<PAGE>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
      OF 1934


     for Quarterly Period Ended June 29, 2002 Commission File Number 0-21068
     -----------------------------------------------------------------------
                           Sight Resource Corporation

             (Exact name of registrant as specified in its charter)


          Delaware                                     04-3181524
  (State or other jurisdiction           (I.R.S. Employer Identification No.)
  of incorporation or organization)


               6725 Miami Avenue, Suite 102, Cincinnati, Oh 45243
               --------------------------------------------------
               (Address of principal executive offices) (Zip Code)


                                 (513) 527-9700
                                 --------------
              (Registrant's telephone number, including area code)


                                       N/A
                                       ---
                 (Former name, former address and former fiscal
                     year, if changed since the last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 YES X NO______

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date:

On August 11, 2002, 30,667,709 shares (does not include 30,600 shares held as
treasury stock) of common stock, par value $0.01 per share, were outstanding.




<PAGE>


                           SIGHT RESOURCE CORPORATION
                                      INDEX

PART I.   FINANCIAL INFORMATION                                            PAGE
          ---------------------                                            ----

Item 1. Financial Statements

          Consolidated Balance Sheets as of June 29, 2002 and
          December 29, 2001                                                 1

          Consolidated Statements of Operations for the Three
          And Six Months Ended June 29, 2002 and June 30, 2001              2

          Consolidated Statements of Cash Flows for the
          Six Months Ended June 29, 2002 and June 30, 2001                  3

          Notes to Consolidated Financial Statements                        4

Item 2. Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                             7

Item 3. Quantitative and Qualitative Disclosures about Market Risk         17

PART II. OTHER INFORMATION

Item 4.   Submission of Matters to a Vote of Security Holders              17

Item 5.   Other Information                                                17

Item 6.   Exhibits and Reports on Form 8-K                                 17

          Signatures                                                       18



<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                           SIGHT RESOURCE CORPORATION
                           Consolidated Balance Sheets
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                   As of           As of
                                                               June 29, 2002  December 29, 2001
                                                               -------------  -----------------
<S>                                                              <C>            <C>
Assets                                                         (unaudited)
Current assets:
Cash and cash equivalents                                        $    851       $  1,356
Accounts receivable, net of allowance of $1,855 and $1,915,
respectively                                                        2,548          2,613
Inventories                                                         5,416          4,666
Prepaid expenses and other current assets                             423            395
                                                                 --------       --------

Total current assets                                                9,238          9,030
                                                                 --------       --------

Property and equipment, net                                         2,405          2,729

Other assets:
Intangible assets, net                                             19,439         19,770
Web site development                                                2,288          2,288
Other assets                                                          120            127
                                                                 --------       --------

          Total assets                                           $ 33,490       $ 33,944
                                                                 ========       ========

Liabilities and Stockholders' Equity
Current liabilities:
Revolver notes payable                                           $  2,500       $  2,500
Current portion of long term debt                                   5,328          5,979
Current portion of capital leases                                       4             10
Accounts payable                                                    6,060          5,789
Accrued expenses                                                    1,899          1,813
Dividends payable                                                     254           --
                                                                 --------       --------

Total current liabilities                                          16,045         16,091
                                                                 --------       --------

Non-current liabilities:
Long term debt, less current maturities                               926            928
Capital leases                                                         17             17
                                                                 --------       --------

Total non-current liabilities                                         943            945
                                                                 --------       --------

Series B redeemable convertible preferred stock
1,452,119 shares issued and outstanding                             6,535          6,535

Stockholders' equity:
Preferred Stock, $.01 par value. Authorized 5,000,000
shares; no shares of Series A issued and outstanding                 --             --
Common Stock, $.01 par value. Authorized 70,000,000
shares; 30,698,309 at June 29, 2002
and 29,597,703 at December 29, 2001 shares
issued and outstanding                                                307            296
Additional paid-in capital                                         41,546         41,810
Treasury stock at cost, 30,600 shares at June 29, 2002
and December 29, 2001                                                (137)          (137)
Accumulated deficit                                               (31,749)       (31,596)
                                                                 --------       --------

Total stockholders' equity                                          9,967         10,373
                                                                 --------       --------

                                                                 $ 33,490       $ 33,944
                                                                 ========       ========
</TABLE>

See accompanying notes to consolidated financial statements.

                                        1




<PAGE>


                           SIGHT RESOURCE CORPORATION
                      Consolidated Statements of Operations
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                               ------------------                    ----------------

                                                         JUNE 29, 2002   JUNE 30, 2001        JUNE 29, 2002      JUNE 30, 2001
                                                         ------------       ------------       ------------       ------------
                                                                  (unaudited)                           (unaudited)
<S>                                                      <C>                <C>                <C>                <C>
Net revenue                                              $     14,080       $     14,505       $     29,356       $     30,564

Cost of revenue                                                 4,113              4,822              8,480              9,740
                                                         ------------       ------------       ------------       ------------

Gross profit                                                    9,967              9,683             20,876             20,824

Selling, general and administrative expenses                   10,368             11,421             20,658             22,610
                                                         ------------       ------------       ------------       ------------

Income (loss) from operations                                    (401)            (1,738)               218             (1,786)

Interest expense, net                                            (169)              (193)              (358)              (429)
                                                         ------------       ------------       ------------       ------------

Loss before taxes                                                (570)            (1,931)              (140)            (2,215)

Income tax  expense                                                 9                 24                 13                 45
                                                         ------------       ------------       ------------       ------------

Net Loss                                                         (579)            (1,955)              (153)            (2,260)
                                                         ------------       ------------       ------------       ------------

Dividends on redeemable convertible preferred stock               127                129                254                257
                                                         ------------       ------------       ------------       ------------

Net Loss attributable to common stockholders             $       (706)      $     (2,084)      $       (407)      $     (2,517)
                                                         ------------       ------------       ------------       ------------

Basic and diluted Loss per common share                  $      (0.02)      $      (0.21)      $      (0.01)      $      (0.26)

Weighted average number of common shares
  outstanding - Basic and Diluted                          30,698,000          9,991,000         30,329,000          9,625,000
                                                         ------------       ------------       ------------       ------------
</TABLE>



See accompanying notes to consolidated financial statements.

                                        2




<PAGE>


                           SIGHT RESOURCE CORPORATION
                      Consolidated Statements of Cash Flows
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED
                                                                              ----------------

                                                                      JUNE 29, 2002  JUNE 30, 2001
                                                                      -------------  -------------

                                                                                (unaudited)
<S>                                                                      <C>           <C>
Operating activities:
Net loss                                                                 $  (153)      $(2,260)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization                                                929         1,820
Amortization and write-off of deferred financing costs                        --           100
Loss on disposal of assets                                                    --            22
Changes in operating assets and liabilities:
          Accounts receivable                                                 65            69
          Inventories                                                       (750)          561
          Prepaid expenses and other current assets                          (28)         (202)
          Accounts payable and accrued expenses                              352          (269)
                                                                         -------       -------

              Net cash provided by (used in) operating activities            415          (159)
                                                                         -------       -------

Investing activities:
Purchases of property and equipment                                         (274)         (240)
Proceeds from sale of assets                                                  --            --
Other assets (liabilities)                                                     7            (5)
                                                                         -------       -------

          Net cash used in investing activities                             (267)         (245)
                                                                         -------       -------

Financing activities:
Principal payments                                                          (653)          (17)
Proceeds from notes                                                           --            76
Proceeds from issuance of stock                                               --            14
                                                                         -------       -------

          Net cash provided by (used in) financing activities               (653)           73
                                                                         -------       -------

Net decrease in cash and cash equivalents                                   (505)         (331)

Cash and cash equivalents, beginning of period                             1,356           532
                                                                         -------       -------

Cash and cash equivalents, end of period                                 $   851       $   201
                                                                         =======       =======

Supplementary cash flow information:
          Interest paid                                                  $   349       $   441
          Income taxes paid                                                   22            55
See accompanying notes to consolidated financial statements
</TABLE>

                                        3




<PAGE>


                           SIGHT RESOURCE CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  THE COMPANY

       (a) Nature of Business

       Sight Resource Corporation (the "Company") manufactures, distributes and
       sells eyewear and related products and services.

       (b) Eyeshop Merger

       In July 2001, the Company merged with eyeshop.com, inc. ("Eyeshop"), an
       early-stage optical development company established by E. Dean Butler in
       late 1999. Concurrent with the merger, there were two Common Stock
       Purchase Agreements whereby the former shareholders of Eyeshop purchased
       additional shares of the Company. It was anticipated that, following the
       merger, available cash resources of the combined companies would be
       devoted to continuation and improvement of the business of the Company,
       with a decision to be made at a future date as to when the Eyeshop
       development activities should be resumed. As of June 29, 2002, no
       decision had been made to resume Eyeshop development activities.

       Pursuant to a merger agreement, former Eyeshop stockholders are also
       entitled to receive additional shares of the Company's common stock if
       and when certain options, warrants and other rights to receive the
       Company's common stock that were held by the Company's security holders
       as of May 23, 2001 are exercised. The Company issued a total of 7,306,662
       shares of common stock to former Eyeshop stockholders and assumed
       1,757,096 stock options in connection with the merger.

       Collectively, the former stockholders of Eyeshop together with the common
       stock purchasers associated with Eyeshop held approximately 18,876,162
       shares of the Company's common stock immediately after the merger and the
       common stock financings, or approximately 64% of the Company's issued and
       outstanding common stock and approximately 61% of the Company's issued
       and outstanding voting securities.

       The Company has completed its accounting for the merger. The treatment,
       for accounting purposes, was considered to be a purchase of Eyeshop's
       assets and assumption of Eyeshop's liabilities by the Company. The
       aggregate purchase price was $2,054,000 and the costs of the assets
       acquired and liabilities assumed have been allocated on the basis of the
       estimated fair value of the net assets required. There was no goodwill
       provided in the transaction.

                                        4




<PAGE>


                           SIGHT RESOURCE CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       Basis of Presentation

       The accompanying consolidated financial statements have been prepared by
       the Company without audit, pursuant to the rules and regulations of the
       United States Securities and Exchange Commission the ("SEC"). In the
       opinion of the Company, these consolidated financial statements contain
       all adjustments (consisting of only normal, recurring adjustments)
       necessary to present fairly the Company's financial position as of June
       29, 2002 and the results of its operations and cash flows for the periods
       presented.

      The Company's fiscal year ends on the last Saturday in December. Each
      quarter represents a 13-week period, except during a 53-week year in which
      case one quarter represents a 14-week period. The quarters and six months
      ended June 29, 2002 and June 30, 2001 were 13-week and 26-week periods,
      respectively. Fiscal years 2002 and 2001 are 52-week fiscal years.

      The accompanying consolidated financial statements and related notes
      should be read in conjunction with the audited consolidated financial
      statements which are contained in the Company's Annual Report on Form
      10-K, as amended on Form 10-K/A, for the year ended December 29, 2001.

(3)  GOODWILL AND INTANGIBLE ASSETS

The Company adopted the provisions of Statement of Financial Accounting
Standards No. 141, Business Combinations ("Statement 141") effective July 1,
2001 and Statement No. 142, Goodwill and Other Intangible Assets ("Statement
142"), effective December 30, 2001. Statement 141 addresses financial accounting
and reporting for business combinations requiring the use of the purchase method
of accounting and reporting for goodwill and other intangible assets requiring
that goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of Statement 142. The Company had up to six months from the
adoption of Statement 142 to determine the fair value of each reporting unit and
compare it to the reporting unit's carrying amount. Statement 142 also requires
intangible assets with estimated useful lives be amortized over their respective
useful life to their estimated residual values, and reviewed for impairment. As
of June 29, goodwill had a value of $14,305,000 and other intangibles with a
definite useful life value of $5,134,000.

Based on independent third party enterprise valuations of each of the Company's
reporting units, the Company did not recognize any impairment of its goodwill
and intangible assets upon adoption of Statement 142. The Company completed its
initial review of Statement 142 during the second quarter 2002.

In the three and six months ended June 30, 2001, $261,000 and $522,000,
respectively, of goodwill amortization was included in selling, general and
administrative expenses. The net loss for the three and six months ended June
30, 2001 without goodwill amortization would have been $1,694,000 and
$1,738,000, respectively. No goodwill amortization was incurred during 2002. For
the year ended December 29, 2001, goodwill amortization of $1,046,000 was
included in selling, general and administrative expenses. The net loss for the
year ended December 29, 2001 without goodwill amortization would have been
$4,441,000. In accordance with Statement 142, the Company will test each
reporting unit's goodwill for impairment as of end of the fiscal year.

                                        5




<PAGE>


                           SIGHT RESOURCE CORPORATION
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

(4)  EARNINGS PER SHARE

        The following table provides a reconciliation of the numerators and
        denominators of the basic and diluted loss per share computations for
        the three and six months ended June 29, 2002 and June 30, 2001:

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                    SIX MONTHS ENDED
                                                        ------------------                    ----------------

                                                JUNE 29, 2002      JUNE 30, 2001     JUNE 29, 2002      JUNE 30, 2001
                                                -------------      -------------     -------------      -------------

                                                              (In thousands, except share and per share data)
<S>                                             <C>                <C>                <C>                <C>
Basic and Diluted Loss Per Share
Net loss                                        $       (579)      $     (1,955)      $       (153)      $     (2,262)

Net loss available to common stockholders
                                                $       (706)      $     (2,084)      $       (407)      $     (2,517)
                                                ============       ============       ============       ============

Weighted average common shares outstanding        30,698,000          9,991,000         30,329,000          9,625,000
Net loss per share                              $      (0.02)      $      (0.21)      $      (0.01)      $      (0.26)
                                                ============       ============       ============       ============
</TABLE>

Outstanding options, warrants and convertible preferred stock were not included
in the computation of diluted loss per share for the three and six months ended
June 29, 2002 and June 30, 2001, because they would have been antidilutive. The
following table presents the number of shares of common stock underlying
outstanding options, warrants and convertible preferred stock, which shares were
not included in such computation of diluted loss per share.

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED                SIX MONTHS ENDED
                                                           ------------------                ----------------

                                                JUNE 29, 2002       JUNE 30, 2001    JUNE 29, 2002       JUNE 30, 2001
                                                -------------      -------------     -------------      -------------
<S>                                            <C>                  <C>            <C>                  <C>
Options                                            6,206,596                  0          6,206,596                  0
Warrants                                           1,992,568              5,463          1,992,568              5,108
Convertible preferred stock                        3,243,900          1,452,119          3,243,900          1,452,119
                                                ------------       ------------       ------------       ------------

Total                                             11,443,064          1,457,582         11,443,064          1,457,227
                                                ============       ============       ============       ============
</TABLE>

                                        6




<PAGE>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

The Company manufactures, distributes and sells eyewear and related products and
services. As of June 29, 2002, the Company's operations consisted of 116 eye
care centers, and one optical laboratory and distribution center, and was one of
the fifteen largest providers in the United States based upon annual sales. The
Company's eye care centers operate primarily under the brand names Cambridge Eye
Doctors, E.B. Brown Opticians, Eyeglass Emporium, Kent Optical, Shawnee Optical,
Vision Plaza, and Vision World. The Company also provides, or where necessary to
comply with applicable law, administers the business functions of optometrists,
ophthalmologists and professional corporations that provide, vision related
professional services.

The Company operates one optical laboratory and distribution center. The
regional optical laboratory provides complete services to the Company's eye care
centers that do not have lab facilities, including polishing, cutting and
edging, tempering, tinting and coating of ophthalmic lenses. The distribution
center provides and maintains an inventory of all accessories and supplies
necessary to operate an eye care center, as well as "ready made" eye care
products, including contact lenses and related supplies. The inventory of
eyeglass lenses, frames, contact lenses, accessories and supplies is acquired
through a number of sources, domestic and foreign. Management believes that the
optical laboratory and distribution center has the capacity to accommodate
additional multi-site eye care centers. In early 2001, the Company operated two
regional optical laboratories and three distribution centers. During 2001, one
laboratory and two distribution centers were closed and their operations were
consolidated into the remaining laboratory and distribution center. The
laboratory and distribution centers were closed in an effort for the Company to
realize greater operating efficiencies from lower inventories and lower payroll
costs.

The Company's results of operations and balance sheet include the accounts
(including revenues, assets and liabilities) of the Company, its wholly owned
subsidiaries, and five professional corporations ("PCs") of which the Company's
subsidiaries bear financial and operational risks and rewards. The Company has
no direct equity ownership in the PCs, but has rights and involvement that
permit the Company to consolidate the PCs into the Company's financial
statements. The Company, through its subsidiaries, provides, for a fee, certain
administrative and other services to each of the PCs. The outstanding voting
stock of each of the PCs is 100% owned by a licensed optometrist who generally
has, in turn, executed an agreement in favor of a subsidiary of the Company that
provides that if the employment of the optometrist-owner is terminated, then the
optometrist-owner must sell all of the outstanding stock of the PC to another
qualified person eligible to serve as a new optometrist-owner. The purchase
price for the sale of the PC stock is either (i) at a nominal per share price or
(ii) equal to the aggregate book value of the PC which will always be a nominal
amount because each PC operates and is expected to continue to operate at an
almost break-even level generating a nominal profit, if any at all.

Because the assets and liabilities of the PCs are, for accounting purposes,
consolidated with the assets and liabilities of the Company and its
subsidiaries, any transaction by which operating assets were transferred by a
Company subsidiary to a PC has been properly eliminated for accounting purposes.
While the holding of assets by the PCs lessens the Company's control over those
assets, the Company believes that the assets are adequately protected and
maintained.

                                        7




<PAGE>



RESULTS OF OPERATIONS

Three Months Ended June 29, 2002 and June 30, 2001

Net Revenue. During the three months ended June 29, 2002, the Company generated
net revenue of $14,080,000, as compared to net revenue of $14,505,000 for the
three months ended June 30, 2001. The decrease of $425,000, or 2.9%, in net
revenue primarily relates to six less eye care centers operating during the
three months ended June 29, 2002 as compared to the corresponding period in
2001.

Cost of Revenue. Cost of revenue decreased from $4,822,000 for the operation of
the Company's 122 eye care centers during the three months ended June 30, 2001
to $4,113,000 for the operation of the Company's 116 eye care centers during the
three months ended June 29, 2002. Cost of revenue as a percentage of net revenue
decreased from 33.2% for the three months ended June 30, 2001 to 29.2% for the
three months ended June 29, 2002. The improvement as a percentage of net revenue
primarily reflects the consolidation of optical laboratory operations, improved
margins on frames and slightly higher eye exam revenue. Cost of revenue
principally consisted of the cost of manufacturing, purchasing and distributing
optical products to customers of the Company.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to $10,368,000 for the three months ended June
29, 2002 from $11,421,000 for the three months ended June 30, 2001. The decrease
of $1,053,000 primarily relates to reduced staffing levels and lower
amortization expenses of $261,000 resulting from the Company's adoption of
Statement 142. Selling, general and administrative expenses, as a percentage of
net revenue, decreased from 78.7% for the three months ended June 30, 2001 to
73.6% for the three months ended June 29, 2002.

The Company adopted Statement 142 as of December 30, 2001 and had up to six
months from the date of adoption to complete its determination of the fair value
of each of the Company's reporting units. Based on independent third party
enterprise valuations of each of the Company's reporting units, the Company did
not recognize any impairment of its goodwill and intangible assets upon
completion of such determinations. Further, under the new guidelines set forth
in Statement 142, the Company ceased amortization of its goodwill, which reduced
selling, general and administrative expenses for the three months ended June 29,
2002 by $261,000 compared to the three months ended June 30, 2001.

Interest Expense, Net. Interest expense, net decreased to $169,000 for the three
months ended June 29, 2002 from $193,000 for the three months ended June 30,
2001. The decrease of $24,000 is primarily associated with a lower average
balance of debt outstanding during the three months ended June 29, 2002 as
compared to the corresponding period in 2001.

Income Tax Expense. The Company has a significant net operating loss
carryforward and as such provides for income taxes only to the extent that it
expects to pay cash taxes (primarily state taxes) for current income.

Net Loss. The Company realized a net loss of $579,000 for the three months ended
June 29, 2002 as compared to a net loss of $1,955,000 for the three months ended
June 30, 2001.

Dividends on Redeemable Convertible Preferred Stock. During the three months
ended June 29, 2002 the Company accrued $127,000 for cash dividends payable to
the redeemable convertible preferred stockholders. The dividends are accruing
pursuant to an agreement dated May 21, 2001 and are scheduled to be paid at the
earliest of the following events, as outlined in the letter with the redeemable
convertible preferred stockholder:

                                        8




<PAGE>


(i) the merger, consolidation, reorganization, recapitalization, dissolution or
liquidation of the Company where the stockholders of the Company immediately
following the consummation of the merger no longer own more than 50% of the
voting securities of the Company; (ii) the sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company; (iii) the
consummation of an equity financing by the Company in which proceeds to the
Company, net of transaction costs, are greater than or equal to $10,000,000;
(iv) the end of the first twelve month period in which earnings before income
taxes, depreciation and amortization are equal to or greater than $5,000,000; or
(v) or the refinancing of the Company's outstanding indebtedness to Fleet Bank.
The Company is presently unable to predict when the cash dividend will be paid.

During 2001, the Company accrued and issued stock dividends.

Net Loss Attributable to Common Stockholders. The Company realized a net loss
attributable to common stockholders of $706,000, or $(0.02) per share, for the
three month period ended June 29, 2002 as compared to $2,084,000, or $(0.21) per
share, for the three month period ended June 30, 2001. The per share net loss
for the three months ended June 29, 2002 and the per share loss for the three
months ended June 30, 2001, were affected by an increase in the number of
outstanding shares of common stock primarily due to the closing of the merger
with Eyeshop and related stock purchase transactions that occurred between May
23, 2001 and July 20, 2001.


RESULTS OF OPERATIONS

Six Months Ended June 29, 2002 and June 30, 2001

Net Revenue. During the six months ended June 29, 2002, the Company generated
net revenue of $29,356,000, as compared to net revenue of $30,564,000 for the
six months ended June 30, 2001. The decrease of $1,208,000, or 4.0%, in net
revenue primarily relates to six less eye care centers operating during the
three months ended June 29, 2002 as compared to the corresponding period in
2001.

Cost of Revenue. Cost of revenue decreased from $9,740,000 for the operation of
the Company's 122 eye care centers during the six months ended June 30, 2001 to
$8,480,000 for the operation of the Company's 116 eye care centers during the
six months ended June 29, 2002. Cost of revenue as a percentage of net revenue
decreased from 31.9% for the six months ended June 30, 2001 to 28.9% for the six
months ended June 29, 2002. The improvement as a percentage of net revenue
primarily reflects the consolidation of optical laboratory operations, improved
margins on frames and slightly higher eye exam revenue. Cost of revenue
principally consisted of the cost of manufacturing, purchasing and distributing
optical products to customers of the Company.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to $20,658,000 for the six months ended June
29, 2002 from $22,610,000 for the six months ended June 30, 2001. The decrease
of $1,952,000 primarily relates to reduced staffing levels and lower
amortization expenses of $522,000 resulting from the Company's adoption of
Statement 142. Selling, general and administrative expenses, as a percentage of
net revenue, decreased from 74.0% for the six months ended June 30, 2001 to
70.4% for the six months ended June 29, 2002.

The Company adopted Statement 142 as of December 30, 2001 and had up to six
months from the date of adoption to complete its determination of the fair value
of each of the Company's reporting units. Based on independent third party
enterprise valuations of each of the Company's reporting units, the Company did
not recognize any impairment of its goodwill and intangible assets upon
completion of such determinations. Further, under the new guidelines set forth
in Statement 142, the Company ceased amortization of its goodwill, which reduced
selling, general and administrative expenses for the six months ended June 29,
2002 by $522,000 compared to the six months ended June 30, 2001.

Interest Expense, Net. Interest expense, net decreased to $358,000 for the six
months ended June 29, 2002 from $429,000 for the six months ended June 30, 2001.
The decrease of $71,000 is primarily associated with a lower average balance of
debt outstanding during the six months ended June 29, 2002 as compared to the
corresponding period in 2001.

Income Tax Expense. The Company has a significant net operating loss
carryforward and as such provides for income taxes only to the extent that it
expects to pay cash taxes (primarily state taxes) for current income.

Net Loss. The Company realized a net loss of $153,000 for the six months ended
June 29, 2002 as compared to a net loss of $2,260,000 for the six months ended
June 30, 2001.

Dividends on Redeemable Convertible Preferred Stock. During the six months ended
June 29, 2002 the Company accrued $254,000 for cash dividends payable to the
redeemable convertible preferred stockholders. The dividends are accruing
pursuant to an agreement dated May 21, 2001 and are scheduled to be paid at the
earliest of the following events, as outlined in the letter with the redeemable
convertible preferred stockholder:

(i) the merger, consolidation, reorganization, recapitalization, dissolution or
liquidation of the Company where the stockholders of the Company immediately
following the consummation of the merger no longer own more than 50% of the
voting securities of the Company; (ii) the sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company; (iii) the
consummation of an equity financing by the Company in which proceeds to the
Company, net of transaction costs, are greater than or equal to $10,000,000;
(iv) the end of the first twelve month period in which earnings before income
taxes, depreciation and amortization are equal to or greater than $5,000,000; or
(v) or the refinancing of the Company's outstanding indebtedness to Fleet Bank.
The Company is presently unable to predict when the cash dividend will be paid.

During 2001, the Company accrued and issued stock dividends.

Net Loss Attributable to Common Stockholders. The Company realized a net loss
attributable to common stockholders of $407,000, or $0.01 per share, for the six
month period ended June 29, 2002 as compared to a net loss of $2,517,000, or
$0.26 per share, for the six month period ended June 30, 2001. The per share net
income for the six months ended June 29, 2002 and the per share loss for the six
months ended June 30, 2001, were


<PAGE>


affected by an increase in the number of outstanding shares of common stock
primarily due to the closing of the merger with Eyeshop and related stock
purchase transactions that occurred between May 23, 2001 and July 20, 2001.


LIQUIDITY AND CAPITAL RESOURCES

At June 29, 2002, the Company had $851,000 in cash and cash equivalents and a
working capital deficit of $6,807,000 in comparison to $1,356,000 in cash and
cash equivalents and working capital deficit of approximately $7,061,000 as of
December 29, 2001. The reduction in working capital deficit of $254,000 is
primarily due to the increase of inventories and a decrease in outstanding
indebtedness offset in part by an increase in accounts payable and a decrease in
cash. The largest portion of the net working capital deficit at June 29, 2002
was debt of $7,570,000 that matures on December 31, 2002. The Company may need
to raise additional funds during 2002 to replace maturing bank debt and may seek
to raise those funds through additional financings, including public or private
equity offerings. There can be no assurance that such funds will be available on
terms acceptable to the Company, if at all. If adequate funds are not available,
the Company may be required to limit its operations, which would have a material
and adverse affect on the Company. In addition, in its report on the Company's
consolidated financial statements as of and for the periods ended December 29,
2001, the Company's independent auditors have expressed substantial doubt about
the Company's ability to continue as a going concern due to the Company's
recurring losses and ability to pay its outstanding debts.

On March 26, 2001, the Company entered into a Third Modification Agreement (as
defined below) with Fleet Bank that, among other things, extended the maturity
date of the loans to December 31, 2002. The Third Modification Agreement
required that the Company obtain equity financing in the amount of $1,000,000 by
May 2001. On May 14, 2001, the Company entered into the Amended and Restated
Third Modification Agreement which extended the date for an equity infusion from
May 2001 to July 2001. In July 2001, the Company obtained equity proceeds of
$1,750,000.

Effective April 1, 1999, the Company acquired all of the outstanding shares of
capital stock of Kent Optical Company and its associated companies
(collectively, "Kent"). The purchase price paid in connection with this
acquisition was $5,209,000 in cash, $1,000,000 in notes payable over three years
and 160,000 shares of common stock. In addition, the Company offered to issue
additional consideration to the Kent stockholders if the market price of the
Company's common stock did not equal or exceed $5.00 per share at any time
during the period from April 23, 2000 to April 23, 2001, which the market price
of the common stock did not achieve. The amount of additional consideration due
to the Kent stockholders for each

                                        9




<PAGE>


share of common stock issued in the acquisition and held by them on April 23,
2001 is equal to the difference between $5.00 and the greater of (a) the market
price of the common stock on April 23, 2001 or (b) $2.73. At the Company's
option, the additional consideration may be paid to the Kent stockholders in
cash or in additional shares of the Company's common stock valued at its market
price on the date that the additional consideration becomes payable to the Kent
stockholders. At the time of acquisition, the Company included the value of this
additional consideration in its determination of the purchase price. As a result
of the Company's obligation to issue additional consideration to the former Kent
stockholders, on February 7, 2002, the Company entered into a settlement
agreement in which it agreed to pay such additional consideration by issuing
1,100,636 shares of its common stock to the former Kent stockholders. The shares
were issued on February 27, 2002. Additionally, the payment terms and interest
rates on the outstanding acquisition notes of $667,000 and outstanding
obligations from the acquisition contract of $100,000 were revised, as disclosed
in the Company's annual report.

As of June 29, 2002, the Company had warrants outstanding which provide it with
potential sources of financing as outlined below. However, because the current
market value of the Company's common stock is significantly less than the
exercise prices for most of the warrants with the greatest potential for
proceeds, it is unlikely that any significant proceeds will be realized by the
Company.

<TABLE>
<CAPTION>
                                                                                              Exercise
                                                                               Potential      Price       Expiration
                             Securities                           Number       Proceeds       Per Share      Date
                             ----------                           ------       --------       ---------      ----
<S>                                                               <C>          <C>             <C>                <C>
Carlyle Warrants............................................      1,000,000  $  200,000        $0.20      January 2009

Class II Warrants...........................................        679,684   2,100,224         3.09      November 2002
Bank Austria AG, f/k/a Creditanstalt, Warrants..............        150,000     693,750         4.63      December 2003
Fleet Warrants..............................................         50,000      25,500         0.51      August 2010
Fleet Warrants..............................................         50,000       7,810         0.16      December 2010
                                                                  ---------  ----------
                                                                  1,929,684  $3,027,284
                                                                  =========  ==========
</TABLE>

The Company also has outstanding 62,884 Class I Warrants. The Class I Warrants
entitle the holder to purchase an amount of shares of the Company's common stock
equal to an aggregate of up to 19.9% of the shares of common stock purchasable
under the Company's warrants and options outstanding as of October 9, 1997,
which have not subsequently terminated or expired, on the same terms and
conditions of existing warrant and option holders. The purchaser is obligated to
exercise these warrants at the same time the options and warrants of existing
holders are exercised, subject to certain limitations. The amount of proceeds
from the exercise of these Class I Warrants cannot be estimated at this time.
However, for the same reasons stated above, it is unlikely that any proceeds
would be realized by the Company.

On April 15, 1999, the Company entered into a credit agreement (the "1999
Agreement") with Fleet National Bank ("Fleet") pursuant to which the Company
could borrow $10,000,000 on an acquisition line of credit, of which $7,000,000
is on a term loan basis and $3,000,000 is on a revolving line of credit basis,
subject to certain performance criteria and an asset-related borrowing base for
the revolver. The performance criteria include, among others, financial
condition covenants such as net worth requirements, indebtedness to net worth
ratios, debt service coverage ratios, funded debt coverage ratios, and pretax
profit, net profit and EBITDA requirements.

At December 25, 1999, the Company was not in compliance with the following
financial covenants of the 1999 Agreement: minimum net worth, minimum debt
service coverage, maximum funded debt service coverage and minimum net profit.
However, on March 31, 2000, the Company and Fleet entered into a modification
agreement (the "Original Modification Agreement") that amended the 1999
Agreement in order to, among other things, waive the Company's default, adjust
certain covenants to which the Company is subject and terminate the acquisition
line of credit. In addition, the Original Modification Agreement limited the
revolving line note to $2,500,000 and the term loan to $6,750,000 and
established the maturity date for each of these credit lines as March 31, 2001.
As part of the Original Modification Agreement, the Company issued to Fleet
warrants to purchase 50,000 shares of the Company's common stock at an exercise
price of $0.51 per share, which was equal to the average closing price of the
common stock for the last five trading days for the month of August 2000, and
warrants to purchase 50,000 shares of the Company's common stock at an exercise
price of $0.156 per share, which was equal to the average closing price of the
Company's common stock for the last five trading days for the month of December
2000. In August 2000, as a result of a bank merger, Sovereign Bank of New
England ("Sovereign") became the successor party to Fleet in the 1999 Agreement
and the Original Modification Agreement.

On November 30, 2000, the Company and Sovereign entered into a second
modification agreement (the "Second Modification Agreement") that amended the
terms of the Original Modification Agreement in order to, among other things,
defer certain payments required under the term note and amend certain terms and
conditions of the 1999 Agreement. At December 30, 2000, the Company was in
default for non-compliance with certain negative covenants contained in the
Second Modification Agreement relating to minimum net worth, minimum debt
service coverage, maximum funded debt service coverage and minimum net profit.

On March 26, 2001, the Company and Sovereign entered into the Third Modification
Agreement (the "Third Modification Agreement") that amended the terms of the
Original Modification Agreement and the Second Modification Agreement in order
to, among other things, waive the Company's default, adjust or delete certain
covenants to which the Company was subject, change the repayment terms and
extend the maturity date of the loans to December 31, 2002. In addition, the
Third Modification Agreement required that the Company close an equity financing
of at least $1,000,000 with third party investors on or before May 31, 2001. The
Third Modification Agreement established the following annual interest rates for
both the revolving line and term loans: (i) from February 1, 2001 through
September 30, 2001 - six (6%) percent, (ii) from October 1, 2001 through
December 31, 2001 - seven (7%) percent, (iii) from January 1, 2002 through
December 31, 2002 - prime rate subject to a minimum rate of eight (8%) percent
and a maximum rate of eleven (11%) percent. The scheduled monthly

                                       10




<PAGE>


principal payments did not begin until July 1, 2001 and were set as $30,000 from
July 1, 2001 through December 31, 2001, and $100,000 from January 1, 2002
through December 31, 2002. On May 14, 2001, the Company entered into the Amended
and Restated Third Modification Agreement which restated the terms described
above and extended the date for which the Company was required to close an
equity financing to July 2001. In August 2001, Sovereign sold the loan back to
Fleet.

As of June 29, 2002, the Company's outstanding indebtedness under the 1999
Agreement was $2,500,000 under the revolving line of credit and $5,070,000 under
the term loan.

The Company was in compliance with the covenants contained in the Amended and
Restated Third Modification Agreement for the six months ended June 29, 2002.
The Company has obtained waivers from the bank for all breaches of loan
covenants to date, but the Company may not receive waivers for any future
breaches that may occur. Any breach that is not waived may result in the bank
declaring the breach to be a default under the 1999 Agreement, which would
require immediate repayment of all outstanding principal and accrued interest at
a time when the Company may not be able to repay the bank.

On July 20, 2001, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated as of May 23, 2001 by and among the Company, Eyeshop
Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of
the Company ("EAC"), and eyeshop.com, inc. ("Eyeshop"), EAC merged with and into
Eyeshop (the "Merger") and Eyeshop became a wholly-owned subsidiary of the
Company.

Pursuant to the Merger Agreement, former Eyeshop stockholders are also entitled
to receive additional shares of the Company's common stock if and when the
options, warrants and other rights to receive the Company's common stock that
were held by the Company's security holders as of May 23, 2001 are exercised.
The Company issued a total of 7,306,662 shares of Common Stock to former Eyeshop
stockholders in connection with the Merger. Concurrently with the Eyeshop
merger, the Company assumed outstanding options under the Eyeshop stock option
plan to purchase up to an aggregate of 1,757,096 shares of the Company's common
stock.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company adopted the provisions of Statement 141, effective July 1, 2001 and
Statement 142, effective December 30, 2001. Statement 141 addresses financial
accounting and reporting for business combinations requiring the use of the
purchase method of accounting and reporting for goodwill and other intangible
assets requiring that goodwill and intangible assets with indefinite useful
lives no longer be amortized, but instead be tested for impairment at least
annually in accordance with the provisions of Statement 142. Under Statement
142, the Company was required to reassess the useful lives and residual values
of all intangible assets acquired in purchase business combinations, and make
any necessary amortization period adjustments by the end of the first interim
period after adoption. In addition, to the extent an intangible asset is
identified as having an indefinite useful life, the Company was required to test
the intangible asset for impairment in accordance with the provisions of
Statement 142 within the first interim period. Any impairment loss would be
measured as of the date of adoption and recognized as the cumulative effect of a
change in accounting principle in the first interim period.

                                       11




<PAGE>


In connection with the transitional goodwill impairment evaluation, Statement
142 requires the Company to perform an assessment of whether there is an
indication that goodwill (and equity-method goodwill), which totaled $14,305,000
million at December 30, 2001, is impaired as of December 30, 2001, the date of
adoption. To accomplish this, the Company has identified its reporting units and
determined the carrying value of each reporting unit by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. The Company had up to six months
from the date of adoption to determine the fair value of each reporting unit and
compare it to the reporting unit's carrying amount. To the extent a reporting
unit's carrying amount exceeds its fair value, an indication exists that the
reporting unit's goodwill may be impaired and the Company must perform the
second step of the transitional impairment test. In the second step, the Company
must compare the implied fair value of the reporting unit's goodwill, determined
by allocating the reporting unit's fair value to all of its assets (recognized
and unrecognized) and liabilities in a manner similar to a purchase price
allocation in accordance with Statement 141, to its carrying amount, both of
which would be measured as of the date of adoption, which is December 30, 2001
for the Company. This second step is required to be completed as soon as
possible, but no later than the end of the year of adoption. Any transitional
impairment loss will be recognized as the cumulative effect of a change in
accounting principle in the Company's statement of operations.

Based on independent third party enterprise valuations of each of the Company's
operating units, the Company did not recognize any impairment of its goodwill
and intangible assets upon adoption of Statement 142. During the second quarter
2002, the Company finalized the enterprise evaluations. Further, under the
Statement 142's new guidelines, the Company ceased amortization of its goodwill,
which favorably impacts the three and six months ended June 29, 2002 by $261,000
and $522,000, respectively, compared to the prior periods.

Effective December 30, 2001, the Company adopted Statement 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets". Statement 144 retained many of
the fundamental provisions of Statement No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", but resolved
certain implementation issues associated with that Statement. Statement 144 also
requires the results of operations of a component entity that is classified as
held for sale or has been disposed of to be reported as discontinued operations
in the Condensed Consolidated Statements of Operations if certain conditions are
met. These conditions include elimination of the operations and cash flows of
the component entity from the ongoing operations of the Company, and no
significant continuing involvement by the Company in the operations of the
component entity after the disposal transaction. The adoption of Statement 144
did not have a material impact on the Company's consolidated results of
operations.

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement No. 143, "Accounting for Asset Retirement Obligations", which will be
effective for the Company beginning December 29, 2002. Statement 143 addresses
the financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs.

In April 2002, the FASB issued Statement 145, "Rescission of FASB Statements No.
4, 44, 64, Amendment of FASB Statement 13, and Technical Corrections", which
will be effective for the Company beginning January 1, 2003. Statement 145
rescinds Statement 4, 44, 64 and amends Statement No. 13, "Accounting for
Leases", to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. The Company has assessed the impact of Statements 143 and 145, and
estimates that the impact of these standards will not be material.


MANAGEMENT'S DISCUSSION OF CRITICAL ACCOUNTING POLICIES

Revenue Recognition and Allowance for Bad Debts

The Company recognizes revenue from the sale of eyewear at the time an order is
complete and revenue from eyecare services when the service is performed. The
Company has fee for service arrangements with most of its third party payers.
The Company recognizes revenue with third party payers net of contractual
allowances. The level of management judgment used to determine revenue is small.

Because of various circumstances, such as changes in third party plan
contractual allowances, changes in patient co-pays, and goods or services denied
by third party payers, the Company reviews the agings of receivables from third
party payers and patients on at least a monthly basis. Sometimes claims have
incomplete or inaccurate information, and the Company re-submits those claims to
the third party payer. If amounts are denied by the third party payer and the
Company has recourse to the patient, the Company pursues payment from the
patient. Based on the Company's history of collectibility of older third party
payer and patient receivables, the Company provides a reserve for
uncollectibility.



                                       12




<PAGE>


At June 29, 2002 and December 29, 2001, the Company had reserved for 42% of the
gross amount of the outstanding third party payer and patient receivables. If
actual collectibility of these receivables is significantly different from
management's estimate, it could have a material (favorable or unfavorable)
result on the operating results and liquidity of the Company.

Impairment of Long Lived Assets

The Company records impairment losses on long-lived assets when events and
circumstances indicate that the assets might be impaired and the undiscounted
cash flows estimated to be generated by those assets are less than the book
value of those items. The Company's cash flow estimates are based on historical
results adjusted to reflect the Company's best estimate of future market and
operating conditions. In performing this analysis, the Company considers such
factors as current results, trends and future prospects, in addition to other
economic factors. Based on those analyses during the years 1999 through 2001,
the Company did not record any charges for the impairment of long-lived assets.
At June 29, 2002, the Company had long-lived assets, including goodwill and
other intangibles of $19,439,000, property and equipment of $2,405,000, and web
site development costs of $2,288,000.

Conditions that could cause future impairment are deterioration of on-going or
forecasted operating results resulting from increased competition, a recession
in the United States or lack of liquidity causing the Company to limit its
operations. If one or more of these conditions occur, the future analyses may
indicate that certain long-lived assets are impaired, at which time the Company
would recognize an impairment charge. That impairment charge may be material and
have a significant impact on the Company's results of operations.

Further, the Company's software development relates to software acquired in the
Eyeshop merger. It was anticipated that, following the merger, available cash
resources of the combined companies would be devoted to continuation and
improvement of the business of the Company, with a decision to be made at a
future date as to when the Eyeshop development activities should be resumed. As
of June 29, 2002, no decision had been made to the timing of resuming Eyeshop
web site development activities. If the Company were to make a future decision
to not resume development of this web site, then it is possible that the Company
may have to recognize an impairment charge up to the entire amount of $2,288,000
and that charge may have a material impact on the Company's results of
operations.

Income Taxes

The Company has a history of unprofitable operations and these losses have
generated a sizeable federal tax net operating loss, or NOL, carryforward of
approximately $28,074,000 million as of December 29, 2001. Generally accepted
accounting principles require that the Company records a valuation allowance
against the deferred tax asset associated with this NOL if it is "more likely
than not" that the Company will not be able to utilize it to offset future
taxes. Due to the size of the NOL carryforward in relation to the Company's
history of unprofitable operations, the Company has not recognized any of this
net deferred tax asset. The Company currently provides for income taxes only to
the extent that it expects to pay cash taxes (primarily state taxes) for current
income.

It is possible, however, that the Company could be profitable in the future at
levels which cause management to conclude that it is more likely than not that
the Company will realize all or a portion of the NOL carryforward. Upon reaching
such a conclusion, the Company would immediately record the estimated net
realizable value of the deferred tax asset at that time and would then provide
for income taxes at a rate equal to the Company's combined federal and state
effective rates, which would

                                       13




<PAGE>


approximate 40% under current tax rates. Subsequent revisions to the estimated
net realizable value of the deferred tax asset could cause the Company's
provision for income taxes to vary significantly from period to period, although
the Company's cash tax payments would remain unaffected until the benefit of the
NOL is utilized.

Consolidation Accounting

The Company's results of operations and balance sheet include the accounts
(including revenues, assets and liabilities) of the Company, its wholly owned
subsidiaries, and five professional corporations ("PCs") of which the Company's
subsidiaries bear financial and operational risks and rewards. The Company has
no direct equity ownership in the PCs, but has rights and involvement that
permit, under the tests set forth in FASB Emerging Issues Task Force bulletin
97-2, "Application of FASB Statement No. 94, Consolidation of All Majority-Owned
Subsidiaries, and APB Opinion No. 16, Business Combinations, To Physician
Practice Management Entities," the Company to consolidate the PCs into the
Company's financial statements. The Company, through its subsidiaries, provides,
for a fee, certain administrative and other services to each of the PCs. The
outstanding voting stock of each of the PCs is 100% owned by a licensed
optometrist who generally has, in turn, executed an agreement in favor of a
subsidiary of the Company that provides that if the employment of the
optometrist-owner is terminated, then the optometrist-owner must sell all of the
outstanding stock of the PC to another qualified person eligible to serve as a
new optometrist-owner. The purchase price for the sale of the PC stock is either
(i) at a nominal per share price or (ii) equal to the aggregate book value of
the PC which will always be a nominal amount because each PC operates and is
expected to continue to operate at an almost break-even level generating a
nominal profit, if any at all.

Because the assets and liabilities of the PCs are, for accounting purposes,
consolidated with the assets and liabilities of the Company and its
subsidiaries, any transaction by which operating assets were transferred by a
Company subsidiary to a PC has been properly eliminated for accounting purposes.
While the holding of assets by the PCs lessens the Company's control over those
assets, the Company believes that the assets are adequately protected and
maintained.

In December 2001, the SEC requested that all registrants identify and describe
their most "critical accounting policies" in Management's Discussion and
Analysis. The SEC indicated that a "critical accounting policy" is one which is
both important to the portrayal of the company's financial condition and results
and requires management's most difficult, subjective or complex judgments, often
as a result of the need to make estimates about the effect of matters that are
inherently uncertain. The Company believes that the following of the Company's
accounting policies fit this definition.


BUSINESS RISKS AND CAUTIONARY STATEMENTS

Statements in this Quarterly Report on Form 10-Q under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations," as
well as oral statements that may be made by the Company or by officers,
directors or employees of the Company acting on the Company's behalf, that are
not historical fact constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
could cause the actual results of the Company to be materially different from
the historical results or from any results expressed or implied by such
forward-looking statements. Such factors include, but are not limited to, the
risk factors set forth below.

The Company does not intend to update any forward-looking statements to reflect
events or circumstances after the date of such statements or to reflect the
occurrence of anticipated or unanticipated events.

RISKS RELATED TO THE COMPANY'S BUSINESS

The Company has experienced losses in each year of operation since inception in
November 1992. For the fiscal year ended December 29, 2001, the Company incurred
a net loss of $5,500,000 bringing its accumulated deficit to $31,600,000 at
December 29, 2001. The Company may never achieve profitability and, if it
achieves profitability, it may not be able to maintain profitability.

The Company's primary loan facilities expire at December 31, 2002 and the
Company may not be able to obtain financing or refinancing at terms acceptable
to the Company.

As of June 29, 2002, the Company owed Fleet Bank $2,500,000 under a revolving
loan and $5,070,000 under a term loan. Interest rates on the loans during 2002
are at prime rate with a minimum of 8% and a maximum of 11% The principal
payments during 2002 on the term loan are $100,000 per month. Given the
Company's history, including substantial historical losses, the Company may not
be able to obtain financing or refinancing at terms acceptable to the Company.
The Company is making every effort to refinance these loans on terms that are
acceptable to the Company. The failure to obtain additional financing would
result in the declaration of a default with such loan facilities and could
materially and adversely affect the Company's business and financial condition.
Any additional equity financing, if available, may be dilutive to the Company's
stockholders and any debt financing, if available, may involve restrictions on
the Company's financing and operating activities.

The Company has previously breached certain loan covenants for which waivers of
such breaches have been granted, but the Company may not be able to obtain
waivers of any future breaches of loan covenants that may occur, which could
result in a default under existing or future loan agreements.

The Company has previously defaulted on a credit line agreement due to
non-compliance with negative covenants relating to minimum net worth, minimum
debt service coverage, maximum funded

                                       14

<PAGE>

debt service coverage and minimum net profit. The Company has obtained waivers
from the bank for all breaches of loan covenants to date, but future breaches
may occur for which the Company may not be able to obtain waivers. Any breach
that is not waived may result in the bank declaring the breach to be a default
under the loan agreement, which would require immediate repayment of all
outstanding principal and accrued interest at a time when the Company may not be
able to repay the bank. Accordingly, the declaration of a default under the loan
agreement could materially and adversely affect the Company's business and
financial condition.

The Company is dependent upon certain key management personnel and may not be
able to attract and retain additional personnel.

The Company's future success is dependent in part on the Company's ability to
retain certain key personnel, particularly E. Dean Butler, the Company's
Chairman and Carene S. Kunkler, the Company's President and Chief Executive
Officer, and the Company's ability to recruit and retain qualified personnel
over time. The Company may not be able to retain its existing personnel or
attract additional qualified employees in the future.

The primary eye care market is highly competitive. The Company's current and
potential competitors include many larger companies with substantially greater
financial, operating, marketing and support resources.

The optical industry is highly competitive and includes chains of retail optical
stores, multi-site eye care centers, and a large number of individual opticians,
optometrists and ophthalmologists who provide professional services and/or
dispense prescription eyewear. Because retailers of prescription eyewear
generally service local markets, competition varies substantially from one
location or geographic area to another. The Company believes that the principal
competitive factors affecting retailers of prescription eyewear are location and
convenience, quality and consistency of product and service, price, product
warranties, and a broad selection of merchandise. In the Company's current
regional markets, the Company faces competition from national and regional
retail optical chains which, in many cases, have greater financial resources
than the Company.

The Company may not be able to acquire new managed primary eye care contracts,
existing contracts may not be expanded in any meaningful way and the Company may
not be successful in retaining existing managed care business.

As an increasing percentage of optometric and ophthalmologic patients are coming
under the control of managed care entities, the Company believes that its
success will, in part, be dependent upon the Company's ability to negotiate, on
behalf of existing and prospective affiliated practices, contracts with HMOs,
employer groups and other private third party payors pursuant to which services
will be provided on a risk-sharing or capitated basis by some or all affiliated
practices. The proliferation of contracts that pass much of the risk of
providing care from the payor to the provider in markets the Company serves may
result in greater predictability of revenues, but greater unpredictability of
expenses. The Company may not be able to negotiate, on behalf of the affiliated
practices, satisfactory arrangements on a risk-sharing or capitated basis. In
addition, to the extent that patients or enrollees covered by such contracts
require more frequent or extensive care than anticipated, operating margins may
be reduced or, in the worst case, the revenues derived from such contracts may
be insufficient to cover the costs of the services provided. As a result,
affiliated practices may incur additional costs, which would reduce or eliminate
anticipated earnings under such contracts. Any such reduction or elimination of
earnings would have a material adverse affect on the Company's business and
results of operations. Further, the Company may not be successful in retaining
existing managed care business. If the Company were to loose a significant
managed care account, it could have a material adverse affect on the Company's
business and results of operations. Currently, the Company is appealing a
potential loss of managed care business that represents approximately 2.5% of
the Company's overall revenue. If the Company is unsuccessful in the appeal
process, the Company could lose this business as patients over time use other
eye care providers.

                                       15




<PAGE>


The Company may be exposed to significant risk from liability claims if the
Company is unable to obtain insurance at acceptable costs or is otherwise unable
to protect itself against potential product liability claims.

The provision of professional eye care services entails an inherent risk of
professional malpractice and other similar claims. The Company does not
influence or control the practice of medicine or optometry by professionals or
have responsibility for compliance with certain regulatory and other
requirements directly applicable to individual professionals and professional
groups. As a result of the relationship between the Company's affiliated
practices and itself, the Company may become subject to some professional
malpractice actions under various theories. Claims, suits or complaints relating
to professional services provided by affiliated practices may be asserted
against the Company in the future.

The Company may not be able to retain adequate liability insurance at reasonable
rates and the Company's insurance may not be adequate to cover claims asserted
against it, in which event its business and results of operations may be
materially adversely affected.

The Company's operations and success are dependent upon its ability to enter
into agreements with health care providers.

Certain states prohibit the Company from practicing medicine, employing
physicians to practice medicine on the Company's behalf or employing
optometrists to render optometric services on the Company's behalf. Accordingly,
the success of the Company's operations as a full-service eye care provider
depends upon its ability to enter into agreements with health care providers,
including institutions, independent physicians and optometrists, to render
surgical and other professional services at facilities owned or managed by the
Company. The Company may not be able to enter into agreements with other health
care providers on satisfactory terms or such agreements may not be profitable to
the Company.

The Company is subject to extensive federal, state and local regulation, which
could materially affect the Company's operations.

The health care industry is highly regulated by federal, state and local law.
The regulatory environment in which the Company operates may change
significantly in the future. The Company expects to modify agreements and
operations from time to time as the business and regulatory environment changes.
Although the Company believes that its operations comply with applicable law,
the Company may not be able to address changes in the regulatory environment
successfully.

The Company's common stock was delisted from the Nasdaq Stock Market, which
makes it more difficult for stockholders to sell shares of the Company's common
stock.

On September 11, 2000, the Nasdaq National Market ("Nasdaq") terminated the
Company's listing on Nasdaq and the Company's common stock began trading on the
Over-the-Counter Bulletin Board (the "OTC"). Stockholders are likely to find it
more difficult to trade the Company's common stock on the OTC than on Nasdaq. In
order for the Company's common stock to resume trading on Nasdaq, the Company
must satisfy all of Nasdaq's requirements for initial listing, apply for listing
and be accepted for listing by Nasdaq. The Company does not currently satisfy
Nasdaq's initial listing requirements and may never satisfy Nasdaq's listing
requirements or, if the Company does satisfy such requirements in the future,
the Company's securities may not be accepted for listing by Nasdaq. If the
Company's securities are not accepted for listing on Nasdaq or another stock
exchange, it will also likely be more difficult for the Company to raise equity
capital.

                                       16




<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has not entered into any transactions using derivative financial
instruments or derivative commodity instruments and believes that its exposure
to market risk associated with other financial instruments (such as investments)
is not material.

As of June 29, 2002, approximately $7,570,000 of the Company's debt is subject
to a floating interest rate and every 1% increase in the relevant interest rate
would adversely affect the Company on an annual basis by $76,000.

PART II - OTHER INFORMATION

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Annual Meeting of Stockholders of the Company was held on May 30, 2002. The
following actions were taken at the meeting:

-    William Connell and William G. McLendon were elected as Directors of the
     Company for a three year term expiring at the 2005 Annual Meeting of
     Stockholders.

         NAME              SHARES VOTED FOR          SHARES WITHHELD
         ----              ----------------          ---------------
         Connell              29,671,016                458,031
         McLendon             29,598,316                530,731

-    The 2002 Employee, Director and Consultant Stock Option Plan was adopted.

     SHARES VOTED FOR      SHARES VOTED AGAINST      SHARES WITHHELD
     ----------------      --------------------      ---------------
        23,413,019               767,696                 27,774

-    An amendment to the Company's Restated Certificate of Incorporation
     increasing the number of authorized shares of common stock from 50,000,000
     to 70,000,000 was adopted.

     SHARES VOTED FOR      SHARES VOTED AGAINST      SHARES WITHHELD
     ----------------      --------------------      ---------------
        23,788,652               380,447                39,390

-    The appointment of KPMG LLP as independent public accountants for the
     Company for the fiscal year ending December 28, 2002 was ratified.

     SHARES VOTED FOR      SHARES VOTED AGAINST      SHARES WITHHELD
     ----------------      --------------------      ---------------
        30,085,148                35,900                 7,999

ITEM 5.  OTHER INFORMATION

Mr. William Connell resigned as a Director of the Company effective July 18,
2002. Mr. Connell's resignation was not the result of any disagreement with the
Company.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 10-K

a)       The exhibits filed with this report are listed on the Exhibit Index.
b)       No reports on Form 8-K were filed during the quarter ended
         June 29, 2002.

                                       17




<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                           Sight Resource Corporation

Date:        August 13, 2002         BY: /S/    CARENE S. KUNKLER
             ---------------         -------    -----------------

                                     Carene S. Kunkler
                                     President and Chief Executive Officer
                                     (duly    authorized officer)

Date:      August 13, 2002           BY: /S/    DUANE D. KIMBLE, JR.
           ---------------           -------    --------------------

                                     Duane D. Kimble, Jr.
                                     Chief Financial Officer
                                     (principal financial officer)

                                       18


<PAGE>


                                  EXHIBIT INDEX

EXHIBIT
NUMBER                     DESCRIPTION
-------                    -----------

10.37 Carene S. Kunkler's employment contract

99.2  Certification by Carene S. Kunkler pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.3  Certification by Duane D. Kimble, Jr., pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002