<PAGE>   1




                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

   
                                  FORM 10-K/A
    

X        ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
         OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED APRIL 30, 1998

                                     1-10629
                             COMMISSION FILE NUMBER

                           LASER VISION CENTERS, INC.
                (Name of Registrant as Specified in its Charter)

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

                      540 MARYVILLE CENTRE DRIVE, SUITE 200
                            ST. LOUIS, MISSOURI 63141
                    (Address of Principal Executive Offices)

                                 (314) 434-6900
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                                                          NAME OF EACH EXCHANGE
 TITLE OF EACH CLASS                                       ON WHICH REGISTERED
 -------------------                                       -------------------

    Common Stock,
   $.01 Par Value                                        NASDAQ National Market

         Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.01 par value
                                (Title of Class)

          Check whether the Company: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such report(s), and
(2) has been subject to such filing requirements for past 90 days. YES X NO

          The aggregate market value of the voting stock of the Company held by
non-affiliates as of July 17, 1998 was approximately $122,720,000.

<TABLE>
<CAPTION>

            CLASSES OF COMMON EQUITY OUTSTANDING AS OF JULY 17, 1998
<S>                                                                                                    <C>
          Common Stock, $.01 par value                                                                  9,780,098
          Underwriter Warrants                                                                             45,388
          Other Registered Warrants                                                                     1,523,500
          Unregistered Warrants                                                                           680,300
          Incentive Stock Options                                                                         468,252
          Non-Qualified Options                                                                           263,931
</TABLE>

                       DOCUMENTS INCORPORATED BY REFERENCE

          The Company incorporates by reference various exhibits from the
Company's 1991 Registration Statement, file No. 33-33843, the Company's November
1993 Registration Statements, file Numbers 33-67328 and 33-58618, the Company's
September 1994 Registration Statement, file No. 33-94050, the Company's March
1997 Registration Statement, file No. 333-22609 and periodic reports filed under
the Exchange Act.


   
                              REASON FOR AMENDMENT

          The Company has restated its 1998 financial statements to account for
the beneficial conversion feature and the mandatory redemption features of the
Series B convertible preferred stock. See Note 3 to the Consolidated Financial
Statements.
    

<PAGE>   2



ITEM 1

                             DESCRIPTION OF BUSINESS

          The Company is one of the world's largest providers of access to
excimer lasers and related services for the treatment of refractive vision
disorders and owns 40 excimer lasers which are available for use in the United
States, Canada or Europe. The Company is also the world's largest operator of
mobile excimer laser systems. The excimer laser can be used to treat refractive
vision disorders such as nearsightedness, farsightedness and astigmatism to
eliminate or reduce the need for corrective lenses. LaserVision Centers operate
primarily on a shared-access model, giving individual or group ophthalmic
practices use of excimer laser technology without investment risk or maintenance
requirements, thereby improving utilization of the excimer laser equipment. In
addition, the Company provides a broad range of professional services, including
physician and staff training, technical support services and maintenance and,
through its MarketVision division, advertising and marketing programs and
services.

          The Company has operated commercial excimer laser centers in Canada,
Europe, and the U.S. since 1991, 1993, and 1995 respectively. In the U.S., the
Company currently provides eight fixed base lasers and utilizes twenty lasers to
provide mobile access to over 100 sites. Internationally, the Company provides
fixed base lasers and related services to centers in Canada, the United Kingdom,
Finland, Greece, and Sweden and provides mobile access services in Canada, the
United Kingdom, and Ireland. In the United States, fixed-site laser centers are
operated in conjunction with Columbia/HCA Healthcare Corporation ("Columbia") or
by the Company independently or through joint operating agreements.

          In anticipation of approval by the Food and Drug Administration (FDA)
of the excimer laser to perform refractive procedures, the Company developed a
relationship with Columbia whereby the Company would become the primary provider
of excimer lasers to Columbia ambulatory surgery centers. Currently, the Company
is providing over twenty Columbia centers with fixed or mobile access to excimer
lasers pursuant to this agreement.

          The Company's growth strategy includes the following elements:
(i)expanding the use of its mobile systems; (ii) increasing market penetration
through fixed-site laser centers in selected markets; (iii) targeting efforts
towards specific markets and key demographic groups within those markets; (iv)
promoting development of physician alliances with the goal of maximizing excimer
laser usage; (v) expanding its presence through complementary acquisitions of
other excimer laser providers as well as potential acquisitions of related and
ancillary businesses; and (vi) solidifying and expanding its existing strategic
alliances with health care providers, equipment manufacturers, major employers,
managed care providers and other third party payers.

          The Company continues to explore opportunities to expand both its
domestic and international operations.

VISION DISORDERS

          The human eye is approximately 25 millimeters in diameter and
functions much like a camera, incorporating a lens system which focuses light
(the cornea and the lens), a variable aperture system which regulates the amount
of light passing through the eye (the iris) and film which records the image
(the retina). Light from a distant object passes through the cornea, iris, and
lens, which focus the light on the retina. The retina contains light sensitive
receptors which transmit the image through the optic nerve to the brain.
Seventy-five percent of the focusing power of the eye is provided by the
curvature of the corneal surface.

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

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

          Another major category of vision problems is pathological disorders.
Traumatic, congenital and pathological sources cause defects in the cornea which
result in restricted vision. A typical medical alternative for treatment of
these conditions is a corneal transplant which involves major surgery and is
dependent on the availability of a suitable donor cornea and 


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on the individual surgeon's skill and experience. Corneal transplants
frequently produce irregular corneal surfaces which compromise the patient's
vision. Another major concern regarding corneal transplantation involves the
possibility of transmission of viruses that could infect the patient.

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

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

EXCIMER LASER SURGERY

          An excimer laser emits energy in an extremely short pulse lasting only
several billionths of a second. High energy ultraviolet photons produced by the
excimer laser create a "non-thermal" process known as ablation which does not
heat adjacent tissue. The excimer laser can be used to treat refractive vision
disorders such as nearsightedness and astigmatism in the PRK procedure. PRK
involves using the excimer laser to resculpt the cornea. This adjusts the amount
of refraction which in turn eliminates or reduces the need for corrective
lenses. The excimer laser can also be used to treat a number of pathological
superficial corneal disorders in a procedure called PTK. The laser manufactured
by Visx, Inc. ("Visx") is currently approved to treat myopia up to -12 diopters
with astigmatism of up to -4 diopters. Visx is currently seeking approval to
treat hyperopia (farsightedness). The laser manufactured by Summit Technology
("Summit") is currently approved to treat myopia of up to -6 diopters with
astigmatism of up to -4 diopters. In February 1998, the laser manufactured by
Autonomous Technologies, Inc. was recommended for approval by the FDA Ophthalmic
Devices Advisory Panel to treat low to moderate myopia with astigmatism, but has
not yet received final FDA approval. Excimer lasers are also used to perform a
procedure known as laser assisted in situ keratomileusis (LASIK) in which an
ophthalmologist, using a microkeratome, lifts a thin layer of cornea to create a
flap. Laser energy is then used to ablate corneal cells on the exposed surface
to improve the person's visual acuity, and the flap is then folded back into
place. While LASIK has not been specifically approved in the U.S. by the FDA, it
has been widely adopted by U.S. ophthalmologists and is treated by the FDA as a
practice of medicine matter. Industry sources estimate that more than 200,000
refractive excimer laser procedures were performed in the United States in 1997.

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

          Some potential medical risks have been identified in connection with
the use of laser refractive surgery and there may be other risks which will not
be known until the procedure has been widely used and monitored. Potential
complications and side effects include: post-operative discomfort; corneal haze
during healing (an increase in the light scattering properties of the cornea);
glare/halos (undesirable visual sensations produced by bright lights); decreases
in contrast sensitivity; temporary increases in intraocular pressure in reaction
to medication; modest fluctuations in refractive capabilities during healing;
modest decreases in best corrected 


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vision (i.e., with corrective lenses); unintended over- or under-corrections; 
regression of effect; disorders of corneal healing; corneal scars; corneal 
ulcers and induced astigmatism.

BUSINESS STRATEGY

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

          The Company's growth strategy includes the following elements: (i)
expanding the use of its mobile systems by helping existing customers increase
their procedure volume and adding new mobile customers; (ii) increasing market
penetration with fixed-site laser centers in selected markets; (iii) targeting
efforts towards specific markets and key demographic groups within those
markets; (iv) promoting development of physician alliances with the goal of
maximizing excimer laser usage; (v) expanding its presence worldwide through
complementary acquisitions of other excimer laser providers as well as potential
acquisitions of related and ancillary businesses; and (vi) solidifying and
expanding its existing strategic alliances with health care providers, equipment
manufacturers, major employers, managed care providers and other third party
payers.


OPERATION OF LASER CENTERS

          The Company provides access to excimer lasers and related services for
elective ophthalmic surgery, collecting a fee for each procedure performed by
independent ophthalmologists. Currently, patients are charged approximately
$1,500 to $2,500 per eye for the procedure. The Company's fee ranges from
approximately $400 to $1,100 per procedure, depending on the services provided
by the Company. The Company provides access to excimer lasers and related
services through fixed-site laser centers and its mobile excimer laser systems.
The Company currently provides excimer lasers and related services in the United
States, Canada, the United Kingdom, Finland, Greece, Sweden and Ireland.

MOBILE SYSTEMS

          In addition to operating fixed-site centers, the Company has developed
proprietary systems for transporting excimer lasers: the MobilExcimer system,
which is a self-contained mobile refractive surgery center duplicating most of
the equipment and services typically found in a fixed-site location and the
"Roll-on/Roll-off" system which is capable of transporting the laser into a
surgery center or ophthalmologist's office. These proprietary systems give the
Company flexibility that the Company believes is not currently available to its
competitors and are intended to help the Company achieve broader penetration of
both domestic and international markets. The Company uses its mobile systems to
provide excimer laser access to communities where the Company's potential
patient base is insufficient to sustain a fixed-site center, thereby enhancing
the Company's ability to expand quickly into multiple markets. Currently the
Company operates two MobilExcimer systems in the U.S. and one MobilExcimer
system in Canada. Eighteen "Roll-on/Roll-off" systems are in use in the U.S. and
two "Roll-on/Roll-off" systems are being used in Europe.

OTHER LASER CENTERS

          U.S. Centers. In addition to its affiliation with Columbia, the
Company also provides fixed base lasers to U.S. centers that are not associated
with Columbia including the Company's LaserVision Center in St. Louis and three
other independent sites. Sites are selected based on a number of criteria, such
as the number of physicians who indicate a substantial interest in using the
center, the historical surgical volumes of these physicians, demographic
factors, the results of market research and local media costs.

          Canadian Center. The Company currently provides one fixed base laser
and operates one MobilExcimer unit in Canada.

          European Centers. The Company owns and operates one fixed-site excimer
laser center in the United Kingdom, provides lasers to four fixed sites in
Finland, Greece, and Sweden, and operates two "Roll-on/Roll-off" excimer laser
systems in the United Kingdom and Ireland.

RMSO

          The Company developed an RMSO (refractive management services
organization) program in the U.S. to increase its alliance with ophthalmologists
with active refractive practices, involving both RK and laser refractive
procedures, as a means of increasing demand for its excimer lasers. The RMSO
agreement provided for the Company to purchase refractive assets of the practice
of the ophthalmologist for cash. The Company completed only one RMSO agreement
with Lindstrom, Samuelson & Hardten Ophthalmology Associates, P.A. ("LSH"). Dr.
Lindstrom is a member 


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of the Board of Directors and the Company's Medical Director, Dr. Hardten is a 
medical advisor to the Company. That RMSO agreement was terminated by mutual 
agreement as of April 15, 1998 and the Company has entered into a new 
arrangement with Minnesota Eye Associates (successor to LSH) as of May 1, 1998.

SUPPLIERS

          The current list cost of an excimer laser ranges from $450,000 to
$525,000, plus sales tax and shipping, as well as a $250 royalty or licensing
fee per U.S. refractive procedure to be paid to the laser manufacturer
(previously Pillar Point partnership) which owns certain patent rights with
respect to the excimer laser. Trade-ins of earlier excimer laser technology and
volume purchase discounts could reduce the costs of new lasers. The purchase
price includes a one year warranty on all parts except the optics (mirror and
glass components) which carry a 30-day warranty. Annual maintenance and service
fees are paid by the Company and cost up to $50,000 per year, but vary with
usage.

          The Company currently has an available base of 40 excimer lasers
worldwide of which 27 are available for use in the U.S. The Company has the
flexibility to utilize any excimer laser approved by the FDA and provides the
laser preferred by the physician users at each location or center.

MARKETING

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

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

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

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

                   - Consumers. The Company begins planning a physician's
          marketing program by analyzing available media for the targeted
          demographic group. The marketing program consists of advertising and
          public relations. Public relations efforts attempt to place news
          stories in various media which will highlight the opening of the
          center and the availability of laser refractive surgery in the market.
          The Company utilizes radio, print, television and direct mail to
          disseminate its message to prospective patients. Prospective patients
          then respond to a toll free number (888-LaserVision) and the calls are
          answered by Company representatives who qualify the prospective
          patients and record the prospective patients' names and related
          information into a computer system which can be used for subsequent
          mailing lists. The representative makes an appointment with a local
          center or surgeon to determine whether the prospective patient is a
          candidate for the surgery. Based on its experience operating centers
          internationally and providing marketing services to refractive
          surgeons, the Company believes that the conversion level is higher
          when calls are received and processed by a central system. Prospective
          patients are routed to exams and given educational materials about
          laser refractive surgery. If the prospective patient elects not to
          proceed to surgery following the exam process, the prospective
          patient's name is placed on a follow-up list and additional materials
          are sent to the prospective patient over a defined period of time.

COMPETITION

          The market for access to excimer lasers is subject to increasingly
intense competition. The Company competes with several other companies in
providing access to excimer lasers in the United States and internationally.
Other companies are currently in the process of gaining FDA approval for their
lasers and these companies may elect to enter the laser access business. Other
non-manufacturing companies which operate excimer laser centers in the United
States are: LCA Vision, Inc., ClearVision Laser Centers, Inc., Sight Resources,
Inc., Sterling Vision, Inc. 


                                                                               
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and TLC The Laser Center, Inc. The Company also competes with laser centers 
operated by local operators in certain markets. There can be no assurance that 
any reduction in per procedure fees that may result from increased competition 
will be compensated for by an increase in
procedure volume.

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

PATENTS AND TRADEMARKS

          The names LASERVISION(R), LASERVISION CENTERS AND DESIGN(R),
LASERVISION CENTERS(R), LASERVISION CENTER(R) and MobilExcimer(R) are registered
U.S. service marks of the Company. In addition, the Company owns service mark
registrations in a number of foreign countries. The Company has also secured a
patent for the MobilExcimer mounting system and is in the process of obtaining a
U.S. patent for certain aspects of its "Roll-on/Roll-off" system. The Company's
service marks, MobilExcimer patent and other proprietary technology may offer
the Company a competitive advantage in the marketplace and could be important to
the success of the Company. There can be no assurance that one or all of these
registrations will not be challenged, invalidated or circumvented in the future.
Litigation regarding intellectual property is common and there can be no
assurance that the Company's service mark registrations and patent will
significantly protect the Company's intellectual property. The defense and
prosecution of intellectual property proceedings is costly and involves
substantial commitments of management time. Failure to defend the Company's
rights with respect to its intellectual property would have a material adverse
effect on the Company's business, financial condition and results of operations.

GOVERNMENT REGULATION

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

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

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

          There are currently two manufacturers, Visx and Summit, that have
received FDA approval to market excimer lasers for refractive procedures for
myopia (nearsightedness) and for PTK. The Visx excimer laser system is currently
approved to treat myopia up to -12 diopters and up to -4 cylinders of
astigmatism. Visx is also seeking approval to treat hyperopia (farsightedness).
The laser manufactured by Summit is currently approved to treat myopia of up to
-6 diopters with astigmatism of up to -4 cylinders. In February 1998, the laser
manufactured by Autonomous Technologies, Inc. was recommended for approval by
the FDA Ophthalmic Devices Advisory Panel to treat low to moderate myopia with
astigmatism, but has not yet received final FDA approval. The process of
obtaining FDA approval of medical devices is time consuming and expensive, there
can be no assurance that any approval sought will be granted or that the FDA
review will not involve delays. Even after regulatory clearance is obtained,
approval of medical devices is subject to review. Discovery of problems,
violations of the Radiation Control for Health and Safety Act or 


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future legislative or administrative action in the U.S. or elsewhere may 
adversely affect the manufacturers' ability to retain regulatory approval of any
such equipment. Furthermore, the failure of Visx, Summit or any other 
manufacturers that supply excimer lasers to the Company to comply with 
applicable federal, state or foreign regulatory requirements, or any adverse 
regulatory action against such manufacturers, could limit the supply of lasers 
or limit the ability of the Company to use the lasers.

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

EMPLOYEES

          The Company currently has 83 employees in the U.S., England and
Canada. Management believes that the Company's relationship with its employees
is satisfactory. As the Company expands, it expects to add additional employees
in technical, marketing and management positions. The Company does not
anticipate any unusual difficulty in hiring such personnel when needed. On March
1, 1997, the Company established a 401(k) Profit Sharing Plan and Trust for its
U.S. employees. The Company match associated with this Plan is payable in common
stock of the Company based on the market price at the end of each month.


ITEM 2

                             DESCRIPTION OF PROPERTY

          The Company currently occupies 9,989 square feet of space in St. Louis
County, Missouri for its corporate headquarters under a lease which expires in
2001. The Company also leases 2,700 square feet of space in St. Louis County,
Missouri for its St. Louis LaserVision Center under a lease which expires in
2001.

          The Company's wholly-owned subsidiary leases 3,000 square feet of
space on Harley Street in London, England, which houses the Harley Street
LaserVision Centre as well as the European corporate headquarters.

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


ITEM 3

                                LEGAL PROCEEDINGS

          The Company is party to the following legal proceedings:

          In March 1998 the Company was served with a subpoena by the United
States Department of Justice. The Company understands that the subpoena is part
of an industry-wide investigation into the so-called "international card"
software that enabled the excimer lasers to be used to perform laser eye
surgeries for higher myopia cases (greater than -6.0 diopters) than what was
initially approved by the FDA. The FDA ultimately did approve use of an excimer
laser for higher myopia cases in January 1998. Many ophthalmologists have taken
the position that FDA restrictions on physicians' use of laser equipment through
software control, rather than the traditional means of labeling, deny physicians
the flexibility to treat individual patients as the physician deems medically
necessary, and represent an unwarranted intrusion upon physicians' rights to
practice medicine according to their best medical judgment. The subpoena
requests that the Company produce several specified categories of documents. The
Company has provided the documents as requested and intends to continue to fully
cooperate in this matter. Although it is impossible to assess the effect, if
any, of this investigation on the operating results and cash flow for a
particular period, the Company's management does not believe that it should be
material to the financial condition of the Company.

          Other than as described above, management does not expect that any
outstanding or pending legal proceedings, individually or in the aggregate, will
have a material adverse effect upon the Company's future results of operations,
liquidity or financial condition.


ITEM 4

               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          At the Annual Meeting of Shareholders on March 19, 1998, shareholders
elected six members of the Board of Directors, approved Price Waterhouse LLP
(currently PricewaterhouseCoopers LLP) as the Company's independent public
accountants, approved a 300,000 share increase in the common 


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stock available in the Incentive Stock Option Plan and a 700,000 share increase
in the common stock available in the Non-Qualified Warrant Plan.

                                     PART II

ITEM 5

                           MARKET FOR COMMON STOCK AND
                           RELATED STOCKHOLDER MATTERS

          The common stock of the Company is traded on the over-the-counter
market through NASDAQ. Furthermore, the following dealers are listed on NASDAQ
summaries as market makers in the Company's stock as of July 1998:

             A. G. Edwards & Sons, Inc.          Schneider Securities Inc.
             Prudential Securities, Inc.         Mayer & Schweitzer Inc.
             UBS Securities Inc.                 Herzog, Heine, Geduld Inc.
             Everen Securities Inc.              Josephthal Lyon & Ross
             Sherwood Securities Corp.           Troster Singer Corp.
             Nash Weiss/Div of Shatkin Inv.      Knight Securities, L.P.
             Paragon Capital Corp.               Jeffries & Company, Inc.
             Kenny Securities Corp.              Gaines Berland, Inc.

          There were approximately 405 holders of record of the Company's common
stock on July 8, 1998. This figure does not consider the individual holders of
securities that are held in the "street name" of a securities dealer. Based upon
information received from securities dealers, the total number of individual
holders of the Company's common stock exceeds 1,400.

          There have been and are expected to be no dividends declared on the
common stock.


                 TABLE OF HIGH/LOW SALES PRICES FOR EACH QUARTER


<TABLE>
<CAPTION>

                                                  -COMMON-
                                            HI CLOSE    LOW CLOSE
QUARTER ENDED                                 LVCI        LVCI
<S>                                         <C>          <C>
July 96                                      $14.50       $7.00
October 96                                     9.13        6.88
January 97                                     7.63        4.94
April 97                                       6.63        5.13

July 97                                        8.25        6.00
October 97                                    10.06        6.75
January 98                                     9.00        6.50
April 98                                      14.50        6.88
</TABLE>


ITEM 6
                            SELECTED FINANCIAL DATA

   
<TABLE>
<CAPTION>
                                                                 YEAR ENDED APRIL 30,
  (in thousands, except per share data)      1998        1997         1996         1995      1994
                                          (Restated)
<S>                                         <C>        <C>          <C>           <C>       <C>
STATEMENT OF OPERATIONS DATA:
Revenues                                    $23,469    $ 8,238      $ 3,918       $3,311    $2,106

Gross profit (loss)                           6,719        648         (332)         (64)      338

Selling, general and administrative           9,592      9,719        5,831        3,144     2,238

Fixed asset impairment provision                  -      2,772        3,063            -         -

Loss from operations                         (2,873)   (11,843)      (9,216)      (3,208)   (1,900)

Net Loss                                    $(3,496)  $(12,069)     $(8,803)     $(3,297)  $(2,210)

Basic and diluted loss per share
(Restated)                                    $(.59)    $(1.45)      $(1.75)      $(0.82)    $(.66)

Weighted average number of common
shares outstanding                            9,178      8,421        5,278        4,001     3,356
</TABLE>
    

   
          Basic and diluted loss per share for the year ended April 30, 1998
have been restated as discussed in Note 3 to the Consolidated Financial
Statements included elsewhere herein.
    

                                                                               8
<PAGE>   9
   

<TABLE>
<CAPTION>

                                                                                 APRIL 30,
                                                          1998       1997        1996         1995      1994
BALANCE SHEET DATA:                                    (Restated)
<S>                                                      <C>        <C>         <C>         <C>        <C>
Cash and cash equivalents                                $8,430    $ 3,794      $12,672     $ 2,126    $  706

Working capital (deficit)                                 5,554      1,654       10,002     (1,301)     (244)

Total assets                                             30,829     22,870       28,913      11,318     9,135

Non-current liabilities                                   6,615      6,267        1,763         791     2,900

Convertible preferred stock with mandatory
redemption provisions (restated)                          1,915          -       14,539           -         -

Common stock and stock options issued
for contract rights                                           -      1,092            -           -         -

Stockholders' equity (restated)                         $13,578    $10,276      $ 7,453     $ 6,349   $ 4,594

</TABLE>


    

   
Convertible preferred stock with mandatory redemption provisions and 
Stockholders' equity at April 30, 1998 have been restated as discussed in Note 
3 to the consolidated financial statements included elsewhere herein.
    

There were no cash dividends or common stock dividends during this five year
period.



SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

          (in thousands except per share data)
   
<TABLE>
<CAPTION>


Fiscal 1998 quarterly                         July 1997        October 1997          January 1998         April 1998
---------------------                         ---------        ------------          ------------         ----------
                                              (RESTATED)
<S>                                           <C>              <C>                   <C>                  <C>
 Revenues                                        $4,098              $5,223                $6,345             $7,803
 Gross Profit                                       781               1,276                 1,877              2,785
 Net income (loss)                               (1,537)             (1,173)                 (913)               127
 Deemed preferred dividends (restated)            1,765                  66                    56                 43
 Basic and diluted
  income (loss) per share (restated)             $ (.37)              $(.14)                $(.10)              $.01
 Weighted average number of
  common shares outstanding                       8,821               9,044                 9,301              9,558

Fiscal 1997 quarterly                         July 1996        October 1996          January 1997         April 1997
---------------------                         ---------        ------------          ------------         ----------
 Revenues                                        $1,502              $1,928                $2,009             $2,799
 Gross Profit                                       110                  98                   118                322
 Fixed asset impairment provision                                                                              2,772
 Net loss                                        (2,292)             (2,136)               (2,333)            (5,308)
 Deemed preferred dividends                         104                  21
 Basic and diluted
  loss per share                                  $(.32)              $(.25)                $(.26)             $(.60)
 Weighted average number of
  common shares outstanding                       7,542               8,537                 8,811              8,816
</TABLE>
    

   
Deemed preferred dividends and Basic and Diluted loss per share for the 
quarter ended July 31, 1997 has been restated as discussed in Note 3 to the 
consolidated financial statements included elsewhere herein.
    


                                                                               9
<PAGE>   10


ITEM 7

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

          Except for historical information, statements relating to the
Company's plan, objectives and future performance are forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are based on management's current expectations. Because of various
risks and uncertainties, actual strategies and results in future periods may
differ materially from those currently expected.

          The discussion set forth below analyzes certain factors and trends
related to the financial results for each of the three years ended April 30,
1998, 1997 and 1996. This discussion should be read in conjunction with the
consolidated financial statements and notes to the consolidated financial
statements.

BACKGROUND

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

          The Company then determined that FDA approval for PRK in the U.S.
would take longer than originally anticipated and therefore decided to enter
international markets for excimer laser surgery where regulatory restrictions
were less prohibitive. Between late 1991 and April 1994, the Company acquired
four commercial excimer laser centers in Canada, developed the first
MobilExcimer unit and purchased fourteen European excimer lasers. The first PRK
procedure on a MobilExcimer system was performed in Ontario, Canada in September
1994.

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

          In August 1995, the Company acquired an excimer laser access provider,
Vision Correction, Inc., for $650,000 of Common Stock. In October 1995 and March
1996, the FDA approved the use of the excimer lasers manufactured by Summit and
VISX, respectively, for performing PRK procedures for low to moderate myopia,
making it possible for the Company to begin providing ophthalmologists access to
excimer lasers in the United States. During April 1996, the Company purchased
assets from a former competitor to expand its European operations for a purchase
price of approximately $300,000, including cash and assumed liabilities.

          In 1997 and 1998, the Company helped train hundreds of U.S.
ophthalmologists in refractive eye surgery, developed its capacity to provide
mobile services to over one hundred twenty domestic locations, expanded its
international mobile services, closed five unprofitable international fixed
sites, established eight domestic fixed sites, developed comprehensive practice
development and telemarketing services to help domestic ophthalmologists
increase their profits and procedure volume and, during the quarter ended April
30, 1998, succeeded in reaching profitability. In addition, when Visx obtained
approval to treat astigmatism and higher levels of myopia, the number of
patients able to be treated increased.

RESULTS OF OPERATIONS

Fiscal Year ended April 30, 1998 Compared to Fiscal Year ended April 30, 1997

          During the year ended April 30, 1998, the Company continued to develop
the U.S. market by targeting ophthalmologists in medium-sized markets. These
practices were primarily served with the newly developed "Roll-on/Roll-off"
mobile system.

          Revenues. Total revenues increased to $23,469,000 for the year ended
April 30, 1998 from $8,238,000 for the year ended April 30, 1997, or an increase
of 185%.

          The increase in revenues is attributable to a $15,442,000 increase in
domestic revenues partially offset by a $211,000 decrease in European and
Canadian revenues. The increase in domestic revenues is attributable to the
increased number of U.S. lasers in operation and procedures performed on each
laser in the U.S. The decrease in European and Canadian revenues is attributable
to closing certain unprofitable fixed sites and converting most of them to
mobile sites during the year.


                                                                              10
<PAGE>   11


          Costs of Revenues/Gross Profit. Costs of revenues increased to
$16,750,000 for the year ended April 30, 1998 from $7,590,000 for the year ended
April 30, 1997. This increase was primarily due to an increase of $5,394,000 in
total domestic per procedure royalties, an increase of $2,031,000 in mobile
laser operator salaries and travel costs, an increase of $963,000 in
depreciation, and an increase of $894,000 in professional medical services.

          Total gross profit increased to $6,719,000 for the year ended April
30, 1998 from $648,000 for the year ended April 30, 1997. The variable gross
profit, excluding depreciation, increased to $11,154,000 from $4,120,000,
primarily due to higher volumes of procedures at an increased number of sites.

          Operating Expenses. Selling, general and administrative expenses
decreased to $9,592,000 for the year ended April 30, 1998 from $12,491,000 for
the year ended April 30, 1997 primarily due to the non-cash impairment charge of
$2.7 million recorded in the fourth quarter of fiscal 1997. Decreases in general
and administrative expenses of $310,000 and selling and marketing expenses of
$839,000, were partially offset by increases in salaries and related expenses of
$970,000 and depreciation and amortization of $52,000.

          Loss from Operations. The loss from operations decreased to $2,873,000
for the year ended April 30, 1998 from $11,843,000 for the year ended April 30,
1997 primarily due to the gross profit on the increased U.S. revenues, the
decreased non-cash impairment charges of $2.7 million and the reduced operating
loss from the international operations where unprofitable fixed sites were
closed and replaced with mobile services.

          Other Income (Expense). Other income(expense) increased to a net
expense of $623,000 for the year ended April 30, 1998 from a net expense of
$226,000 for the year ended April 30, 1997. This increase was primarily due to
an increase of $403,000 in interest expense.

Fiscal Year ended April 30, 1997 Compared to Fiscal Year ended April 30, 1996

          During the year ended April 30, 1997, the Company focused upon the
development of the U.S. market. During the last quarter of fiscal 1997 the
Company began aggressively pursuing its mobile laser strategy in the U.S. by
redeploying several of its fixed-site lasers utilizing its newly developed
roll-on/roll-off strategy.

          Revenues. Total revenues increased to $8,238,000 for the year ended
April 30, 1997 from $3,918,000 for the year ended April 30, 1996, or an increase
of 110%. The increase in revenues is attributable to a $3,936,000 increase in
U.S. revenues and a $776,000 increase in European revenues. The increase in U.S.
revenues for the LaserVision Centers division is attributable primarily to the
increased number of lasers in operation and procedures performed on each laser
in the U.S. The increase in European revenues is attributable to the increased
procedures from the Solihull and Edinburgh centers acquired in the New Image
acquisition and increased procedures performed on the MobilExcimer.

          Costs of Revenues/Gross Profit (Loss). Cost of revenues increased to
$7,590,000 for the year ended April 30, 1997 from $4,240,000 for the year ended
April 30, 1996. This increase was primarily due to an increase in depreciation
to $3,472,000 from $1,973,000 in these respective periods due to the increased
inventory of lasers and other medical equipment.

          Excluding laser and medical equipment depreciation, all other costs of
revenues increased by $1,851,000. This increase, when combined with the revenue
increase, resulted in these other costs of revenues decreasing from 58% of total
revenues for the year ended April 30, 1996 to 50% of total revenues for the year
ended April 30, 1997. This $1,851,000 increase was primarily due to an increase
of $1,077,000 in total domestic per procedure royalties, $548,000 in
professional medical services and $142,000 in gas costs on higher volumes of PRK
procedures and new centers.

          Total gross profit increased to a profit of $648,000 for the year
ended April 30, 1997 from a loss of $322,000 for the year ended April 30, 1996.
The variable gross profit, excluding depreciation, increased to $4,120,000 from
$1,651,000, primarily due to higher volumes of PRK procedures and centers.

          Operating Expenses. Selling, general and administrative expenses
increased to $12,491,000 for the year ended April 30, 1997 from $8,894,000 for
the year ended April 30, 1996 due to an increase of $1,551,000 in general and
administrative expenses, an increase of $1,261,000 in salaries and related
expenses, and increase of $208,000 in depreciation and amortization, and an
increase of $868,000 in selling and marketing expenses. These increases were
partially offset by a decrease in non-cash impairment charges of $291,000.

          Loss from Operations. The domestic loss from operations increased to
$9,055,000 for the year ended April 30, 1997 from $3,695,000 for the year ended
April 30, 1996 due to a $2.3 million write down of lasers and related equipment,
a $2.1 million increase in the loss from U.S. laser operations, and a $891,000
increase in payroll.


                                                                              11
<PAGE>   12

          The Canadian loss from operations decreased to $725,000 for the year
ended April 30, 1997 from $1,350,000 for the year ended April 30, 1996 primarily
due to a decrease of $477,000 in the write-down of lasers and related medical
equipment, and a decrease in the loss from operations of $114,000 in the St.
Catharines center which became a MobilExcimer site.

          The European loss from operations decreased to $1,963,000 for the year
ended April 30, 1997 from $4,312,000 for the year ended April 30, 1996 due to a
decrease in the write-down of lasers and related medical equipment of
$2,161,000.

          Other Income (Expense). Other income (expense) decreased to a net
expense of $226,000 during the year ended April 30, 1997 from a net income of
$413,000 during the year ended April 30, 1996. This decrease was due to a
$169,000 decrease in interest income and other, a $381,000 increase in interest
expense and a $89,000 decrease in the minority interest in the net loss of a
subsidiary.

INFLATION

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

LIQUIDITY AND CAPITAL RESOURCES

          Since the completion of its initial public offering in April 1991, the
Company's primary sources of liquidity have consisted of financing from the sale
of Common Stock and Convertible Preferred Stock, revenues from laser access and
marketing services provided to ophthalmic physicians, leases and notes payable.
At April 30, 1998, the Company had $8,430,000 of cash and cash equivalents
compared with $3,794,000 at April 30, 1997. At April 30, 1998, the Company had
working capital of $5,554,000 compared with working capital of $1,654,000 at
April 30, 1997. The ratio of current assets to current liabilities at April 30,
1998 was 1.64 to one, compared to 1.32 to one at April 30, 1997.

          Cash Flows from Operating Activities. Net cash provided by operating
activities was $1,025,000 for fiscal 1998 compared to net cash used in operating
activities of $5,688,000 and $2,825,000 for fiscal 1997 and 1996, respectively.
The cash flows provided by operating activities during fiscal 1998 primarily
represent the net loss incurred in this period less depreciation and
amortization and an increase in accounts payable and accruals, offset by an
increase in accounts receivable and inventory. The cash flows used for operating
activities during fiscal 1997 primarily represent the net loss incurred in this
period less depreciation, amortization and fixed asset impairment and an
increase in accounts payable, offset by an increase in accounts receivable. The
cash flows used for operating activities in fiscal 1996 primarily represent the
net loss incurred less depreciation, amortization and fixed asset impairment.

          Cash Flows from Investing Activities. Net cash used for investing
activities was $4,145,000 during fiscal 1998 and $4,679,000 and $7,901,000 for
fiscal 1997 and 1996, respectively, and was primarily due to the acquisition of
equipment, equipment deposits and acquisitions.

          Cash Flows from Financing Activities. Net cash provided by financing
activities during fiscal 1998 was $7,756,000 and was primarily due to proceeds
from a private offering of preferred stock, notes payable, and exercise of stock
options and warrants offset by the repayment of notes payable and capitalized
lease payments. Net cash provided by financing activities during fiscal 1997 was
$1,489,000 and was primarily due to proceeds received from notes payable and the
exercise of stock options offset by the repayment of certain notes payable and
capitalized lease obligations. Net cash provided by financing activities for
fiscal 1996 was $21,272,000 and was primarily due to proceeds received from a
private placement of the Company's Convertible Preferred Stock with a provision
for mandatory redemption in 2005 and the exercise of warrants.

          The Company anticipates that its current cash and cash equivalents
will be sufficient to fund operating expenses for the next two years, including
any capital expenditures not externally financed. The Company expects to
continue to fund future operations from existing cash and cash equivalents,
revenues received from providing laser access and market services, the exercise
of stock options and warrants and external financing as required. There can be
no assurance that capital will be available when needed or, if available, that
the terms for obtaining such funds will be favorable to the Company.

   
          As discussed in Note 3, the Company has restated its financial 
statements to account for the beneficial conversion feature and the mandatory 
redemption features of its Series B Convertible Preferred Stock. The 
restatement resulted in the recognition of an additional $1,732,000 deemed 
preferred dividend at the Issuance Date, which was reported as a charge to 
paid-in capital and net loss applicable to common stockholders, and an increase 
in the carrying value of the Series B shares. The recognition of the deemed 
dividend did not effect the cash flows of the Company for the period, and 
subsequent recognition of additional deemed dividends associated with the 
beneficial conversion feature will not effect the Company's future cash flows. 
However, under certain limited circumstances, as defined in the preferred stock 
agreement, the holders of the Series B shares may be able to require the 
Company to redeem their shares for cash. While there can be no assurance that 
those circumstances will not arise, the Company believes the likelihood of 
redemption occurring is remote. Accordingly, the redemption features of the 
Series B shares are not expected to adversely impact the Company's cash flows 
or liquidity.
    

          At April 30, 1998, the Company has net operating loss carryforwards of
approximately $31 million available to offset future taxable income, expiring
2006 through 2013. The Company has recorded a deferred tax asset of
approximately $13 million with offsetting valuation allowances at April 30,
1998. For purposes of recording deferred tax assets, no future taxable income is
assumed given the results of operations of the Company to date. The amount of
the valuation allowance could be reduced in the near term if estimates of future
taxable income are increased.


                                                                              12
<PAGE>   13

NEW ACCOUNTING STANDARDS

          In March 1997, the Financial Standards Board issued a Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128) which
requires public entities to present both basic and diluted earnings per share
amounts on the face of their financial statements, replacing the former
calculations of primary and fully diluted earnings per share. The Company
adopted FAS 128 effective with its fiscal 1998 third quarter.

          In June 1997, the FASB issued FAS 131, "Disclosures about Segments of
an Enterprise and Related Information", effective for periods beginning after
December 15, 1997. FAS 131 supersedes FAS 14, "Financial Reporting for Segments
of a Business Enterprise." FAS 131 establishes standards for the way public
business enterprises report financial and descriptive information about the
reportable operating segments in their financial statements. Generally,
financial information is required to be reported on the basis that is used
internally for evaluating segment performance and deciding how to allocate
resources to segments. The Company continues to evaluate the provisions of FAS
131 to determine the impact of the revised disclosure requirements on its fiscal
1999 financial statements.

YEAR 2000 COMPLIANCE

          The Company is currently working to resolve the potential impact of
the Year 2000 on the processing of date-sensitive information by the Company's
computerized information systems. The year 2000 problem is the result of
computer programs being written using two digits (rather than four) to define
the applicable year. Any of the Company's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or system failures. The Company's
new accounting and management reporting system is Year 2000 compliant. The laser
manufacturer of the Company's lasers has advised the Company that the lasers
will operate in the year 2000 and that the manufacturer is working to ensure
that all documentation from the lasers' computers will be reported properly in
the year 2000. At this stage in the assessment process, the Company does not
believe that the Year 2000 issue will (1) pose significant operational problems
for its business or products or (2) have a material adverse impact on the
Company's financial position, results of operations or cash flows in future
periods. There can be no assurance that operating problems or expenses related
to the Year 2000 issue will not arise with the Company's computer systems and
software or that the Company's customers or suppliers will be able to resolve
their Year 2000 issues in a timely manner. Accordingly, the Company plans to
devote the necessary resources to resolve all significant Year 2000 issues in a
timely manner.


ITEM 8
                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   
<TABLE>
<CAPTION>

                                                                                              Page
<S>                                                                                           <C>
Report of Independent Accountants                                                              F-1
Consolidated Balance Sheet at April 30, 1998 and 1997                                          F-2
Consolidated Statement of Operations for the three years
          ended April 30, 1998                                                                 F-3
Consolidated Statement of Changes in Stockholders' Equity
          for the three years ended April 30, 1998                                             F-4
Consolidated Statement of Cash Flows for the three years
          ended April 30, 1998                                                                 F-5
Notes to Consolidated Financial Statements                                                     F-7

Financial Statement Schedules:
          VIII - Valuation and Qualifying Accounts                                             F-18
</TABLE>
    

All other schedules were omitted because they are not applicable or the required
information is shown in the Consolidated Financial Statements or notes thereto.


ITEM 9

                        CHANGES IN AND DISAGREEMENTS WITH
               ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

          None.


                                                                              13
<PAGE>   14


                                    PART III

ITEM 10

               DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

<TABLE>
<CAPTION>

            NAME                          AGE                                          POSITION
<S>                                     <C>         <C>
John J. Klobnak                           47         Chairman of the Board and Chief Executive Officer
Robert W. May                             51         Vice-Chairman of the Board, General Counsel and Secretary
B.  Charles Bono III                      50         Executive Vice President, Chief Financial Officer and
                                                     Treasurer
James C. Wachtman                         37         Executive Vice President and Chief Operating Officer -- 
                                                     North America
Dr.  Henry Simon                          67         Director
James M. Garvey                           50         Director
Richard Lindstrom, M.D.                   51         Director
Steven C. Straus                          41         Director
</TABLE>

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

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

          B. CHARLES BONO III. Mr. Bono joined the Company as Executive Vice
President, Chief Financial Officer and Treasurer in 1992. From 1980 to 1992, Mr.
Bono was employed by Storz Instrument Company, a global marketer of ophthalmic
devices and pharmaceutical products, serving as Vice President of Finance from
1987 to 1992.

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

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

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

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

          STEVEN C. STRAUS. Mr. Straus has served as a director of the Company
since January 1996. He currently serves as President and Chief Operating Officer
of Jordan Industries, Inc., Healthcare Products Group. In 1997, Mr. Straus was
Senior Vice President of the Ambulatory 


                                                                              14
<PAGE>   15

Surgery Division of Columbia, the world's largest for-profit health care 
provider and was employed in a similar capacity with Medical Care America, Inc.
from 1993 until Medical Care America was merged into Columbia/HCA Healthcare 
Corporation in 1994. From 1986 to 1993, Mr. Straus held various positions with 
Baxter Healthcare Corporation.

                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

          As required by the Securities and Exchange Commission rules under
Section 16 of the Securities Exchange Act of 1934, as amended, the Company notes
that during the fiscal year ended April 30, 1998, all reports regarding
transactions in the Company's common stock were filed timely.


ITEM 11

                             EXECUTIVE COMPENSATION

          The following table sets forth the compensation paid to six officers
earning total compensation at annual rates in excess of $100,000 during the
fiscal year ended April 30, 1998:

<TABLE>
<CAPTION>

                                                                                                                      WARRANTS
NAME AND PRINCIPAL POSITION               FISCAL YEAR        SALARY(A)             BONUS(B)         OTHER(C)         AND OPTIONS
---------------------------               -----------        ---------             --------         --------         -----------
<S>                                       <C>                <C>                    <C>              <C>               <C>
John J. Klobnak                            April 1998         $202,700               $144,999         $4,750            150,000(d)
  Chief Executive Officer                  April 1997         $196,800               $ 32,000         $  792             38,250(e)
                                           April 1996         $186,000(a1)           $124,330             --                  0

Alan F. Gillam                             April 1998         $313,576(a3)                  0        $   159                  0
  former President, left                   April 1997         $190,700               $ 30,512        $   318             36,000(e)
  the Company May 1997                     April 1996         $185,340(a1)           $123,890             --                  0

Robert W. May                              April 1998         $166,200                $85,185         $4,750            100,000(d)
  Secretary and                            April 1997         $161,300               $ 25,808         $  950             33,750(e)
  General Counsel                          April 1996         $156,710(a1)           $104,750             --                  0

B. Charles Bono                            April 1998         $152,700               $ 79,743         $4,750            100,000(d)
  Exec. VP, CFO                            April 1997         $148,200               $ 23,712         $  988             22,500(e)
  and Treasurer                            April 1996         $143,950(a1)           $ 96,230             --                  0

James C. Wachtman                          April 1998         $160,000               $ 96,746         $4,750            110,000(d)
  Chief Operation Officer                  April 1997         $140,000               $ 28,000         $  817            125,000(f)
  joined the Company in
  May 1996

T. Wesley Dunn                             April 1998         $125,000               $ 92,460         $4,750             20,000(d1)
  Vice President-Sales                     April 1997         $125,000               $ 30,850         $  792             75,000(g)
                                           April 1996         $125,000(a2)           $ 10,400             --                  0
</TABLE>

(a)       Annual compensation rate as of April 30th of fiscal year.
(a1)      Effective since October 11, 1995.
(a2)      Effective since February 1, 1996 date of hire.
(a3)      Includes severance payment and accrued vacation.
(b)       Earned during fiscal year but paid in the following fiscal year.
(c)       Company matching contribution to 401(k) plan made in Company common 
          stock.
(d)       Warrants with exercise price of $7.4375 per share. 
(d1)      Options with exercise price of $7.4375 per share. 
(e)       Warrants with exercise price of $12.4375 per share. 
(f)       Incentive Stock Options(10,000), Non-Qualified Warrants(40,000) and 
          unregistered warrants (75,000) with exercise price of $7.625 per 
          share, initially issued at $12.50 per share. 
(g)       Non-Qualified Warrants with exercise price of $8.25 per share since 
          August 7, 1996 initially issued at $12.625 per share during fiscal 
          1996.



                                                                              15

<PAGE>   16



                   WARRANT AND OPTION GRANTS LAST FISCAL YEAR

<TABLE>
<CAPTION>

                                                                         PERCENT OF
                                                                           TOTAL
                                                                          OPTIONS/
                                                       NUMBER OF:         WARRANTS        EXERCISE
                                                       OPTIONS(O)        GRANTED TO        PRICE           EXPIRATION DATE/
                NAME/POSITION                          WARRANTS(W)        EMPLOYEES      PER SHARE         GRANT DATE VALUE
                -------------                          -----------        ---------      ---------         ----------------
<S>                                                     <C>                <C>            <C>              <C>
John J. Klobnak                                                                                             September, 2002
  Chief Executive Officer                                150,000(w)         19.5%          $7.4375             $370,800

Robert W. May                                                                                               September, 2002
  Secretary and General Counsel                          100,000(w)         13.0%          $7.4375             $247,200

B.  Charles Bono                                                                                            September, 2002
  Exec. V.P., CFO and Treasurer                          100,000(w)         13.0%          $7.4375             $ 247,200

James C. Wachtman                                                                                           September, 2002
  Chief Operating Officer                                110,000(w)         14.3%          $7.4375             $271,900

T.  Wesley Dunn                                                                                             September, 2002
  V.P. - Sales                                            20,000(o)          2.6%          $7.4375              $49,400
</TABLE>

          The warrants and options have a five year term and vest 25% on the
grant date and the 25% per year for three years. The exercisability of these
warrants and options may accelerate in the event of a change in control of the
company. The Black-Scholes option pricing model was used to determine the value
of options and warrants issued as of the grant date using the following
assumptions, dividend yield - none, 6% risk free rate of return, 45% volatility,
and expected time of exercise - thirty months. The grant date values do not take
into account risk factors such as non-transferability and limits on
exercisability. The ultimate value of a stock warrant or option will depend on
the market value of the Company's stock at a future date and could vary
significantly from the theoretical Black-Scholes value.

             AGGREGATED OPTION/WARRANT EXERCISES IN LAST FISCAL YEAR
                    AND FISCAL YEAR END OPTION/WARRANT VALUES

<TABLE>
<CAPTION>

                                                             OPTIONS AND WARRANTS AT FISCAL YEAR END
                                                                                            VALUE OF
                                                              NUMBER OF SECURITIES        UNEXERCISED
                                                            UNDERLYING UNEXERCISED       IN-THE-MONEY
                        # OF SHARES                               EXERCISABLE/           EXERCISABLE/
                    ACQUIRED ON EXERCISE   VALUE REALIZED        UNEXERCISABLE           UNEXERCISABLE
                    --------------------   --------------        -------------           -------------
<S>                    <C>                <C>                    <C>                <C>
John J. Klobnak           N/A                 N/A                 478,917/112,500    $3,067,100/$675,000
Alan F. Gillam          225,700            $964,400               126,000/ 0           $475,400/$  0
Robert W. May             N/A                 N/A                 258,950/ 75,000    $1,346,500/$450,000
Charles Bono             16,850             $59,900               157,000/ 75,000      $795,100/$450,000
James C. Wachtman        N/A                  N/A                 142,708/ 92,292      $862,500/$524,100
T. Wesley Dunn            N/A                 N/A                  80,000/ 15,000      $419,100/$ 90,000
</TABLE>

          The value of the unexercised in-the-money options and warrants was
calculated using the $13.4375 closing price per share of the Company's common
stock on April 30, 1998 minus the exercise price.


                          OPTION AND WARRANT REPRICINGS
<TABLE>
<CAPTION>

                                                                        James C. Wachtman     T. Wesley Dunn
<S>                                                                    <C>                   <C>
Date                                                                    August 7, 1996        August 7, 1996
Number of securities underlying repriced options/warrants                         125,000             75,000
Market price of stock at time of repricing                                         $7.625             $7.625
Exercise price at time of repricing                                                $7.625              $8.25
Length of original option term remaining at date of repricing                   58 months          54 months
</TABLE>

          The Compensation Committee of the Board of Directors (the "Committee")
met on July 29, 1996 and voted unanimously to lower the exercise price of
certain options and warrants issued 


                                                                              16
<PAGE>   17

earlier in calendar 1996 to reflect the market bid price seven days
later, after the announcement was made that the Company elected to withdraw an
underwritten public offering. The 125,000 options and warrants granted to James
C. Wachtman at $12.50 on May 29, 1997 were repriced at $7.625 per option and
warrant and the 75,000 warrants granted to T. Wesley Dunn at $12.625 share on
February 1, 1996 were repriced at $8.25 per warrant. The repricing decision to
$7.625 also affected 70,000 options and warrants granted to members of the Board
of Directors and the Company's medical advisory board on May 29, 1996 at $12.625
per option or warrant. Since the date of the grants of options and warrants to
Messrs. Wachtman and Dunn, new officers of the Company, the Company's common
stock experienced a decline in the market price due to several factors including
a general decline in the stock market as well as within the Company's industry
segment, particularly during the June and July 1996 period, and the fact that
the Company was in registration for an underwritten public offering of its
common stock. Ultimately, the Board elected to withdraw the offering due in
large part to these factors. The Committee felt it would be unfair and a
significant disincentive to Messrs. Wachtman and Dunn, especially in view of the
fact that they had only recently joined the Company (on May 20, 1996 and
February 1, 1996, respectively) in positions of significant responsibility, to
continue to have these options and warrants priced at the previous level.



ITEM 12

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The following table and notes thereto set forth certain information
regarding beneficial ownership of the Company's common stock as of April 30,
1998 by (i) all those known by the Company to be beneficial owners of more than
5% of the Company's common stock, (ii) all of the Company's directors and (iii)
all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>

                                                                                        NUMBER                  PERCENTAGE OF
                                                                                       OF SHARES                COMMON SHARES
                                                                                     BENEFICIALLY               BENEFICIALLY
             DIRECTORS, OFFICERS AND 5% SHAREHOLDERS                                   OWNED(1)                     OWNED
             ---------------------------------------                                    -------                     -----
<S>                                                                                   <C>                          <C>
John J. Klobnak(2)
  540 Maryville Centre Dr. Suite 200
  St. Louis, MO 63141                                                                      604,032                      5.9%

Robert W. May(3)
  540 Maryville Centre Dr., Suite 200
  St. Louis, MO 63141                                                                      261,422                      2.6%

Dr. Henry Simon(4)
  20 Southampton Street
  London, England WC2E 7QG                                                               1,675,986                     17.3%

James M. Garvey(4)
  One Beacon Street, Suite 4500
  Boston, MA 02108                                                                       1,675,586                     17.3%

Richard L. Lindstrom, M.D.(5)
  710 East 24th Street
  Minneapolis, MN 55391                                                                    112,953                      1.2%

Steven C. Straus (6)
  1751 Lake Cook Road, Suite 550
  Deerfield, IL 60015                                                                        8,721                      0.1%

Provident Investment Counsel Inc.
and Robert M. Kommerstad (9)
  300 North Lake Avenue
  Pasadena, CA 91101                                                                       485,100                      5.0%


All officers and directors as a group (8 persons)(7)(8)                                  2,988,898                     27.5%
</TABLE>


                                                                              17
<PAGE>   18

          Pursuant to the rules of the Securities and Exchange Commission,
shares of common stock which an individual or group has a right to acquire
within sixty days pursuant to the exercise of options or warrants are deemed to
be outstanding for the purpose of computing the percentage of ownership of such
individual or group, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person shown in the table.

(1)       Takes into account the possible exercise of the outstanding options
          granted under the Incentive Stock Option Plan, the Non-Qualified Stock
          Option Plan, the Non-Qualified Warrant Plan and other unregistered
          warrants which are presently exercisable.

(2)       Includes presently exercisable options and warrants to purchase
          478,917 shares of common stock granted to Mr. Klobnak by the Board of
          Directors pursuant to the Company's Incentive Stock Option Plan, the
          Non-Qualified Warrant Plan and other unregistered warrants. See
          "Executive Compensation -- Stock Option Plan." and "Executive
          Compensation -- Employment Agreements". Mr. Klobnak also owns 112,500
          warrants which are not presently exercisable.

(3)       Includes presently exercisable warrants and options to purchase
          258,950 shares of common stock granted to Mr. May by the Board of
          Directors pursuant to the Non-Qualified Warrant Plan, the Incentive
          Stock Option Plan and other unregistered warrants. Mr. May also owns
          75,000 warrants which are not presently exercisable.

(4)       Beneficial ownership established by virtue of membership on the Board
          of Directors of the Company as the representative of Schroder Ventures
          Life Sciences Advisors, Inc., an affiliate of the holders of 1,666,665
          shares of the common stock of the Company. Includes presently
          exercisable options granted to Dr. Simon and Mr. Garvey, respectively,
          by the Board of Directors to purchase 8,321 shares of common stock
          each pursuant to the Non-Qualified Stock Option Plan. Each also owns
          11,679 options which are not presently exercisable.

(5)       Includes presently exercisable warrants and options to purchase 98,321
          shares of common stock granted to Dr. Lindstrom by the Board of
          Directors pursuant to the Non-Qualified Option Plan as a director and
          medical director of the Company and unregistered warrants granted to
          Dr. Lindstrom as a consultant to the Company. Dr. Lindstrom also owns
          141,679 options and warrants which are not presently exercisable.

(6)       Includes presently exercisable options to purchase 8,321 shares of
          common stock granted to Mr. Straus by the Board of Directors pursuant
          to the Non-Qualified Option Plan. Mr. Straus also owns 11,679 options
          which are not presently exercisable.

(7)       Includes presently exercisable options and warrants to purchase an
          aggregate of 1,044,867 shares of common stock granted to four
          executive officers (three of which are also directors) of the Company.
          An additional 347,500 options and warrants to purchase shares of
          common stock are owned but are not presently exercisable by these
          executive officers. See "Executive Compensation -- Stock Option Plan"
          and "Executive Compensation -- Employment Agreements."

(8)       Includes presently exercisable options and warrants to purchase an
          aggregate of 861,151 shares of common stock granted to directors (two
          of which are also executive officers of the Company). An additional
          364,216 options and warrants to purchase shares of common stock are
          owned but not presently exercisable by these directors or their
          affiliates.

(9)       Information obtained from an SEC filing on Schedule 13G dated April
          30, 1998.

          As required by the Securities and Exchange Commission rules under
Section 16 of the Securities and Exchange Act of 1934, the Company notes that
during the fiscal year ended April 30, 1998, all reports regarding transactions
in the Company's common stock were timely filed.


                                                                              18
<PAGE>   19


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ITEM 13

          All directors hold office until the next annual meeting of
stockholders or the election and qualification of their successors. Other than
Non-Qualified Stock Options and/or warrants, directors of the Company do not
receive any compensation for their services as members of the Board of
Directors, except for directors who have no other affiliation with the Company
who receive $1,500 per Board meeting attended. Directors are entitled to
reimbursement for expenses incurred in connection with their attendance at Board
of Directors meetings. Officers are appointed by the Board of Directors and
serve at the discretion of the Board.

          Dr. Henry Simon and James M. Garvey are both members of the Board of
Directors and are affiliated with Schroder Ventures Life Sciences Advisors, Inc.
a beneficial owner of 1,666,665 shares of the Company's common stock. Under the
terms of the October 1995 Stock Purchase Agreement, the Company pays Schroder
Ventures Life Sciences Advisors, Inc. $100,000 per year for consulting and
advisory services.

                        EXHIBITS AND REPORTS ON FORM 8-K

ITEM 14

  3.0*             Company's Certificate of Incorporation and Amendment.
  3.1*             Company's Restated Certificate of Incorporation.
  3.2*             Form of Company's By-Laws, as amended.
  4.1*             Specimen Stock Certificate.
  4.2***           Stock Purchase warrant Initial Warrant)
  4.3***           Registration Rights Agreement
  4.4***           Form of Stock Purchase Warrant (additional Warrant)
21.0**             Subsidiaries of the Company
23.0**             Consent of Independent Accountants, PricewaterhouseCoopers 
                   LLP

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

   **     Filed herewith.

  ***     Incorporated by reference from Form 8-K filed July 1, 1997.


                                                                              19
<PAGE>   20



REPORTS ON FORM 8-K

          The following reports on Form 8-K were filed during the last quarter
of the period covered by this report:


          On March 17, 1998, the Company filed a report on Form 8-K concerning 
the subpoena served upon it by the U.S. Department of Justice as discussed in
Item 3 of this Form 10-K.




                                   SIGNATURES

          In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


                                        LASER VISION CENTERS, INC.

                                        By: /s/ John J. Klobnak
                                        John J. Klobnak, Chief Executive Officer

                                        By: /s/ B. Charles Bono
                                        B.  Charles Bono, Principal
                                        Accounting Officer


Date: July 17, 1998

          In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant in the capacities and on
the dates indicated.

<TABLE>
<CAPTION>

            SIGNATURE                                    TITLE                                              DATE
            ---------                                    -----                                              ----
<S>                                         <C>                                                        <C>
/s/ John J. Klobnak
John J. Klobnak                              CEO, Chairman of Board of Directors                        July 15, 1998

/s/ B. Charles Bono
B. Charles Bono                              Exec. VP, CFO and Treasurer                                July 15, 1998

/s/ Robert W. May
Robert W. May                                Secretary, Director                                        July 15, 1998

/s/ James M. Garvey
James M Garvey                               Director                                                   July 16, 1998

/s/ Richard L. Lindstrom, M.D.
Richard L. Lindstrom, M.D.                   Director                                                   July 16, 1998

/s/ Dr. Henry Simon
Dr. Henry Simon                              Director                                                   July 16, 1998

/s/ Steven C. Straus
Steven C. Straus                             Director                                                   July 16, 1998

/s/ James C. Wachtman
James C. Wachtman                            Chief Operating Officer                                    July 15, 1998
</TABLE>



                                                                              20
<PAGE>   21

                        REPORT OF INDEPENDENT ACCOUNTANTS


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


   
         In our opinion, the consolidated financial statements in the
accompanying index, after the restatement described in Note 3, present fairly,
in all material respects, the financial position of Laser Vision Centers, Inc.
and its subsidiaries at April 30, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
April 30, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

         As discussed in Note 3, the Company has restated its 1998 financial 
statements to account for a beneficial conversion feature related to preferred 
stock and to reclassify the presentation of preferred stock.

/s/ PricewaterhouseCoopers LLP


PricewaterhouseCoopers LLP

St. Louis, Missouri

June 12, 1998, except as to Note 3, which is as of April 21, 1999
    



                                      F-1
<PAGE>   22



                   LASER VISION CENTERS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET



   
<TABLE>
<CAPTION>
                                                                                      APRIL 30,
                                                                                      ---------
                                                                            1998                    1997
                                                                            ----                    ----
                                                                     (Restated - Note 3)
ASSETS
<S>                                                                      <C>                      <C>
Current assets:
  Cash and cash equivalents                                               $  8,430,000             $ 3,794,000
  Restricted cash                                                              471,000                 461,000
  Accounts receivable, net of allowance of
    $395,000 and $360,000, respectively                                      3,503,000               1,719,000
  Inventory                                                                  1,185,000                 538,000
  Prepaid expenses and other current assets                                    686,000                 377,000
          Total current assets                                              14,275,000               6,889,000
Property and equipment:
  Laser equipment (Notes 6, 8 and 9)                                        16,485,000              12,617,000
  Medical equipment (Notes 6 and 9)                                            713,000                 750,000
  Mobile equipment                                                           3,498,000               1,599,000
  Furniture and fixtures                                                     1,374,000               1,316,000
                                                                           22,070,0000              16,282,000
Less-accumulated depreciation                                               (7,879,000)             (3,799,000)
          Net property and equipment                                        14,191,000              12,483,000
Other assets (Note 7)                                                        2,363,000               3,498,000
Total assets                                                              $ 30,829,000             $22,870,000

LIABILITIES, CONTINGENT EQUITY
  AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of notes payable (Note 8)                               $  2,365,000             $ 1,003,000
  Current portion of obligations under
    capital leases (Note 9)                                                    672,000                 690,000
  Accounts payable                                                           2,667,000               2,078,000
  Accrued compensation                                                         981,000                 616,000
  Other accrued liabilities                                                  2,036,000                 848,000
          Total current liabilities                                          8,721,000               5,235,000
Non-current liabilities:
  Notes payable (Note 8)                                                     5,907,000               4,544,000
  Capital lease obligations (Note 9)                                           678,000               1,589,000
  Other                                                                         30,000                 134,000
          Total non-current liabilities                                      6,615,000               6,267,000
Commitments and contingencies (Notes 12 and 13)
Contingent equity, common stock and stock options
     issued for contract rights (Note 4)                                            --               1,092,000
Series B convertible preferred stock with
 mandatory redemption provisions, 3,250 shares
 outstanding (Restated - Note 3)       
Stockholders' equity (Notes 14 and 15):                                      1,915,000
  Common stock, par value $.01 per share,
    50,000,000 authorized; 9,687,323 and
    8,817,057 shares issued and outstanding,
    respectively                                                                97,000                  88,000
  Warrants and options (Restated - Note 3)                                   1,261,000                  36,000
  Paid-in-capital (Restated - Note 3)                                       44,227,000              38,663,000
  Accumulated deficit                                                      (32,007,000)            (28,511,000)
          Total stockholders' equity                                        13,578,000              10,276,000

          Total liabilities, contingent equity, redeemable equity
            and stockholders' equity                                      $ 30,829,000             $22,870,000

</TABLE>
    

                 See Notes to Consolidated Financial Statements.


                                      F-2
<PAGE>   23



                   LASER VISION CENTERS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF OPERATIONS

   
<TABLE>
<CAPTION>

                                                                                             YEARS ENDED APRIL 30,
                                                                                             ---------------------
                                                                              1998                   1997                1996
                                                                              ----                   ----                ----
                                                                      (Restated - Note 3)
<S>                                                                      <C>                     <C>
Revenues                                                                  $ 23,469,000            $  8,238,000         $ 3,918,000
Cost of revenues (includes $4,435,000, $3,472,000,
 and $1,973,000 of depreciation, respectively)                              16,750,000               7,590,000           4,240,000
          Gross profit (loss)                                                6,719,000                 648,000            (322,000)

Selling, general and administrative expenses                                 9,592,000               9,719,000           5,831,000
Fixed asset impairment provision (Note 6)                                           --               2,772,000           3,063,000

          Loss from operations                                              (2,873,000)            (11,843,000)         (9,216,000)

Other income (expenses):
  Interest income and other                                                    377,000                 268,000             437,000
  Interest expense                                                          (1,000,000)               (597,000)           (216,000)
  Minority interest in net loss of subsidiary
    (Note 5)                                                                        --                 103,000             192,000
Net loss                                                                   ($3,496,000)           $(12,069,000)       $ (8,803,000)

  Deemed preferred      
   dividends (Restated - Note 3)                                            (1,930,000)               (126,000)           (439,000)

Net loss applicable to common stockholders                                  (5,426,000)           ($12,195,000)        ($9,242,000)
  (Restated - Note 3)
Basic and diluted loss per share (Restated - Note 3)                      $       (.59)           $      (1.45)        $     (1.75)

Weighted average number of common shares
  outstanding                                                                9,178,000               8,421,000           5,278,000
</TABLE>
    



                 See Notes to Consolidated Financial Statements.



                                      F-3
<PAGE>   24


                   LASER VISION CENTERS, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                FOR EACH OF THE THREE YEARS ENDED APRIL 30, 1998

   
<TABLE>
<CAPTION>

                                                                                                                              
                                                           COMMON STOCK                PAID-IN       ACCUMULATED 
                                                        SHARES        AMOUNT           CAPITAL         DEFICIT   
                                                        ------        ------           -------         -------   
<S>                                                  <C>            <C>          <C>             <C>             
Balance at April 30, 1995                             4,452,555      $45,000       $13,943,000     $(7,639,000)  
Exercise of incentive and non-qualified options         100,210        1,000           468,000                   
Exercise of C, D, non-qualified,                                                                                 
  underwriter and other warrants                        363,294        3,000         2,137,000                   
Exercise of Class B and F warrants                    1,159,690       12,000         6,910,000                   
Issuance of common stock in private offering            242,218        2,000         1,143,000                  
Issuance of common stock in conjunction                                                                          
  with acquisitions (Note 5)                             98,026        1,000           911,000                   
Costs associated with issuance of                                                                                
  convertible preferred stock with                                                                               
  mandatory redemption provision                                                    (1,242,000)                  
Dividends accrued on convertible                                                                                 
  preferred stock (Note 10)                                                           (439,000)                  
Net loss for the year ended April 30, 1996                                                          (8,803,000)  
                                                      ---------      -------       -----------    -------------  
Balance at April 30, 1996                             6,415,993       64,000        23,831,000     (16,442,000)  
Issuance of restricted                                                                                             
  shares of common stock                                 20,609                        160,000                   
Exercise of incentive and non-qualified options          28,790                        147,000                   
Dividends accrued on convertible                                                                                   
  preferred stock (Note 10)                                                           (126,000)                  
Conversion of preferred stock (Note 10)               2,349,991       24,000        14,641,000                   
Warrants and options issued (Note 15)                                                                              
Shares issued to 401(k) plan                                                                                       
  for employees                                           1,674                         10,000                   
Net loss for the year ended April 30, 1997                                                         (12,069,000)  
                                                      ---------      -------       -----------    -------------  
Balance at April 30, 1997                             8,817,057       88,000        38,663,000     (28,511,000)  
Issuance of warrants and preferred stock 
  with beneficial conversion feature
  (Restated -- Note 3)                                                               3,667,000                 
Exercise of incentive and                                                                                          
  non-qualified options and                                                                                        
  warrants                                              410,123        4,000         2,178,000                   
Deemed dividends on convertible                                                                                   
  preferred stock (Restated -- Note 3)                                              (1,930,000)
Conversion of preferred stock (Restated --
  Note 3)                                               452,146        5,000         1,585,000                   
Warrants and options issued (Note 10)                                                                                         
Shares issued to 401(k) plan                                                                                                  
  for employees                                           7,997                         64,000                   
Net loss for the year ended April 30, 1998                                                          (3,496,000)  
                                                      ---------      -------       -----------    ------------   
Balance at April 30, 1998                             9,687,323      $97,000       $44,227,000    $(32,007,000)  



<CAPTION>

                                                     WARRANTS       TOTAL
                                                       AND       STOCKHOLDERS'
                                                     OPTIONS        EQUITY
                                                     -------        ------
<S>                                                <C>         <C>
Balance at April 30, 1995                                        $6,349,000
Exercise of incentive and non-qualified options                     469,000
Exercise of C, D, non-qualified,                  
  underwriter and other warrants                                  2,140,000
Exercise of Class B and F warrants                                6,922,000
Issuance of common stock in private offering                      1,145,000
Issuance of common stock in conjunction           
  with acquisitions (Note 5)                                        912,000
Costs associated with issuance of                 
  convertible preferred stock with                
  mandatory redemption provision                                 (1,242,000)
Dividends accrued on convertible                  
  preferred stock (Note 10)                                        (439,000)
Net loss for the year ended April 30, 1996                       (8,803,000)
                                                                  ----------
Balance at April 30, 1996                                         7,453,000
Issuance of restricted                            
  shares of common stock                                            160,000
Exercise of incentive and non-qualified options                     147,000
Dividends accrued on convertible                  
  preferred stock (Note 10)                                        (126,000)
Conversion of preferred stock (Note 10)                          14,665,000
Warrants and options issued (Note 15)                  $36,000       36,000
Shares issued to 401(k) plan                      
  for employees                                                      10,000
Net loss for the year ended April 30, 1997                      (12,069,000)
                                                    ----------   ----------
Balance at April 30, 1997                               36,000   10,276,000
Issuance of warrants and preferred stock with
  beneficial conversion features 
  (Restated -- Note 3)                                 245,000    3,912,000
Exercise of incentive and                         
  non-qualified options and                       
  warrants                                                        2,182,000
Deemed dividends on convertible preferred  
  stock (Restated -- Note 3)                                     (1,930,000)
Conversion of preferred stock (Restated -- 
  Note 3)                                                         1,590,000       
Warrants and options issued (Note 10)                  980,000      980,000
Shares issued to 401(k) plan                      
  for employees                                                      64,000
Net loss for the year ended April 30, 1998                       (3,496,000)
                                                    ----------  -----------
Balance at April 30, 1998                           $1,261,000  $13,578,000

</TABLE>
    


                 See Notes to Consolidated Financial Statements.


                                      F-4
<PAGE>   25



                   LASER VISION CENTER, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                             YEARS ENDED APRIL 30,
                                                                              1998                   1997                1996
                                                                              ----                   ----                ----
<S>                                                                       <C>                    <C>                  <C>
Cash flows from operating expenses:
  Net loss                                                                 $(3,496,000)           $(12,069,000)        $(8,803,000)
  Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
    Depreciation and amortization                                            4,925,000               3,910,000           2,203,000
    Fixed asset impairment                                                                           2,772,000           3,063,000
    Compensation paid in common stock                                          326,000                  46,000
    Imputed interest                                                                                                        74,000
    Changes in operating assets and liabilities, excluding 
      the effects of acquisitions:
      Increase (decrease) in accounts receivable                            (1,784,000)               (914,000)             23,000
      Increase in inventory                                                   (647,000)               (378,000)            (87,000)
      Increase in prepaid expenses and other
        current assets                                                        (146,000)                (54,000)           (232,000)
      Increase in accounts payable                                             590,000               1,581,000             380,000
      Increase (decrease) in accrued liabilities                             1,257,000                (479,000)            746,000
      Decrease in minority interest                                                                   (103,000)           (192,000)
          Net cash provided (used) by
           operating activities                                              1,025,000              (5,688,000)         (2,825,000)
Cash flows from investing activities:
  Acquisition of equipment                                                  (4,132,000)             (4,586,000)         (5,993,000)
  Business acquisitions and other                                              (13,000)                (93,000)           (233,000)
  Equipment deposits                                                                                                    (1,685,000)
            Net cash used by investing activities                           (4,145,000)             (4,679,000)         (7,901,000)
Cash flows from financing activities:
  Proceeds from private offering, preferred                                  6,000,000
  Private placement offering costs, preferred                                 (513,000)
  Return of restricted cash                                                    255,000
  Proceeds from notes payable                                                1,863,000               4,148,000
  Payment on notes payable                                                  (1,315,000)               (459,000)         (2,135,000)
  Principal payments under capital lease
    obligations                                                               (716,000)             (2,257,000)           (252,000)
  Proceeds from exercise of incentive and
    nonqualified stock options and warrants                                  2,182,000                 107,000             469,000
  Deposits on financing contracts                                                                      (50,000)
  Proceeds from private offering, redeemable
    preferred                                                                                                           14,100,000
  Private placement offering costs, redeemable
    preferred                                                                                                           (1,117,000)
  Proceeds from private offerings, common                                                                                1,220,000
  Private placement offering costs, common                                                                                 (75,000)
  Net proceeds from exercise of Class A, B
    and F Warrants                                                                                                       6,922,000
  Net proceeds from exercise of other warrants                                                                           2,140,000
          Net cash provided by financing activities                          7,756,000               1,489,000          21,272,000
Net increase (decrease) in cash and
            cash equivalents                                                 4,636,000              (8,878,000)         10,546,000
Cash and cash equivalents at beginning of year                               3,794,000              12,672,000           2,126,000

Cash and cash equivalents at end of year                                   $ 8,430,000            $  3,794,000        $ 12,672,000
</TABLE>




                                      F-5
<PAGE>   26


<TABLE>
<CAPTION>

                                                                                             YEARS ENDED APRIL 30,
                                                                              1998                   1997                1996
                                                                              ----                   ----                ----
                                                                           (Restated -
                                                                             Note 3)
   
<S>                                                                       <C>                     <C>                 <C>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
  FINANCING ACTIVITIES:
  Conversion of preferred stock and value assigned
   to warrants (Restated - Note 3)                                          $2,128,000             $14,665,000
  Deemed preferred dividends   (Restated - Note 3)                           1,930,000                 126,000            $439,000
  Offering costs, private placement redeemable preferred                                                                   125,000
  Restricted cash upon issuance of capital leases                                                    1,650,000
  Management Services Agreements:
    Stock and stock options (returned) issued
          for contract rights                                               (1,092,000)              1,092,000
    Contract rights surrendered                                              1,044,000
    Equipment returned                                                         233,000
    Lease obligation transferred                                               215,000
    Warrants and options issued for equipment
          purchase and future services                                         718,000
  Notes payable issued for laser purchases                                   2,177,000                                     675,000
  Capital lease obligations related to laser                                   
    purchases                                                                                                            1,936,000
Acquisitions -- Fair value of assets acquired                                                                            1,676,000
  Liabilities assumed                                                                                                      595,000
  Common stock issued                                                                                  130,000             912,000
  Cash paid                                                                                            193,000             169,000

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for interest                                  $1,010,000             $   587,000        $    127,000

</TABLE>
    

                 See Notes to Consolidated Financial Statements.



                                      F-6
<PAGE>   27


                   LASER VISION CENTERS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  NATURE OF ORGANIZATION

          Laser Vision Centers, Inc. (the Company), provides access to excimer
lasers and related services for the treatment of refractive vision disorders and
owns 40 excimer lasers which are available for use in the United States, Canada
or Europe. The Company is also the world's largest operator of mobile excimer
laser systems and provides mobile laser access with two different types of
mobile support equipment including the patented MobilExcimer(R) surgical suite
which received FDA approval in April 1997 and another system which is used to
move excimer lasers into qualified ambulatory surgery centers and physician's
offices. The excimer laser can be used to treat refractive vision disorders such
as nearsightedness, farsightedness and astigmatism to eliminate or reduce the
need for corrective lenses. LaserVision Centers(R) operate primarily on a
shared-access model, giving individual or group ophthalmic practices use of the
technology without investment risk or maintenance requirements, thereby
improving utilization of the excimer laser equipment. In addition, the Company
provides a broad range of professional services, including physician and staff
training, technical support services and maintenance and, through its
MarketVision division, advertising and marketing programs and services.

          Photorefractive keratectomy (PRK) involves the use of an excimer laser
to reshape the cornea, thereby adjusting its refractive power, which in turn
eliminates or reduces the need for corrective lenses. Most of the Company's
lasers were manufactured by VISX, Incorporated (VISX) which has received
approval by the United States Food and Drug Administration (FDA) for use of
their excimer lasers to perform PRK for myopia and astigmatism. In addition to
such procedures, excimer lasers can also be used with microkeratomes to perform
procedures known as laser in situ keratomileusis (LASIK). While LASIK has not
been specifically approved in the U.S. by the FDA, it has been widely adopted by
U.S. ophthalmologists and is treated by the FDA as a practice of medicine
matter.

          The Company has operated excimer laser centers in Canada, Europe and
the U.S. since 1991, 1993 and 1995, respectively. The Company currently provides
excimer lasers and related services to fixed-site centers in the U.S., Canada,
the United Kingdom, Finland, Greece, and Sweden and provides mobile services in
the U.S., Canada, the United Kingdom, and Ireland. The Company's mobile access
strategy makes it possible to provide excimer laser access to additional
locations without having to purchase a separate laser for each location. In the
United States, fixed-site laser centers are operated in conjunction with
Columbia/HCA Healthcare Corporation or by the Company independently or through
joint operating agreements. Risk factors associated with the successful
implementation of the Company's business strategy include the absence of
profitable operations, the potential for new refractive technologies,
competition, the Company's dependence on limited sources of excimer lasers,
government regulation, potential unidentified long-term medical risks associated
with excimer laser surgery, product professional liability, the Company's
ability to manage its growth, and its dependence on current management.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities, as well as the reported amounts
of revenue and expenses. Actual results could differ from those estimates.

Basis of Consolidation

          The consolidated financial statements include the accounts of the
Company and its wholly and majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.

Cash equivalents

          The Company considers unrestricted cash, as well as short-term
investments purchased with an original maturity of three months or less, to be
cash equivalents. At April 30, 1998, cash and cash equivalents included
$4,651,000 of money market funds and at April 30, 1997 $1,943,000 of money
market funds and $1,488,000 of short term government obligations and commercial
paper.


                                      F-7
<PAGE>   28

Fair Value of Financial Instruments

          For purposes of financial reporting, the Company has determined that
the fair value of the Company's financial instruments, including cash and cash
equivalents, accounts receivable, restricted cash, notes payable and capitalized
lease obligations approximates book value at April 30, 1998 and 1997, based on
terms currently available to the Company in financial markets.

Credit risk

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

          As of April 30, 1998 and 1997, the Company has deposited $4,651,000
and $3,431,000, respectively, in government obligations, commercial paper and
money market accounts at financial institutions. Management believes the credit
risk related to these funds is limited due to the short-term nature of the
accounts.

          One customer with multiple locations accounted for 21%, 24% and 3% of
total revenues in fiscal 1998, 1997 and 1996, respectively and 17% of accounts
receivable at April 30, 1998. Management believes the credit risk related to its
trade receivables, and the patient notes with recourse to the Company, is
limited due to the Company's large number of customers and that its allowance
for doubtful accounts is adequate.

Inventory
          Inventory consists of key cards which operate the lasers and is
recorded at cost.

Property and equipment

          Property and equipment is stated at cost. Long-lived assets determined
to be impaired are stated at the estimated fair value at the date impairment was
determined. Expenditures for repairs and maintenance are charged to expense as
incurred. Depreciation and amortization are computed utilizing the straight-line
method. In the opinion of management, this method is adequate to allocate the
cost of equipment over its estimated useful lives which range from four to five
years. Depreciation for lasers, mobile equipment and medical equipment is
included in cost of revenues. Depreciation for leasehold improvements, furniture
and fixtures is classified as a selling, general and administrative expense.

Impairment of long-lived assets

          The Company reviews for the impairment of long-lived assets when
events or changes in circumstances indicate that an asset's carrying value may
not be recoverable. In reviewing for impairment, if the carrying value of an
asset is greater than the sum of the undiscounted projected cash flows
attributable to that asset, an impairment loss is recognized. The impairment
loss is based on the fair value of the asset which is determined based on market
prices, discounted cash flows or the best information available.

Other assets

          Costs of goodwill, tradename, servicemark and deferred contract rights
are being amortized over 5 to 15 years.

Stock-Based Compensation

          In October 1995, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123") which defines the fair value based method
of accounting for stock options, purchase and award plans. SFAS 123 allows
companies to use the fair value method defined in the Statement or to continue
use of the intrinsic value method as outlined in Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). The
Company utilizes APB 25 for accounting for employee stock options and warrants.
See Note 14 for the pro forma impact on the net loss per share for the fiscal
years ended April 30, 1998, 1997 and 1996.


                                      F-8
<PAGE>   29

          For all equity instruments issued to non-employees, the fair value is
determined and recorded using the Black-Scholes option pricing model for options
and warrants, or the market price for common stock, at the date of grant or
issuance.

Revenue

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


Cost of revenues

          Cost of revenues include laser and medical equipment depreciation,
laser maintenance including optics and gasses, per procedure royalty fees,
mobile equipment travel, laser technician salaries, professional medical
services and medical supplies for the LaserVision Centers division. For the
MarketVision division, client media and production costs are expensed when the
revenue is earned. Advertising costs are expensed as incurred and included in
selling, general and administrative expenses for the LaserVision Centers
division.

Income taxes

          The Company uses the asset and liability method of accounting for
income taxes. Deferred tax assets and liabilities are recorded based on the
difference between the income tax basis of assets and liabilities and their
carrying amounts for financial reporting purposes. Deferred tax assets are
reduced by a valuation allowance if, based on the weight of available evidence,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized.

Foreign Currency Translation

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

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

Loss per share

          In March 1997, FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings per Share" (FAS 128), which requires public entities to
present both basic and diluted earnings per share amounts on the face of their
financial statements, replacing the former calculations of primary and fully
diluted earnings per share. The Company adopted FAS 128 effective with the
beginning of its fiscal 1998 third quarter. The calculations exclude the effect
of the Series B convertible preferred stock, stock options and warrants since
their inclusion in such calculations would have been antidilutive.

Segment disclosure

          In June 1997, the FASB issued FAS 130, "Disclosures about Segments of
an Enterprise and Related Information", effective for periods beginning after
December 15, 1997. FAS 131 supersedes FAS 14, "Financial Reporting for Segments
of a Business Enterprise." FAS 131 establishes standards for the way public
business enterprises report financial and descriptive information about the
reportable operating segments in their financial statements. Generally,
financial information is required to be reported on the basis that is used
internally for evaluating segment performance and deciding how to allocate
resources to segments. The Company continues to evaluate the provisions of FAS
131 to determine the impact of the revised disclosure requirements on its fiscal
1999 financial statements.

Note 3. EFFECTS OF RESTATEMENTS

          In the course of a review of a Securities Act filing, the staff of the
Securities and Exchange Commission (the "Commission"), raised an issue regarding
the existence of a beneficial conversion feature embedded in the Series B
Convertible Preferred Stock ("Series B shares"), which should be accounted for
as a deemed dividend to the preferred shareholders. After consideration, the
Company concluded that a beneficial conversion feature does exist and has
quantified the amount as $3,667,000 at the issuance date. In addition, based on
review of the terms of the stock agreement, it has been determined that the
Series B shares have certain mandatory redemption features. Although the Company
believes that the likelihood of redemption occurring is remote, the carrying
value of the Series B shares is required to be presented as temporary equity,
which is outside of stockholders' equity.

          The closing of the Series B Convertible Preferred Stock occurred on
June 20, 1997 (the "Issuance Date") at an aggregate price of $6,000,000. The
Company issued 6,000 shares of preferred stock, having a stated value of $1,000
per share, together with 100,000 warrants to purchase common stock at $9.39 per
share, and the right to an additional 100,000 warrants to purchase common stock
issuable on June 20, 1998, provided at least $2,000,000 of the preferred shares
remain outstanding at that date. Such additional warrants were issued in June
1998 in accordance with the terms of the agreement at an exercise price of
$17.85 per share. The Series B shares bear no dividends and are convertible at
any time. The warrants are exercisable immediately upon issuance. In August
1997, the common shares underlying the Series B shares and warrants were
registered with the Securities and Exchange Commission pursuant to registration
rights under this Series B stock purchase agreement.

          The Series B shares are convertible into common stock at a conversion
price, which at the Issuance Date, is the lower of (a) 85% of the average of the
daily low sale price for the five consecutive trading days ending two days prior
to the conversion date, or $6.01 at the Issuance date, and (b) $8.05. The number
of common shares into which the preferred stock is convertible is determined by
dividing the stated value of the preferred stock, increased on a daily basis at
a rate of 5% per annum, by the conversion price. As the Series B shares are
automatically convertible on June 20, 2002, the most beneficial conversion ratio
was determined to include the additional common shares attributable to the 5%
adjustment feature for the five-year period ending in 2002. After adjustment for
this additional benefit, the $6.01 conversion price is reduced to $4.81, the
most beneficial conversion price at the Issuance Date.

          The Series B shares are subject to mandatory redemption requirements 
under certain limited circumstances as defined in the preferred stock 
agreement.  Those circumstances include, a change in control of the Company in 
which more than 50% of the voting power of the company is disposed of, the 
Company's failure to maintain its common stock listing on the NASDAQ National 
Market or other designated stock exchange, or the Series B shares ceasing to be 
convertible as a result of the aggregate number of common shares then issuable 
upon conversion equaling 19.99% of the outstanding common stock.  Should the 
Series B shares become redeemable, the redemption price would be greater of (a) 
118% of the stated value of the preferred stock, increased on a daily basis 
since the Issuance Date at a rate of 5% per annum, or (b) the number of shares 
issuable upon conversion multiplied by the closing price of the common stock on 
such conversion date.

   
          The Company received $6,000,000 of proceeds, and paid offering costs
of $513,000, resulting in net proceeds of $5,487,000 for the preferred shares
and warrants. In the April 30, 1998 financial statements, the Company ascribed
$6,000,000, the stated value, to the preferred stock, $362,000 to paid in
capital for the warrants and charged paid-in-capital $875,000, to account for
the net proceeds received.  The Company accounted for the 5% adjustment feature 
as a deemed dividend by charging paid-in capital, as the Company had an
accumulated deficit, and increasing the carrying value of the preferred stock.
For the year ended April 30, 1998, the Company recognized deemed dividends of
$198,000, which were determined based on the amount of the 5% adjustment feature
realizable by the Series B stockholder during this period.

          The Company has restated its 1998 financial statements to account for
the beneficial conversion feature and the mandatory redemption features of the
Series B shares. In determining the accounting for the beneficial conversion
feature, the Company first allocated the net proceeds of $5,487,000 to the
Series B shares and the warrants based on their relative fair values at the
Issuance Date; resulting in $5,242,000 assigned to the Series B shares and
$245,000 assigned to the warrants as of June 20, 1997. The Company then
allocated $3,667,000 of the Series B shares net proceeds to paid-in capital for
the beneficial conversion feature resulting in a reduction in the carrying
value of the Series B shares to $1,575,000. The beneficial conversion feature
is being recognized as a deemed dividend to the preferred shareholders over the
minimum period in which the preferred shareholders can realize that return.
Because the Series B shares were immediately convertible, a portion of the
beneficial conversion feature is realizable at the issuance date.  Accordingly,
a  $1,732,000 deemed dividend as of the Issuance Date has been recognized as a
charge to paid-in capital and net loss applicable to common stockholders, and
an increase in the carrying value of the preferred stock. As a result, through
April 30, 1998, $1,930,000 of the beneficial conversion feature has been
recognized. The balance of the beneficial conversion feature related to the
outstanding Series B shares which is not realizable until future periods
is being recognized through June, 2002 using the interest method.

          During Fiscal 1998, 2,750 of Series B shares were converted to 452,146
shares of common stock. The converted Series B shares had a carrying value,
including the beneficial conversion feature recognized through the date of
conversion, of $1,590,000.  As a result of the above, the carrying value of the
Series B shares is $1,915,000 at April 30, 1998.

          In addition, due to the mandatory redemption features noted above, the
carrying value of the Series B shares, which were previously presented as a
component of Stockholders' Equity, has been reclassified as temporary equity,
outside of Stockholders' Equity at April 30, 1998.

          The restatements of the 1998 financial statements for the matters
described above had no effect on the Company's net loss, total assets or total
liabilities. The Company's redeemable equity, total stockholders' equity at
April 30, 1998 and basic and diluted loss per common share for the year ended
April 30, 1998, as previously reported and as restated, are as follows:

<TABLE>
<CAPTION>
                                                                  April 30, 1998
                                                                  --------------
<S>                                                                 <C>
Redeemable equity -- previously reported                            $    --
Adjustment related to the presentation of the
  Series B shares as redeemable                                        1,915,000
                                                                     -----------
As restated                                                          $ 1,915,000
                                                                     ===========
Stockholders' equity -- previously reported                          $15,493,000
Adjustment related to the presentation of the
  Series B shares as redeemable                                       (1,915,000)
                                                                     -----------
As restated                                                          $13,578,000
                                                                     ===========

<CAPTION>                                                            Year ended
                                                                   April 30, 1998
                                                                   --------------
<S>                                                                  <C>
Basic and diluted net loss per common share --
  previously reported                                                     ($0.40)
Adjustment related to the recognition of the 
  beneficial conversion feature as a deemed preferred dividend            ( 0.19)
                                                                          ------
As restated                                                               ($0.59)
                                                                          ====== 
</TABLE>

          The quarterly data for deemed preferred dividends and basic and 
diluted net loss per common share, as previously reported in the Company's Form 
10-Q and as restated, are as follows:

<TABLE>
<CAPTION>
                                                                    3 Months Ended
                                                                    July 31, 1997
                                                                     (unaudited)
                                                                    --------------
<S>                                                                   <C>
Deemed preferred dividends -- previously reported                     $   33,000

Adjustments related to the recognition of the
  beneficial conversion feature as a deemed preferred dividend         1,732,000
                                                                      ----------
As restated                                                           $1,765,000
                                                                      ==========
Basic and diluted loss per common share --
  previously reported                                                     ($0.18)

Adjustments related to the recognition of the
  beneficial conversion feature as a deemed preferred dividend             (0.19)
                                                                           -----
As restated                                                               ($0.37)
                                                                            ====
</TABLE>
    

4. MANAGEMENT SERVICES AGREEMENTS

          Effective January 1, 1997, the Company completed a management services
agreement with an ophthalmic practice whose president is a member of the
Company's Board of Directors and is also the Company's medical director. The
Company acquired certain contract rights and fixed assets for $288,000 of cash,
the issuance of 96,400 shares of common stock and 157,593 stock options 


                                      F-9
<PAGE>   30

with an exercise price of $5.98 per share, the market price. The Company also 
assumed certain lease obligations described in Note 9.

          In April 1998, the previous management services agreement was
terminated by mutual agreement. In accordance with the termination, the
ophthalmic practice returned the previously issuable common stock and the stock
options and agreed to repay $163,000 of the cash paid by the Company upon
consummation of the original agreement. In addition the ophthalmic practice
agreed to assume the capital lease obligations that were previously transferred
and the Company returned the related ophthalmic equipment.

          Upon termination of the management services agreement described above,
a new five year contract was entered with the president of the ophthalmic
practice and member of the Company's Board of Directors to provide ongoing
service as the Company's medical director for $60,000 per year. The Company has
agreed to pay another physician in the same practice $60,000 per year for five
years to provide services as a medical director for the Company. 160,000
unregistered warrants with an average exercise price of $10.53 per share, $.28
above the market price, were also issued to these physicians in exchange for
their future services. The practice has also agreed to exchange their right to
purchase an excimer laser at a discounted price in exchange for 60,000 stock
options with an exercise price of $10.25 per share, the market price. The
ophthalmic practice has committed to using this laser for a minimum number of
procedures for five years. These unregistered warrants and stock options are
included in the Warrants and options line in the Stockholders' equity section of
the balance sheet. The $466,000 of costs associated with these future medical
services have been deferred and will be amortized over the related service
period (vesting period when shorter).

5.  ACQUISITIONS

          In October 1996, the Company acquired the 49.998% minority interest in
its European subsidiary, Harley Street Laser Vision Centre, for approximately
$193,000 plus the issuance of 17,000 shares of restricted common shares with a
market value of $130,000.

          In April 1996, the Company purchased certain European assets and
assumed certain liabilities of New Image Laser Centres Limited for approximately
$229,000 ($60,000 paid during fiscal 1997).

          In February 1996, the Company purchased the stock of Med-Source, Inc.
for 21,845 restricted shares of the Company's common stock with a market price
of $265,000. In accordance with the purchase method of accounting, approximately
$282,000 of goodwill was recorded.

          In August 1995, the Company acquired the stock and assumed certain
liabilities of Vision Correction, Inc. of Minnesota for 76,181 shares of the
Company's common stock with a market price of $648,000 issued. In accordance
with the purchase method of accounting, approximately $664,000 of goodwill was
recorded.

6.  FIXED ASSET IMPAIRMENT PROVISIONS

          In connection with the Company's continuing evaluation of the
recoverability of its assets, asset impairment charges were recognized in the
fourth quarter of fiscal 1997 ($2,772,000) and the fourth quarter of fiscal 1996
($3,063,000). International lasers were written down in fiscal 1996. In fiscal
1997 domestic and international lasers, as well as goodwill was written down.
The total original cost of the above equipment and goodwill written down in
fiscal 1997 was $4,534,000 and the accumulated depreciation and amortization at
the time of the write-downs was $1,404,000. The total original cost of the
equipment written down in fiscal 1996 was $9,542,000 and the accumulated
depreciation at the time of the write-downs was $4,044,000.



                                      F-10
<PAGE>   31



7. OTHER ASSETS

          Other assets at April 30 consist of the following:
<TABLE>
<CAPTION>

                                                                              1998             1997
                                                                                               ----
<S>                                                                    <C>                <C>
Goodwill, net of $261,000 and $103,000 amortization,
  respectively (Notes 5 and 6)                                             $678,000           $836,000
Tradename and servicemark costs, net of $69,000 and $49,000
  amortization, respectively                                                113,000            136,000
Deferred contract rights, net of $42,000 amortization (Note 4)                               1,238,000
Future services obtained for issuance of warrants and options               539,000
Restricted cash (Notes 8 and 12)                                            974,000          1,239,000
Rent deposits and other, net                                                 59,000             49,000
                                                                             ------             ------
                                             Total                       $2,363,000         $3,498,000
</TABLE>

          Restricted cash secures one of the Company's notes payable and the
Company's guarantee to a third party of notes by certain patients who elected to
finance a portion of the cost of their PRK or LASIK procedure.

8.  NOTES PAYABLE

          In September 1997, the Company borrowed $1,050,000 at 11.3% per annum
with a term of four years to finance the acquisition of lasers and mobile
equipment. The debt is collateralized by the same equipment. In October 1997 the
Company borrowed $813,000 from the lender which provided financing in March
1997. The March 1997 debt agreement gave the lender the right to increase the
amount funded by the loan under similar financial terms including the receipt of
7,500 additional stock warrants. This debt bears interest at 13.6% with a term
of four years. In January 1998, the Company financed the purchase of a laser and
other medical equipment for $390,000, with interest at 9.5% for three years. The
debt is collateralized by the equipment purchased. In January and April 1998,
the Company borrowed a total of $1,837,000 at 5.8% for two to three year terms
to finance the purchase of six excimer lasers. The debt is collateralized by the
same lasers.

          In October 1996 and March 1997, the Company entered into agreements to
borrow a total of $5.9 million from two different lenders over four to four and
one half years and bearing interest at 11% and 15% per annum, respectively.
These loans were secured by fifteen excimer lasers used in the U.S. The October
loan was also secured by $1,650,000 of restricted cash which will become
available to the Company in proportion to the reduction in the principal balance
and, under certain circumstances, if financial targets are achieved. As of April
30, 1998, $353,000 of this restricted cash is classified as a current asset and
$914,000 is classified as a non-current asset. As part of the March loan
agreement, the Company also issued 25,000 warrants, exercisable within five
years, to the lender at the then current market price. At April 30, 1998 the
future maturity schedule for these notes was as follows:

<TABLE>
<CAPTION>

          YEAR ENDING APRIL 30,
          ---------------------
<S>                                                   <C>
          1999                                         $2,365,000
          2000                                         $2,538,000
          2001                                         $2,894,000
          2002                                           $475,000
</TABLE>

9.  OBLIGATIONS UNDER CAPITAL LEASES

          In January 1997, the Company assumed responsibility for an excimer
laser lease and a microkeratome lease with remaining lives of three and one half
years with principal payments totaling $381,000 and bearing interest at rates
from 7% to 9% per annum as part of a management services agreement, see Note 4.
In conjunction with the dissolution of the management services agreement in
April 1998, the lease obligations have returned to the practice with which
the management services agreement was dissolved. In August 1996, the Company
financed an excimer laser purchase with a four year capital lease requiring
principal payments totaling $525,000 and bearing interest at 15%. During fiscal
1997, the Company financed a total of nine corneal topographer purchases for use
in the United States with three to five year capital leases requiring total
principal payments of $139,000 and bearing interest at rates from 6% to 12% per
annum.

          In September 1995, the Company acquired two excimer lasers for use in
the United States. The lasers were financed by five year capital leases
requiring principal payments totaling 


                                      F-11
<PAGE>   32

$1,024,000 and bearing interest at 11% per annum. In January 1996, the Company 
acquired two additional excimer lasers which were financed by three and one-half
year term capital leases requiring principal payments totaling $912,000 and 
bearing interest at 12% per annum. Future minimum payments under capital leases 
as of April 30, 1998 are as follows:

<TABLE>
<CAPTION>

                   YEAR ENDING APRIL 30,                                             AMOUNT
                   ---------------------                                             ------
<S>                                                                               <C>
                   1999                                                              $793,000
                   2000                                                               585,000
                   2001                                                               117,000
                   2002                                                                26,000
                   Total minimum lease payments                                     1,521,000
                   Less amount representing interest                                 (171,000)
                   Less current portion                                              (672,000)
                                                                                     ---------
                   Long-term portion of obligations under capital leases             $678,000
</TABLE>

          Assets under capital leases totaled $283,000 and $721,000,
respectively, at April 30, 1998 and 1997. Depreciation of leased assets was
$136,000, $655,000 and $265,000 for the years ended April 30, 1998, 1997 and
1996, respectively. In addition, the fixed asset impairment provision in fiscal
1997 included $1,590,000 related to leased U.S. lasers.

   
10.  CONVERTIBLE PREFERRED STOCK
    

          The Company's amended Articles of Incorporation authorize the Board of
Directors to issue 1,000,000 shares of preferred stock, at $.01 par value per
share, in one or more series, designated by them as to rights, preferences,
terms and limitations.

   
          In June 1997, the Company received $6,000,000, less $513,000 of
offering costs, from the issuance of 6,000 shares of restricted Series B
Convertible Preferred Stock, par value $1,000, 100,000 vested stock warrants
with an exercise price of $9.39 per warrant and, effective June 1998, 100,000
vested stock warrants with an exercise price of $17.85 per warrant. The
underlying common stock was registered with the SEC in August 1997. During
fiscal 1998, a total of 2,750 Series B preferred shares were converted to
452,146 shares of common stock. The 3,250 Series B preferred shares outstanding
have a mandatory conversion requirement by June 2002 which varies with the
future market price of the Company's common stock and is subject to an $8.05 per
share maximum conversion price. The number of common shares into which the
preferred stock is convertible is determined by dividing the stated value of the
Series B shares, increased on a daily basis at a rate of 5% per annum, by the
conversion price. As of April 30, 1998, the outstanding Series B preferred stock
would have converted to 421,109 shares of common stock. The Series B preferred
shares are non-voting except in regard to issues directly affecting the
preferred stock as a class. See Note 3.
    

          In October 1995, the Company received $14,100,000, less $1,242,000 of
offering costs, from the sale of 141,000 shares of restricted convertible
preferred stock with a mandatory redemption provision in 2005. These restricted
preferred shares, par value $100, converted into 2,349,991 shares of common
stock during the first half of fiscal 1997 and were registered with the SEC in
March 1997. For the fiscal years ended April 30, 1997 and 1996, dividends of
$126,000 and $439,000, respectively, were accrued and reflected in the
calculation of basic and diluted loss per common share.


   
11.  INCOME TAXES
    

          At April 30, 1998, the Company has net operating loss carryforwards of
approximately $31 million available to offset future taxable income, expiring
2006 through 2013. The Company has recorded a deferred tax asset of
approximately $13 million with offsetting valuation allowances at April 30,
1998. The "valuation allowance, equity" affects equity and will not reduce
income tax expense. For purposes of recording deferred tax assets, no future
taxable income is assumed given the results of operations of the Company to
date. The amount of the valuation allowance could be reduced in the near term if
estimates of future taxable income are increased.


                                      F-12
<PAGE>   33


       The components of deferred taxes at April 30 are as follows:
<TABLE>
<CAPTION>

                                                                                                    1998                 1997
                                                                                                    ----                 ----
<S>                                                                                            <C>                    <C>
Net operating loss                                                                               $11,773,000           $ 9,403,000
Depreciation                                                                                       1,124,000             1,769,000
Other                                                                                                117,000                81,000
Net asset                                                                                         13,014,000            11,253,000
Valuation allowance, provision for income taxes                                                  (12,073,000)          (10,747,000)
Valuation allowance, equity                                                                         (941,000)             (506,000)
          Total deferred taxes                                                                   $        -0-           $       -0-

</TABLE>


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

<TABLE>
<CAPTION>

                                                                                      1998          1997           1996
                                                                                      ----          ----           ----
<S>                                                                                  <C>           <C>           <C>
Computed expected tax benefit                                                        $ 1,189,000   $ 4,103,000   $ 2,993,000
Change in valuation allowance, provision for income taxes                             (1,327,000)   (4,593,000)   (3,178,000)
State income taxes, net of federal benefit                                               138,000       478,000       349,000
Other                                                                                         --        12,000      (164,000)
  Income tax expense                                                                 $        -0-  $        -0-  $        -0-
</TABLE>

   
12.  COMMITMENTS AND CONTINGENCIES
    

Employment agreements

          During fiscal 1996, the Company entered into three-year agreements
with four executive officers of the Company to provide for base salaries, the
potential payment of certain bonuses and severance payments equal to 18 months
of base compensation. Three other key employees have employment agreements with
unexpired terms ranging from twelve to twenty four months.

Operating leases

          The Company has office and laser center lease agreements in St. Louis,
Missouri and London, England. The respective leases commenced in 1994 and 1996
and shall end in 1999 and 2001. Approximate future minimum rental payments under
the leases are as follows:
   

<TABLE>
<CAPTION>

  YEAR ENDING APRIL 30,                                                                   MINIMUM RENTAL PAYMENTS
  ---------------------                                                                   -----------------------
<S>                                                                                            <C>
          1999                                                                                    $329,000
          2000                                                                                     306,000
          2001                                                                                     283,000
          2002                                                                                       4,000
</TABLE>
    

          Related rental expenses totaled $443,000, $545,000, and $184,000 for
the years ended April 30, 1998, 1997 and 1996, respectively.

Notes with recourse

          As of April 30, 1998, the Company had guaranteed notes payable
totaling $959,000 to a third party by certain patients who elected to finance a
portion of the cost of their refractive surgery. Interest bearing deposits with
the third party, classified as current and non-current restricted cash on the
balance sheet, secure $178,000 of this contingent obligation.



   
13.  LEGAL PROCEEDINGS
    

          In March 1998 the Company was served with a subpoena by the United
States Department of Justice. The Company understands that the subpoena is part
of an industry-wide investigation into the so-called "international card"
software that enabled the excimer lasers to be used to perform laser eye
surgeries for higher myopia cases (greater than -6.0 diopters) than what was
initially approved by the FDA. The FDA ultimately did approve use of an excimer
laser for higher myopia cases in January 1998. Many ophthalmologists have taken
the position that FDA restrictions on physicians' use of laser equipment through
software control, rather than the traditional means of labeling, deny physicians
the flexibility to treat individual patients as 


                                      F-13
<PAGE>   34

the physician deems medically necessary, and represent an unwarranted intrusion 
upon physicians' rights to practice medicine according to their best medical 
judgment. The subpoena requests that the Company produce several specified 
categories of documents. The Company has provided the documents as requested and
intends to continue to fully cooperate in this matter. Although it is impossible
to assess the effect, if any, of this investigation on the operating results and
cash flow for a particular period, the Company's management does not believe 
that it should be material to the financial condition of the Company.

          Other than as described above, management does not expect that any
outstanding or pending legal proceedings, individually or in the aggregate, will
have a material adverse effect upon the Company's future results of operations,
liquidity or financial condition.

   
14.  CAPITAL STOCK
    

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

   
15.  STOCK OPTIONS AND WARRANTS
    

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

          The 1990 Incentive Stock Option Plan (the Option Plan) was approved by
stockholders of the Company on March 5, 1990 and amended by the stockholders on
April 22, 1992, January 19, 1996 and March 19,1998. Under the terms of the
Option Plan, the Company has reserved 1,000,000 shares for issuance upon
exercise of options granted to employees and officers of the Company. The
exercise price may not be less than the market price of the common stock on the
date of grant. Options are nonassignable and may be exercised only by the
employee while employed by the Company or within three months after termination
of employment unless due to death or disability. Options are exercisable in
increments over four years and expire no later than ten years from the date of
the grant. All outstanding options had an initial expiration date of five years.
A total of 371,405 options were available for issuance under this plan at April
30, 1998.

          The 1990 Non-Qualified Stock Option Plan (the Plan) was approved by
the stockholders of the Company on March 5, 1990, and amended by the
stockholders on April 22, 1992 and January 19, 1996. Under the terms of the
Plan, as amended, the Company has reserved 600,000 shares of common stock for
issuance upon exercise of options granted to outside directors and consultants.
Such options vest over various lengths of time and expire after five years. A
total of 165,237 options were available for issuance under this plan at April
30, 1998.

          Under the 1994 Non-Qualified Warrant Plan, as amended on January 19,
1996 and March 19, 1998, the Company has reserved 2,200,000 shares of common
stock for issuance upon exercise of registered warrants granted to certain
employees, directors and consultants. Such warrants generally vest ratably over
periods up to twenty-four months and are exercisable over a five year period. A
total of 527,000 warrants were available for issuance under this plan at April
30, 1998.

          Unregistered warrants are exercisable over a five year period and vest
at varying rates ranging from immediately to four years. Of the 680,300
unregistered warrants outstanding as of April 30, 1998, 325,000 were issued to
officers, employees and consultants during fiscal 1995 at $9.00 per share, above
the market price, 100,000 were issued to a consultant during fiscal 1996 at
$5.25 per share, below the market price, 60,000 were issued to medical advisors
during fiscal 1998 at $11.00 per share, above the market price, and the balance
were issued at the market price.


                                      F-14
<PAGE>   35



          Information with respect to the previous plans is as follows:

<TABLE>
<CAPTION>

                                                                   NON-QUALIFIED
                                              INCENTIVE STOCK             STOCK      UNREGISTERED     NON-QUALIFIED
                                                   OPTION PLAN       OPTION PLAN         WARRANTS      WARRANT PLAN
                                                   -----------       -----------         --------      ------------
<S>                                                 <C>                <C>              <C>              <C>
Outstanding at April 30, 1995                          286,695           192,000          355,000           944,500
Exercised ($3.00 to $7.75)                             (59,210)          (41,000)         (30,000)         (104,250)
Granted ($5.25 to $16.63)                               59,000                --          110,000            61,000
Canceled                                                (3,000)               --               --                --
Outstanding at April 30, 1996                          283,485           151,000          435,000           901,250

Exercised ($3.00 to $7.75)                             (10,283)          (16,957)              --            (1,550)
Exchanged ($5.00 to $8.13)                              19,000                --               --           (19,000)
Granted ($5.75 to $12.44)                               55,000            63,306           75,000           319,000
Canceled ($6.88 to $8.75)                              (31,000)          (40,000)              --          (100,000)
Outstanding at April 30, 1997                          316,202           157,349          510,000         1,099,700

Exercised ($3.00 to $8.75)                             (74,350)          (30,000)              --          (243,700)
Granted ($5.75 to $11.00)                              311,150           222,500          170,300           467,500
Canceled ($5.75 to $16.63)                             (69,850)          (13,043)              --                --
Outstanding at April 30, 1998                          483,152           336,806          680,300         1,323,500

Average price per share at April 30,
 1996                                                   $ 7.42            $ 5.78           $ 8.11            $ 6.40
 1997                                                   $ 7.28            $ 6.37           $ 8.04            $ 7.03
 1998                                                   $ 7.70            $ 7.76           $ 8.60            $ 7.43
Exercisable at April 30,
 1996                                                  170,235           151,000          239,583           827,041
 1997                                                  241,452           123,189          409,375           969,156
 1998                                                  249,602           223,663          492,025           973,073

</TABLE>

          The Company also has the following warrants and options outstanding as
of April 30, 1998:

                   47,388 Underwriter warrants-Exercisable for one share of
          common stock, at a price of $7.25 per share, expire in November 1998

                   100,000 warrants-Exercisable for one share of common stock,
          at a price of $9.39 per share, expire in June 2002

                   At the January 1998 Board of Directors meeting, 33,500 
incentive stock options issued in January 1996 and April 1996 to non-officer 
employees had the exercise price reduced from a weighted average of $12.63 per 
option to $8.75 per option, above the market price at that time.

          During fiscal 1997, the Company adopted SFAS 123, which addresses
accounting for stock option and warrant plans and selected the "intrinsic value
based method" for valuing stock options granted to employees. Had compensation
cost for all of the Company's stock option and warrant plans been determined
based upon the fair value at the grant dates consistent with the methodology
prescribed in SFAS 123, the Company's net loss and net loss per share would have
increased to the pro forma amounts indicated below using the weighted average
fair values indicted:
   

<TABLE>
<CAPTION>

                   YEAR ENDING APRIL 30,                              1998               1997             1996
                   ---------------------                              ----               ----             ----
<S>                                                             <C>                  <C>               <C>
Net loss as reported (thousands)                                    $3,496            $12,069           $8,803
Pro forma net loss (thousands)                                      $4,309            $12,862           $9,064

Loss per share as reported (Restated - Note 3)                        $.59              $1.45           $ 1.75
Pro forma loss per share (Restated - Note 3)                          $.68              $1.54            $1.80

Weighted average fair value of grants at market                      $2.55              $2.75            $2.41
Weighted average fair value of grants below market                       -                  -            $4.06
</TABLE>
    


                                      F-15
<PAGE>   36


          The fair value of each option and warrant grant is estimated on the
date of grant using the Black-Scholes option pricing model with the following
assumptions for grants in fiscal 1998, 1997 and 1996: risk-free interest rates
ranging from 5.0% to 6.5%, expected volatility of 30% to 45%, no dividends, and
an expected life of two and one half years. Since employee stock options and
warrants are not traded on a secondary exchange, employees receive no benefit
and derive no value from holding stock options and warrants under these plans
without an increase in the market price of the Company's stock. Such an increase
would benefit all stockholders.

The following table summarizes information for stock warrants and options
outstanding at April 30, 1998:

<TABLE>
<CAPTION>

                                                 WEIGHTED  AVERAGE              EXERCISABLE
                                                 -----------------              -----------
RANGE OF AVERAGE            NUMBER            REMAINING      EXERCISE       NUMBER       WEIGHTED
EXERCISE PRICE           OUTSTANDING          LIFE             PRICE     OUTSTANDING   EXERCISE PRICE
---------------          -----------          -----           ------     -----------   --------------
<S>                     <C>                  <C>           <C>           <C>               <C>
$  3.00                     37,652            1.8 years     $  3.00         37,652          $ 3.00
$  5.00 - $  6.50          671,300            1.0 years     $  5.51        646,150          $ 5.51
$  7.25 - $  9.00          721,888            1.7 years     $  8.34        713,838          $ 8.34
$  7.43 - $  8.75          948,806            4.1 years     $  7.58        368,612          $ 7.62
$  9.25 - $ 11.00          447,500            4.8 years     $ 10.02        185,500          $ 9.72
$ 12.44                    144,000            3.0 years     $ 12.44        144,000          $12.44
                           -------            ---           -------      ---------          ------
                         2,971,146            2.8 years     $  7.84      2,095,752          $ 7.65
</TABLE>

   
The fiscal 1998 financial statements reflect $262,000 of expense for warrants
and options issued as compensation to consultants and lenders, $718,000 of cost
for warrants issued to acquire equipment and non-current contract rights from
medical advisors and $245,000 of cost assigned to the warrants issued or
issuable as part of the issuance of preferred stock (Restated - Note 3). Fiscal
1997 operating results reflect $36,000 of expense for warrants and options 
issued as compensation to consultants and lenders.
    

16.  BUSINESS SEGMENT INFORMATION

          After allocating certain corporate expenses and determining the
primary geographic area for mobile equipment, business segment information for
the years ended April 30, 1998, 1997 and 1996 is as follows:


<TABLE>
<CAPTION>
                                                                              FOREIGN
                                                                              -------
                                                 DOMESTIC          CANADA                EUROPE                  TOTAL
                                                 --------          ------                ------                  -----
<S>                                              <C>               <C>                 <C>                    <C> 
YEAR ENDED APRIL 30, 1998
Revenues                                         $20,721,000       $836,000            $1,912,000             $23,469,000
Income (loss) from operations                    ($2,127,000)       $25,000             ($771,000)            ($2,873,000)
Interest/other income                                                                                            $377,000
Interest expense                                                                                              ($1,000,000)
  Net Loss                                                                                                    ($3,496,000)
Identifiable assets                              $27,064,000       $893,000            $2,872,000             $30,829,000
Capital expenditures                              $6,130,000                             $179,000              $6,309,000
Depreciation and amortization                     $3,767,000       $225,000              $933,000              $4,925,000

YEAR ENDED APRIL 30, 1997
Revenues                                         $ 5,279,000      $ 928,000           $ 2,031,000            $  8,238,000
Income (loss) from operations                    $(9,155,000)     $(725,000)          $(1,963,000)           $(11,843,000)
Minority interest in net
  loss of subsidiary                                                                                             $103,000
Interest/other income                                                                                            $268,000
Interest expense                                                                                                $(597,000)
  Net Loss                                                                                                   $(12,069,000)
Identifiable assets                              $18,310,000       $876,000            $3,684,000             $22,870,000
Capital expenditures                              $6,423,000       $436,000            $1,363,000              $8,222,000
Depreciation and amortization                     $2,642,000       $285,000              $983,000              $3,910,000

</TABLE>


                                      F-16
<PAGE>   37


<TABLE>
<CAPTION>

                                                                           FOREIGN
                                                                           -------
                                                 DOMESTIC          CANADA           EUROPE                TOTAL
                                                 --------          ------           ------                -----
YEAR ENDED APRIL 30, 1996
<S>                                           <C>              <C>                <C>                  <C>
Revenues                                       $   1,720,000    $   943,000        $ 1,255,000          $ 3,918,000
Income (loss) from operations                    $(3,554,000)   $(1,350,000)       $(4,312,000)         $(9,216,000)
Minority interest in net
  loss of subsidiary                                                                                       $192,000
Interest/other income                                                                                      $437,000
Interest expense                                                                                          ($216,000)
  Net loss                                                                                              $(8,803,000)
Identifiable assets                              $24,325,000    $   561,000        $ 4,027,000          $28,913,000
Capital expenditures                             $ 7,197,000    $   426,000        $   981,000          $ 8,604,000
Depreciation and amortization                    $   306,000    $   467,000        $ 1,430,000          $ 2,203,000
</TABLE>




                                      F-17

<PAGE>   38



<TABLE>
<CAPTION>

SCHEDULE VIII                                      VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands)
                                         Balance at          Expense                  Uncollectable           Balance at
                                  beginning of year        provision          Other        accounts          end of year
<S>                                          <C>              <C>           <C>            <C>                  <C>
FISCAL 1998
Doubtful accounts
receivable                                     $360             $153                         $(118)                 $395

FISCAL 1997
Doubtful accounts
receivable                                      286              121              -            (47)                  360

FISCAL 1996

Doubtful accounts
receivable                                      157              127         $34(a)            (32)                  286
</TABLE>


          (a) - Allowances obtained as part of European acquisition


                                      F-18