.

Ralph H. Laffler has been a director of the Company since July 1994 and is
Chairman of the Company's Audit Committee and since April 1979 has been the
Chief Executive Officer of Graphics Illustrated, Inc., a company founded and
owned by Mr. Laffler which is engaged in printing, graphic design, marketing
and digital communications. Mr. Laffler has spent his entire career in the
graphics industry.

Robert S. Marker has been a director of the Company since April 1994 and
is a member of the Company's Compensation Committee. From 1970 to 1975, Mr.
Marker was the Chairman of the Board of Directors and Chief Executive Officer
of McCann-Erickson Worldwide, Inc., an advertising agency. Since 1983, Mr.
Marker has been an advertising management consultant.

Ralph H. Laffler is a member of the Audit Committee, Fred E. Ahlbin and
Robert S. Marker are members of the Compensation Committee and Robert Marker
is a member of the Nominating Committee of the Board of Directors of the
Company. There are no family relationships among any of the officers or
directors of the Company.

EXECUTIVE COMPENSATION

The following table (the "Summary Table") sets forth certain information
with respect to all compensation paid by the Company during the years
indicated to (i) the Company's chief executive officer and (ii) the Company's
four most highly compensated executive officers other than the chief
executive officer who served as such on December 31, 1995 and whose total
annual salary exceeded $100,000 (the "Named Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------------
SHARES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY OPTIONS GRANTED
- ----------------------------- ------- ----------- ------------------
<S> <C> <C> <C>
Edmund G. Vimond, Jr. 1995 $150,000 31,250
Chief Executive Officer 1994 100,000 -0-
1993 -0- 12,500

Larry M. Reid, 1995 $115,000 23,438
Executive Vice President and 1994 76,800 -0-
Chief Financial Officer 1993 29,000 6,250
</TABLE>

During 1993, 1994 and 1995, no other compensation not otherwise referred
to herein was paid or awarded by the Company to the Named Officers, the
aggregate amount of which compensation, with respect to any such person,
exceeded the lesser of $50,000 or 10% of the annual salary reported in the
Summary Compensation Table for such person.

Each of the Named Officers has accepted shares of common stock as payment
for a portion of the Company's cash indebtedness to him arising from unpaid
salary. The value of such shares has been included as salary in the Summary
Compensation table. See "Certain Relationships and Transactions." Neither of
the Named Officers received any bonus during the three years referred to in
the table.

29
<PAGE>
The following table sets forth certain information with respect to
individual grants of options to each of the Named Officers during the fiscal
year ended December 31, 1995:

<TABLE>
<CAPTION>
PERCENT
OF TOTAL
NUMBER OF OPTIONS
SHARES GRANTED TO
UNDERLYING EMPLOYEES
NAME OPTIONS FISCAL YEAR EXERCISE PRICE EXPIRATION DATE
- ---- ------------ ------------ -------------- ---------------
<S> <C> <C> <C> <C>
Edmund G.Vimond, Jr. . 31,250 52% $4.80 October 5, 2005
Larry M. Reid ........ 23,438 39% $4.80 October 5, 2005
</TABLE>

The options referred to in the table will not become exercisable unless
the Company achieves net sales of not less than $20 million in any
consecutive twelve month period prior to January 1, 1999.

During the year ended December 31, 1995, none of the Named Officers
exercised any options issued by the Company. At that date, none of the
options issued by the Company to the Named Officers was in-the-money.

There are no standard or other arrangements pursuant to which any director
of the Company is or was compensated during the Company's last fiscal year
for services as a director, for committee participation or special
assignments.

Other than as set forth under "Management--Employment Agreements," the
Company does not have any compensatory plan or arrangement, including
payments to be received from the Company, with respect to a Named Officer,
which plan or arrangement results or will result from the resignation,
retirement or any other termination of such person's employment with the
Company or from a change in control of the Company or a change in such
person's responsibilities following a change in control and the amount
involved, including all periodic payments or installments, exceeds $100,000.

EMPLOYMENT AGREEMENTS

Messrs. Vimond and Reid have each entered into employment agreements with
the Company for a three-year period which commenced on January 1, 1994. Mr.
Carlson has entered into an employment agreement with the Company for an
eighteen-month period which commenced July 1, 1996. Each of such employment
agreements continues thereafter for successive one year terms except upon
notice to the contrary given by the Company or the respective executive
officer at least ninety days prior to the end of the then current term. Each
of Messrs. Vimond and Reid were initially entitled to receive a base salary
of $75,000 and $57,500 per annum, respectively. The foregoing salaries were
increased to $150,000 and $115,000, respectively, effective January 1, 1995.
Mr. Carlson receives a salary of $125,000 per annum.

The Company's respective employment agreements with its executive officers
permits each of them to terminate his employment by the Company for any
reason without incurring any liability to the Company. Such employment
agreements may also be terminated by the Company for any reason. If any such
employment agreement is terminated by the Company without cause, the
terminated executive officer is entitled to receive a lump sum payment equal
to the greater of one year's salary or the balance of the salary which would
otherwise have been paid to him during the remaining term of such employment
agreement. In the event of the death or permanent incapacity of an executive
officer during the term of his employment agreement, he or his estate, as the
case may be, is entitled to receive, in addition to his salary through the
date of determination of permanent incapacity or death, an additional six
months' salary. For purposes of such employment agreements, permanent
incapacity is deemed to occur at the conclusion of 90 days of continuous
incapacity or 120 days of intermittent incapacity in any twelve month period.

Each of the Company's executive officers is eligible to receive salary
increases as well as incentive compensation pursuant to the 1992 Stock Option
Plan or other incentive compensation plan which may

30
<PAGE>
be established by the Company. Any such eligibility must be determined by the
vote of Company's Board of Directors, including a majority of the directors
who are not executive officers.

1992 STOCK OPTION PLAN

In 1992, the Company adopted a Stock Option Plan (the "1992 Stock Option
Plan") in order to induce certain individuals to remain in the employ or
service of the Company; to attract new individuals to enter into such
employment and service; and to encourage such individuals to secure or
increase on reasonable terms their equity ownership in the Company. Options
granted under the 1992 Stock Option Plan may be "incentive stock options," as
that term is defined in the Internal Revenue Code of 1986, as amended or
"non-incentive stock options" as described below. An aggregate of 72,000
shares of the Company's Common Stock are available for issuance upon exercise
of options that have been granted under the 1992 Stock Option Plan. Such
options have exercise prices ranging from $4.00 to $4.80 per share and expire
from 2002 to 2006. To the extent that any such options expire or terminate
without having been exercised, they may be reissued under the 1992 Stock
Option Plan. The 1992 Stock Option Plan is administered by a committee
consisting of Messrs. Reid and Vimond, who are not eligible to participate in
the 1992 Stock Option Plan because of such duties. Incentive stock options
may be granted only to employees of the Company. Non-incentive stock options
may be granted only to (a) employees of the Company, (b) directors of the
Company who are not employees, certain independent contractors hired by the
Company, and (d) certain employees of a corporation which is acquired by the
Company. The exercise price of incentive stock options shall not be less than
the fair market value of a share of the Common Stock on the date of the
grant. The exercise price of non-incentive stock options shall not be less
than 85% of the fair market value of a share of the Common Stock on the date
of the grant. In the event that the fair market value of a share of the
Company's Common Stock declines below the exercise price of an option, the
committee may at any time reduce such exercise price with the prior approval
of the Company's Board of Directors.

31
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of the date hereof
with respect to any person who is known to the Company to be the beneficial
owner of more than 5% of any class of its voting securities and as to each
class of the Company's equity securities beneficially owned by its directors
and executive officers as a group:

<TABLE>
<CAPTION>
NUMBER OF SHARES APPROXIMATE
NAME OF BENEFICIAL OWNER(1)(2) BENEFICIALLY OWNED PERCENT OF CLASS
- ------------------------------ ------------------ ----------------
<S> <C> <C>
Ralph H. Laffler ....................................... 450,846(3) 23%
Edmund G. Vimond, Jr. .................................. 183,271(4) 9%
Fred E. Ahlbin ......................................... 160,760(5) 8%
Larry M. Reid .......................................... 68,602(6) 4%
Robert S. Marker ....................................... 52,550(7) 3%
John F. Carlson ........................................ -0-(8) --
Executive Officers and Directors as a group (6 persons) 916,029(9) 44%
Maurice Porter ......................................... 242,398(10) 12%
Robert M. Kassenbrock .................................. 180,000(11) 9%
Eric R. Schwarz ........................................ 113,038(12) 6%
</TABLE>
- -------------
(1) Unless otherwise noted below, the Company believes that all persons
named in the table have sole voting and investment power with respect to
all shares of Common Stock beneficially owned by them. For purposes
hereof, a person is deemed to be the beneficial owner of securities that
can be acquired by such person within 60 days from the date hereof upon
the exercise of warrants or options or the conversion of convertible
securities. Each beneficial owner's percentage ownership is determined
by assuming that any such warrants, options or convertible securities
that are held by such person (but not those held by any other person)
and which are exercisable within 60 days from the date hereof have been
exercised.

(2) Each of the persons named in the above table may receive correspondence
addressed to him c/o Ocurest Laboratories, Inc., 4400 PGA Boulevard,
Palm Beach Gardens, FL 33410.

(3) Includes 218,173 shares held by Mr. Laffler's spouse, as to which shares
Mr. Laffler disclaims any beneficial ownership, and 4,500 shares which
may be purchased upon exercise of options.

(4) Includes 11,560 shares which may be purchased upon exercise of warrants
and 25,000 shares which may be purchased upon exercise of options and
25,000 shares which may be purchased upon exercise of warrants held by
Mr. Vimond's spouse in which shares Mr. Vimond disclaims any beneficial
ownership. Does not include 31,250 shares underlying options which may
not be exercised during the 60 day period subsequent to the date of this
Prospectus.

(5) Includes 41,528 shares which may be purchased upon exercise of warrants
and 4,500 shares which may be purchased upon exercise of options.

(6) Includes 51,713 shares which are held jointly with Mr. Reid's spouse,
4,389 shares which may be purchased upon exercise of warrants and 12,500
shares which may be purchased upon exercise of options. Does not include
23,438 shares underlying options which may not be exercised during the
60 day period subsequent to the date of this Prospectus.

(7) Includes 20,625 shares which may be purchased upon exercise of warrants
and 4,500 shares which may be purchased upon exercise of options.

(8) Does not include 75,000 shares underlying an option which may not be
exercised during the 60 day period subsequent to the date of this
Prospectus.

(9) See Notes above.

(10) Includes 135,209 shares which may be purchased upon exercise of warrants
and 4,500 shares which may be purchased upon exercise of options.
Includes 10,000 shares held jointly with two children.

(11) Includes 10,000 shares owned by Mr. Kassenbrock's spouse as to which
shares Mr. Kassenbrock disclaims any beneficial ownership. Does not
include 100,000 shares which may be purchased upon exercise of a warrant
which may not be exercised during the 60 day period subsequent to the
date of this Prospectus. See "Selling Shareholders" and "Certain
Relationships and Transactions."

(12) Includes 45,991 shares which may be purchased upon exercise of warrants
and 11,250 shares which may be purchased upon exercise of options. Does
not include 1,563 shares underlying options which may not be exercised
during the 60 day period subsequent to the date of this Prospectus.
32
<PAGE>
SELLING SHAREHOLDERS

If the Over-Allotment Option is exercised, the Selling Shareholders will
sell certain shares of their Common Stock in the Offering. The following
table sets forth certain information regarding the ownership of Common Stock
by each of the Selling Shareholders as of the date of this Prospectus and
after giving effect to the shares of Common Stock offered hereby, assuming
that the Over-Allotment Option is exercised in full. Substantially all
offering expenses, other than the underwriting discount and non accountable
expense allowance applicable to sales of shares of Common Stock by the
Selling Shareholders, will be borne by the Company. See "Management" and
"Certain Relationships and Transactions" for a description of certain
relationships between certain of the Selling Shareholders and the Company.

<TABLE>
<CAPTION>
SHARES TO BE OWNED
AFTER SALES IN
THE OFFERING (1)
-----------------------------
NUMBER OF APPROXIMATE
SHARES OWNED PERCENTAGE OF
PRIOR TO SHARES TO BE SOLD OUTSTANDING
SELLING SHAREHOLDER OFFERING(1) IN THE OFFERING NUMBER COMMON STOCK(2)
- ------------------- ------------- ----------------- ----------- ---------------
<S> <C> <C> <C> <C>

American Growth Fund I L.P. . 50,000 25,000 25,000 *
Jose Azel ................... 10,000 5,000 5,000 *
William Boyd ................ 53,334 10,000 43,334 1%
Robert & Nancy Cousins ..... 4,000 2,000 2,000 *
Cousins Trust ............... 4,000 2,000 2,000 *
Paul Engel .................. 2,000 1,000 1,000 *
William J. Hart ............. 10,000 5,000 5,000 *
Hideaway Partners ........... 40,000 20,000 20,000 *
Marcia G. Kassenbrock ....... 10,000 5,000 5,000 *
Robert M. Kassenbrock ....... 170,000 75,000 95,000 3%
Carl Teutch ................. 2,000 1,000 1,000 *
Thomas L. Schroeder Trust .. 3,000 1,500 1,500 *
William Roberts ............. 5,000 2,500 2,500 *
Ardis Schwarz ............... 98,243(3) 15,000 83,243(3) 3%(3)
E.J. Sylvester Trust ........ 10,000 5,000 5,000 *
Duane Wilder ................ 10,000 5,000 5,000 *
</TABLE>
- -------------
Less than 1%.

(1) For purposes hereof, a person is deemed to be the owner of securities
that can be acquired by such person within 60 days from the date hereof
upon the exercise of warrants or options or the conversion of convertible
securities. Each owner's percentage ownership is determined by assuming
that any such warrants, options or convertible securities that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof, have been exercised.

(2) Computed without regard to a maximum of (a) 832,328 shares of Common Stock
issuable upon exercise of outstanding warrants and options, (b) 1,200,000
shares issuable upon exercise of the Warrants, (c) 240,000 shares issuable
upon exercise of the Representative's Warrants and the warrants included in
the units issuable upon exercise of the Representative's Warrants, and (d)
180,000 shares issuable upon exercise of the Warrants included in the
Over-Allotment Option.

(3) Includes 5,303 shares issuable upon exercise of warrants.

On April 1, 1996 the Company borrowed $260,000 from American Growth Fund I
L.P. ("AGF"). The Company intends to repay such amount, plus accrued interest
thereon, from the net proceeds of the Offering. In connection with the
transaction with AGF, the Company issued warrants to AGF for the purchase of
25,000 shares of the Company's Common Stock at $.01 per share and warrants
for the purchase of 25,000 shares of the Company's Common Stock at $2.50 per
share. 30,000 shares underlying the warrants are being offered by AGF
pursuant to this Prospectus. The exercise prices of the warrants were
determined by negotiation between the Company and AGF. Among the factors
considered in such negotiation were the Company's working capital deficit and
the unavailability of funds on terms more favorable to the Company. Between
April 1, 1996 and August 1, 1996, AGF agreed to provide certain management
consulting and investment banking services to the Company. In addition,
during such

33
<PAGE>
period, the Company had agreed to grant a right of first refusal to AGF in
connection with subsequent public offerings of debt or equity. The offers and
sales of the shares and warrants to AGF were not registered under the Securities
Act in reliance upon the exemption from registration provided by Section 4(2) of
the Securities Act for "transactions by an issuer not involving any public
offering." The principals of AGF are E.G. Marchi and Donna Snyder. See "Use of
Proceeds."

The shares being offered by the Selling Shareholders were purchased from
the Company from February to June 1996.

Other than as set forth above or, in the case of Mr. Kassenbrock under the
caption "Certain Relationships and Transactions," none of the Selling
Shareholders has had any position, office or other material relationship with
the Company during the past three years.

CERTAIN RELATIONSHIPS AND TRANSACTIONS

Eric R. Schwarz, an employee and beneficial owner of approximately 6% of
the Company's outstanding Common Stock, has entered into an employment
agreement with the Company for a three-year period which commenced on January
1, 1994 and continues thereafter for successive one year terms except upon
notice to the contrary given by either party. Mr. Schwarz initially received
a base annual salary of $33,000 which increased to $55,000 when the Company
began shipments of its products to Florida and to $66,000 seven months
subsequent to the commencement of shipments to a designated area of Florida.
In addition, Mr. Schwarz is eligible to receive incentive compensation
pursuant to the 1992 Stock Option Plan or other incentive compensation plan
which may be established by the Company as well as increases in salary.

In July 1994, Fred E. Ahlbin, Ralph H. Laffler, Eric R. Schwarz and
Maurice Porter, a former director of the Company and beneficial owner of
approximately 12% of the Company's outstanding Common Stock, purchased 15,625
shares, 75,000 shares, 15,625 shares and 20,834 shares of Common Stock and a
like number of warrants (the "$5.00 Warrants"), respectively. The purchase
price consisted of $4.80 for a combination of one such share and one $5.00
Warrant. Each of the $5.00 Warrants entitles its holder to purchase one share
of Common Stock at $5.00 per share on or before May 31, 1998. The original
exercise price of the $5.00 Warrants was $8.00 per share. Such exercise price
was subsequently lowered to $5.00.

In July 1994, Messrs. Laffler and Porter converted promissory notes
previously issued to them by the Company in the respective amounts of $25,000
and $150,000 into units consisting of one share of Common Stock and one $5.00
Warrant at a price of $4.80 per unit.

In November 1994, Eric R. Schwarz, Mr. Laffler, Berthold and Ardis Schwarz
and Mr. Ahlbin purchased 7,340 shares, 15,469 shares, 10,605 shares and
15,469 shares of Common Stock, respectively, upon the exercise of warrants
previously issued to them at an exercise price of $4.60 per share.

In December 1994, Robert S. Marker was issued 1,000 shares of Common Stock
for services rendered to the Company having an aggregate value of $4,500.

In January 1995, for no additional consideration, the Company issued $5.00
Warrants, to Mr. Laffler, Mr. Ahlbin, Eric R. Schwarz and Berthold and Ardis
Schwarz in the respective amounts of 22,735, 7,735, 3,421 and 5,303 $5.00
Warrants.

In January 1995, Mr. Laffler loaned $300,000 to the Company for which he
received a one year promissory note bearing interest at the rate of 12% per
annum and 15,000 $5.00 Warrants.

In April 1995, Mr. Ahlbin purchased 18,169 shares of Common Stock and a
like number of $5.00 Warrants for $73,584. During the same month, Mr. Laffler
converted a promissory note in the amount of
34
<PAGE>
$100,000 previously issued to him by the Company into 22,223 shares of Common
Stock and Mr. Marker received 4,000 shares of Common Stock for services rendered
to the Company valued at $18,000.

In May 1995, Mr. Laffler received 1,645 shares of Common Stock as payment
for interest of approximately $7,400 owed to him by the Company.

In June 1995, Mr. Laffler loaned the Company $75,000 for which he received
a one year promissory note bearing interest at the rate of 12% per annum and
warrants for the purchase of 25,000 shares of Common Stock at an exercise
price of $4.00 per share on or before June 30, 2000. During the same month
Mr. Marker received 1,800 shares of Common Stock for services rendered to the
Company valued at $9,000 and Eric R. Schwarz purchased 3,422 shares of Common
Stock for $15,741 upon the exercise of warrants previously issued to him.

In November 1995, Mr. Porter loaned the Company $50,000 for which he
received a ninety day promissory note bearing interest at the rate of 12% per
annum and warrants to purchase 25,000 shares of Common Stock on the same
terms as those issued to Mr. Laffler in June 1995.

During 1995, Edmund G. Vimond, Jr., Larry M. Reid and Eric R. Schwarz,
accepted 37,336 shares of Common Stock, 14,957 shares of Common Stock and
22,388 shares of Common Stock, respectively, at values ranging from $5.00 per
share in February 1995 to $2.32 per share in December 1995 as payment for a
portion of their respective salaries.

In January 1996, Mr. Laffler purchased 75,000 shares of Common Stock for
$130,000 upon exercise of warrants previously issued to him by the Company.
During the same month Messrs. Laffler, Porter and Eric R. Schwarz converted
the Company's indebtedness to them of approximately $525,000, $52,000 and
$19,500, respectively, into 226,334 shares, 22,480 shares and 8,417 shares of
Common Stock, respectively.

In January 1996, Mr. Ahlbin and Berthold and Ardis Schwarz purchased
40,000 and 20,000 shares of Common Stock, respectively, at $2.50 a share.

In February 1996, Robert M. Kassenbrock and his spouse purchased an
aggregate of 180,000 shares of Common Stock at $2.50 per share. 80,000 of
such shares have been registered under the Securities Act by means of the
registration statement of which this Prospectus is a part. See "Selling
Shareholders."

In March 1996, the spouse of Mr. Vimond loaned $50,000 to the Company for
which she received a ninety day promissory note bearing interest at the rate
of 12% per annum and 25,000 warrants. Each of the warrants entitles its
holder to purchase one share of Common Stock at an exercise price of $2.50 a
share on or before June 30, 2000 (the "$2.50 Warrants"). During the same
month Mr. Laffler and Eric R. Schwarz received 5,000 $2.50 Warrants and
22,500 $2.50 Warrants, respectively in connection with loans made by them to
the Company in the respective amounts of $10,000 and $35,000. In connection
with such loans Messrs. Laffler and Schwarz each received ninety day
promissory notes bearing interest at the rate of 12% per annum. During the
same month, Mr. Porter received 7,500 shares of Common Stock for services
rendered to the Company valued at $18,750.

The exercise prices of the warrants described above were determined by the
Company.

In March 1996, Mr. Reid accepted 3,256 shares of Common Stock as payment
for $8,140 of salary owed to him by the Company.

In May 1996 Messrs. Ahlbin and Laffler each purchased 10,000 shares of
Common Stock at $2.50 per share.

In September 1996, the Company borrowed $200,000 from Mr. Kassenbrock. The
Company intends to repay such amount, plus accrued interest thereon at the
annual rate of 12%, from the net proceeds of

35
<PAGE>

the Offering. In connection with the transaction with Mr. Kassenbrock, the
Company issued a warrant to him for the purchase of 100,000 shares of the
Company's Common Stock at $2.40 per share (60% of the initial public offering
price). The Company has granted piggy back registration rights with respect to
such shares. The exercise price of the warrants was determined by negotiation
between the Company and Mr. Kassenbrock. Among the factors considered in such
negotiation were the Company's working capital deficit and the unavailability of
funds on terms more favorable to the Company. See "Use of Proceeds," "Security
Ownership of Certain Beneficial Owners and Management" and "Selling
Shareholders."

The offers and sales of the securities referred to hereunder were not
registered under the Securities Act in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act for "transactions
by an issuer not involving any public offering."

In October 1996, the Company's three executive officers guaranteed the
repayment by the Company of $200,000 to an advertising agency. See "Use of
Proceeds."

From November 1994 to January 1996, the Company issued an aggregate of
214,340 shares of its Common Stock to officers, directors and beneficial owners
of more than 5% of the Company's outstanding Common Stock upon exercise of
warrants previously issued to them at exercise prices ranging from $1.60 to
$4.60 per share.

All of the equity interest of Acorn is owned by William J. Casey, his
spouse and daughters. Mr. Casey is a former director of the Company and
beneficially owns approximately 4% of the Company's outstanding Common Stock.
One such daughter, having a 16% equity interest in Acorn, is the spouse of
Larry M. Reid. Acorn has assigned 25% and 15% of its rights to receive
payments from the Company to Edmund G. Vimond, Jr. and Larry M. Reid,
respectively. Notwithstanding the foregoing, in the event that the Company
disposes of all or substantially all of its business including the licenses
granted pursuant to the Acorn Agreement, Messrs. Vimond and Reid will not be
entitled to receive any amounts from Acorn from the first $2,500,000 of
proceeds therefrom. Should, however, such proceeds exceed that amount,
Messrs. Vimond and Reid shall be entitled to receive from Acorn 25% and 15%,
respectively, of the proceeds above such amount and not in excess of
$8,133,333 and 62.5% and 37.5%, respectively, of such proceeds between such
latter amount and $9,800,000 less any payments made to them by Acorn from
royalties paid to Acorn by the Company, respectively. Because royalty
payments to Acorn are based on the Company's sales, subject to the Company
achieving the minimum levels of net income as described earlier, any activity
taken thereafter to increase the Company's sales at the expense of profits
would benefit those persons having an interest in Acorn, including Messrs.
Vimond and Reid. Both Messrs. Vimond and Reid, as officers and directors of
the Company, owe a fiduciary duty to the Company and have advised the Company
that they will act in the best interests of the Company, irrespective of their
personal interests in Acorn. See "Business--Patents and Trademarks."

36
<PAGE>

The terms of the Acorn Agreement were determined through negotiation
between Messrs. Casey and Vimond. Among the factors considered in such
negotiation were the obligations of the Company under the Acorn Agreement,
the scope of the license granted to the Company and the nature of the Ocurest
Delivery System. Mr. Casey has advised the Company that Acorn's cost of the
assets which are the subject of the Acorn Agreement was in excess of
$200,000. The Company does not know whether the terms of the Acorn Agreement
are as favorable to the Company as could have been obtained from an
unaffiliated third party in a similar transaction at the time of the
execution of the Acorn Agreement. The Company believes that if the Acorn
Agreement were to be negotiated as of the date of this Prospectus, the
Company would not be able to secure more favorable terms from an unaffiliated
party in a similar transaction. The Company's belief is based upon, among
other things, the initial consumer response to the marketing of Ocurest Eye
Drops, the retail chains which have ordered Ocurest Eye Drops for retail
distribution, the deferral of certain accrued royalty payments and the
Company's manufacturing arrangements with Bausch & Lomb. Because the Company
believes that the Ocurest Delivery System is unique, it is not possible to
verify the Company's belief. Under the Acorn Agreement, the Company has made
payments to Acorn and is obligated to make additional payments thereto,
including royalties. See "Business--Patents and Trademarks."

The Board of Directors of the Company has adopted a resolution to the
effect that all future transactions between the Company and its officers,
directors, or the beneficial owners of more than 5% of any class of the
Company's voting securities, or any affiliate of any of such person, must be
approved or ratified by a majority of the disinterested directors of the
Company, and the terms of such transaction must be no less favorable to the
Company than could have been realized by the Company in an arms-length
transaction with an unaffiliated person.

The Board of Directors of the Company has also adopted a resolution that
provides that the area in which the Company shall be interested for the
purpose of the doctrine of corporate opportunities shall be the business of
marketing eye care products for the consumer market. Pursuant to the
resolution, any business opportunity which falls within such area of interest
must be brought to the attention of the Company for acceptance or rejection
prior to any officer or director of the Company taking advantage of such
opportunity. Any business opportunity outside such area of interest may be
entered into by any officer of director of the Company without the officer or
director first offering the business opportunity to the Company.

Subsequent to the receipt of the net proceeds of the Offering, the Company
does not intend to borrow any funds from or make loans to its officers and
directors.

DESCRIPTION OF SECURITIES

THE UNITS

Each Unit consists of one share of Common Stock and one Warrant. The Common
Stock and Warrants must be purchased together. The Common Stock and the Warrants
will not be separately tradeable or transferable for a period of six months from
the date of this Prospectus or earlier at the discretion of the Representative.

COMMON STOCK

The holders of the Common Stock are entitled to one vote per share on all
matters submitted to a vote of shareholders. Subject to preferential rights
that may be applicable to any Preferred Stock which may be issued, holders of
the Common Stock are entitled to receive dividends, if and when declared by
the Company's Board of Directors from funds legally available for that
purpose. See "Dividend Policy." In the event of a liquidation, dissolution or
winding up of the Company, holders of the Common Stock are entitled to share
ratably in the assets available of the Company, if any, remaining after the
payment

37
<PAGE>
of all liabilities of the Company and the liquidation preferences
applicable to any outstanding Preferred Stock. Holders of the Common Stock
have no cumulative voting rights, no preemptive rights and no conversion
rights and there are no redemption or sinking fund provisions with respect to
the Common Stock. The outstanding Common Stock is fully paid, validly issued
and non-assessable.

On July 30, 1996, the Company's 1,922,674 shares of outstanding Common
Stock were held by 118 holders of record.

PREFERRED STOCK

The Company's Board of Directors has the authority to issue the authorized
shares of Preferred Stock in one or more series and to fix the designations,
relative powers, preferences, rights, qualifications, limitations and
restrictions of all shares of each such series, including without limitation
dividend rates, conversion rights, voting rights, redemption and sinking fund
provisions, liquidation preferences and the number of shares constituting
each such series, without any further vote or action by the stockholders. The
issuance of Preferred Stock could decrease the amount of earnings and assets
available for distribution to holders of Common Stock or adversely affect the
rights and powers, including voting rights, of the holders of Common Stock.
The issuance of Preferred Stock also could have the effect of delaying,
deterring or preventing a change in control of the Company without further
action by the shareholders.

THE WARRANTS

The Warrants will be issued in registered form under, governed by and
subject to the terms of a Warrant Agent Agreement (the "Warrant Agreement")
between the Company and the Warrant Agent. The following statements are
qualified in their entirety by reference to the Warrant Agreement and also
the detailed provisions of the form of Warrant attached to the Warrant
Agreement. Copies of the Warrant Agreement may be obtained from the Company
or the Warrant Agent and have been filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement of which this
Prospectus is a part. See "Additional Information." Commencing on the date
the Warrants are separately tradeable and transferable, the Warrants may be
presented to the Warrant Agent for transfer, exchange or exercise at any time
prior to their redemption or expiration date, at which time the Warrants
become wholly void and of no value. If a market for the Warrants develops,
the holder may sell the Warrants instead of exercising them. There can be no
assurance, however, that a market for the Warrants will develop or continue.

Each Warrant entitles its holder to purchase, at any time commencing on the
date the Warrants are separately tradeable and transferable and until the third
anniversary of the date of this Prospectus, one share of Common Stock at a price
of $4.80 per share, subject to adjustment in certain events. The right to
exercise the Warrants will terminate at the close of business on the third
anniversary of the date of this Prospectus. The Warrants contain provisions that
protect the Warrantholders against dilution by adjustment of the exercise price
in certain events including, but not limited to, stock dividends, stock splits,
reclassifications or mergers. In the event of liquidation, dissolution or
winding up of the Company, holders of the Warrants, unless exercised, will not
be entitled to participate in the assets of the Company. Holders of the Warrants
will have no voting, preemptive, liquidation or other rights of a shareholder by
virtue of holding the Warrants, and no dividends will be declared on the
Warrants. The Company has authorized and reserved for issuance a sufficient
number of shares of Common Stock to accommodate the exercise of all Warrants to
be issued in the Offering. The shares of Common Stock, when issued upon the
exercise of the Warrants in accordance with the terms thereof, will be fully
paid and non-assessable.

Commencing on the date the Warrants are separately tradeable and
transferable, the holder of any Warrant may exercise such Warrant by
surrendering the certificate representing the Warrant to the Warrant Agent, with
the subscription form on the reverse side of such certificate properly completed
and executed, together with payment of the exercise price. Unless they have been
redeemed by the

38
<PAGE>
Company, the Warrants may be exercised at any time in whole or in part at the
applicable exercise price commencing on the date the Warrants are separately
tradeable and transferable and until expiration of the Warrants three years from
the date of this Prospectus. In lieu of fractional shares which would otherwise
be issuable upon the exercise of the Warrants, the Company will round up or down
to the nearest whole share.

Commencing on the date the warrants are separately tradeable and
transferable, the Warrants may be redeemed by the Company at a redemption price
of $0.55 per Warrant until the end of the second year after the date of this
Prospectus, and at $0.75 per Warrant until the end of the third year after the
date of this Prospectus and prior to their expiration, on 30 days' prior written
given at any time that the Common Stock has traded above $6.72 (or 140% of the
then exercise price of the Warrants if the exercise price is adjusted as earlier
described) per share for a at least 20 consecutive trading days ending within 10
days prior to the date of the notice of redemption. For purposes of determining
the daily trading price of the Common Stock, if the Common Stock is listed on a
national securities exchange, is admitted to unlisted trading privileges on a
national securities exchange, or is listed for trading on a trading system of
the NASD such as the NASDAQ Small-Cap Market or the NASDAQ National Market
System, then the last reported sale price of the Common Stock on such exchange
or system each day shall be used or if the Common Stock is not so listed on such
exchange or system or admitted to unlisted trading privileges, then the average
of the last reported high bid prices reported by the National Quotation Bureau,
Inc. each day shall be used to determine such daily trading price. Holders of
Warrants shall have exercise rights until the close of the business day
preceding the date fixed for redemption. If any Warrant called for redemption is
not exercised by such time, it will cease to be exercisable and the holder will
be entitled only to the redemption price. Redemption of the Warrants could force
Warrantholders either to (i) exercise the Warrants and pay the exercise price
thereof at a time when it may be less advantageous economically to do so, or
(ii) accept the redemption price in consideration for cancellation of the
Warrant, which could be substantially less than the market value thereof at the
time of redemption.

At any time when the Warrants are exercisable, the Company is required to
have a current registration statement on file with the Commission and to
effect appropriate qualifications under the laws and regulations of the
states in which the holders of Warrants reside in order to comply with
applicable laws in connection with the exercise of the Warrants and the
resale of the Common Stock issued upon such exercise. So long as the Warrants
are outstanding, the Company has undertaken to file all post-effective
amendments to the Registration Statement required to be filed under the
Securities Act, and to take appropriate action under federal and state
securities laws to permit the issuance and resale of Common Stock issuable
upon exercise of the Warrants. There can be no assurance, however, that the
Company will be in a position to effect such action under the federal and
applicable state securities laws, and the failure of the Company to effect
such action may cause the exercise of the Warrants and the resale or other
disposition of the Common Stock issued upon such exercise to become unlawful.
The Company may amend the terms of the Warrants but only by extending the
termination date or lowering the exercise price thereof. The Company has no
present intention of amending such terms.

If the Representative, at its election, solicits the exercise of the
Warrants, the Company will be obligated, subject to certain conditions, to
pay the Representative a solicitation fee equal to 10% of the aggregate
proceeds received by the Company as a result of the solicitation. The
Representative may reallow a portion of the fee to soliciting broker-dealers.
Because the Representative is a member of the National Association of
Securities Dealers, Inc. ("NASD"), any such solicitation by the
Representative must comply with the requirements of Section 2710(c)(6)(B)(ix)
of the NASD Corporate Financing Rules.

TRANSFER AGENT AND WARRANT AGENT

The transfer agent for the Common Stock and the Warrant Agent is American
Securities Transfer & Trust, Inc.

<PAGE>

CONTROL-SHARE ACQUISITIONS

The Florida Business Corporation Act (the "FBCA") provides that "control
shares" of an "issuing public corporation" acquired in a "control-share
acquisition" have the same voting rights as accorded the shares before the
control-share acquisition only to the extent granted by resolution approved
by the shareholders. Such resolution must be approved by: (a) a majority of
the votes of the shareholders entitled to vote thereon, and if the proposed
control-share acquisition would, if fully carried out, result in any action
which would require a vote as a class or series, by a majority of the votes
of the shareholders of each such class or series entitled to vote thereon;
and (b) a majority of the votes by the shareholders of each class or series
entitled to vote as a class or series, excluding all shares owned by the
acquiror (or member of a group), officers and directors who are employees of
the corporation.

An "issuing public corporation" is a corporation that has: (a) 100 or more
shareholders; (b) its principal place of business, its principal office or
substantial assets within Florida; and (c) one or more of the following: (i)
more than 10% of its shareholders reside in Florida; (ii) more than 10% of
its shares are owned by Florida residents; (iii) 1,000 of its shareholders
reside in Florida. A "control-share acquisition" is the acquisition by any
person of ownership of, or the power to direct the exercise of voting power
with respect to, issued and outstanding control shares. "Control shares" are
voting shares which, if aggregated with all other shares owned by such
person, would entitle the acquiror, directly or indirectly, alone or as part
of a group, to exercise voting power in electing directors within one of the
following ranges of voting power: (a) one-fifth or more but less than
one-third, (b) one-third or more but less than a majority, or (c) a majority
of all voting power.

A person who has made or proposes to make a control-share acquisition,
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the Board of Directors to call a special meeting of
shareholders to be held within 50 days of the receipt of the demand to
consider the voting rights of the shares. If the acquiring person's statement
has been filed but no request for a meeting is made, the corporation must
present the question at the next special or annual shareholders' meeting.

If authorized in an issuing public corporation's articles of incorporation
or bylaws before a control-share acquisition has occurred, control shares
acquired in a control-share acquisition where no acquiring person's statement
has been filed, may be subject to redemption by the corporation at the fair
value of the shares at any time during the period ending 60 days after the
last acquisition of control shares. Control shares acquired in a
control-share acquisition are not subject to such redemption after an
acquiring person's statement has been filed and after the meeting at which
the voting rights of the control shares acquired in a control-share
acquisition are submitted to the shareholders unless the shares are not
accorded full voting rights by the shareholders.

Unless otherwise provided in an issuing public corporation's articles of
incorporation or bylaws before a control-share acquisition has occurred, if
voting rights for control shares are approved at a shareholders' meeting and the
acquiror becomes entitled to vote a majority of all of the corporation's shares
entitled to vote, all other shareholders may exercise dissenters' rights to
receive the fair value of their shares. Neither the Company's Bylaws nor its
Articles of Incorporation makes any provision with respect to control-share
acquisitions.

<PAGE>

The control-share acquisition provisions of the FBCA could have the effect
of discouraging offers to acquire the Company and of increasing the
difficulty of consummating any such offer.

SHARES ELIGIBLE FOR FUTURE SALE

All of the shares of Common Stock outstanding as of the date hereof are
"restricted securities," as that term is defined in Rule 144 promulgated under
the Securities Act. Without regard to the volume limitations described below,
approximately 325,000 of such shares are currently eligible for resale under
Rule 144 and approximately 600,000 of such shares will be eligible for resale
under Rule 144 commencing ninety days subsequent to the date of this Prospectus.
The remaining shares will become so eligible at various times between October
1996 and June 1998. See "Underwriting" with respect to an agreement by certain
shareholders restricting their ability to sell their Common Stock without the
consent of the Representative.

In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions specified in such Rule, sales of
restricted securities may be made if a minimum of two years has elapsed
between the later of the date of the acquisition of such securities from the
issuer or from an affiliate of the issuer and any resale thereof in reliance
on Rule 144 for the account of either the initial acquiror or any subsequent
holder. If sales can be made under Rule 144, a seller, including persons
whose securities are required to be aggregated, is entitled to sell, within
any three-month period, a number of shares that does not exceed the greater
of 1% of the total number of outstanding shares of the same class or, if the
shares are quoted on NASDAQ, the average weekly trading volume during the
four calendar weeks preceding the filing of a notice with the Securities and
Exchange Commission. Where a minimum of three years has elapsed between the
later of the date of the acquisition of restricted securities from the issuer
or from an affiliate of the issuer and any resale thereof in reliance on Rule
144 for the account of either the initial acquiror or any subsequent holder,
a person who has not been an affiliate of the Company for at least the three
months immediately preceding the sale is entitled to sell such securities
under Rule 144 without regard to any of the limitations described above.

The Company has granted piggyback registration rights to the holders of an
aggregate of 133,920 shares of the Company's outstanding Common Stock should
the Company file a registration statement under the Securities Act which
includes shares of Common Stock of certain of the Company's officers and
directors. The Company has granted piggyback registration rights with respect
to 100,000 shares of Common Stock which may be obtained by Robert M.
Kassenbrock upon exercise of a warrant issued to him by the Company. The
Company has granted similar rights to holders of warrants for the purchase of
an aggregate of 250,000 shares of Common Stock. The Company has also granted
future demand and piggyback registration rights to AGF with respect to 25,000
shares of Common Stock underlying a warrant held by AGF. Such registration
rights terminate seven years subsequent to the Company's receipt of the net
proceeds of the Offering. See "Security Ownership of Certain Beneficial
Owners and Management," "Selling Shareholders" and "Certain Relationships and
Transactions."

No meaningful prediction can be made as to the effect, if any, that market
sales of shares of Common Stock or the availability of such shares for sale will
have on the market prices, if any, of the Units, Common Stock and Warrants
prevailing from time to time. Nevertheless, the possibility that substantial
amounts of Common Stock may be sold in the public market may adversely affect
any prevailing market prices for the Units, Common Stock and Warrants and could
impair the Company's ability to raise capital through the sale of its equity
securities.

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<PAGE>
UNDERWRITING

The Underwriters named below, acting through the Representative, have
jointly and severally agreed, subject to the terms and conditions of the
Underwriting Agreement, to purchase from the Company and the Company has
agreed to sell to the Underwriters, the respective number of Units set forth
opposite their names below at the initial public offering price less the
underwriting discount set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF UNITS
- ----------- ---------------
<S> <C>
RAF Financial Corporation ................ 970,000
Cohig & Associates, Inc.................... 180,000
Shepherd Financial Group, Inc.............. 50,000

----------------
TOTAL ......................... 1,200,000
================
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the Units offered hereby are
subject to the approval of certain legal matters by their counsel and to
certain other conditions. The Underwriters are obligated to purchase
1,200,000 Units, if any are purchased.

The Underwriters propose to offer part of the Units offered hereby
directly to the public at the initial offering price and part of such Units
to certain dealers at a price that represents a concession within the
discretion of the Representative. The Underwriters do not intend to confirm
sales to accounts over which they exercise discretionary authority. The
Underwriters may allow, and such dealers may re-allow, a concession within
the discretion of the Representative. After the initial offering, the
offering price and the selling terms may be changed by the Underwriters.

The Units offered by the Underwriters are subject to prior sale. The
Underwriters reserve the right to withdraw, cancel or modify such offer
(which may be done only by filing an amendment to the Registration Statement)
and to reject orders in whole or in part for the purchase of any of the Units
and to cancel any sale even after the purchase price has been paid if such
sale, in the opinion of the Underwriters, would violate federal or state
securities laws or a rule or policy of the NASD.

The Company and the Underwriters have agreed to indemnity each other and
related persons against certain liabilities, including liabilities under the
Securities Act, and, if such indemnifications are unavailable or are
insufficient, the Company and the Underwriters have agreed to damage
contribution arrangements between them based upon the relative benefits
received from the Offering and the relative fault resulting in such damages.
Such relative benefits and relative fault would be determined in legal
actions among the parties. Under such contribution arrangements, the maximum
amount payable by any Underwriter would be the public offering price of the
Units underwritten and distributed by such Underwriter.

Except for the outstanding securities described herein and except upon the
exercise of the options and warrants described herein, the Company has agreed
not to sell any additional securities (other than debt securities to
financial institutions) for three years after the date of this Prospectus
without the Representative's prior written consent. Also excepted are
securities issued to officers, directors, holders of more than 5% of the
Company's outstanding Common Stock and their affiliates two years after the
date of this Prospectus. The officers and directors of the Company, holders
of more than 5% of the Company's outstanding Common Stock prior to the
Offering and their affiliates have entered into agreements which provide that
such persons, who own an aggregate of 724,427 shares of Common

42
<PAGE>
Stock, may not sell any of such shares without the consent of the Representative
for a period of one year commencing on the date of this Prospectus. The
agreements also provide that any sales of Common Stock by such persons pursuant
to Rule 144 will be executed through the Representative. The provisions of this
paragraph do not apply to any securities held by Maurice Porter. See "Shares
Eligible for Future Sale."

The Selling Shareholders have granted to the Underwriters an option
excersisable for 30 days from the date of this Prospectus to purchase up to
180,000 additional shares of Common Stock at $4.00 per share less the
underwriting discounts solely to cover over-allotments, if any. The Company has
agreed, for no additional consideration, to contribute a like number of Warrants
toward the Over-Allotment Option. In addition, the Company and the Selling
Shareholders have agreed to pay to the Representative at the closing of the
Offering, a non-accountable expense allowance equal to 3% of the aggregate
allocated public offering prices of the Units and Common Stock sold by them.
Such expense allowance is to cover expenses incurred by the Representative in
connection with the Offering, reduced by amounts advanced by the Company which,
as of the date of this Prospectus, are $30,000.

The Company has agreed to issue for $100.00, warrants to the Representative
and its designees to purchase 120,000 units (the "Representative's Warrants").
The Representative's Warrants are exercisable at any time during the five year
period after the date of this Prospectus at $6.40 per unit. The Representative's
Warrants are not transferable for one year from the date of this Prospectus
except (i) to an Underwriter or a partner or officer of an Underwriter or (ii)
by will or operation of law. Any profit realized on the sale of the
Representative's Warrants or the underlying securities may be deemed additional
underwriting compensation. Commencing one year from the date hereof, holders of
the Representative's Warrants and the securities underlying the Representative's
Warrants will have demand and piggyback registration rights for periods of four
years and six years, respectively, with respect to the Representative's Warrants
and the underlying securities. The Representative's Warrants, the units issuable
upon exercise of the Representative's Warrants, the Common Stock and warrants
included in the units issuable upon exercise of the Representative's Warrants
and the Common Stock underlying such warrants have been registered under the
Securities Act by means of the Registration Statement of which this Prospectus
is a part.

Each of the units issuable upon exercise of the Representative's Warrants
consists of one share of Common Stock and a warrant to puchase one share of
Common Stock. Each of such warrants contains the same terms and conditions as
the Warrants except that (i) the exercise price of these warrants will be $7.68
and (ii) these warrants will not be transferable for a period of one year after
the date of this Prospectus except to an Underwriter or a partner or officer of
an Underwriter, or by will or operation of law.

If any of the Representative's Warrants are exercised during the first year
after the date of this Prospectus, the units and any underlying securities
acquired may not be transferred or assigned except to an Underwriter or a
partner or an officer of an Underwriter, or by will or operation of law, until
after the expiration of such one year period.

For a period of three years from the date hereof, the Representative has a
preferential right to purchase for its account or to sell for the account of the
Company, or any parent or subsidiaries of the Company, any securities with
respect to which any of them may seek to sell, publicly or privately, for cash.

The price to the public of the Units has been determined by negotiations
between the Company and the Representative, with consideration being given to
the current status of the Company's business, its financial condition, its
present and prospective operations, the general status of the securities
market, and the market conditions for new offerings of securities. The price
bears no relationship to the assets, net worth, book value, sales price of
securities issued to shareholders of the Company, or any other criteria of
value.

The Company has agreed to give the Representative notice of meetings of
its Board of Directors and to grant access to such meetings to a
representative of the Representative. Any such representative will have no
official status or voting rights at any such meeting.

43
<PAGE>

For a period of five years after the date of this Prospectus, the Company
has agreed to pay the Representative a consulting fee in connection with any
merger, consolidation, stock exchange or acquisition or sale of all or a
material part of the assets or business of any entity, if such transaction
involves the Company, its parent company, or any of its subsidiaries, if such
transaction was initiated by the Representative. The total fee will be from
1% to 5% of the value of the transaction. In connection with any such
transaction, the Representative has agreed to provide consulting services
which are customary in the industry. If the Company, its parent company, or
any of its subsidiaries, proposes to engage in any such type of transaction
which is not initiated by the Representative, but in connection with which
the Company, its parent company, or any of its subsidiaries, proposes to
obtain services from an investment banker, the Company has agreed that the
Representative will have the first opportunity to provide consulting services
which are customary in the industry in connection therewith. In such event,
the fee to be paid to the Representative will be 50% of the total fee
described above.

If the Representative, at its election, at any time one year after the
date of this Prospectus, solicits the exercise of the Warrants, the Company
will be obligated, subject to certain conditions, to pay the Representative a
solicitation fee equal to 10% of the aggregate proceeds received by the
Company as a result of the solicitation. No warrant solicitation fees will be
paid within one year after the date of this Prospectus. The Representative
may reallow a portion of the fee to soliciting broker-dealers. Because the
Representative is a member of the NASD, any such solicitation by the
Representative must comply with the requirements of Section 2710(c)(6)(B)(xi)
of the NASD Corporate Financing Rules.

LEGAL PROCEEDINGS

There are no material pending or threatened legal proceedings to which the
Company or any of its subsidiaries is a party or of which any of their
property is the subject or, to the knowledge of the Company, any proceedings
contemplated by governmental authorities.

EXPERTS

The audited financial statements included in this Prospectus have been
audited by Grant Thornton L.L.P., independent certified public accountants,
to the extent and for the periods set forth in their report thereon which
contains an explanatory paragraph expressing substantial doubt about the
Company's ability to continue as a going concern which is attributed to
recurring operating losses, working capital deficiencies and delinquencies
and defaults on its accounts payable and other matters and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

LEGAL MATTERS

The legality of the securities offered hereby has been passed upon for the
Company by Reisman & Associates, P.A., Boca Raton, Florida. An affiliate of
Reisman & Associates, P.A. is a beneficial owner of options to acquire an
aggregate of 15,000 shares of the Company's Common Stock at prices of $4.00
and $4.50 per share. Smith, McCullough & Ferguson, P.C., Denver, Colorado,
has acted as legal counsel to the Representative in connection with certain
legal matters relating to the Offering.

INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Under the Florida Business Corporation Act, the Company has the power and
authority to indemnify any person who is or was a director, officer, employee
or agent of the Company (or of the affiliates of the Company) for liability
incurred in connection with any action brought against such

44
<PAGE>
person (other than an action by, or in the right of, the Company) if such person
acted in good faith and in a manner reasonably believed to be in, or not opposed
to, the best interests of the Company, and with respect to any criminal action
or proceeding, had no reasonable cause to believe that his conduct was unlawful.
The Company's Articles of Incorporation and Bylaws require the Company to
indemnify any such person who has complied with the foregoing standard. Under
the Florida Business Corporation Act, the Company also currently has the power
and authority to indemnify any such person for liability incurred in any action
by, or in the right of, the Company against the expenses and amounts paid in
settlement not exceeding, in the judgment of the Board of Directors, the
estimated expense of litigating the proceeding described above to its
conclusion, provided such expenses and amounts are actually and reasonably
incurred in connection with the defense or settlement of such proceeding,
including any appeal thereof. The Company's Articles of Incorporation and Bylaws
require the Company to indemnify any such person against the expenses and
amounts paid in settlement as described in the foregoing sentence. The
Underwriting Agreement provides that, in certain cases, the Underwriters shall
indemnify each officer and director and controlling person of the Company
against certain costs, expenses and liabilities which he may incur in his
capacity as such. The indemnification provisions described under this caption
include indemnification for breaches of fiduciary duties. Insofar as
indemnification arising under the Securities Act may be permitted to directors,
officers and controlling persons of the Company pursuant to such provisions, or
otherwise, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

ADDITIONAL INFORMATION

The Company has filed a Registration Statement under the Securities Act
with respect to the securities offered hereby with the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. This Prospectus, which is a part of the
Registration Statement, does not contain all of the information contained in
the Registration Statement and the exhibits and schedules thereto, certain
items of which are omitted in accordance with the rules and regulations of
the Commission. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement,
including all exhibits and schedules thereto, which may be examined at the
Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington,
D.C. 20549 without charge, or copies of which may be obtained from the
Commission upon request and payment of the prescribed fee. Statements made in
this Prospectus as to the contents of any contract, agreement or document are
not necessarily complete and in each instance reference is made to the copy
of such contract, agreement or other document filed as an exhibit to the
Registration Statement, and each such statement is qualified in its entirety
by such reference.

As of the date of this Prospectus, the Company became a reporting company
under the Exchange Act and in accordance therewith in the future will file
reports and other information with the Commission. All of such reports and
other information may be inspected and copied in Washington, D.C. and at
regional offices of the Commission located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. The Commission maintains a web site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the Commission. The address of such site is
http://www.sec.gov. In addition, the Company intends to provide its
shareholders with annual reports, including audited financial statements,
unaudited semi-annual reports and such other reports as the Company may
determine.

45
<PAGE>
CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Certified Public Accountants ........................................... F-2
FINANCIAL STATEMENTS
Balance Sheets at December 31, 1994 and 1995 and June 30, 1996 (Unaudited) .................. F-3
Statements of Operations for the years ended December 31, 1994 and 1995 and the six months
ended June 30, 1995 and 1996 (Unaudited) ................................................... F-4
Statement of Stockholders' Equity (Deficit) for the years ended December 31, 1994 and 1995
and the six months ended June 30, 1996 (Unaudited) ......................................... F-5
Statements of Cash Flows for the years ended December 31, 1994 and 1995 and the six months
ended June 30, 1995 and 1996 (Unaudited) ................................................... F-6
Notes to Financial Statements ................................................................ F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Ocurest Laboratories, Inc.

We have audited the accompanying balance sheets of Ocurest Laboratories,
Inc. (a Florida corporation) as of December 31, 1994 and 1995, and the
related statements of operations, stockholders' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Ocurest Laboratories,
Inc. as of December 31, 1994 and 1995, and the results of its operations and
its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial
statments, the Company incurred a net loss of $2,736,792 for the year ended
December 31, 1995, and, as of that date, the Company's current liabilities
exceeded its current assets by $1,975,824. These factors, among others, as
discussed in Note B to the financial statements, raise substantial doubt
about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note B. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.

GRANT THORNTON LLP

Fort Lauderdale, Florida
March 29, 1996

F-2
<PAGE>
OCUREST LABORATORIES, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
--------------- --------------- --------------
(UNAUDITED)
ASSETS
<S> <C> <C> <C>
Current Assets ........................................
Cash ................................................. $ 84,836 $ 1,607 $ 5,138
Accounts receivable-customers ........................ 22,066 65,140 240,643
Inventories .......................................... 325,854 542,071 847,183
Prepaid expenses ..................................... 21,056 64,412 133,100
--------------- --------------- --------------
Total current assets ............................... 453,812 673,230 1,226,064
Property and Equipment, at cost, net .................. 618,602 543,301 888,443
Other Assets ..........................................
Patent and trademark licensing rights, net .......... 164,300 141,600 130,250
Deposits ............................................. 7,000 198,340 12,000
Deferred offering costs .............................. -- 5,000 83,742
Organizational costs, net ............................ 1,600 800 400
--------------- --------------- --------------
Total Other Assets ................................. 172,900 345,740 226,392
--------------- --------------- --------------
Total assets ....................................... $ 1,245,314 $ 1,562,271 $ 2,340,899
=============== =============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities

Accounts payable ..................................... $ 548,854 $ 1,889,113 $ 1,626,865
Accrued advertising .................................. 114,436 155,276 --
Accrued salaries and taxes ........................... 116,649 47,362 60,202
Accrued expenses ..................................... 55,531 144,620 259,298
Accrued interest ..................................... -- 16,770 98,530
Notes payable-stockholders ........................... 198,537 238,774 295,000
Advances payable-factor ............................. -- 127,139 665,721
Notes payable-other .................................. -- -- 260,000
Patent and trademark licensing rights payable ....... 30,000 30,000 --
--------------- --------------- --------------
Total current liabilities ......................... 1,064,007 2,649,054 3,265,616
Notes Payable Stockholders ............................ -- 657,257 --
Commitments ........................................... -- -- --
Stockholders' Equity (deficit) ........................
Preferred stock - $.01 par value, 5,000,000 shares
authorized - none issued ........................... -- -- --
Common stock, $.008 par value, 25,000,000 shares
authorized, 897,811, 1,123,341 and 1,922,674 shares
issued and outstanding at December 31, 1994,
December 31, 1995 and June 30, 1996, respectively .. 7,183 8,989 15,381
Paid-in capital ...................................... 2,435,823 3,245,462 5,068,843
Accumulated deficit .................................. (2,261,699) (4,998,491) (6,008,941)
--------------- --------------- --------------
Total stockholders' equity (deficit) .............. 181,307 (1,744,040) (924,717)
--------------- --------------- --------------
Total liabilities and stockholders' equity
(deficit) ............................................. $ 1,245,314 $ 1,562,271 $ 2,340,899
=============== =============== ==============
</TABLE>

The accompanying notes are an integral part of this statement.

F-3
<PAGE>
OCUREST LABORATORIES, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
-------------------------------- ------------------------------
1994 1995 1995 1996
--------------- --------------- -------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales ........................... $ 96,830 $ 687,122 $ 200,384 $ 734,291
Cost of goods sold .................. 139,733 545,175 160,206 443,579
--------------- --------------- -------------- ---------------

Gross profit (loss) .............. (42,903) 141,947 40,178 290,712
Selling and marketing expenses ..... 676,079 1,784,102 462,835 639,052
General and administrative expenses 948,458 964,426 466,548 484,648
Royalty expense ..................... 3,875 27,885 8,015 29,380
--------------- --------------- -------------- ---------------
Operating loss ................... (1,671,315) (2,634,466) (897,220) (862,368)
Other income (expense) ..............
Interest expense ................... (20,626) (112,326) (32,558) (148,082)
Interest income .................... 2,621 -- -- --
Royalty income ..................... -- 10,000 -- --
--------------- --------------- -------------- ---------------
Net loss before
provision for taxes ............. (1,689,320) (2,736,792) (929,778) (1,010,450)
Provision for taxes ................. -- -- -- --
--------------- --------------- -------------- ---------------
Net loss ......................... $(1,689,320) $(2,736,792) $ (929,778) $(1,010,450)
=============== =============== ============== ===============
Net loss per share .................. $ (1.16) $ (1.55) $ (.54) $ (.40)
=============== =============== ============== ===============
</TABLE>

The accompanying notes are an integral part of this statement.

F-4
<PAGE>
OCUREST LABORATORIES, INC.

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995
AND THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
COMMON
COMMON STOCK ADDITIONAL STOCK
------------------------- PAID-IN SUBSCRIPTION ACCUMULATED
SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT TOTAL
------------ ----------- -------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 579,698 $ 4,638 $ 940,602 $ (50,000) $ (572,379) $322,861
Issuance of stock, net of placement
costs of $98,520 ................... 268,375 2,147 1,252,219 -- -- 1,254,366
Common stock subscription received .. -- -- -- 50,000 -- 50,000
Issuance of stock upon conversion of
notes .............................. 48,738 390 237,610 -- -- 238,000
Issuance of stock in lieu of cash to
stockholders who provide
professional services .............. 1,000 8 5,392 -- -- 5,400
Net loss for the year ................ -- -- -- -- (1,689,320) (1,689,320)
------------ ----------- -------------- -------------- ---------------- -------------
Balance at December 31, 1994 ......... 897,811 7,183 2,435,823 -- (2,261,699) 181,307
Issuance of stock for cash, net of
placement costs of $6,548 .......... 57,031 457 248,452 -- -- 248,909
Issuance of stock upon conversion of
notes .............................. 23,865 191 107,204 -- -- 107,395
Issuance of stock for cash upon
exercised warrants ................. 35,730 286 124,767 -- -- 125,053
Issuance of stock in lieu of cash to
directors/stockholders who provide
professional services .............. 30,203 242 86,063 -- -- 86,305
Issuance of stock in lieu of cash to
employees for accrued salaries ..... 78,701 630 243,153 -- -- 243,783
Net loss for the year ................ -- -- -- -- (2,736,792) (2,736,792)
------------ ----------- -------------- -------------- ---------------- -------------
Balance at December 31, 1995 ......... 1,123,341 8,989 3,245,462 -- (4,998,491) (1,744,040)

Balance at December 31, 1995 ......... 1,123,341 $ 8,989 $ 3,245,462 $ -- $ (4,998,491) $ (1,744,040)
Issuance of stock, net ............... 400,000 3,200 931,800 -- -- 935,000
Issuance of stock upon conversion of
notes and accrued interest ......... 300,327 2,402 693,081 -- -- 695,483
Issuance of stock for cash upon
exercised warrants ................. 88,250 705 171,695 -- -- 172,400
Issuance of stock in lieu of cash to
stockholders who provide
professional services .............. 7,500 60 18,690 -- -- 18,750
Issuance of stock in lieu of cash to
employees for accrued salaries ..... 3,256 25 8,115 -- -- 8,140
Net loss for the six months ended
June 30, 1996 ...................... -- -- -- -- (1,010,450) (1,010,450)
------------ ----------- -------------- -------------- ---------------- -------------
Balance at June 30, 1996 (Unaudited) . 1,922,674 $ 15,381 $ 5,068,843 $ -- $ (6,008,941) $ (924,717)
============ =========== ============== ============== ================ =============
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>
OCUREST LABORATORIES, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------- --------------------------------
1994 1995 1995 1996
---------------- ---------------- -------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss ................................... $ (1,689,320) $ (2,736,792) $ (929,778) $ (1,010,450)
Adjustments to reconcile net loss to net cash
used in operating activities: ..............
Professional services paid with stock ...... 5,400 86,305 27,000 18,750

Accrued salaries paid with stock ............ -- 243,783 118,848 8,140
Interest expense paid with stock ............ -- -- 7,394 53,425
Depreciation and amortization ............... 63,128 102,986 51,264 65,098
Changes in assets and liabilities ...........
Increase in accounts receivable ............ (22,066) (43,074) (65,508) (175,503)
Increase in inventories .................... (325,854) (216,217) (24,009) (305,112)
Increase in prepaid expenses ............... (21,056) (43,356) (2,944) (65,688)
Increase (decrease) in accounts payable ... 524,646 1,340,259 (451,275) (262,248)
Increase in accrued expenses ............... 251,786 108,748 194,737 54,002
---------------- ---------------- -------------- ----------------
Net cash used in operating activities .... (1,213,336) (1,157,358) (1,074,271) (1,622,586)
Cash flows from investing activities ........
Purchase of property and equipment ......... (606,420) (4,185) (47,744) (398,490)
Deposits on fixed assets ................... -- (186,340) -- 186,340
Increase in deposits ....................... (6,600) (5,000) -- --
---------------- ---------------- -------------- ----------------
Net cash used in investing activities .... (613,020) (195,525) (47,744) (212,150)
Cash flows from financing activities ........
Proceeds from issuance of common stock, net 1,304,366 373,962 363,109 1,107,400
Proceeds from new borrowings ............... 277,498 900,692 713,439 1,079,609
Principal repayments on indebtedness ....... (5,000) -- -- (270,000)

(Increase) decrease in deferred offering
costs ..................................... 25,000 (5,000) (16,500) (78,742)
---------------- ---------------- -------------- ----------------
Net cash provided by financing activities 1,601,864 1,269,654 1,060,048 1,838,267
---------------- ---------------- -------------- ----------------
Net increase (decrease) in cash .............. (224,492) (83,229) (61,967) 3,531
Cash at beginning of period .................. 309,328 84,836 84,836 1,607
---------------- ---------------- -------------- ----------------
Cash at end of period ........................ $ 84,836 $ 1,607 $ 22,869 $ 5,138
================ ================ ============== ================
Supplemental disclosure of cash flow
information: ...............................
Cash paid during the period for: .............
Interest ................................... $ 17,767 $ 32,340 $ 8,920 $ 12,896
================ ================ ============== ================
Noncash transactions: ........................
Conversion of notes payable to common stock $ 238,000 $ 107,395 $ 100,000 $ 642,058
================ ================ ============== ================
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

PRESENTATION

The interim financial statements as of June 30, 1995 and 1996 and the six
months then ended as included herein are unaudited. However, in the opinion
of management, such information reflects all adjustments, consisting only of
normal recurring accruals necessary for a fair presentation of the
information shown. The interim financial statements for the periods stated
and notes presented herein do not contain certain information included in the
Company's annual financial statements and notes as also herein presented.
Results for interim periods are not necessarily indicative of results
expected for the full year.

OPERATIONS

Ocurest Laboratories, Inc. (the "Company") was incorporated in the State
of Florida on April 29, 1991. In July 1994, the Company began selling Ocurest
Sterile Eyedrops, a line of non-prescription eye medications featuring a
patented new dispenser for delivering ophthalmic drugs into the eye.

CASH

Cash and cash equivalents include cash on deposit in checking and money
market accounts with maturities of three months or less.

INVENTORIES

Inventories are principally raw materials and finished goods held for
resale and are stated at the lower of cost (first in, first out) or market.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the related assets which range from 5 to 10 years.

ORGANIZATIONAL COSTS

Organizational costs were capitalized and are being amortized using the
straight-line method over five years. Accumulated amortization was $2,400,
$3,200 and $3,600 at December 31, 1994, December 31, 1995 and June 30, 1996,
respectively.

PATENT AND TRADEMARK LICENSING RIGHTS

The Company has acquired the exclusive worldwide licensing rights to
certain patents and trademarks from a previously related party (see Note E)
and is capitalizing additional costs to maintain and protect these patents
and trademarks as they are incurred. These costs are being amortized over ten
years, the estimated economic life of the patent, using the straight line
method.

F-7
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION--(CONTINUED)

ADVERTISING

The Company expenses the cost of advertising, which includes production
costs, media time and space as costs are incurred. Total advertising expense
for the years ended December 31, 1994, December 31, 1995 and the six months
ended June 30, 1996, amounted to approximately $567,000, $1,528,000 and
$301,000, respectively.

INCOME TAXES

The Company accounts for income taxes under the provisions of FAS 109,
"Accounting for Income Taxes." This pronouncement requires accounting for
deferred taxes utilizing the liability method, which applies the enacted
statutory rates in effect at the balance sheet date to differences between
the book and tax basis of assets and liabilities. The resulting deferred tax
liabilities and assets are adjusted to reflect changes in tax laws.

FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents, trade receivables,
accounts payable and notes payable approximate fair value due to the
short-term maturities of these instruments.

USE OF ESTIMATES

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amount of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the reporting period. Actual
results could differ from those estimates.

STOCK OPTIONS

Options granted under the Company's Stock Option Plans are accounted for
under APB 25, "Accounting for Stock Issued to Employees," and related
interpretations. In November 1995, the Financial Accounting Standards Board
issued Statement 123, "Accounting for Stock-Based Compensation," which will
require additional proforma disclosures for companies that will continue to
account for employee stock options under the intrinsic value method specified
in APB 25. The Company plans to continue to apply APB 25 and the only effect
of Statement 123 in 1996 is the new disclosure requirement.

NET LOSS PER SHARE

Net loss per share has been computed by dividing net loss by the weighted
average number of shares of common stock and common stock equivalents
outstanding during each period. The weighted average number of shares of
common stock and common stock equivalents used for computing net loss per
share was 1,459,059 and 1,767,562 for the years ended December 31, 1994 and
1995, respectively,

F-8
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER
INFORMATION--(CONTINUED)

and 1,725,825 and 2,527,613 for the six months ended June 30, 1995 and 1996,
respectively. The weighted average includes the effect of common stock,
options and warrants issued within one year of the proposed Initial Public
Offering ("IPO") at prices below the IPO price, as calculated under the
treasury stock method, and have been retroactively restated for a 1 for 2
reverse stock split that was approved on July 15, 1996 (See Note P). The
weighted average number of shares of common stock and common stock
equivalents was not computed utilizing the modified treasury stock method as
this method is antidilutive.

SUPPLEMENTAL PRO FORMA NET LOSS AND NET LOSS PER SHARE

The Company's supplemental pro forma net loss and net loss per share for
the year ended December 31, 1995 and the six months ended June 30, 1996 are
$2,670,192 and $977,150 and $1.40 and $0.37, respectively.

The supplemental pro forma net loss and net loss per share reflect the
issuance of shares necessary to retire $555,000 of notes payable and the
resulting decrease in net loss in the amount of $66,600 and $33,300 for the
year ended December 31, 1995 and the six months ended June 30, 1996,
respectively, as of the beginning of 1995. The calculation is based on the
weighted average shares outstanding used in the calculation of net loss per
share, adjusted for the estimated shares that would be issued by the Company,
i.e. 138,750 shares at $4.00 per share, to retire these obligations.

ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS

Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
requires that long-lived assets and certain intangibles held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. This
statement had no impact on the Company's results of operations or financial
position upon adoption in 1996.

NOTE B - GOING CONCERN

The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has sustained substantial
losses from operations since the date of inception, and such losses have
continued through the year ended December 31, 1995. In addition, the Company has
used more cash than capital raised and provided through its operations which
resulted in the working capital deficit of $1,975,824 as of December 31, 1995.
Loans and accrued interest in the amount of $250,000 and $650,000 were
delinquent as of January 31, 1996 and June 30, 1996, respectively.

In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to raise funds
to continue to fund its operations and planned expansion. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification of
liabilities that might be necessary should the Company be unable to continue
in existence.

F-9
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE B - GOING CONCERN--(CONTINUED)

In addition to the debt conversion, debt issuance and the private
placement of its common stock described in Note P, the Company has entered
into a Letter of Intent (Note O) with RAF Financial Corporation relating to a
proposed IPO of its common stock and warrants. This offering is intended to
generate net proceeds to the Company of approximately $3,876,000.

NOTE C -INVENTORIES

Inventories consist of the following at:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
--------------- --------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials $ 68,406 $ 44,646 $ 68,742
Finished goods 257,448 497,425 778,441
--------------- --------------- ------------
$325,854 $542,071 $847,183
=============== =============== ============
</TABLE>

NOTE D - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
--------------- --------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Manufacturing equipment ..... $648,565 $ 652,295 $1,050,784
Furniture and fixtures ....... 2,268 2,723 2,723
Computer equipment ........... 7,111 7,111 7,111
--------------- --------------- -------------
657,944 662,129 1,060,618
Less accumulated depreciation (39,342) (118,828) (172,175)
--------------- --------------- -------------
$ 618,602 $ 543,301 $ 888,443
=============== =============== =============
</TABLE>

At December 31, 1995, the Company had placed a $310,000 order for certain
product specific molds to be used in its manufacturing process, of which
approximately $152,000 had been billed and is reflected in deposits and
accounts payable in the accompanying financial statements.

As of December 31, 1995, the Company has also paid a $34,000 deposit
towards the purchase of specialized machinery with an acquisition price of
$370,000. The deposit is subject to the risk of forfeiture in the event the
purchase is not consummated.

NOTE E - PATENT AND TRADEMARK LICENSING RIGHTS

The Company has acquired the exclusive worldwide licensing rights to
certain patents and trademarks for the newly developed eye drop dispenser
from a related party, Acorn Laboratories, Inc. ("Acorn"), owned by William J.
Casey, past Chairman of the Company. The Company has paid to Acorn $170,000
and accrued for an additional $30,000 through December 31, 1995, both of
which represent an initial payment on the purchase from Acorn.

F-10
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE E - PATENT AND TRADEMARK LICENSING RIGHTS--(CONTINUED)

Further, the Company has agreed to pay Acorn a royalty of 4% of future net
sales up to a maximum royalty of $9,800,000. The Company has capitalized the
initial payment and other related patent costs and is amortizing them using
the straight line method over a ten year life. Upon payment of the maximum
royalty of $9,800,000, Acorn has agreed to assign the patent and trademark to
the Company. Acorn has also agreed to allow the Company to defer payment of
certain royalties until certain earnings levels are attained. The agreement
also provides for a payment to Acorn in the event of a change in control of
the Company.

Patent and trademark licensing rights consist of the following at:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
--------------- --------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Patent and trademark licensing rights $227,000 $227,000 $227,000
Less accumulated amortization ....... (62,700) (85,400) (96,750)
--------------- --------------- ------------
$164,300 $141,600 $130,250
=============== =============== ============
</TABLE>

F-11
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE F - NOTES PAYABLE - STOCKHOLDERS

Notes payable are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1994 1995 1996
--------------- --------------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable, minority stockholders, fixed interest
at 10%, maturing June 1994 .......................... $ 5,000 $ 5,000 $ 5,000
Notes payable, minority stockholders, fixed interest
at 10%, maturing February 1995 ...................... 10,000 10,000 10,000
Notes payable, minority stockholders, fixed interest
at 12%, maturing June 1994 .......................... 50,000 -- --
Note payable, minority stockholders, fixed interest at
12%, maturing January 1995 .......................... 123,537 50,000 50,000
Note payable, minority stockholders, fixed interest at
15%, maturing June 1994 ............................. 10,000 10,000 10,000
Note payable, minority stockholders, fixed interest at
12%, maturing October 1995 .......................... -- 73,966 --
Note payable, minority stockholder, fixed interest at
12%, maturing April 1995 ............................ -- 50,000 50,000
Note payable, Director, fixed interest at 12%,
maturing November 1996 .............................. -- 200,000 --
Note payable, Director, fixed interest at 12%,
maturing January 1996 ............................... -- 91,906 --
Note payable, minority stockholders, interest at 12%,
maturing January 1996 ............................... -- 135,000 85,000
Note payable, Director, interest at prime plus 1.5%,
maturing December 31, 1995 .......................... -- 238,823 --
Note payable, individual, interest at 12%, maturing
June 1996 ........................................... -- -- 50,000
Note payable, corporation, interest at prime plus 2%,
maturing September 1996 ............................. -- -- 260,000
Note payable, minority shareholder, interest at 12%,
maturing June 1996 .................................. -- -- 35,000
--------------- --------------- ------------
$198,537 $864,695 $555,000
=============== =============== ============
</TABLE>

Principal and interest is due at maturity for all notes. Accrued interest
due during 1994 on these notes was paid. The accrued and unpaid interest as
of December 31, 1995 amounted to $48,106 of which $31,336 was converted into
common stock during January 1996 and is classified in the long-term portion
of notes payable stockholders in the 1995 financial statements. Interest
expense was $20,626 and $112,326 for the years ended December 31, 1994 and
1995 and $148,082 for the six months ended June 30, 1996, respectively.

Subsequent to December 31, 1995, the Company converted $625,921 of notes
payable to common stock. This portion of the notes payable has been
classified as long-term in the 1995 financial statements.

F-12
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE G - ADVANCES PAYABLE - FACTOR

During 1995, the Company entered into an agreement with a factor for the
financing of accounts receivable and inventory. Under the terms of the accounts
receivable agreement, the Company sells its accounts receivable to the factor
and the factor advances the Company an amount equal to 70% of the accounts
receivable sold. The factor's initial fee for this service is equal to 3% of
the amount advanced. Under certain circumstances, such fee may increase by
an additional 3%. However, the Company can avoid the additional fees by
replacing an unpaid invoice with a new invoice of equal value within 30 days.
Under the terms of the inventory agreement, the factor will finance 50% of the
finished goods inventory cost. Financings are made in the form of a "sale"
whereby the factor buys the inventory and then re-sells it to the Company when
the sale is made to the end customer. The factor charges a fee ranging from 3%
to 6% of the inventory amounts financed. The factor also makes advances against
the Company's machinery and equipment up to a maximum of $524,000. The agreement
calls for an associated management fee of $5,000 per month which the factor has
pro-rated based upon the actual amounts of such advances as compared to the
$524,000 maximum. Based upon the escalating fee schedule and the Company's
ability to substitute sales invoices, all rights and obligations associated with
a sale have not occurred and therefore this transaction has been accounted for
as a financing transaction in the financial statements.

The total amounts financed under this agreement, including advances relating
to accounts receivable, inventory, and machinery and equipment, amounted to
$127,539 and $665,721 as of December 31, 1995 and June 30, 1996, respectively.

NOTE H - COMMITMENTS AND CONTINGENCY

LEASES

The Company is obligated under noncancelable leases which are classified
as operating leases. The Company conducts operations in a facility under a
three year lease that expires on June 30, 1997. The rent expense for real
property was $17,530, $21,530 and $6,446 for the years ended December 31,
1994 and 1995, and for the six months ended June 30, 1996, respectively.
Total rent expense for the years ended December 31, 1994 and 1995 and for the
six months ended June 30, 1996, amounted to approximately $19,200, $25,221
and $13,005, respectively.

At December 31, 1995, the following are the minimum rental payments under
such operating leases which expire at various dates through 1997:

<TABLE>
<CAPTION>
OFFICE OFFICE
YEAR TOTAL RENTAL EQUIPMENT
- ---- --------- --------- ------------
<S> <C> <C> <C>
1996 24,834 22,806 $2,028
1997 13,021 11,669 1,352
--------- --------- ------------
37,855 34,475 $3,380
========= ========= ============
</TABLE>

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with three key
executives which provide for base salaries ranging from $66,000 to $150,000.
Total compensation paid under these agreements amounted to approximately
$221,000 and $326,000 for the years ended December 31, 1994 and 1995,
respectively. The employment agreements expire on December 31, 1996, and are
extended automatically for successive one-year terms of employment. The
Company's remaining aggregate commitments at December 31, 1995, under such
contracts, total approximately $331,000.

F-13
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE I - INCOME TAXES

The Company has a net operating loss carryforward for tax purposes of
approximately $3,821,000, which will expire during the years 2006 through
2011. As a result of certain cumulative changes in the Company's stock
ownership over the past three years, future use of the net operating loss
carryforwards may be substantially limited by the change in ownership rules.
The Company has deductible temporary differences which consists of the
following at:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1995
------------ ----------
<S> <C> <C>
Allowance for doubtful accounts -- 5,000
Start up and organization costs 741,000 577,000
Depreciation and amortization . 144,000 67,000
Accrued salaries ............... 117,000 47,000
Inventory capitalization ...... 56,000 90,000
------------ ----------
1,058,000 786,000
============ ==========
</TABLE>

The following tax benefit was recorded for the net operating loss
carryforwards and the deductible temporary differences at:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1994 1995
------------ --------------
<S> <C> <C>
Current assets:
Deferred tax benefit ..................... $ 127,000 $ 135,000
Less valuation allowance ................. (127,000) (135,000)
------------ --------------
Deferred tax benefit - net of allowance $ -- $ --
============ ==============
Other assets:
Deferred tax benefit ..................... $ 716,000 $ 1,598,000
Less valuation allowance ................. (716,000) (1,598,000)
------------ --------------
Deferred tax benefit - net of allowance $ -- $ --
============ ==============
</TABLE>

NOTE J - STOCK OPTIONS

In July 1994, the Board of Directors amended the 1992 Stock Option Plan
(the "Plan") which reserves 143,750 shares of common stock for issuance under
the Plan. Options may be granted as qualified options under Section 422 of
the Internal Revenue Code, or as non-qualified options, as deemed
appropriate. Qualified options must have exercise prices equal to at least
100% of the fair market value of the stock at the date of grant. The term of
the options is generally ten years and they are exercisable in one-third
installments annually from the date of grant.

In addition, the Company has granted other non-qualified options. The term
of these options is for a period of 10 years and they remain exercisable
throughout their term. Options granted and outstanding are as follows at:

F-14
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE J - STOCK OPTIONS--(CONTINUED)

<TABLE>
<CAPTION>
GRANTED UNDER THE PLAN
----------------------------------------
QUALIFIED NON-QUALIFIED OTHER NON-QUALIFIED
------------------- ------------------- --------------------
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1992 9,375 $4.00 18,750 $4.00 5,125 $4.00
December 31, 1993 3,125 $4.00 18,750 $4.50 1,875 $4.00
3,125 $4.50
December 31, 1994 3,125 $4.50 -- $ -- 18,000 $4.50
December 31, 1995 5,000 $4.50 56,250 $4.80 22,750 $4.50
--------- --------- ---------
23,750 93,750 47,750
========= ========= =========
</TABLE>

Non-qualified options are currently exercisable, and no compensation
expense has been recognized under any of these grants. As of December 31,
1995, no options have been exercised.

NOTE K - WARRANTS

During the years ended December 31, 1994 and 1995, the Company issued
warrants to acquire common stock of the Company. Each warrant represents the
right to purchase one share of common stock for prices ranging from $4.00 to
$12.00 per warrant. Warrants unexercised as of December 31, 1995 are as
follows (exercise prices are retroactively restated to reflect 1 for 2
reverse stock split - see Note P):

<TABLE>
<CAPTION>
NUMBER OF WARRANTS EXERCISE PRICE EXPIRATION DATE
- ------------------ -------------- ---------------
<S> <C> <C>
463,545 $ 8.00 January 1997
9,750 $12.00 January 1997
43,750 $11.00 January 2000
10,784 $ 7.20 November 1997
27,000 $ 5.00 January 1996
50,000 $ 4.50 June 1997
50,000 $ 4.00 June 2000
</TABLE>

In January 1996, the Company allowed warrant holders to exercise their
warrants at 40% of their exercise price provided that they exercised on or
before January 31, 1996. Pursuant to this agreement, 88,250 warrants were
exercised for $172,400. The incremental value of the modified warrants is not
significantly different than the value of the previous warrants.

In February 1996, the Company agreed to permanently reduce the exercise
price of all warrants with an exercise price above $5.00 per share to $5.00
share (see Note P).

NOTE L - SIGNIFICANT CUSTOMERS

For the year ended December 31, 1994, the Company's three largest
customers accounted for 25%, 23% and 23%, respectively, of the Company's
gross sales. For the year ended December 31, 1995, the Company's three
largest customers accounted for 43%, 13% and 11%, respectively, of the
Company's gross sales. For the six months ended June 30, 1996, the Company's
three largest customers accounted for 13%, 11% and 10%, respectively, of the
Company's gross sales.

F-15
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE M - SIGNIFICANT VENDORS

The Company has purchases from two vendors which represent 97% of net
purchases in 1995. The Company does not anticipate any interruption in
supplies from its vendors. In the event supplies were disrupted for any
reason, management believes alternative sources for these purchases are
available.

NOTE N - AFFILIATED TRANSACTIONS

During 1994, the Company entered into consulting agreements with each of
the previous Chairman of the Board of Directors and a director to provide
certain advertising consulting activities. Total consulting expense during
the years ended December 31, 1994 and 1995 was $28,000 and $27,000,
respectively, and the amount accrued and unpaid as of December 31, 1994 and
1995 was $5,600 and $-0-, respectively.

NOTE O - INITIAL PUBLIC OFFERING

The Board of Directors has authorized the filing of a registration statement
relating to an IPO for Units consisting of 1,200,000 shares of common stock and
1,200,000 Class A warrants. In connection with the offering, during February
1996 the Company entered into a Letter of Intent with RAF Financial Corporation
(RAF). RAF individually or as the representative of a group of underwriters
intends to underwrite the shares and the warrants being offered as Units on a
"firm commitment basis." The underwriters will be paid 10% of the IPO proceeds
and a non-accountable expense allowance (of which $30,000 has been paid), will
be given the right to purchase warrants for 10% of the Units sold exclusive of
over-allotment shares.

The Letter of Intent, among other things, provides for certain anti-dilution
and registration rights to RAF in the warrants for 10% of the Units and allows
designees of RAF to observe all Board of Directors meetings for three years.

NOTE P - SUBSEQUENT EVENTS

In January 1996, the Company converted $657,257 of its debt to common
stock. This conversion reduces long-term debt to $-0-and decreases total
stockholders' deficit to $1,086,783.

In addition to the warrant exercise described in Note K, between January
1, 1996 and June 30, 1996 the Company sold and issued 400,000 shares of its
common stock for approximately $935,000.

During April 1996, the Company issued a $260,000 promissory note which is
to be repaid at the earlier of September 1996 or the closing of the IPO. In
connection with this note, the Company issued warrants to purchase 50,000
shares of the Company's common stock.

On April 19, 1996, the Company's Board of Directors approved a 1 for 2
reverse-split of its issued and outstanding shares of common stock, warrants
and options. The Company will issue new certificates to shareholders
following the closing of the Company's forthcoming IPO. All per share and
weighted average share amounts, for all periods presented, have been restated
to reflect the effect of the 1 for 2 reverse stock split. The Company amended
its Article of Incorporation by increasing the authorized shares of common
stock from 3 million to 25 million shares and preferred stock from 1 million
to 5

F-16
<PAGE>
OCUREST LABORATORIES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994 AND 1995
AND JUNE 30, 1996 (UNAUDITED)

NOTE P - SUBSEQUENT EVENTS--(Continued)

million shares. The Company also approved the post-split warrants with an
exercise price greater than $5.00 to be $5.00 and all warrants with
expiration dates falling in calendar year 1997 to a common expiration date of
May 31, 1998.

In September and October 1996, the Company borrowed an additional $700,000
from certain individuals, including a shareholder, at 12% interest. The loans
and accrued interest mature upon the earlier of 10 days after the closing of
the initial public offering or 6 months from the date of the loans. In
connection with the loans, the Company issued warrants to purchase an
aggregate of 350,000 shares of its common stock at $2.40 per share. The
warrant holders have certain piggyback registration rights.

F-17
<PAGE>

PHOTOGRAPH #2 (Photo storyboard consisting of nine small photographs with
captions)

<PAGE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

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

TABLE OF CONTENTS

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

Prospectus Summary ................................ 3
Risk Factors ...................................... 6
Use of Proceeds ................................... 14
Dividend Policy ................................... 15
Dilution .......................................... 15
Capitalization .................................... 16
Selected Financial Data ........................... 17
Management's Discussion and Analysis
of Financial Condition and Results
of Operations ................................... 18
Business .......................................... 21
Management ........................................ 28
Security Ownership of Certain Beneficial Owners
and Management .................................. 32
Selling Shareholders .............................. 33
Certain Relationships and Transactions ............ 34
Description of Securities ......................... 37
Shares Eligible for Future Sale ................... 40
Underwriting ...................................... 42
Legal Proceedings ................................. 44
Experts ........................................... 44
Legal Matters ..................................... 44
Indemnification for Securities Act Liabilities ... 44
Additional Information ............................ 45
Index to Financial Statements ..................... F-1
</TABLE>
-------------------

UNTIL DECEMBER 7, 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE UNITS,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

OCUREST LABORATORIES, INC.

1,200,000 UNITS

EACH CONSISTING OF
ONE SHARE OF
COMMON STOCK
AND ONE CLASS A
REDEEMABLE COMMON STOCK
PURCHASE WARRANT

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

PROSPECTUS

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

RAF
FINANCIAL CORPORATION

NOVEMBER 12, 1996