<PAGE>   1

                                    FORM 10Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

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

                  For the quarterly period ended March 31, 1998

                                       OR

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

For the transition period from _____________________ to _______________________
Commission file number: 0-22977


                             VISION TWENTY-ONE, INC.
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

FLORIDA                                      59-3384581
----------------------------------------     -----------------------------------
(STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION)                NO.)

7209 BRYAN DAIRY ROAD
LARGO, FLORIDA                               33777
----------------------------------------     -----------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)     (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  (813) 545-4300

                                 NOT APPLICABLE
--------------------------------------------------------------------------------
          (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE 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.

The registrant had 14,180,657 Shares outstanding as of April 30, 1998.


<PAGE>   2


                         PART I - FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             THREE-MONTH PERIODS ENDED
                                                                     MARCH 31,
                                                           -----------------------------
                                                               1997              1998
                                                           -----------       -----------
<S>                                                        <C>               <C>        
Revenues:
  LADS operations, net revenues .....................      $ 7,968,160       $21,219,734
  Managed care ......................................        3,046,811        13,007,310
  Buying group ......................................               --        13,725,148
                                                           -----------       -----------
                                                            11,014,971        47,952,192
                                                           -----------       -----------

Operating expenses:
  LADS operating expenses ...........................        6,793,394        16,968,842
  Medical claims ....................................        2,444,294         9,658,487
  Cost of buying group sales ........................               --        12,794,985
  Regional service centers ..........................               --           554,119
  Corporate expense .................................        1,459,432         3,553,708
  Depreciation and amortization .....................          300,956         1,351,763
  Merger costs ......................................               --           508,443
                                                           -----------       -----------
                                                            10,998,076        45,390,347
                                                           -----------       -----------

Income from operations ..............................           16,895         2,561,845
Interest expense ....................................          254,598           662,984
                                                           -----------       -----------
Income (loss) before income taxes ...................         (237,703)        1,898,861
Income taxes ........................................               --           712,000
                                                           -----------       -----------
Income (loss) before extraordinary charge ...........         (237,703)        1,186,861
Extraordinary charge - early extinguishment                                             
  of debt, net of income taxes of $238,000  .........               --           397,190
                                                           -----------       -----------
Net income (loss) ...................................      $  (237,703)      $   789,671
                                                           -----------       -----------
Earnings (loss) per common share:                                                       
  Income (loss) before extraordinary charge .........      $     (0.04)      $      0.09
  Extraordinary charge ..............................               --             (0.03)
                                                           -----------       -----------
Net income (loss) per common share ..................      $     (0.04)      $      0.06
                                                           ===========       ===========

Earnings (loss) per common share - assuming dilution:
  Income (loss) before extraordinary charge .........      $     (0.04)      $      0.08
  Extraordinary charge ..............................               --             (0.02)
                                                           -----------       -----------
Net income (loss) per common share -
  assuming dilution .................................      $     (0.04)      $      0.06
                                                           ===========       ===========
</TABLE>


    See accompanying notes to the condensed consolidated financial statements


                                       1

<PAGE>   3


                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                    DECEMBER 31,       MARCH 31,
                                                                                                        1997              1998
                                                                                                    ------------      ------------
<S>                                                                                                 <C>               <C>         
                                                            ASSETS
Current Assets:
  Cash and cash equivalents ...................................................................     $  4,048,358      $ 12,225,318
  Accounts receivable due from:                                                                             
      Buying group members, net of allowance for doubtful accounts of $33,000 and
      $42,000 at December 31, 1997 and March 31, 1998, respectively ...........................        5,427,592         7,309,162
     Patients, net of allowances for uncollectible accounts and contractual adjustments of 
        $3,446,000 and $4,456,000 at December 31, 1997 and March 31, 1998, respectively........        5,502,110         7,187,107
     Managed Professional Associations ........................................................        4,950,067         7,121,997
     Managed health benefits payors ...........................................................        1,276,790         1,590,785
     Other ....................................................................................          165,292            22,921
  Inventory ...................................................................................          936,242         1,535,632
  Prepaid expenses and other current assets ...................................................        2,016,036         2,829,038
                                                                                                    ------------      ------------
         Total current assets .................................................................       24,322,487        39,821,960
Fixed assets, net .............................................................................        8,626,964         9,648,918
Intangible assets, net of accumulated amortization of $1,131,501 and $1,953,383 at December 31,
  1997 and March 31,1998, respectively .......................................................        84,164,341        93,531,967
Cash surrender value of life insurance, net policy loans of $624,464 at December 31, 1997 and
  March 31,1998 ..............................................................................           205,596           205,596
Deferred tax assets ...........................................................................        1,882,000         1,882,000
Other assets ..................................................................................        1,155,359         1,651,551
                                                                                                    ------------      ------------
         Total assets .........................................................................     $120,356,747      $146,741,992
                                                                                                    ============      ============

                                   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable ............................................................................     $  5,319,654      $  5,454,621
  Accrued expenses ............................................................................        2,708,741         4,720,243
  Medical claims payable ......................................................................        3,555,195         4,563,384
  Accrued compensation ........................................................................        1,381,497         2,465,217
  Accrued acquisition and offering costs ......................................................        1,045,905           363,009
  Due to Managed Professional Associations ....................................................        1,938,309         3,381,906
  Due to selling shareholders .................................................................        2,811,809         6,315,562
  Current portion of deferred leasehold incentive .............................................           23,046            23,046
  Current portion of long-term debt ...........................................................          104,371            96,175
  Current portion of obligations under capital leases .........................................          566,084           416,436
                                                                                                    ------------      ------------
         Total current liabilities ............................................................       19,454,611        27,799,599

Deferred rent payable .........................................................................          261,117           261,117
Obligations under capital leases ..............................................................          632,850           534,996
Long-term debt, less current portion ..........................................................       25,980,253        39,246,444
Deferred leasehold incentive ..................................................................          186,323           180,562
Deferred income taxes .........................................................................        6,111,000         6,111,000

Stockholders' equity:
  Preferred stock, $.001 par value; 10,000,000 shares authorized:  no shares issued ..........                --                --
  Common stock, $.001 par value; 50,000,000 shares authorized; 13,529,892 (December 31, 1997)
      and 14,105,909 (March 31, 1998) shares issued ...........................................           13,530            14,106
  Additional paid in capital ..................................................................       76,416,476        82,228,451
  Deferred compensation .......................................................................         (408,735)         (381,660)
  Notes receivable from stockholder ...........................................................         (175,484)         (172,984)
  Treasury stock at cost, 168,270 shares March 31, 1998  ......................................               --        (1,548,084)
  Accumulated deficit .........................................................................       (8,115,194)       (7,531,555)
                                                                                                    ------------      ------------
         Total stockholders' equity ...........................................................       67,730,593        72,608,274
                                                                                                    ------------      ------------
         Total liabilities and stockholders' equity ...........................................     $120,356,747      $146,741,992
                                                                                                    ============      ============
</TABLE>

    See accompanying notes to the condensed consolidated financial statements


                                       2

<PAGE>   4


                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    THREE-MONTH PERIODS ENDED
                                                                                            MARCH 31,
                                                                                  -----------------------------
                                                                                      1997              1998
                                                                                  -----------       -----------
<S>                                                                               <C>               <C>        
OPERATING ACTIVITIES
Net income (loss) ..........................................................      $  (237,703)      $   789,671
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
   Extraordinary charge - early extinguishment of debt .....................               --           635,190
   Depreciation and amortization ...........................................          300,956         1,351,763
   Amortization of loan fees ...............................................               --            28,050
   Non-cash compensation expense ...........................................           19,650            40,083
   Amortization of deferred compensation ...................................           27,075                --
   Interest accretion ......................................................           15,284                --
   Changes in operating assets and liabilities, net of effects from business
   combinations:
     Accounts receivable, net ..............................................         (380,752)       (5,150,069)
     Inventory .............................................................         (211,718)           37,255
     Prepaid expenses and other current assets .............................          (98,571)         (300,191)
     Other assets ..........................................................          (51,970)         (139,095)
     Accounts payable ......................................................           (4,332)         (550,048)
     Accrued expenses ......................................................          377,675         2,574,013
     Accrued acquisition and offering costs ................................          (58,223)               --
     Accrued compensation ..................................................          267,465           623,890
     Medical claims payable ................................................         (367,899)        1,014,780
     Due to Managed Professional Associations ..............................          276,346         1,443,597
                                                                                  -----------       -----------
          Net cash provided by (used in) operating activities ..............         (126,717)        2,398,889

INVESTING ACTIVITIES
Purchases of furniture and equipment, net ..................................         (534,323)         (983,335)
Payments for acquisitions, net of cash acquired ............................               --        (2,486,177)
Payments for capitalized acquisition costs .................................       (1,449,129)       (1,715,910)
                                                                                  -----------       -----------
          Net cash used in investing activities ............................       (1,983,452)       (5,185,422)

FINANCING ACTIVITIES
Proceeds from long term debt ...............................................               --        39,222,073
Payments on long term debt .................................................         (780,454)      (25,850,700)
Net proceeds from credit facilities ........................................        1,657,331                --
Net proceeds from issuance of senior notes and warrants ....................        2,000,000                --
Payments for financing fees ................................................               --          (724,101)
Payments to acquire treasury stock .........................................               --        (1,548,084)
Sale of detachable stock purchase warrants and exercise of options .........               --           107,353
Decrease in notes receivable from stockholder ..............................               --             2,500
Capital distributions ......................................................               --          (245,548)
                                                                                  -----------       -----------
          Net cash provided by financing activities ........................        2,876,877        10,963,493
                                                                                  -----------       -----------

Increase in cash and cash equivalents ......................................          766,708         8,176,960
Cash and cash equivalents at beginning of period ...........................          251,832         4,048,358
                                                                                  -----------       -----------
Cash and cash equivalents at end of period .................................      $ 1,018,540       $12,225,318
                                                                                  ===========       ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest ...................................      $    75,043       $   914,301
                                                                                  ===========       ===========
</TABLE>

    See accompanying notes to the condensed consolidated financial statements


                                       3

<PAGE>   5


                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                                 MARCH 31, 1998

1.       BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
information set forth therein have been included. The accompanying condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and footnotes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.

Operating results for the three-month period ended March 31, 1998 are not
necessarily an indication of the results that may be expected for the year
ending December 31, 1998.

RECLASSIFICATION

Certain prior period amounts have been reclassified to conform to the current
period presentation.


2.       EYECARE ONE CORP. AND VISION INSURANCE PLAN OF AMERICA, INC.  MERGER

         On March 31, 1998, the Company completed a merger with EyeCare One
Corp. (EyeCare One) and Vision Insurance Plan of America, Inc. (VIPA). EyeCare
One is an optical retailer, selling frames, lenses and contact lenses,
with optometric services by licensed Doctors of Optometry in each of its 16
locations in the Milwaukee, Wisconsin area. VIPA provides subscriber group
member enrollees with covered vision care services through EyeCare One and its
provider network under a master provider agreement which began in 1997. The
Company issued 1,109,806 shares of common stock for all of the outstanding
common stock of EyeCare One and VIPA. The merger was accounted for as a pooling
of interests and accordingly, the Company's financial statements have been
restated to include the results of EyeCare One and VIPA for all periods
presented.

Combined and separate results of the Company, EyeCare One and VIPA during the
periods preceding the merger were as follows:

                     THREE-MONTH PERIOD ENDED MARCH 31, 1997

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                             VISION         EYECARE ONE       VIPA          COMBINED
                           TWENTY-ONE
--------------------------------------------------------------------------------------
<S>                        <C>              <C>             <C>           <C>        
Revenue                    $7,718,345       $3,129,682      $166,944      $11,014,971
--------------------------------------------------------------------------------------
Extraordinary charge               --               --            --               --
--------------------------------------------------------------------------------------
Net income (loss)          $ (447,758)      $  196,715      $ 13,340      $  (237,703)
--------------------------------------------------------------------------------------
</TABLE>


                                       4


<PAGE>   6


                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
                                   (CONTINUED)


                     THREE-MONTH PERIOD ENDED MARCH 31, 1998

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                             VISION        EYECARE ONE       VIPA          COMBINED
                          TWENTY-ONE
------------------------------------------------------------------------------------
<S>                       <C>              <C>             <C>           <C>        
Revenue                   $44,431,577      $3,305,219      $215,396      $47,952,192
------------------------------------------------------------------------------------
Extraordinary charge      $   397,190              --            --      $   397,190
------------------------------------------------------------------------------------
Net income                $   583,641      $  153,917      $ 52,113      $   789,671
------------------------------------------------------------------------------------
</TABLE>


The Company recorded merger costs of $508,443 in the three-month period ended
March 31, 1998, or approximately $0.03 per diluted common share. The merger
costs include professional fees and nonrecurring costs associated with executing
the merger of operations. Additional charges are expected to be recognized in
subsequent reporting periods as the merger is implemented.


3.       RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information (SFAS 131), which supersedes Statement of
Financial Accounting Standards No. 14. SFAS 131 uses a management approach to
report financial and descriptive information about a company's operating
segments. Operating segments are revenue-producing components of the enterprise
for which separate financial information is produced internally for the
company's management. SFAS 131 is effective for fiscal years beginning after
December 15, 1997. Management is currently assessing the impact of this 
Standard.

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130). SFAS 130 requires that total comprehensive income and comprehensive income
per share be disclosed and be given equal prominence with net income and
earnings per share. Comprehensive income is defined as changes in stockholders'
equity exclusive of transactions with owners such as capital contributions and
dividends. SFAS 130 is effective for fiscal years beginning after December 15,
1997.


                                       5

<PAGE>   7


                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
                                   (CONTINUED)


4.       EARNINGS (LOSS) PER SHARE

         The following table sets forth the computation of basic and diluted
earnings (loss) per share for income (loss) from continuing operations:

<TABLE>
<CAPTION>
                                                    THREE-MONTH PERIODS ENDED MARCH 31,
                                                    -----------------------------------
                                                           1997              1998
                                                        ----------       -----------
<S>                                                 <C>                  <C>        
Numerator:
  Numerator for basic and diluted earnings (loss)
   per share-income (loss) available to common
   stockholders ..................................      $ (237,703)      $ 1,186,861
Denominator:
  Denominator for basic earnings (loss) per share-
   weighted average shares .......................       6,170,597        13,840,902
                                                        ----------       -----------
Effect of dilutive securities:
   Stock options .................................              --           181,797
   Warrants ......................................              --           199,972
   Nonvested stock ...............................              --            90,678
                                                        ----------       -----------
Dilutive potential common shares .................              --           472,447
                                                        ----------       -----------
  Denominator for diluted earnings (loss) per
   share-adjusted weighted-average shares and
   assumed conversions ...........................       6,170,597        14,313,349
                                                        ==========       ===========
Basic earnings (loss) per common share ...........      $    (0.04)      $      0.09
                                                        ==========       ===========
Diluted earnings (loss) per common share .........      $    (0.04)      $      0.08
                                                        ==========       ===========
</TABLE>


                                       6


<PAGE>   8

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

GENERAL

         The Company provides a wide range of management and administrative
services to local area delivery systems ("LADS") established by the Company.
LADS are developed to provide for integrated networks of optometrists,
ophthalmologists, ASCs and retail optical centers which offer the full continuum
of eye care services in local markets. The Company began operations in 1984,
providing management services to seven optometrists practicing at eight clinic
locations. The Company currently provides its services to 40 LADS located in 27
states through which 5,800 Affiliated Providers deliver eye care services. Of
these Affiliated Providers, 152 are Managed Providers, consisting of 107
optometrists and 44 ophthalmologists practicing at 115 clinic locations and 9
ASCs. In addition, the Company has approximately 6,200 eye care professionals
available for potential managed care business in future markets. The Company's
Affiliated Providers, in conjunction with select national retail optical chains,
deliver eye care services under the Company's 88 managed care contracts and 12
discount fee-for-service plans covering approximately 5.1 million exclusively
contracted patient lives. Furthermore, the Company has established a nationwide
eye care provider network of over 1,400 additional Contract Providers thereby
positioning the Company to capture future managed care business in anticipated
new local markets.

RECENT DEVELOPMENTS

         To date in 1998 and in addition to the other acquisitions finalized or
pending and described below, the Company completed the acquisition of the
business assets of 30 optometry clinics, 2 ophthalmology clinics and 22 optical
dispensaries located in Texas, Arizona, New Jersey, Florida and Minnesota.
Business assets consist of certain non-medical and non-optometric assets,
including accounts receivable, leases, contracts, equipment and other tangible
and intangible assets. Concurrently with these acquisitions, the Company entered
into long-term Management Agreements with the related professional associations
employing 33 optometrists and two ophthalmologists. These acquisitions were
accounted for by recording assets and liabilities at fair value and allocating
the remaining costs to the related Management Agreements. Additionally, the
Company closed the acquisition of all of the outstanding stock of The Complete
Optical Laboratory, Ltd., Corp., located in New Jersey which services the New
Jersey optometry clinics acquired by the Company and the Company closed the
acquisition of substantially all of the business assets of a managed care
company located in Florida servicing more than 82,700 patient lives. These
acquisitions were accounted for under the purchase method of accounting. Such
acquisitions are collectively referred to herein as the "1998 Acquisitions." In
connection with these acquisitions, the Company provided aggregate consideration
of approximately $22.3 million, consisting of 917,185 shares of Common Stock and
approximately $12.9 million in cash and promissory notes in the aggregate
principal amount of $21,000, subject to closing adjustments. In addition, the
Company is required to provide additional contingent consideration consisting of
33,695 shares of Common Stock and up to $600,000, to be paid to certain sellers
if certain post-acquisition performance targets are met.

         In March 1998, the Company completed a pooling of interests transaction
with EyeCare One Corp. ("EyeCare One") and Vision Insurance Plan of America,
Inc. ("VIPA"). EyeCare One was the parent company of Stein Optical which
operates 16 optometric retail locations in Milwaukee, Wisconsin. VIPA holds a
single service insurance license and delivers vision care benefits to
approximately 19,000 patient lives in Wisconsin. These transactions were
accounted 


                                       7

<PAGE>   9

for by the Company as a pooling of interests. The costs of approximately
$508,000 incurred in connection with these transactions were charged to expense.
In connection with these transactions, the Company issued 1,109,806 shares of
Common Stock, subject to closing adjustments, valued at approximately $10.5
million.

         In addition to the Company's acquisitions, Block Vision has entered
into three new managed care contracts with Vanderbilt Health Plans, Southeast
Medical Alliance and Methodist Care which added an additional 63,000 exclusively
contracted patient lives. With these additions, the Company now has
approximately 5.1 million exclusively covered patient lives under contract.
During fiscal 1998, the Company has initiated a new managed care contract for
the provision of ophthalmology services to 250,000 existing vision care lives.

         The Company expects to continue to use its Common Stock as
consideration for future acquisitions in conjunction with its expansion
strategy, which will be a factor in the Company's future acquisitions, financial
position and performance. The number of shares of Common Stock the Company is
ultimately required to provide in connection with its acquisitions will be
effected by the market price for its Common Stock and will effect the Company's
future earnings per share. The Company from time to time reviews and will
continue to review acquisition opportunities (some of which may be material to
the Company) that will further broaden its LADS or geographic presence. The
Company is currently engaged in preliminary discussions regarding various
possible acquisitions, some of which could be material. However, the Company
currently has no agreement, arrangement or understanding which at this time,
based upon all factors considered is reasonably certain to close, with respect
to any acquisitions that are, individually or in the aggregate, material to the
Company. The Company's acquisition strategy places significant demands on the
Company's resources and there can be no assurance the Company's management and
operational systems and structure can be expanded to effectively support the
Company's continued acquisition strategy.

HISTORICAL OVERVIEW

         The Company enters into Management Agreements with the Managed
Professional Associations pursuant to which the Company is the sole provider of
comprehensive management, business and administrative services for the
non-professional aspects of the Professional Practices which obligate the
Company to provide certain facilities, equipment, accounting services,
purchasing, assistance in managed care, contract negotiations, management and
clinical personnel, information systems, training, and billing and collection
services. Each managed Provider maintains full authority, control and
responsibility over the provision of professional care and services to its
patients. The Company does not provide professional care to patients.
Furthermore, the Company does not employ any of the ophthalmologists,
optometrists or other Professional health care provider personnel of the Managed
Professional Association. The


                                       8

<PAGE>   10

Managed Professional Association is responsible for, but not limited to: hiring,
supervising and directing certain professional employees, adopting a peer
review/quality assurance program and maintaining appropriate workers'
compensation, professional and comprehensive general liability insurance. The
Managed Professional Associations derive their revenues from fees received for
the use of ASCs and sales of optical goods. The Managed Professional
Associations currently receive revenues from a combination of sources, including
capitation payments from managed care companies and government funded
reimbursements (Medicare and Medicaid).

         The initial term of the Management Agreement is typically 40 years.
Under substantially all of the Company's Management Agreements, management fees
range from 24% to 37% of the Managed Professional Association's gross revenues
after deducting from such revenues all expenses of the clinic other than those
related to shareholders of the Managed Professional Associations. This type of
arrangement is usually utilized in management relationships with ophthalmology
practices. Additionally, the Company has Management Agreements with management
fees ranging from 70% to 87% of gross revenues of a practice and the Company is
required to pay generally all of the expenses at the clinic with the exception
of professional salaries and benefits. Such arrangements are typically utilized
in management relations with optometrists. The practice management fees earned
by the Company pursuant to these Management Agreements fluctuate depending on
variances in clinic revenues and expenses of the Managed Professional
Association. Therefore, in connection with the Management Agreements, the amount
of such fees will be significantly affected by the degree of success of
operations of the Managed Professional Association and the Company's ability to
successfully manage the practice.

         The Company recognizes as managed care revenue certain fixed payments
received pursuant to its managed care contracts on a capitated or risk-sharing
basis. The Company also recognizes fees received for the provision of certain
financial and administrative services related to its indemnity fee-for-service
plans. The Company manages risk of capitated managed care contracts by
monitoring utilization of each Affiliated Provider and comparing their
utilization to national averages, expected utilization at the time the contract
was bid, utilization of other providers and historical utilization of the
Affiliated Provider. Abnormal utilization of an Affiliated Provider results in a
medical chart review by the Company and further counseling on appropriate
clinical protocols. To further manage the risk of capitated managed care
contracts, the Company, in certain instances, enters into agreements to pay
Affiliated Providers a fixed per member per month fee for eye care services
rendered on a pro rata share of managed care capitated payments received (as
determined by the number of eye care procedures performed relative to other
Affiliated Providers). The Company targets these payments at a range of 80% to
90% of total payments received pursuant to the Company's capitated managed care
contracts. Pursuant to its capitated managed care contracts, the Company
receives a fixed payment per member per month for a predetermined benefit level
of eye care services, as negotiated between the Company and the payor.
Profitability of the Company's capitated managed care contracts is directly
related to the specific terms negotiated, utilization of eye care services by
member patients and the effectiveness of administering the contracts. The
Company receives a percentage of collected medical billings for administering
indemnity fee-for-service plans for its Affiliated Providers. Although the terms
and conditions of the Company's managed care contracts vary considerably, they
are typically over a one-year term.


                                       9


<PAGE>   11


         Effective December 1, 1997, the Company acquired all of the issued and
outstanding stock of LSI Acquisition, Inc. ("LSI") and MEC Health Care, Inc.
("MEC"), both of which were wholly-owned subsidiaries of LaserSight,
Incorporated (the "LaserSight Acquisitions"). LSI has a twenty-five year service
agreement with Northern New Jersey Eye Institute, an ophthalmology practice
located in South Orange, New Jersey, with four locations including an ambulatory
surgery center. The LSI acquisition allows the Company to further expand its
LADS in the state of New Jersey. MEC is a managed care company located in
Baltimore, Maryland. MEC operates an Administrative Service Center and holds
eleven managed eye care contracts covering over 650,000 capitated optometry and
ophthalmology lives which are serviced through a provider panel consisting of
over 400 contracted eye care physicians, principally located in the greater
Baltimore, Washington, D.C. and Virginia metropolitan areas. With the
substantial increase in covered lives, the MEC acquisition continues the
Company's strategy of capturing managed care business. The LaserSight
Acquisitions were accounted for under the purchase method of accounting. The
aggregate consideration paid by the Company for the LaserSight Acquisitions was
approximately $13.0 million consisting of $6.5 million in cash and 820,085
shares of Company common stock, subject to certain post-closing adjustments. The
cash portion of the consideration paid by the Company for the LaserSight
Acquisitions was financed through a letter amendment to the Company's credit
facility with Prudential Securities Credit Corporation. In addition, LaserSight,
Incorporated and the Company entered into a Stock Distribution Agreement for the
liquidation of the shares of Company common stock received by LaserSight,
Incorporated by May 29, 1998 through, at the Company's option, the filing of a
shelf registration statement, a private placement, a direct redemption by the
Company, or other method acceptable to the Company and LaserSight, Incorporated.
Under the Stock Distribution Agreement, LaserSight, Incorporated is entitled to
receive a minimum of $6.5 million and a maximum of $7.475 million from the
liquidation subject to certain post-closing adjustments and subsequent
redemptions by the Company. On March 10, 1998 the Company redeemed 168,270
shares of its Common Stock from LaserSight Incorporated at $9.20 per share for
an aggregate amount of $1,548,084.

         Effective October 31, 1997, the Company acquired all of the issued and
outstanding stock of Block Vision (the "Block Acquisition"). Block Vision
provides administration services on behalf of managed vision care plans for a
nationwide network of 5,171 Contract Providers who provide eye care services
pursuant to 58 capitated and five discount fee-for-service managed care
contracts covering over 2.1 million exclusively contracted patient lives. The
Block Acquisition has enabled the Company to establish 28 new LADS for future
development. Furthermore, Block Vision has established a network of
approximately 4,500 additional credentialed Contract Providers, and another
1,400 Contract Providers in the process of being credentialed, to provide eye
care services to capture future managed care business in anticipated new local
markets. In addition, Block Vision operates a buying group division which
provides billing and collection services to suppliers of optical products. The
Block Acquisition was accounted for under the purchase method of accounting. The
aggregate consideration paid by the Company was approximately $35.0 million,
consisting of $25.6 million in cash, 458,365 shares of Common Stock, subject to
certain post-closing adjustments, and 219,633 shares of Common Stock to be held
in escrow as contingent consideration, of which 109,816 shares of Common Stock
are to be delivered by the Company to the sellers if earnings before interest,
taxes, depreciation and amortization ("EBITDA") of Block Vision reaches $4.5
million for the year ended December 31, 1998. The remaining 109,817 shares will
be deliverable on a pro rata escalating basis if Block Vision reaches $4.5
million of EBITDA for 1998 with the full contingent consideration deliverable
upon Block Vision attaining $4.9 million of EBITDA for 1998.


                                       10

<PAGE>   12

         During 1997, the Company also completed the acquisition of the business
assets of one optometry clinic, 19 ophthalmology clinics, nine optical
dispensaries and five ASCs. Concurrently with these acquisitions, the Company
entered into long-term Management Agreements with the related professional
associations employing nine optometrists and 29 ophthalmologists. These
acquisitions were accounted for by recording assets and liabilities at fair
value and allocating the remaining costs to the related Management Agreements.
Additionally, the Company completed the acquisition of substantially all the
business assets of a managed care company servicing two capitated managed care
contracts covering over 134,000 patient lives. Such acquisitions (excluding the
Block and LaserSight Acquisitions) are collectively referred to herein as the
"1997 Acquisitions." In connection with the 1997 Acquisitions, the Company
provided aggregate consideration of $20.1 million, consisting of 1,480,122
shares of Common Stock, $6.7 million in cash and $364,000 in promissory notes.
Additionally, the Company is required to provide additional contingent
consideration, consisting of approximately 174,021 shares of Common Stock and
approximately $821,000 in cash, and approximately $467,000 in shares of Common
Stock, to be paid to certain sellers if post-acquisition performance targets are
met.

         The Company has made a substantial number of acquisitions beginning in
December 1996 and continuing through to the present. Such acquisitions have made
a significant impact on the Company's historical financial performance and will
impact its future financial statements. See "- Liquidity and Capital Resources."




                                       11

<PAGE>   13


RESULTS OF OPERATIONS

         The following table sets forth, as a percentage of total revenues,
certain items in the Company's statement of operations for the periods indicated
which give effect to the EyeCare One and VIPA Merger accounted for as a pooling
of interests. As a result of the 1997 Acquisitions, the Block Acquisition, the
LaserSight Acquisition, the 1998 Acquisitions and the Company's entering into
capitated arrangements with its Contract Providers, the Company does not believe
that the historical percentage relationships for the three months ended March
31, 1997 and 1998 reflect the Company's expected future operations.

<TABLE>
<CAPTION>
                                              THREE-MONTH PERIODS ENDED
                                                      MARCH 31
                                                 ------------------
                                                  1997         1998
                                                 -----        -----
<S>                                           <C>             <C>  
Revenues:
  LADS operations, net revenues ...........       72.3%        44.3%
  Managed care ............................       27.7         27.1
  Buying group ............................        0.0         28.6
                                                 -----        -----
         Total revenues ...................      100.0        100.0
                                                 -----        -----

Operating expenses:
  LADS operating expenses .................       61.8         35.4
  Medical claims ..........................       22.2         20.1
  Cost of buying group sales ..............        0.0         26.7
  Regional service centers ................        0.0          1.2
  Corporate expense .......................       13.2          7.4
  Depreciation and amortization ...........        2.7          2.8
  Merger costs ............................        0.0          1.1
                                                 -----        -----
         Total operating expenses .........       99.9         94.7
                                                 -----        -----

Income from operations ....................        0.1          5.3
Interest expense ..........................        2.3          1.3
                                                 -----        -----
Income (loss) before income taxes .........       (2.2)         4.0
Income taxes ..............................        0.0          1.5
                                                 -----        -----
Income (loss) before extraordinary charge .       (2.2)         2.5
Extraordinary charge - early extinguishment
  of debt, net of income taxes of $238,000         0.0         (0.9)
                                                 -----        -----
         Net income (loss) ................       (2.2)%        1.6%
                                                 =====        =====

Medical claims ratio ......................       80.2%        74.3%
                                                 =====        =====
</TABLE>


Three-Month Period Ended March 31, 1998 Compared to Three-Month Period Ended
March 31, 1997

         Revenues. Revenues increased 335.3% from $11.0 million for the three
months ended March 31, 1997 to $48.0 million for the three months ended March
31, 1998. This increase was caused primarily by an increase in LADS operations
net revenues attributable to the 1997 Acquisitions, the 1998 Acquisitions and
the LaserSight Acquisition, which accounted for $13.3 million of the increase;
an increase in buying group revenues attributable to the Block Acquisition which
accounted for $13.7 million of the increase; an increase in managed care
revenues attributable to the Block Acquisition; and the addition of three
capitated contracts and the expansion of an existing contract which accounted
for $10.0 million of the increase. Comparable clinic revenues increased 14.6%
over 1997 levels for practices managed by the Company in both periods.
Managed care revenues on a comparable basis increased 40.0% over 1997 levels for
business units operated by the Company in both periods.


                                       12

<PAGE>   14

         LADS Operating Expenses. LADS operating expenses increased 149.8% from
$6.8 million for the three months ended March 31, 1997 to $17.0 for the three
months ended March 31, 1998. LADS operating expenses consist of salaries, wages
and benefits of certain clinic staff, professional fees, medical supplies,
advertising, building and occupancy costs, and other general and administrative
costs related to the operation of clinics and ASCs. This increase was caused
primarily by the 1997 Acquisitions, the LaserSight Acquisition, the 1998
Acquisitions, and the EyeCare One and VIPA merger.

         Medical Claims. Medical claims expense increased 295.1% from $2.4
million for the three months ended March 31, 1997 to $9.7 million for the three
months ended March 31, 1998. The Company's medical claims ratio decreased from
80.2% for the three months ended March 31, 1997 to 74.3% for the three months
ended March 31, 1998. This decrease was caused primarily by the Company's Block
Acquisition and the renegotiated agreement to pay its ophthalmology and ASC
Contract Providers a per member per month fee for surgical eye care services
provided under the Company's largest capitated managed care contract. Medical
claims expense consists of payments by the Company to its Affiliated Providers
for primary eye care services, medical and surgical eye care services and
facility services. These payments are based on fixed payments per member per
month, a pro rata share of managed care capitated payments received (as
determined by the number of eye care procedures performed relative to other
Affiliated Providers) or negotiated fee-for-service schedules. Capitated
payments and pro rata payments collectively represented 28.8% and 55.9% and
fee-for-service claims represented 71.2% and 44.1% of total medical claims
expense for the three-month periods ended March 31, 1998 and 1997, respectively.
Medical claims for the three- month period ended March 31, 1997 were based
entirely on negotiated fee-for-service schedules.

         Cost of Buying Group Sales. Cost of buying group sales were incurred by
the Company as a result of its acquisition of Block Vision. The cost of buying
group sales consists of the costs of various optical products which are shipped
directly to the providers of eye care services.

         Regional Service Centers. Regional Service Center expenses were
incurred as a result of the 1997 acquisitions, the 1998 acquisitions, and the
LaserSight acquisition. The regional service center expenses consist primarily
of salaries, wages, and operating expenses of the Company's regional service
centers.

         Corporate Expense. Corporate expense increased 143.5% from $1.5 million
for the three months ended March 31, 1997 to $3.6 million for the three months
ended March 31, 1998. This increase was caused primarily by an increase in
corporate staff necessary to support the Company's expanded LADS Operations and
managed care business and increases in travel expenses, professional fees and
occupancy costs. Salary, wage and benefit expenses consist of expenses related
to management and administrative staff located at the Company's corporate
headquarters and regional offices. As a percentage of revenues, corporate
expense decreased from 13.2% for the three months ended March 31, 1997 to 7.4%
for the three months ended March 31, 1998. This decrease was caused primarily by
increased economies of scale resulting from the Company's expanding business.

         Depreciation and amortization. Depreciation and amortization expense
increased from $301,000 for the three months ended March 31, 1997 to $1.4
million for the three months ended March 31, 1998. As a percentage of revenues,
depreciation and amortization expense increased from 2.7% for the three months
ended March 31, 1997 to 2.8% for the three months ended March 31, 1998. This
increase was caused primarily by the amortization of intangibles attributable to
the 1997 Acquisitions, the 1998 Acquisitions, the LaserSight Acquisition and the
Block Acquisition.


                                       13


<PAGE>   15
         Merger Costs.  Merger costs were incurred as a result of the EyeCare
One pooling of interests and consist primarily of professional fees.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has historically funded its working capital and capital
expenditure requirements primarily through institutional borrowings and private
debt and equity financings. Net cash used in operating activities for the three
months ended March 31, 1997 was $127,000 as compared to net cash provided by
operating activities of $2.4 million for the three months ended March 31, 1998.
Net cash used in operating activities for the three months ended March 31, 1997
resulted primarily from the net loss for the period.

         Net cash used in investing activities for the three months ended March
31, 1997 and 1998 was $2.0 million and $5.2 million, respectively, and resulted
from payments for acquisitions, furniture and equipment and capitalized
acquisition costs.

         Net cash provided by financing activities for the three months ended
March 31, 1997 and 1998 was $2.9 million and $11.0 million, respectively. The
amounts for 1997 and 1998 were attributable to debt and equity financings and
higher levels of institutional borrowings to support the Company's internal
expansion and acquisition activities.

         On January 30, 1998 the Company entered into a five year, $50.0 million
bank credit agreement (the "Credit Agreement") with the Bank of Montreal as
agent (the "Agent") for a consortium of banks. The Credit Agreement, which
matures in January, 2003, provided the Company with a revolving credit facility
component in an aggregate amount of up to $10.0 million and a term loan
component in an aggregate amount of up to $40.0 million. The Credit Agreement is
secured by a pledge of the stock of substantially all of the Company's
subsidiaries and the assets of the Company and certain of its subsidiaries and
is guaranteed by certain of the Company's subsidiaries. The Credit Agreement
contains negative and affirmative covenants and agreements which place
restrictions on the Company regarding disposition of assets, capital
expenditures, additional indebtedness, permitted liens and payment of dividends,
as well as requiring the maintenance of certain financial ratios. The interest
rate on the Credit Agreement is, at the option of the Company, either (i) the
London InterBank Offered Rate plus an applicable margin rate, (ii) the greater
of (a) the Agent's prime commercial rate or (b) the "federal funds" rate plus
0.5%, or (iii) a fixed rate loan as determined by the Agent at each time of
borrowing. At the closing of the Credit Agreement the Company used approximately
$26.9 million of its available borrowing to repay the outstanding balance under
the Company's Bridge Credit Facility with Prudential Credit and related accrued
interest and transaction costs. As of March 31, 1998, the Company had used
approximately $45.0 million of its available borrowings under the Credit
Agreement and currently had an available balance of approximately $5.0 million
which it expects will be utilized for acquisitions, working capital and general
corporate purposes.

         On November 20, 1997, the Company completed the sale of 2,300,000
shares of its common stock at a price of $9.50 in a secondary public offering
(the "Secondary Offering"). The net proceeds of $20.5 million from the Secondary
Offering were used to fund a portion of the consideration for the Block
Acquisition.

         In October 1997, the Company received a commitment from Prudential
Securities Credit Corporation ("Prudential Credit") for a credit facility in the
aggregate amount of $37.0 million pursuant to a Note Purchase Agreement (the
"Bridge Credit Facility"). Approximately $27.0


                                       14

<PAGE>   16

million of the Bridge Credit Facility was available, if needed, to fund the cash
portion of the Block Acquisition to the extent the net proceeds from the
Company's Secondary Offering were insufficient for such purpose. The remaining
balance of approximately $10.0 million of the Bridge Credit Facility was
available for optometry and ophthalmology practice acquisitions. The Company
borrowed $5.6 million and $6.5 million for use in funding the cash portions of
the Block Acquisition and LaserSight Acquisitions, respectively. Additionally,
the Company borrowed approximately $3.5 million for use in the funding of
certain optometry and ophthalmology practice acquisitions. Amounts borrowed
pursuant to the Bridge Credit Facility were secured by a first security interest
in all of the Company's assets. The Bridge Credit Facility was required to be
repaid at the earlier of six months from the date of any borrowing from the
Bridge Credit Facility or upon the closing of any future debt or equity offering
by the Company. The Bridge Credit Facility contained negative and affirmative
covenants and agreements which included covenants requiring the maintenance of
certain financial ratios. The Company repaid its Bridge Credit Facility
borrowings in full from available proceeds under its Credit Agreement.

         On August 18, 1997, the Company completed the sale of 2,100,000 shares
of its common stock at a price of $10.00 per share in an initial public offering
(the "Initial Public Offering"). The net proceeds from the Initial Public
Offering were used to repay substantially all of the Company's outstanding
indebtedness and to provide funding to continue acquisitions of optometry and
ophthalmology clinics and ASCs.

         In April 1997, the Company entered into a credit facility in the
aggregate amount of $4.9 million with Prudential Securities Group Inc.
("Prudential") pursuant to a "Note and Warrant Purchase Agreement" (as amended
and restated, the Note and Warrant Purchase Agreement). The proceeds from the
borrowing were used to repay the Company's credit facility with Barnett Bank
N.A. in the principal amount of $2.0 million and for general working capital
purposes. Under the Note and Warrant Purchase Agreement, the Company issued a
senior note secured by all the Company's assets (the "Prudential Note"). The
Prudential Note accrued interest at 10% per annum with a maturity of the earlier
of January 1, 1998 or upon completion of the Initial Public Offering. In
addition, the Note and Warrant Purchase Agreement included a detachable warrant
to purchase 210,000 shares of Common Stock at an exercise price equal to $10.00
per share, the price of the Common Stock in the Initial Public Offering. The
Prudential Note was repaid by the Company from the net proceeds of the Initial
Public Offering.

         In February 1997, the Company borrowed an aggregate of $2.0 million
from Piper Jaffray Healthcare Fund II Limited Partnership ("Piper Jaffray") for
working capital purposes pursuant to the issuance of senior subordinated notes
bearing interest at 10% per annum (the "1997 Subordinated Notes"). The 1997
Subordinated Notes included a detachable warrant to purchase an aggregate of
333,333 shares of Common Stock which have an exercise price of $6.00 per share.
The 1997 Subordinated Notes were repaid by the Company from the net proceeds of
the Initial Public Offering.

         In December 1996, the Company borrowed an aggregate of $1.3 million
from certain individuals for working capital purposes pursuant to the issuance
of senior subordinated notes bearing interest at 10% per annum (the "1996
Subordinated Notes"). The 1996 Subordinated Notes included detachable warrants
to purchase an aggregate of 208,333 shares of Common Stock at an exercise price
of $6.00 per share. The 1996 Subordinated Notes were repaid by the Company from
the net proceeds of the Initial Public Offering.

         In June 1996, the Company borrowed $3.0 million from Peter Fontaine, a
director of the Company, for working capital purposes pursuant to an unsecured
Promissory Note bearing 


                                       15

<PAGE>   17

interest at 8.0% per annum (the "Fontaine Note"). The Fontaine Note was repaid
by the Company from the net proceeds of the Initial Public Offering. In
addition, the Company borrowed $200,000 and $500,000 from Mr. Fontaine in
November and December 1996, respectively, for working capital purposes pursuant
to unsecured promissory notes bearing interest at 8.5% per annum. The unsecured
promissory notes were repaid from the net proceeds of the Initial Public
Offering.

         To date in 1998, the Company completed the 1998 Acquisitions and, in
connection with the 1998 Acquisitions, the Company provided aggregate
consideration of approximately $22.3 million consisting of 917,185 shares of
Common Stock, $12.9 million in cash and promissory notes in the aggregate
principal amount of approximately $21,000, subject to post-closing adjustments.
In addition the Company is required to provide additional contingent
consideration, consisting of 33,695 shares of Common Stock and up to $600,000 in
cash, to be paid to certain sellers if certain post-acquisition performance
targets are met.

         In March 1998, the Company completed a pooling of interests transaction
with EyeCare One and VIPA. In connection with the pooling transaction, the
Company issued 1,109,806 shares of Common Stock, subject to post-closing
adjustments, valued at approximately $10.5 million.

         Effective December 1, 1997, the Company completed the LaserSight
Acquisition in exchange for aggregate consideration paid to the seller of
approximately $13.0 million, consisting of $6.5 million in cash and 812,500
shares of Common Stock, subject to certain post-closing adjustments. The cash
portion of the consideration paid by the Company for the LaserSight Acquisition
was financed through a letter amendment to the Company's credit facility with
Prudential Securities Credit Corporation. The LaserSight Acquisition was
accounted for under the purchase method of accounting. The aggregate
consideration paid by the Company for the LaserSight Acquisition was
approximately $13.0 million consisting of $6.5 million in cash and 812,500
shares of Company common stock, subject to certain post-closing adjustments. The
cash portion of the consideration paid by the Company for the LaserSight
Acquisition was financed through a letter amendment to the Company's credit
facility with Prudential Securities Credit Corporation. In addition, LaserSight,
Inc. and the Company entered into a Stock Distribution Agreement for the
liquidation of the shares of Company Common Stock received by LaserSight, Inc.
by May 29, 1998 through, at the Company's option, the filing of a shelf
registration statement, a private placement, a direct redemption by the Company,
or other method acceptable to the Company and LaserSight, Inc. Under the Stock
Distribution Agreement, LaserSight, Inc. is entitled to receive a minimum of
$6.5 million and a maximum of $7.475 million from the liquidation subject to
certain post-closing adjustments. On March 11, 1998 the Company redeemed 168,270
shares of its Common Stock pursuant to the Stock Distribution Agreement from
LaserSight, Inc. for an aggregate purchase price of approximately $1.5 million.

         Effective October 31, 1997, the Company completed the Block Acquisition
in exchange for aggregate consideration paid to the sellers of approximately
$35.0 million, consisting of $25.6 million in cash, 458,365 shares of Common
Stock, subject to certain post-closing adjustments and 219, 633 shares of Common
Stock to be held in escrow as contingent consideration, of which 109,816 shares
are to be delivered by the Company to the sellers if EBITDA of Block Vision
reaches $4.5 million for the year ended December 31, 1998. The remaining 109,817
shares will 


                                       16


<PAGE>   18
be deliverable on a pro rata escalating basis if Block Vision reaches $4.5
million of EBITDA for 1998 with the full contingent consideration deliverable
upon Block Vision attaining $4.9 million of EBITDA for 1998. Approximately $2.4
million in net indebtedness of Block Vision was assumed in connection with the
Block Acquisition.

         During 1997, the Company also completed the 1997 Acquisitions, and in
connection with the 1997 Acquisitions, the Company provided aggregate
consideration of $20.1 million, consisting of 1,480,122 shares of Common Stock,
$6.7 million in cash and $364,000 in promissory notes. Additionally, the Company
is required to provide additional contingent consideration, consisting of
approximately 174,021 shares of Common Stock, approximately $821,000 in cash,
and approximately $467,000 in shares of Common Stock, to be paid to certain
sellers if post-acquisition performance targets are met.

         In December 1996, the Company completed the 1996 Acquisitions for an
aggregate consideration of $11.2 million, consisting of 2.1 million shares of
Common Stock, unsecured promissory notes in the aggregate principal amount of
$1.9 million bearing interest at 8.0% per annum and $800,000 in assumed debt.
The promissory notes were repaid by the Company from the net proceeds of the
Initial Public Offering.

         The Company expects to continue to use its Common Stock as
consideration for future acquisitions in conjunction with its expansion
strategy, which will be a factor in the Company's future acquisitions, financial
position and performance. The number of shares of Common Stock the Company is
ultimately required to provide in connection with its acquisitions will be
affected by the market price for its Common stock and the number of shares so
provided will affect the Company's earnings per share. The Company's stock price
has fluctuated since the Initial Public Offering and any significant and
continuing decline the Company's stock price would have a negative impact on the
Company's ability to implement its growth strategy in the future and would have
a negative impact on the Company's financial position and performance.

         Intangible assets consist of the excess of the purchase price over the
fair values of the net assets acquired from the business acquisitions which are
being amortized using the straight-line method over 25-30 years and the
Management Agreements with the Managed Professional Associations which are being
amortized using the straight-line method over an average life of 25 years.
Intangible assets represented 63.7% of the Company's total assets at March 31,
1998. In determining the useful life of a Management Agreement, the Company
considers the operating history and other characteristics of each practice. A
principal consideration is the degree to which the practice has demonstrated its
ability to extend its existence indefinitely. The Company will


                                       17

<PAGE>   19

review the carrying value of its intangible assets at least quarterly on an
entity-by-entity basis to determine if facts and circumstances exist which would
suggest that the intangible assets may be impaired or that amortization periods
need to be modified. Among the factors the Company considers in making the
valuation are changes in the Managed Professional Associations market position,
reputation, profitability, and geographic penetration.

         In addition to the business assets purchased, the Company assumes
certain payables and accrued expenses in connection with its acquisitions.
Generally, the acquired tangible assets exceed the assumed liabilities. The
Company has assumed liabilities of $3.2 million, including $791,000 of long-term
debt, in connection with acquisitions (including the Block Acquisition)
completed through March 31, 1998.

         Currently many computer systems in use today were designed and
developed using two digits, rather than four, to specify the calendar year and
as a result, such systems are unable to recognize the year "2000". The inability
of a computer system to recognize the year "2000" could cause many computer
applications to fail or create erroneous results unless corrective measures are
taken. The Company utilizes software and related computer technologies essential
to its operations that could be affected by the year "2000" computer system
problem. Block Vision's managed care computer systems are year "2000" compliant.
The Company has implemented a plan of action which it believes will make its
other computer systems year "2000" compliant and the expense associated with
such action is not expected to have a material effect on the Company's future
financial condition and results of operations. The Company also expects to
initiate communications with significant suppliers, customers and other third
parties with which the Company does business, to minimize disruptions to the
Company's operations resulting from the year "2000" problem and to ensure that
year "2000" issues are satisfactorily resolved. There can be no assurances,
however, that the computer systems of other companies may have an adverse effect
on the Company's operations. The Company expects to work with such parties to
resolve or minimize year "2000" problems. The Company believes it currently has
no material exposure to contingencies related to the year "2000" issue.

         The Company believes the effects of inflation have not had a material
adverse impact on its operations or financial condition to date. Substantial
increases in prices in the future, however, could have a material adverse effect
on the Company's results of operations.

         Based upon the Company's anticipated capital needs for operation of its
business, general corporate purposes, the acquisition of clinics and ASCs and
repayment of certain indebtedness, management believes that the combination of
the funds expected to be provided from the Company's operations, Credit
Agreement, anticipated future increases of borrowings under its Credit
Agreement, supplemental borrowings and seller financing and the use of Common
Stock in acquisitions will be sufficient to meet the Company's funding
requirements to conduct its operations and for further implementation of its
growth strategy for a period of approximately twelve months. The Company will
continue to offer Common Stock, notes or combinations thereof as consideration
for certain future mergers and acquisitions related to the growth of its LADS.
After the twelve-month period, or in the event the Company's capital
expenditures are greater than currently expected and to the extent additional
capital resources are needed, the Company expects to utilize supplemental
borrowings to the extent available and/or the net proceeds from the offering of
debt or equity securities.


                                       18

<PAGE>   20


               SPECIAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS

         This 10-Q and certain information provided periodically in writing and
orally by the Company's designated officers and agents contain statements which
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
The words "expect," "believe," "goal," "plan," "intend," "estimate," and similar
expressions and variations thereof used in this Prospectus are intended to
specifically identify forward-looking statements. Those statements appear in a
number of places in this Prospectus, particularly "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and include
statements regarding the intent, belief or current expectations of the Company,
its directors or its officers with respect to, among other things; (i) the
financial prospects of the Company, (ii) potential acquisitions by the Company
and the successful integration of both completed and future acquisitions; (iii)
the ability of the Company to efficiently and effectively manage its Managed
Providers; (iv) the Company's financing plans including the Company's ability to
raise additional debt and equity capital; (v) trends affecting the Company's
financial condition or results of operations including the company's stock price
and its potential impact on the number of shares utilized in acquisitions and on
future earnings per share; (vi) the Company's growth strategy and operating
strategy, (vii) the impact of current and future governmental regulations;
(viii) the Company's current and future managed care contracts; (ix) the
Company's ability to continue to recruit Contract Providers, to convert Contract
Providers to Managed Providers, and to maintain its relationships with
Affiliated Providers; (x) the Company's relationships with affiliated retail
optical companies; (xi) the Company's relationships with its buying group
participants and suppliers of eye care products and supplies; (xii) the
Company's ability to operate efficiently, profitably and effectively its new
Block Vision subsidiary, which includes a new business line and a significant
increase in the Company's managed care business; and (xiii) the Company's
revenue run rate and the impact thereon of acquisitions by the Company.
Prospective investors are cautioned that any such forward looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those projected in the forward
looking statements as a result of various factors. The factors that might cause
such differences include, among others, the following: (i) the Company
experiencing future operating and net losses; (ii) any material inability of the
Company to successfully integrate and profitably operate Block Vision and other
acquisitions; (iii) any material inability of the Company to identify,
consummate and integrate suitable acquisitions in conjunction with its growth
strategy or to ultimately close pending and identified acquisitions; (iv) any
material inability of the Company to acquire sufficient capital and financing to
fund its growth strategy, (v) the inability of the Company to expand its managed
care business, renew existing managed care contracts and maintain and expand its
Contract Provider Network (vi) the Company's inability to negotiate managed care
contracts with HMOs; (vii) the inability of the Company to successfully and
profitably operate its managed care business; (viii) the managed practices'
inability to operate profitably, (ix) changes in state and/or federal
governmental regulations which could materially affect the Company's ability to
operate or materially affect the Company's profitability, (x) the inability of
the Company to maintain or obtain required licensure in the states in which it
operates and in the states in which it may seek to operate in the future, (xi)
the inability of the Company to successfully obtain public and/or private
investment capital to expand its operations; (xii) the Company's inability to
meet its financing covenants and commitments; (xiii) consolidation of the
Company's competitors, poor operating results by its competitors, or adverse
governmental or judicial rulings against its competitors; (xiv) any adverse
change in the Company's medical claims to managed care revenue ratio and other
factors including those identified in the Company's previous filings with the
SEC. The Company undertakes no obligation to publicly update or revise forward
looking statements to reflect events or circumstances after the date of this
10-Q or to reflect the occurrence of unanticipated events.


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<PAGE>   21


ITEM 3   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Not applicable.

PART II -OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

(c)      Sales of Unregistered Securities. The Company issued the following
unregistered securities during the quarterly period ended March 31, 1998 in
transactions exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) because they did not involve any public offering.

         In January 1998, the Company issued an additional 7,585 shares of
Common Stock in connection with the acquisition of the stock of LSI Acquisition,
Inc. and MEC Health Care, Inc.

         In January 1998, the Company issued 6,733 shares of Common Stock in
connection with the acquisition of James W. Dyson, O.D., P.C.

         In February 1998, the Company issued 16,779 shares of Common Stock in
connection with the acquisition of Dr. Byron A. Teska, P.A.

         In March 1998, the Company issued an aggregate of 522,600 shares of
Common Stock in connection with the acquisitions of Eye DRx and The Complete
Optical Laboratory, Ltd., Corp.

         In March 1998, the Company issued an aggregate of 1,109,806 shares in
connection with the acquisition of Vision Insurance Plan of America, Inc. and
the merger of Eye Care One Corp.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits.  See Exhibit Index.

(b)      Reports on Form 8-K.

         The Company filed a report on Form 8-K on January 14, 1998 related to
         the Company's acquisition of LSI Acquisitions, Inc. and MEC Healthcare,
         Inc. The Company also filed a Form 8-K/A amendment to the Form 8-K on
         March 14, 1998 to include financial statements and proformas previously
         omitted.



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<PAGE>   22



                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER             EXHIBIT
------             -------
<S>               <C>    
2.13*             Agreement and Plan of Reorganization dated March 31, 1998 by
                  and between Vision Twenty-One, Inc., Eye Care One Corp.,
                  Martin F. Stein, Robert C. Sowinski, Eugene H. Edson, Stephen
                  L. Charnof, John C. Colman, not individually but solely as
                  trustee of the John C. Colman Trust, u/t/a dated August 5,
                  1994, and Stephen L. Charnof and Daniel J. Stein, not
                  individually but solely in their capacities as Trustees of the
                  Daniel J. Stein Irrevocable Trust u/a/d April 3, 1996. (2)

2.14*             Stock Purchase Agreement effective March 31, 1998 by and among
                  Vision Twenty-One, Inc., vision Twenty-One of Wisconsin, Inc.,
                  Vision Insurance Plan of American, Inc., Martin F. Stein,
                  Robert C. Sowinski, Eugene H. Edson, Stephen L. Charnof,
                  Thomas W. Witter, and John C. Colman, not individually but
                  solely as Trustee of the John C. Colman Trust u/t/a dated
                  August 5, 1994. (3)

2.18*             Asset Purchase Agreement effective January 1, 1998, by and
                  among Elliot L. Shack, O.D., P.A., Charles M. Cummins, O.D.
                  and Elliott L. Shack, O.D., P.a., and Vision Twenty-One, Inc.
                  (3)

2.19*             Stock Purchase Agreement effective as of January 1, 1998 by
                  and between Vision Twenty-One, Inc., The Complete Optical
                  Laboratory, Inc., Elliot L. Shack, and Charles M. Cummins. (3)
                  (Schedules (or similar attachments) have been omitted and the
                  Registrant agrees to furnish supplementally a copy of any
                  omitted schedule to the Securities and Exchange Commission
                  upon request.)

4.13*             Credit Agreement dated as of January 30, 1998 among Vision
                  Twenty-One, Inc., the Banks Party Hereto and Bank of Montreal
                  as Agent. (1) (The Company is not filing any instrument with
                  respect to long-term debt that does not exceed 10% of the
                  total assets of the Company and the Company agrees to furnish
                  a copy of such instrument to the Commission upon request.)

27.1              Financial Data Schedule for three months ended March 31, 1998
                  (for SEC use only).

27.2              Restated Financial Data Schedule for three months ended
                  March 31, 1997 (for SEC use only). 
</TABLE>

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

         *Previously filed as an Exhibit in the Company filing identified in the
         footnote following the Exhibit Description and incorporated herein by
         reference.

[1] Form 8-K filed February 10, 1998
[2] Form 8-K filed April 14, 1998
[3] Registration Statement on Form S-1 filed on April 30, 1998 (333-51437)


                                       21

<PAGE>   23



                                    SIGNATURE

                  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, in the city of Largo, State of
Florida on May 14, 1997.


                                    VISION TWENTY-ONE, INC.
                                    Registrant





                                    /s/ RICHARD T. WELCH
                                    -------------------------------------- 
                                    Chief Financial Officer (The Principal 
                                    Accounting Officer and Duly Authorized 
                                    Officer)



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