<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 June 30, 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 NO.)
INCORPORATION OR ORGANIZATION)

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 14,773,550 Shares outstanding as of July 31, 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           SIX-MONTH PERIODS ENDED
                                                                   JUNE 30,                           JUNE 30,
                                                        -------------------------------    ------------------------------
                                                            1997              1998             1997              1998
                                                        --------------    -------------    --------------    ------------
<S>                                                     <C>               <C>              <C>               <C>          
Revenues:
  LADS operations, net revenues....................     $  9,546,245      $22,013,318      $ 17,514,405      $ 43,233,052
  Managed care.....................................        3,160,524       13,812,984         6,207,335        26,820,294
  Buying group.....................................               --       15,603,678                --        29,328,826
                                                        ------------      -----------      ------------      ------------
                                                          12,706,769       51,429,980        23,721,740        99,382,172
                                                        ------------      -----------      ------------      ------------

Operating expenses:
  LADS operating expenses..........................        8,213,931       17,735,648        15,007,325        34,704,490
  Medical claims...................................        2,598,091        9,932,806         5,042,385        19,591,293
  Cost of buying group sales.......................               --       14,645,085                --        27,440,070
  General and administrative.......................        1,525,567        3,824,715         2,984,999         7,932,542
  Depreciation and amortization....................          449,463        1,559,206           750,419         2,910,969
  Merger costs.....................................               --               --                --           508,443
                                                        ------------      -----------       -----------      ------------
                                                          12,787,052       47,697,460        23,785,128        93,087,807
                                                        ------------      -----------       -----------      ------------

Income (loss) from operations......................          (80,283)       3,732,520           (63,388)        6,294,365
Interest expense...................................          339,802        1,042,504           594,400         1,705,488
                                                        ------------      -----------       ------------     ------------
Income (loss) before income taxes                           (420,085)       2,690,016          (657,788)        4,588,877
Income taxes.......................................               --        1,008,000                --         1,720,000
                                                        ------------      -----------       ------------     ------------
Income (loss) before extraordinary charge                   (420,085)       1,682,016          (657,788)        2,868,877
Extraordinary charge - early extinguishment
  of debt, net of income taxes of $238,000.........               --               --                --           397,190
                                                        ------------      -----------       ------------     ------------ 
Net income (loss)..................................     $   (420,085)     $ 1,682,016       $  (657,788)     $  2,471,687
                                                        ============      ===========       ============     ============ 
Earnings (loss) per common share:
  Income (loss) before extraordinary charge             $      (0.06)     $      0.12       $     (0.10)    $        0.21
  Extraordinary charge.............................               --               --                --             (0.03)
                                                        ------------      -----------       -----------      ------------
Net income (loss) per common share.................     $      (0.06)     $      0.12       $     (0.10)    $        0.18
                                                        ============      ===========       ===========      ============
Earnings (loss) per common share-assuming dilution:
 Income (loss) before extraordinary charge              $      (0.06)     $      0.12       $     (0.10)    $        0.20
  Extraordinary charge.............................               --               --                --             (0.03)
                                                        ------------      -----------       -----------     -------------
Net income (loss) per common share -
  assuming dilution................................     $      (0.06)     $      0.12       $     (0.10)    $        0.17
                                                        ============      ===========       ===========     =============
</TABLE>


   See accompanying notes to the condensed consolidated financial statements



                                       2

<PAGE>   3


                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                             DECEMBER 31,       JUNE 30,
                                                                                                 1997             1998
                                                                                           --------------    -------------
<S>                                                                                        <C>               <C>
                                     ASSETS
Current Assets:
  Cash and cash equivalents                                                                $   4,048,358     $   7,035,530
  Accounts receivable due from:
     Buying group members, net of allowance for doubtful accounts of $33,000 and
      $39,000 at December 31, 1997 and June 30, 1998, respectively                             5,427,592         8,165,683
     Patients, net of allowances for uncollectible accounts and contractual 
      adjustments $3,446,000 and $4,020,600 at December 31, 1997 and June 30, 1998, 
      respectively......................................................................       5,502,110         7,954,364
     Managed Professional Associations..................................................       4,950,067         9,077,742
     Managed health benefits payors.....................................................       1,276,790         1,763,568
     Other  ............................................................................         165,292           622,292
  Inventory.............................................................................         936,242         1,417,801
  Prepaid expenses and other current assets.............................................       2,016,036         3,000,424
                                                                                           -------------     -------------
         Total current assets...........................................................      24,322,487        39,037,404
Fixed assets, net.......................................................................       8,626,964        10,592,935
Intangible assets, net of accumulated amortization of $1,131,501 and $2,939,262 at
  December 31, 1997 and June 30,1998, respectively......................................      84,164,341       111,108,490
Cash surrender value of life insurance, net policy loans of $624,464 at 
  December 31, 1997 ....................................................................         205,596                --
Deferred tax assets.....................................................................       1,882,000         1,882,000
Other assets............................................................................       1,155,359         2,029,778
                                                                                           -------------     -------------
         Total assets                                                                      $ 120,356,747       164,650,607
                                                                                           =============     =============

                                   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable......................................................................   $   5,319,654         9,284,317
  Accrued expenses......................................................................       2,708,741         6,254,107
  Medical claims payable................................................................       3,555,195         3,713,472
  Accrued compensation..................................................................       1,381,497            26,443
  Accrued acquisition and offering costs................................................       1,045,905         2,430,948
  Due to Managed Professional Associations..............................................       1,938,309         2,927,276
  Due to selling shareholders...........................................................       2,811,809         3,359,793
  Current portion of deferred leasehold incentive.......................................          23,046            23,046
  Current portion of long-term debt.....................................................         104,371           152,295
  Current portion of obligations under capital leases...................................         566,084           416,436
                                                                                           -------------     -------------
         Total current liabilities......................................................      19,454,611        28,588,133

Deferred rent payable...................................................................         261,117           261,117
Obligations under capital leases........................................................         632,850           534,998
Long-term debt, less current portion....................................................      25,980,253        48,374,836
Deferred leasehold incentive............................................................         186,323           173,657
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 14,686,213 (June 30, 1998) shares issued and outstanding.....          13,530            14,686
  Additional paid in capital............................................................      76,416,476        86,969,285
  Deferred compensation.................................................................        (408,735)         (354,585)
  Notes receivable from stockholder.....................................................        (175,484)         (172,984)
  Accumulated deficit...................................................................      (8,115,194)       (5,849,536)
                                                                                           -------------     -------------
         Total stockholders' equity.....................................................      67,730,593        80,606,866
                                                                                           -------------     -------------
         Total liabilities and stockholders' equity.....................................   $ 120,356,747     $ 164,650,607
                                                                                           =============     =============
</TABLE>

   See accompanying notes to the condensed consolidated financial statements



                                       3

<PAGE>   4
                                        
                                        
                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          SIX-MONTH PERIODS ENDED
                                                                                                 JUNE 30,
                                                                                     --------------------------------
                                                                                         1997               1998
                                                                                     -------------      -------------
<S>                                                                                  <C>                <C>         
OPERATING ACTIVITIES
Net income (loss).............................................................       $   (657,788)      $  2,471,687
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..............................................            750,419          2,881,277
   Amortization of loan fees..................................................                 --             73,821
   Non-cash compensation expense..............................................             45,450             80,166
   Amortization of deferred compensation......................................             54,150                 --
   Interest accretion.........................................................             41,477                 --
   Changes in operating assets and liabilities, net of effects from business
   combinations:
     Accounts receivable, net.................................................         (2,326,791)       (10,334,998)
     Inventory................................................................           (285,837)           155,086
     Prepaid expenses and other current assets................................           (112,024)          (471,574)
     Other assets.............................................................           (126,344)          (314,098)
     Accounts payable.........................................................            331,822          3,279,647
     Accrued expenses.........................................................            115,128          3,993,880
     Accrued acquisition and offering costs...................................           (522,963)                --
     Accrued compensation.....................................................            295,919            589,621
     Medical claims payable...................................................           (451,480)           164,868
     Due to Managed Professional Associations.................................            691,096            988,967
                                                                                     ------------       ------------
          Net cash provided by (used in) operating activities.................         (2,157,766)         4,193,540

INVESTING ACTIVITIES
Purchases of furniture and equipment, net.....................................           (883,133)        (2,470,986)
Payments for acquisitions, net of cash acquired...............................                --         (15,857,590)
Payments for capitalized acquisition costs....................................         (2,317,598)        (3,032,384)
                                                                                     ------------       ------------
          Net cash used in investing activities...............................         (3,200,731)       (21,360,960)

FINANCING ACTIVITIES
Proceeds from long term debt..................................................            359,000         49,632,467
Payments on long term debt....................................................           (831,277)       (27,081,566)
Net proceeds from credit facilities...........................................          4,874,000                 --
Net proceeds from issuance of senior notes and warrants.......................          2,000,000                 --
Payments for financing fees...................................................                --            (729,217)
Payments to acquire treasury stock............................................                --          (1,548,084)
Sale of detachable stock purchase warrants and exercise of options............            126,000            124,040
Decrease in notes receivable, officers and shareholders.......................                --               2,500
Capital distributions.........................................................           (282,719)          (245,548)
                                                                                     ------------       ------------
          Net cash provided by financing activities...........................          6,245,004         20,154,592
                                                                                     ------------       ------------

Increase in cash and cash equivalents.........................................            886,507          2,987,172
Cash and cash equivalents at beginning of period..............................            251,832          4,048,358
                                                                                     ------------       ------------
Cash and cash equivalents at end of period....................................       $  1,138,339       $  7,035,530
                                                                                     ============       ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest......................................       $    168,651       $    912,146
                                                                                     ============       ============
</TABLE>




   See accompanying notes to the condensed consolidated financial statements



                                       4

<PAGE>   5


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

                                 JUNE 30, 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 six-month period ended June 30, 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 Corp. 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:

                      SIX-MONTH PERIOD ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
                             VISION        EYECARE ONE        VIPA          COMBINED
                          -----------      -----------      --------      -----------
<S>                       <C>              <C>              <C>           <C>        
Revenue                   $17,379,587      $6,210,000       $132,153      $23,721,740
Extraordinary charge               --              --             --               --
Net income (loss)         $(1,027,788)     $  336,000       $ 34,000      $  (657,788)
</TABLE>



                                       5
<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
                          -----------        -----------        --------      -----------
<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 $508,000 ($318,000 net of tax) in the
six-month period ended June 30, 1998, or approximately $0.02 per diluted common
share. The merger costs include professional fees and nonrecurring costs
associated with executing the merger of operations.

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.

         In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities, which is
required to be adopted in years beginning after June 15, 1999. The Statement
permits early adoption as of the beginning of any fiscal quarter after its
issuance. The Company's expected date of adoption is not yet known. The
Statement will require the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If the derivative is a hedge, depending on the nature of
the hedge, changes in the fair value of derivatives will either be offset
against the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income until
the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company has not yet determined what the effect of Statement 133 will be on
the earnings and financial position of the Company.



                                       6

<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          SIX-MONTH PERIODS ENDED
                                                               JUNE 30,                          JUNE 30,
                                                    -----------------------------     -----------------------------
                                                        1997              1998            1997              1998
                                                    ------------      -----------     ------------      -----------
<S>                                                 <C>               <C>             <C>               <C>
Numerator:
  Numerator for basic and diluted earnings
  (loss) per share-income (loss) available to 
  Common stockholders..........................         (420,085)     $ 1,682,016     $   (657,788)     $ 2,868,877
   
Denominator:
   Denominator for basic earnings (loss) per
   share-weighted average shares................       6,517,355       14,208,521        6,344,934       14,028,813
                                                     -----------      -----------     ------------      -----------
Effect of dilutive securities:
   Stock options................................              --          155,896               --          175,773
   Warrants.....................................              --          166,634               --          183,303
   Nonvested stock..............................              --           90,146               --           90,412
                                                     -----------      -----------     ------------      -----------
Dilutive potential common shares................              --          412,676               --          449,488
                                                     -----------      -----------     ------------      -----------
  Denominator for diluted earnings (loss) per
   share-adjusted weighted-average shares and
   assumed conversions..........................       6,517,355       14,621,197        6,344,934       14,478,301
                                                     ===========      ===========     ============      ===========
Basic earnings (loss) per common share..........     $     (0.06)     $      0.12     $      (0.10)     $      0.21
                                                     ===========      ===========     ============      ===========
Diluted earnings (loss) common share............     $     (0.06)     $      0.12     $      (0.10)     $      0.20
                                                     ===========      ===========     ============      ===========
</TABLE>

5.       SUBSEQUENT EVENT

         On July 1, 1998 the Company entered into a new $100.0 million bank
credit agreement with the Bank of Montreal as agent for a consortium of banks.
The $100 million credit facility was used to early extinguish the Company's
outstanding balance of approximately $48.3 million under its prior $50 million
credit facility. The remaining balance under the new credit facility shall be
principally utilized for acquisitions, as well as working capital and general
corporate purposes. The facility includes a seven year term loan for $70
million and a $30 million five year revolving and acquisition facility. Other
terms and conditions were substantially the same as the prior agreement with a
slightly higher margin spread on the seven year term portion of the facility.




                                       7

<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, 218 are Managed Providers, consisting of 170 optometrists
and 48 ophthalmologists practicing at 176 clinic locations, 8 ASCs and 4
refractive surgery centers. 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
107 managed care contracts and 12 discount fee-for-service plans covering
approximately 5.0 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 48 optometry clinics, 10 ophthalmology clinics, 1 ambulatory
surgical center, 1 refractive center and 35 optical dispensaries located in
Texas, Arizona, New Jersey, Florida, Nevada 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 67 optometrists and 7 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 $33.5 million, consisting of 1,356,693 shares of
Common Stock and approximately $19.8 million in cash and promissory notes in
the aggregate principal amount of $1,346,000, 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.

         The Company completed the acquisition of Vision World, a retail optical
chain located in Minneapolis, Minnesota, effective June 30, 1998. Vision World
consists of 38 retail clinics and 30 optometrists. In connection with this
transaction, the Company paid $15.6 million in cash, net of cash acquired which
was funded from its credit facility, subject to certain post closing
adjustments. In addition, the Company is required to provide additional
contingent consideration of up to $600,000 in cash 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 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 


                                       8

<PAGE>   9

transactions, the Company issued 1,109,806 shares of Common Stock, subject to
closing adjustments, valued at approximately $10.5 million.

         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. At the time the Company consummates an acquisition, the Company may
receive a flat fee for the initial steps required to commence the integration
of the acquisition.

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 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 




                                      9

<PAGE>   10

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.

         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. 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. Although the terms
and conditions of the Company's managed care contracts vary considerably, they
are typically over a one-year term.

         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 



                                      10

<PAGE>   11

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.

         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 



                                      11

<PAGE>   12

shares of Common Stock, to be paid to certain sellers if post-acquisition
performance targets are met.

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.

<TABLE>
<CAPTION>
                                              THREE-MONTH PERIODS ENDED           SIX-MONTH PERIODS ENDED
                                                       JUNE 30,                           JUNE 30,
                                            -----------------------------      ------------------------------
                                                 1997            1998               1997            1998
                                            -----------------------------      ------------------------------
<S>                                             <C>            <C>                 <C>             <C> 
 Revenues:
   LADS operations, net revenues..........       75.1  %         42.8   %           73.8   %         43.5   %
   Managed care...........................       24.9            26.9               26.2             27.0
   Buying group...........................        0.0            30.3                0.0             29.5
                                            -----------------------------      ------------------------------
          Total revenues                        100.0           100.0              100.0            100.0
                                            -----------------------------      ------------------------------
 Operating expenses:
   LADS operating expenses................       64.7            34.5               63.2             35.0
   Medical claims.........................       20.4            19.3               21.3             19.7
   Cost of buying group sales.............        0.0            28.5                0.0             27.6
   General and administrative.............       12.0             7.4               12.6              8.0
   Depreciation and amortization..........        3.5             3.0                3.2              2.9
   Merger costs...........................        0.0             0.0                0.0              0.5
                                            -----------------------------      ------------------------------
          Total operating expenses              100.6            92.7              100.3             93.7
                                            -----------------------------      ------------------------------
 Income from operations...................       (0.6)            7.3               (0.3)             6.3
 Interest expense.........................        2.7             2.0                2.5              1.7
                                            -----------------------------      ------------------------------
 Income (loss) before income taxes               (3.3)            5.3               (2.8)             4.6
 Income taxes.............................        0.0             2.0                0.0              1.7
                                            -----------------------------      ------------------------------
 Income (loss) before extraordinary charge       (3.3)            3.3               (2.8)             2.9
 Extraordinary charge - early 
 extinguishment of debt, net of income 
 taxes of $238,000.......................         0.0             0.0                0.0              0.4
                                            -----------------------------      ------------------------------
          Net income (loss)...............       (3.3) %          3.3   %           (2.8)  %          2.5   %
                                            =============================      ==============================
 Medical claims ratio.....................       82.2  %         71.9   %           81.2   %         73.0   %
                                            =============================      ==============================
</TABLE>




                                      12

<PAGE>   13

Three-Month Period Ended June 30, 1998 Compared to Three-Month Period Ended
June 30, 1997

         Revenues. Revenues increased 304.7% from $12.7 million for the three
months ended June 30, 1997 to $51.4 million for the three months ended June 30,
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 $12.5 million of the increase; an
increase in buying group revenues attributable to the Block Acquisition which
accounted for $15.6 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 $10.6 million of the increase. Comparable clinic revenues increased 14.0%
over 1997 levels for practices managed by the Company for the entire year.
Managed care revenues on a comparable basis increased 36.4% over 1997 levels
for business units operated by the Company for the entire year.

         LADS Operating Expenses. LADS operating expenses increased 115.9% from
$8.2 million for the three months ended June 30, 1997 to $17.7 million for the
three months ended June 30, 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 and the 1998 Acquisitions. As a percentage of LADS operations net
revenues, LADS operating expenses decreased from 86.0% for the three months
ended June 30, 1997 to 80.6% for the three months ended June 30, 1998. This
decrease was caused primarily by the 1997 Acquisitions, the LaserSight
Acquisition and the 1998 Acquisitions.

         Medical Claims. Medical claims expense increased 282.3% from $2.6
million for the three months ended June 30, 1997 to $9.9 million for the three
months ended June 30, 1998. The Company's medical claims ratio decreased from
82.2% for the three months ended June 30, 1997 to 71.9% for the three months
ended June 30, 1998. This decrease was caused primarily by the increase in
primary eye care service contracts from medical, surgical and facility eye care
service contracts. As a percentage of managed care revenues, primary eye care
service contracts increased from 16.7 % for the three months ended June 30,
1997 to 49.1% for the three months ended June 30, 1998. 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 35.4% and fee-for-service claims represented 64.6% of
total medical claims expense for the three-month period ended June 30, 1998.

         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.

         General and Administrative Expenses. General and administrative
expenses increased 150.7% from $1.5 million for the three months ended June 30,
1997 to $3.8 million for the three months ended June 30, 1998. This increase
was caused primarily by an increase in corporate staff necessary to support the
Company's expanded practice management and managed care business and increases
in travel expenses, professional fees and occupancy costs. Salaries, wages 



                                      13

<PAGE>   14

and benefits expense consist of expenses related to management and
administrative staff located at the Company's corporate headquarters and
regional offices. As a percentage of revenues, general and administrative
expenses decreased from 12.0% for the three months ended June 30, 1997 to 7.4%
for the three months ended June 30, 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 $449,000 for the three months ended June 30, 1997 to $1.6
million for the three months ended June 30, 1998. As a percentage of revenues,
depreciation and amortization expense decreased from 3.5% for the three months
ended June 30, 1997 to 3.0% for the three months ended June 30, 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.

Six-Month Period Ended June 30, 1998 Compared to Six-Month Period Ended June
30, 1997

         Revenues. Revenues increased 318.9% from $23.7 million for the six
months ended June 30, 1997 to $99.4 million for the six months ended June 30,
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 $25.7 million of the increase; an
increase in buying group revenues attributable to the Block Acquisition which
accounted for $29.3 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 $20.6 million of the increase. Comparable clinic revenues increased 17.1%
over 1997 levels for practices managed by the Company for the entire year.
Managed care revenues on a comparable basis increased 38.5% over 1997 levels
for business units operated by the Company for the entire year.

         LADS Operating Expenses. LADS operating expenses increased 131.3% from
$15.0 million for the six months ended June 30, 1997 to $34.7 for the six
months ended June 30, 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 and the 1998
Acquisitions. As a percentage of LADS operations net revenues, LADS operating
expenses decreased from 85.7% for the three months ended June 30, 1997 to 80.3%
for the three months ended June 30, 1998. This decrease was caused primarily by
the 1997 Acquisitions, the LaserSight Acquisition and the 1998 Acquisitions.

         Medical Claims. Medical claims expense increased 288.5% from $5.0
million for the six months ended June 30, 1997 to $19.6 million for the six
months ended June 30, 1998. The Company's medical claims ratio decreased from
81.2% for the six months ended June 30, 1997 to 73.0% for the six months ended
June 30, 1998. This decrease was caused primarily by the increase in primary
eye care service contracts from medical, surgical and facility eye care service
contracts. As a percentage of managed care revenues, primary eye care service
contracts increased from 15.7% for the six months ended June 30, 1997 to 49.1%
for the six months ended June 30, 1998. 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 36.3% and fee-for-




                                       14
<PAGE>   15


service claims represented 63.7% of total medical claims expense for the
six-month period ended June 30, 1998.

         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.

         General and Administrative Expenses. General and administrative
expenses increased 165.7% from $3.0 million for the six months ended June 30,
1997 to $7.9 million for the six months ended June 30, 1998. This increase was
caused primarily by an increase in corporate staff necessary to support the
Company's expanded practice management and managed care business and increases
in travel expenses, professional fees and occupancy costs. Salaries, wages and
benefits expense consist of expenses related to management and administrative
staff located at the Company's corporate headquarters and regional offices. As
a percentage of revenues, general and administrative expenses decreased from
12.6% for the six months ended June 30, 1997 to 8.0% for the six months ended
June 30, 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 $750,000 for the six months ended June 30, 1997 to $2.9 million
for the six months ended June 30, 1998. As a percentage of revenues,
depreciation and amortization expense decreased from 3.2% for the six months
ended June 30, 1997 to 2.9% for the six months ended June 30, 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.

         Merger Costs Merger costs were incurred as a result of the EyeCare One
and VIPA 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 six
months ended June 30, 1997 was $2.2 million as compared to net cash provided by
operating activities of $4.2 million for the six months ended June 30, 1998.
Net cash used in operating activities for the six months ended June 30, 1997
resulted primarily from an increase in accounts receivable for the period.

         Net cash used in investing activities for the six months ended June
30, 1997 and 1998 was $3.2 million and $21.4 million, respectively, and
resulted from payments for acquisitions, furniture and equipment and
capitalized acquisition costs.

         Net cash provided by financing activities for the six months ended
June 30, 1997 and 1998 was $6.2 million and $20.2 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. The Company had used approximately $48.3 million
of its available borrowings under the Credit Agreement which was repaid with
proceeds from the Credit Facility.

         On July 1, 1998 the Company entered into a restated $100.0 million
bank credit agreement with the Bank of Montreal as agent for a consortium of
banks (the "Credit Facility"). The Credit Facility was used in part to early
extinguish the Company's outstanding balance of approximately $48.3 million
under its prior Credit Agreement. The remaining balance under the new Credit
Facility 




                                   15

<PAGE>   16
shall be principally utilized for acquisitions, as well as working capital and
general corporate purposes. The Credit Facility includes a seven year term loan
for $70 million and a $30 million five year revolving and acquisition facility.
Other terms and conditions of the new Credit Facility were substantially the
same as the Company's prior Credit Agreement with a slightly higher margin
spread on the seven year term portion of the Credit Facility. As of August 3,
1998 the Company had used approximately $76.0 million of its available
borrowings under the Credit Facility and currently has an available balance of
approximately $24.0 million.

         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 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.




                                      16


<PAGE>   17

         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.

         To date in 1998, the Company completed the 1998 Acquisitions and, in
connection with the 1998 Acquisitions, the Company provided aggregate
consideration of approximately $33.5 million consisting of 1,356,693 shares of
Common Stock, $19.8 million in cash and promissory notes in the aggregate
principal amount of approximately $1,346,000, 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.



                                      17

<PAGE>   18


         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. 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. Such shares were subsequently reissued by the
Company in connection with the EyeCare One acquisition.

         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 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.



                                      18

<PAGE>   19

         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 can affect the Company's earnings per share.

         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. Management believes that Block Vision's managed
care computer systems have been updated to be 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 



                                      19

<PAGE>   20
that year "2000" issues are satisfactorily resolved. There can be no
assurances, however, that the computer systems of other companies may not 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
Facility, 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 through at least 1998. 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 1998, 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 and/or the net proceeds from the offering of
debt or equity securities.




                                       20

<PAGE>   21


              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
obtain additional debt or raise 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 Company's current and future managed
care contracts; (viii) 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; (ix) the Company's relationships
with affiliated retail optical companies; (x) the Company's relationships with
its buying group participants and suppliers of eye care products and supplies;
and (xi) 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
failure by the Company to meet analysts expectations; (xv) the Company's stock
price; and (xvi) 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.




                                      21


<PAGE>   22

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 June 30, 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 April 1998, the Company issued 73,519 shares of Common
Stock in connection with the acquisition of certain assets of Robert L.
Garrett, O.D., P.C.

          In April 1998, the Company issued 126,183 shares of Common Stock 
in connection with the acquisition of certain assets of Master Eye Consultants, 
P.C.

          In April 1998, the Company issued 28,058 shares of Common Stock in
connection with the acquisition of certain assets of Dr. Freed & Associates,
P.A.

          In April 1998, the Company issued 13,080 shares of Common Stock in
connection with the acquisition of certain assets of Mitchell Goldstein, O.D.,
P.A.

          In May 1998, the Company issued 1,348 shares of Common Stock in
connection with the acquisition of certain assets of Richard A. Sills, P.A.

          In May 1998, the Company issued 21,710 shares of Common Stock in
connection with the acquisition of certain assets of Lew L. Lindley, O.D.

          In May 1998, the Company issued 154,185 shares of Common Stock in
connection with an amendment to the Business Management Agreement with
Lindstrom, Samuelson & Hardten Ophthalmology Associates, P.A.

          In June 1998, the Company issued 81,022 shares of Common Stock in
connection with the acquisition of certain assets of Nevada Eye Care
Professionals.

          In June 1998, the Company issued 5,146 shares of Common Stock in
connection with the acquisition of certain assets of Gail Schechter, O.D.

          In June 1998, the Company issued 35,631 shares of Common Stock in
connection with the acquisition of certain assets of Visionary Charitable
Remainder Trust.

          In June 1998, the Company issued 231,597 shares of Common Stock in
connection with the acquisition of certain assets of Lanny B. Hale, Hale Center
for the Vision Sciences, S.C., and LAH Charitable Remainder Trust.



                                       22

<PAGE>   23

          In June 1998, the Company issued 30,592 shares of Common Stock in
connection with the acquisition of certain assets of Jerold S. Greenfield, O.D.

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

          The Annual Meeting of shareholders of Vision Twenty-One, Inc. was
held on June 8, 1998. At the meeting, the following actions were taken by the
shareholders:

     1.   Richard T. Welch was re-elected to serve as a Director of the Company,
in accordance with the Company's By-laws. The voting on the resolution was as
follows:

                  FOR                                               9,693,404
                  WITHHELD                                             26,810


     2.   Herbert U. Pegues, II was re-elected to serve as a Director of the
Company, in accordance with the Company's By-laws. The voting on the resolution
was as follows:

                  FOR                                               9,693,404
                  WITHHELD                                             26,810

     3.   Jeffrey I. Katz was re-elected to serve as a Director of the
Company, in accordance with the Company's By-laws. The voting on the resolution
was as follows:

                  FOR                                               9,693,404
                  WITHHELD                                             26,810

     4.   The Company's Stock Incentive Plan was amended. The voting on the
resolution was as follows:

                  FOR                                               9,254,644
                  AGAINST                                             447,935
                  ABSTAINED                                            16,835

     5.   Authority was given to the Board of Directors to reallocate
unused shares reserved under the Professional Stock Plan and the Stock
Incentive Plan between such plans. The voting on the resolution was as follows:

                  FOR                                               9,418,570
                  AGAINST                                              61,555
                  ABSTAINED                                           239,289

     6.   Ernst & Young was appointed as the Company's independent auditors
until the conclusion of the 1999 Annual Meeting.

                  FOR                                               9,715,879
                  AGAINST                                               2,900
                  ABSTAINED                                               635



                                    23

<PAGE>   24

ITEM 5.   OTHER INFORMATION

Notice of Shareholder Proposal Deadline Date Under New Proxy Rule 14a-4 for the
1999 Annual Meeting

          The Company hereby notifies all shareholders that March 24, 1999 (the
"Deadline") is the date after which notice of a shareholder sponsored proposal
for consideration at the Company's 1999 meeting of shareholders (other than in
respect of a nominee for election to the Board of Directors) submitted outside
the processes of Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, will be considered untimely under the new proxy Rule 14a-4(c)(1)
issued by the Securities and Exchange Commission. A proposal submitted outside
the processes of Rule 14a-8 is any shareholder proposal submitted for
presentation at the next annual meeting of shareholders but not submitted for
inclusion in the Company's proxy statement. Under Rule 14a-4(c)(1), if a
proponent fails to notify the Company by the Deadline, then the management
proxies will be permitted to use their discretionary voting authority if such
proposal is raised at the annual meeting, without any discussion of the matter
in the proxy statement. With respect to shareholder proposals for consideration
for inclusion in the Company's proxy statement for the 1999 annual meeting of
shareholders, such shareholder proposals are still required to be submitted to
the Company no later than January 8, 1999 as previously stated in the Company's
May 8, 1998 proxy statement.

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

(a)                Exhibits.  See Exhibit Index attached hereto.
(b)                Reports on Form 8-K.

                   The Company filed a report on Form 8-K on April 14, 1998
                   related to the Company's acquisition of EyeCare One Corp.
                   The Company also filed a Form 8-K/A amendment to the Form
                   8-K on June 5, 1998 to include financial statements and
                   proformas previously omitted.



                                      24


<PAGE>   25



                                 EXHIBIT INDEX

<TABLE>
<CAPTION>

EXHIBIT
NUMBER         EXHIBIT
<S>            <C>
2.1*           Asset Purchase Agreement dated effective June 30, 1998 among Vision
               Twenty-One, Inc., Vision World, Inc., Russell Trenholme and Takako
               Trenholme. (2)

               (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.)

4.1*           Amended and Restated Credit Agreement dated as of July 1, 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.)

10.1*          Amended and Restated Credit Agreement dated as of July 1, 1998
               among Vision Twenty-One, Inc., the Banks Party Hereto and Bank
               of Montreal as Agent, filed as Exhibit 4.1 to this Form 10-Q and
               incorporated herein by reference.

27.1           Financial Data Schedule for six months ended June 30, 1998
               (for SEC use only).

27.2           Restated Financial Data Schedule for the six months ended June
               30, 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 July 10, 1998 
[2] Form 8-K filed August 7, 1998




                                      25

<PAGE>   26



                                   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 August 14, 1998.


                                        VISION TWENTY-ONE, INC.
                                        Registrant




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



                                      26