<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark one)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended March 31, 1999

                                       OR

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from _____________ to
     _____________

     Commission file number: 1-14128

                              STERLING VISION, INC.
             (Exact name of Registrant as specified in its Charter)

         New York                                      11-3096941
 ------------------------                   ---------------------------------
 (State of Incorporation)                   (IRS Employer Identification No.)

                             1500 Hempstead Turnpike
                           East Meadow, New York 11554
          ------------------------------------------------------------
          (Address of Principal Executive Offices, including Zip Code)

                                 (516) 390-2100
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

   (Former name, former address and former fiscal year, if changed since last
                                    report)

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

                         Yes  X            No
                             ---              ---

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                         Yes               No
                             ---              ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     There were 15,118,524 shares outstanding of the Registrant's Common Stock,
par value $.01 per share, as of May 7, 1999.


<PAGE>


Item 1.  Financial Statements

                     STERLING VISION, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                      -------------------------------------
                             (Dollars In Thousands)


<TABLE>
<CAPTION>
                                                                                March 31,    December 31,
                                                                                  1999          1998
                                                                               -----------    --------
                                                                               (Unaudited)
<S>                                                                            <C>           <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                                    $  1,082      $    828
   Accounts receivable - net of allowance for
     doubtful accounts of $1,944 and $2,060, respectively                          3,073         2,257
   Other receivables                                                               1,246         1,121
   Franchise and other notes receivable                                            3,074         3,077
   Inventories                                                                     2,226         2,268
   Due from related parties                                                          110           125
   Prepaid expenses and other current assets                                         307           395
                                                                                --------      --------
     Total Current Assets                                                         11,118        10,071

Property and equipment - net of accumulated depreciation                           7,291         8,104

Franchise and other notes receivable - net of allowance
   for doubtful accounts of $400 and $450, respectively                           10,493        11,359
Excess of cost over fair value of assets acquired                                  3,647         3,735
Restricted cash                                                                      624           624
Other noncurrent assets                                                              590           601
                                                                                --------      --------
     Total Assets                                                               $ 33,763      $ 34,494
                                                                                ========      ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Current portion of long-term debt                                            $  4,043      $  4,130
   Accounts payable and accrued liabilities                                        7,253         7,099
   Accrual for store closings                                                      1,222         1,254
   Franchise related obligations                                                     913           939
                                                                                --------      --------
     Total Current Liabilities                                                    13,431        13,422

Long-term debt                                                                     6,403         7,422
Deferred franchise income                                                             87            90
Excess of fair value of assets acquired over cost                                    926         1,013

Commitments and contingencies (Note 5)

Shareholders' Equity:
   Senior Convertible Preferred Stock, $.01 par value per share; authorized
     5,000,000 shares; 29 and 35 shares issued and
     outstanding, respectively                                                     3,277         4,025
   Common stock, $.01 par value per share; authorized 28,000,000
     shares; 15,118,524 and 14,920,351 issued and outstanding,
     respectively                                                                    151           149
   Additional paid-in capital                                                     46,919        46,036
   (Deficit)                                                                     (37,431)      (37,663)
                                                                                --------      --------
     Total Shareholders' Equity                                                   12,916        12,547
                                                                                --------      --------
     Total Liabilities and Shareholders' Equity                                 $ 33,763      $ 34,494
                                                                                ========      ========
</TABLE>




     See accompanying notes to Consolidated Condensed Financial Statements.

                                       -2-


<PAGE>




                     STERLING VISION, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 -----------------------------------------------
                                   (Unaudited)
                      (In Thousands, Except Per Share Data)


<TABLE>
<CAPTION>
                                                                   For the Three Months Ended
                                                                           March 31,
                                                                     1999              1998
                                                                 ------------      ------------
                                                                                   (As Restated)

<S>                                                              <C>               <C>
Systemwide sales                                                 $     37,271      $     37,031
                                                                 ============      ============


Revenues:
   Net sales                                                     $      6,248      $      5,813
   Franchise royalties                                                  2,226             2,385
   Net gains and fees from the conveyance of
     Company-owned store assets to franchisees                            409               135
   Other income                                                           463               555
                                                                 ------------      ------------
Total Revenues                                                          9,346             8,888
                                                                 ------------      ------------

Costs and Expenses:
   Cost of sales                                                        1,800             1,765
   Selling expenses                                                     3,790             3,690
   General and administrative expenses                                  2,869             3,009
   Loss (Gain) from managed stores                                        113               (73)
   Interest expense                                                       306               395
   Amortization of debt discount                                         --               1,073
                                                                 ------------      ------------
Total Costs and Expenses                                                8,878             9,859
                                                                 ------------      ------------


Income (Loss) before provision for income taxes                           468              (971)
Provision for income taxes                                               --                --
                                                                 ------------      ------------
Net income (loss)                                                $        468      $       (971)
                                                                 ============      ============

Per share information (Note 4):
   Net income (loss) per share:

   Basic                                                         $        .02      $       (.07)
                                                                 ------------      ------------

   Diluted                                                       $       (.08)     $       (.07)
                                                                 ------------      ------------

   Shares used in computing net income (loss) per share:

   Basic                                                           15,060,000        14,189,000
                                                                 ------------      ------------

   Diluted                                                         16,085,000        14,189,000
                                                                 ------------      ------------
</TABLE>




     See accompanying notes to Consolidated Condensed Financial Statements.

                                       -3-

<PAGE>


                     STERLING VISION, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                 -----------------------------------------------
                                   (Unaudited)
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                  For the Three Months Ended
                                                                           March 31,
                                                                     1999         1998
                                                                    -------      -------
                                                                               (As Restated)

<S>                                                                 <C>        <C>
Cash flows from operating activities:
   Net income (loss)                                                $   468      $  (971)
   Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
       Depreciation and amortization                                    628          572
       Amortization of debt discount                                   --          1,073
       Allowance for doubtful accounts                                  190           90
       Net gain from the conveyance of Company-owned store
         assets to franchisees                                         (327)         (75)
       Accrued interest                                                  18           22
       Accretion of fair value of assets acquired over cost             (87)         (87)
       Changes in assets and liabilities:
         Accounts receivable                                         (1,071)      (1,890)
         Inventories                                                     42           38
         Prepaid expenses and other current assets                      104          (71)
         Other assets                                                   (10)         (42)
         Accounts payable and accrued liabilities                       155         (134)
         Franchise related obligations                                  (25)         (80)
         Deferred franchise income                                       (3)          (3)
         Accrual for store closings and lease termination costs         (32)        (129)
                                                                    -------      -------

Net cash provided by (used in) operating activities                      50       (1,687)
                                                                    -------      -------

Cash flows from investing activities:
   Franchise notes receivable issued                                   (855)         (22)
   Proceeds from repayment of franchise notes receivable              1,663          708
   Purchase of property and equipment                                  (202)        (182)
   Conveyance of property and equipment                                 821          148
                                                                    -------      -------

Net cash provided by investing activities                           $ 1,427      $   652
                                                                    -------      -------
</TABLE>




     See accompanying notes to Consolidated Condensed Financial Statements.

                                       -4-


<PAGE>




                     STERLING VISION, INC. AND SUBSIDIARIES
                     --------------------------------------
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS -- Cont'd.
           ----------------------------------------------------------
                                   (Unaudited)
                                 (In Thousands)




<TABLE>
<CAPTION>
                                                      For the Three Months Ended
                                                             March 31,
                                                         1999         1998
                                                        -------      -------
                                                                   (As Restated)
<S>                                                     <C>        <C>
Cash flows from financing activities:
   Payment of Price Protection Guarantee                $   (99)     $  --
   Repayment of borrowings under STI Loan Agreement        (850)        (832)
   Repayment of revolving credit note                      --         (1,000)
   Repayment of other debt                                 (335)        (250)
   Issuance of 1998 Debentures                             --          3,500
   Borrowings under additional loan agreements               61         --
                                                        -------      -------

Net cash (used in) provided by financing activities      (1,223)       1,418

Net increase in cash and cash equivalents                   254          383

Cash and cash equivalents - beginning of period             828          334
                                                        -------      -------

Cash and cash equivalents - end of period               $ 1,082      $   717
                                                        =======      =======

Supplemental disclosure of cash flow information:
   Cash paid during the period for:
     Interest                                           $   201      $   331
                                                        =======      =======
</TABLE>





     See accompanying notes to Consolidated Condensed Financial Statements.

                                       -5-


<PAGE>




                     STERLING VISION, INC. AND SUBSIDIARIES
                     --------------------------------------
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 -----------------------------------------------
                    FOR THE THREE MONTHS ENDED MARCH 31, 1999
                    -----------------------------------------
                                   (Unaudited)
                     (In Thousands, Except Number of Shares)

<TABLE>
<CAPTION>
                                                                                            Additional                    Total
                                           Preferred Stock              Common Stock          Paid-In                  Shareholders'
                                         Shares        Amount        Shares       Amount      Capital      Deficit        Equity
                                         -------      -------      ----------     -------     --------    ---------      --------

<S>                                      <C>          <C>          <C>            <C>       <C>           <C>          <C>
Balance - December 31, 1998                   35      $ 4,025      14,920,351     $   149     $ 46,036    $ (37,663)     $ 12,547

Issuance of common shares upon
   conversion of Senior Convertible
   Preferred Stock                            (6)        (748)        175,000           2          899         (153)         --
Stock dividend on Senior Convertible
   Preferred Stock                          --           --            22,506        --             83          (83)         --
Reduction related to Price Protection
   Guarantee                                --           --              --          --            (99)        --             (99)
Issuance of common shares to
   franchisees                              --           --               667        --           --           --            --

Net income                                  --           --              --          --           --            468           468
                                         -------      -------      ----------     -------     --------    ---------      --------

Balance - March 31, 1999                      29      $ 3,277      15,118,524     $   151     $ 46,919    $ (37,431)     $ 12,916
                                         =======      =======      ==========     =======     ========    =========      ========

</TABLE>




      See accompanying notes to Consolidated Condensed Financial Statement.

                                       -6-


<PAGE>




                     STERLING VISION, INC. AND SUBSIDIARIES
                     --------------------------------------
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              ----------------------------------------------------
                                   (Unaudited)

NOTE 1

     The accompanying Consolidated Condensed Financial Statements of Sterling
Vision, Inc. (the "Registrant") and subsidiaries (collectively, the "Company")
have been prepared in accordance with generally accepted accounting principles
for interim financial information and in accordance with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statement presentation. In the opinion of
management, all adjustments for a fair statement of the results of operations
and financial position for the interim periods presented have been included. All
such adjustments are of a normal recurring nature. This financial information
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto included in the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1998. There have been no changes in significant
accounting policies since December 31, 1998.

NOTE 2 - Convertible Debentures

1997 Debentures

     On February 26, 1997, the Company entered into Convertible Debentures and
Warrants Subscription Agreements with certain investors in connection with the
private placement (the "Private Placement") of units (collectively, the "Units")
consisting of an aggregate of $8,000,000 principal amount of the Company's
debentures (collectively, the "Debentures") and an aggregate of 800,000 warrants
(collectively, the "Warrants"). Each Warrant, exercisable until February 26,
2000, entitled the holder to purchase one share of the Company's Common Stock,
at a price per share assumed to be $6.50. For every two Warrants exercised
during the 2-year period ending May 30, 1999, a holder would receive an
additional warrant (collectively, the "Bonus Warrants") to purchase one
additional share of Common Stock at a price of $7.50 per share. Bonus Warrants
have a term of 3 years from the date of grant.

     The Debentures were convertible at a price per share (the "Conversion
Price") equal to the lesser of $6.50 or 85% of the average closing bid price of
the Common Stock, as reported on the Nasdaq National Market System, for the 5
trading days immediately preceding the date of conversion. The Company did,
however, have the right to redeem any Debentures requested to be converted, in
the event the Conversion Price was $6.00 or less. In such event, the redemption
price would have been equal to 115% of the face amount of that portion of the
Debentures requested to be converted. As of March 31, 1999, all of the
Debentures had been converted by the holders thereof.

     As of March 31, 1999, 250,000 and 275,000 Warrants and Bonus Warrants,
respectively, remained outstanding.

1998 Debentures/Convertible Preferred Stock

     In February 1998, the Company again entered into Convertible Debentures and
Warrants Subscription Agreements with certain investors in connection with the
private placement of units consisting of an aggregate of $3,500,000 principal
amount of convertible debentures (collectively, the "1998 Debentures") and an
aggregate of 700,000 warrants (collectively, the "1998 Warrants"). The 1998
Warrants initially entitled the holders thereof to purchase up to 700,000 shares
of the Company's Common Stock at a price of $5.00 per share.

     Subsequent to the date of the Company's issuance and sale of the 1998
Debentures and 1998 Warrants, the Company and the holders thereof (collectively,
the "Original Holders") determined that the issuance and sale of the 1998
Debentures and 1998 Warrants should be rescinded based upon a certain mutual
mistake of the Company and the Original Holders. Accordingly, on April 14, 1998,
the Company and the Original Holders entered into an Exchange Agreement,
effective as of February 17, 1998, whereby the 1998 Debentures were rescinded
and declared null and void from inception and were exchanged for $3,500,000
stated value (approximately $4,025,000 fair value) of a series of

                                       -7-


<PAGE>

the Company's Preferred Stock, par value $.01 per share (the "Senior Convertible
Preferred Stock"), and the 1998 Warrants were exchanged for new warrants (the
"New Warrants") entitling the Original Holders to purchase, until February 17,
2001, to the extent the Company did not redeem the Senior Convertible Preferred
Stock on February 17, 1999, up to 700,000 shares of Common Stock at a price of
$5.00 per share.

     The Senior Convertible Preferred Stock originally required the Company to
pay quarterly dividends (in cash or Common Stock) calculated at a rate of 10%
per annum, commencing May 17, 1998. Additionally, the Company, from and after
February 17, 1999, was required to redeem (in cash or Common Stock) all of the
Senior Convertible Preferred Stock at 105% of the then outstanding stated value,
based on a conversion price of $5.00. The Company would be required to
thereafter pay dividends thereon, calculated at the rate of 24% per annum.
Finally, the Senior Convertible Preferred Stock contained a price-protection
guarantee provision, whereby the Company, under certain circumstances, would be
required to pay to the holders the difference between the $5.00 conversion price
and the selling price (net of commissions) of any such shares sold by the
holders.

     As a result of the foregoing, the Company recorded amortization of debt
discount of $1,073,000 in the first quarter of 1998. This amount represented the
intrinsic value of the beneficial conversion feature which was inherent in the
conversion terms of the 1998 Debentures (approximately $963,000), and $110,000
of amortization related to the fair value of the 1998 Warrants issued in
connection with the 1998 Debentures. The remaining portion of the discount,
attributable to the 1998 Warrants, would have been amortized over the life of
the 1998 Debentures. The terms of the 1998 Warrants allow for exercise at a
price of $5.00 per share through the year 2001.

     On August 18, 1998 and November 19, 1998, the Company issued 19,550 and
27,944 registered shares of its Common Stock, respectively, in payment of the
required dividends on the Senior Convertible Preferred Stock.

     On January 4, 1999, the Company and the holders of its Senior Convertible
Preferred Stock entered into an Amendment Agreement to reduce the conversion
price, from $5.00 to $4.00, of all shares of Senior Convertible Preferred Stock
converted into Common Stock on or prior to February 10, 1999, and to eliminate
the price protection guaranty provision contained in the original Agreement.

     On March 4, 1999, effective as of February 11, 1999, the Company and each
of 4 remaining holders of the Senior Convertible Preferred Stock entered into
another amendment to the original agreement, whereby they reduced the conversion
price of all outstanding shares of Senior Convertible Preferred Stock from $5.00
to $3.00, extended the date by which the Company is required to redeem all
outstanding Senior Convertible Preferred Stock from February 17, 1999 to
February 17, 2000, eliminated the requirement for the Company to pay dividends
on the Senior Convertible Preferred Stock from and after February 17, 1999, and
reduced the exercise price of the outstanding 1998 Warrants from $5.00 to $4.00.

     On January 13, 1999 and March 26, 1999, certain holders of the Company's
Senior Convertible Preferred Stock exercised their right to convert an aggregate
of $650,000 stated value Senior Convertible Preferred Stock, into an aggregate
of 175,000 registered shares of the Company's Common Stock.

NOTE 3 - Singer Transaction

     On April 1, 1997, the Company acquired all of the issued and outstanding
shares of the capital stock of Singer Specs, Inc., a Delaware corporation, and
certain of its wholly-owned subsidiaries (collectively, "Singer") pursuant to
the terms of a certain Agreement and Plan of Reorganization, dated February 19,
1997 (the "Singer Agreement"), between the Company and the owners (collectively,
the "Shareholders") of all of the capital stock of Singer; and, in April 1998,
Singer Specs, Inc. was merged with and into the Registrant. As of the date of
such acquisition, Singer was the operator of 4 retail optical stores, each of
which were simultaneously franchised to corporations owned by the Shareholders,
franchisor of an additional 27 retail optical stores, all of which were located
in the States of Pennsylvania, Delaware, New Jersey, Virginia and the U.S.
Virgin Islands, and owner of a commercial building located in Philadelphia,
Pennsylvania, which was sold by the Company in December 1998.

                                       -8-


<PAGE>




     The Singer Agreement provided for the Shareholders to convey all of their
capital stock to the Company in exchange for shares of the Company's Common
Stock. In addition, the Shareholders pledged all their shares of the Company's
Common Stock to secure their obligations under the Singer Agreement, with
certain restrictions as to when the Shareholders could sell certain portions of
their Common Stock.

     The Singer Agreement also provided that the Company, under certain
circumstances, pay the Shareholders the difference between the market price at
closing, and the selling price (net of 50% of commissions) of any such shares of
Common Stock subsequently sold by the Shareholders (the "Price Protection
Guaranty").

     On July 31, 1998, the Company and the Shareholders entered into a
Settlement Agreement whereby the Company released to the Shareholders all of the
remaining shares of Common Stock originally pledged to the Company.
Additionally, the parties agreed to reduce the Price Protection Guaranty, from
$8.05 to $6.60, the Shareholders agreed to pay the Company the first $300,000 of
net proceeds realized by them in connection with their future sale of the
Company's Common Stock above the Price Protection Guaranty, and the Company
agreed to accelerate the time periods within which the Shareholders could sell
their remaining shares of Common Stock.

     For the three months ended March 31, 1999, the Company paid the
Shareholders approximately $99,000 for the Price Protection Guaranty related to
their sale of approximately 30,000 shares of the Company's Common Stock. There
were no sales of shares for the comparable period in 1998.

                                       -9-


<PAGE>




NOTE 4 - Earnings Per Share

      The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
                                                             For the Three Months Ended
                                                                     March 31,
                                                               1999              1998
                                                           ------------      ------------
                                                                             (As Restated)
<S>                                                        <C>               <C>
Numerator:
   Net income (loss)                                       $    468,000      $   (971,000)
   Senior Convertible Preferred Stock dividends                 (83,000)             --
   Effect of the induced conversion of Senior
      Convertible Preferred Stock                              (153,000)             --
                                                           ------------      ------------

   Numerator for basic earnings (loss) per share -
      income available to common shareholders                   232,000          (971,000)

      Effect of dilutive securities:
        Senior Convertible Preferred Stock dividends             83,000              --
      Effect of the assumed conversion of Senior
        Convertible Preferred Stock                          (1,568,000)             --
                                                           ------------      ------------

   Numerator for diluted (loss) per share - income
      available to common shareholders after effect of
      assumed conversion                                   $ (1,253,000)     $   (971,000)
                                                           ============      ============

Denominator:
   Denominator for basic earnings (loss) per share -
      weighted average shares outstanding                    15,060,000        14,189,000

      Effect of dilutive securities:
        Options and warrants                                     75,000                --
        Effect of assumed conversion of Senior
          Convertible Preferred Stock                           950,000                --
                                                           ------------      ------------
      Dilutive potential common shares                        1,025,000                --

   Denominator for diluted (loss) per share-
      adjusted weighted-average shares outstanding and
        effect of assumed conversions                        16,085,000        14,189,000
                                                           ============      ============

Basic earnings (loss) per share                            $        .02      $       (.07)
                                                           ============      ============

Diluted (loss) per share                                   $       (.08)     $       (.07)
                                                           ============      ============
</TABLE>

NOTE 5 - Commitments and Contingencies

     The Company is, from time to time, a party to litigation arising in the
ordinary course of business. In the opinion of management, there are no
significant claims outstanding that are likely to have a material, adverse
effect upon the consolidated financial statements of the Company.

     The Company leases locations for the majority of both its Company-owned and
franchised stores. The Company holds the master lease on substantially all
franchised locations and, as part of the franchise agreement, sublets the
related

                                      -10-


<PAGE>


premises to the franchisee. Most master leases require the payment of additional
rent in the form of common area maintenance charges, real estate taxes and other
items, as well as percentage rent based upon the store in question exceeding
certain established sales volume. As required by SFAS 13 "Accounting for
Leases," the Company amortizes its rent expense on a straight-line basis over
the respective lives of the related leases.

     As of March 31, 1999, the Company held leases for six excimer lasers and
ancillary equipment expiring in various years through 2001. The assets and
liabilities under capital leases are recorded at the lower of the present value
of the minimum lease payments or the fair value of the assets.

NOTE 6 - Company-Managed Stores

     In the fourth quarter of 1998, the Company, as required, adopted the
provisions of Emerging Issues Task Force Issue 97-2 ("EITF 97-2"), "Application
of FASB Statement No. 94 and APB Opinion No. 16 to Physician Practice Management
Entities and Certain Other Entities with Contractual Management Arrangements."
In connection with the adoption of EITF 97-2, the Company, as required,
deconsolidated the results of operations pertaining to those franchised stores
being operated by the Company under management agreements. In connection with
the adoption of EITF 97-2, the Company restated the Quarterly Report on Form
10-Q/A2 for the three months ended March 31, 1998.

     For the three months ended March 31, 1999 and 1998, Net Sales for
Company-managed stores were approximately $463,000 and $1,126,000, respectively,
and Total Costs and Expenses were approximately $576,000 and $1,053,000,
respectively. There was no impact on net income or net loss per share for either
period. The net result of the Company's Operation of such franchised stores
(being managed by the Company) is classified as a gain or loss from stores
operated under management agreements in the accompanying Consolidated Condensed
Statements of Operations.

     For the three months ended March 31, 1999 and 1998, the Company managed a
total of 5 and 12 franchised locations, respectively, under management
agreements. The agreements generally provide for the Company's management of the
operations of each location, with all operating decisions being made primarily
by the Company. The Company owns the inventory at each location and is generally
responsible for the collection of all revenues and the payment of expenses.

NOTE 7 - Segment Information

     In the fourth quarter of 1998, the Company adopted SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related Information." SFAS 131
establishes annual and interim reporting standards for an enterprise's operating
segments and related disclosures about its products, services, geographic areas
and major customers.

     For the three months ended March 31, 1999 and 1998, the Company's
operations were classified in three principal industry segments:

     RETAIL OPTICAL: The retail optical segment, whereby the Company owns and
operates, as well as franchises, a chain of retail optical stores which offer
eyecare products such as prescription and non-prescription eyeglasses, eyeglass
frames, ophthalmic lenses, contact lenses, sunglasses and a broad range of
ancillary items.

     INSIGHT LASER: The Insight Laser segment, whereby the Company owns and
operates a laser surgery center and provides access, for a fee, to affiliated
ophthalmologists who utilize the Company's other excimer lasers in offering PRK,
a procedure performed to correct certain degrees of myopia.

     AMBULATORY SURGERY: The Ambulatory Surgery segment, whereby the Company
manages the operations of a full-service ambulatory surgery center located in
Garden City, New York.

     Prior to 1996, the Company's operations were limited to the retail optical
segment.

                                      -11-


<PAGE>

     Summarized financial information concerning the industry segments and
geographic areas in which the Company operated for each of the three months
ended March 31, 1999 and 1998, is shown in the following tables (in thousands):

                         OPERATIONS BY INDUSTRY SEGMENT


<TABLE>
<CAPTION>
                                  Retail     Insight  Ambulatory
                                  Optical    Laser     Surgery      Total
                                  -------    ------    ------      --------
<S>                               <C>        <C>      <C>          <C>
1999

Revenues from sales               $ 5,102    $  943    $  203      $  6,248
Franchise-related and other         3,098      -         -            3,098
                                  -------    ------    ------      --------

Total Revenues                      8,200       943       203         9,346
Operating Profit                      255       330        73           658
Capital Expenditures                  202      -         -              202
Depreciation and Amortization         386       212        30           628


1998

Revenues from sales                 5,396       417      -            5,813
Franchise-related and other         3,075      -         -            3,075
                                  -------    ------    ------       -------

Total Revenues                      8,471       417      -            8,888
Operating Profit                      319        39      -              358
Capital Expenditures                  182      -         -              182
Depreciation and Amortization         360       212      -              572
</TABLE>

     There were no intersegment sales for either of the three months ended March
31, 1999 or 1998. No single customer represented more than ten percent of
consolidated sales for either of the three months ended March 31, 1999 or 1998.

NOTE 8 - Reclassifications

     Certain reclassifications have been made to prior year's financial
statements to conform with the current year presentation.

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

Results of Operations

For the Three Months Ended March 31, 1999 compared to March 31, 1998

     Systemwide sales, which represent combined retail sales generated by
Company-owned stores, as well as revenues generated by VisionCare of California
("VCC"), a specialized health care maintenance organization licensed by the
California Department of Corporations , the Company's ambulatory surgery center,
and its Insight Laser division, increased by approximately $240,000, or .6%, to
$37,271,000 for the three months ended March 31, 1999, as compared to
$37,031,000 for the comparable period in 1998. As of March 31, 1999, there were
289 Sterling Stores in operation, consisting of 45 Company-owned stores
(including 5 Company-owned stores being managed by franchisees) and 244
franchised stores (including 5 franchised stores being managed by the Company on
behalf of the franchisee), as compared to 308 Sterling Stores in operation as of
March 31, 1998, consisting of 45 Company-owned stores (including

                                      -12-


<PAGE>




6 Company-owned stores being managed by franchisees) and 263 franchised stores
(including 12 stores being managed by the Company on behalf of the franchisee).
The stores operate under various trade names including Sterling Optical, Site
for Sore Eyes, IPCO Optical, Benson Optical, Superior Optical, Southern Optical,
Nevada Optical, Duling Optical, Monfried Optical, Kindy Optical and Singer
Specs. On a same store basis (for stores that operated as either a Company-
owned or franchised store during the entirety of both of the three months ended
March 31, 1999 and 1998), systemwide sales decreased by $549,000, or 1.7%, to
$32,219,000 for the three months ended March 31, 1999, as compared to
$32,768,000 for the comparable period in 1998. There were 249 stores that
operated as either a Company-owned, a Company-managed or franchised store during
the entirety of both the three months ended March 31, 1999 and 1998.

     Net sales, which represent combined retail sales generated by Company-owned
stores, as well as revenues generated by VCC, the Company's ambulatory surgery
center and its Insight Laser division, increased by $435,000, or 7.5%, to
$6,248,000 for the three months ended March 31, 1999, as compared to $5,813,000
for the comparable period in 1998. This increase was principally due to an
increase in the revenues generated by the Company's Insight Laser division, and
an increase in the revenues of its ambulatory surgery center, which commenced
operations on May 6, 1998, offset in part by a decrease in comparable store
sales as described below. On a same store basis, aggregate sales generated by
Company-owned stores in operation during the entirety of both the three months
ended March 31, 1999 and 1998, decreased by $108,000, or 3.1%, to $3,350,000 for
the three months ended March 31, 1999, as compared to $3,458,000 for the
comparable period in 1998.

     Aggregate sales generated from the operation of franchised stores decreased
by $195,000, or .7%, to $31,023,000 for the three months ended March 31, 1999,
as compared to $31,218,000 for the comparable period in 1998. This decrease was
principally due to a decrease in the number of franchise units in operation
during the three months ended March 31, 1999 as compared to the comparable
period in 1998, and a decrease in comparable store sales as described below,
offset in part by an increase in aggregate sales for those stores opened during
1998 that were open for a full year in 1999. On a same store basis, aggregate
sales generated by franchised stores in operation during the entirety of both
the three months ended March 31, 1999 and 1998, decreased by $442,000, or 1.5%,
to $28,868,000 for the three months ended March 31, 1999, as compared to
$29,310,000 for the comparable period in 1998.

     Franchise royalties decreased by $159,000, or 6.7%, to $2,226,000 for the
three months ended March 31, 1999, as compared to $2,385,000 for the comparable
period in 1998. This decrease was principally due to a decrease in the number of
franchised units in operation for the three months ended March 31, 1999 as
compared to the comparable period in 1998, offset in part by the impact of the
new franchise units opened during the first quarter of 1998, as compared to
those in operation for a full year in 1999.

     Net gains and fees from the conveyance of Company-owned store assets to
franchisees increased by $274,000 to $409,000 for the three months ended March
31, 1999 as compared to $135,000 for the comparable period in 1998. This
increase was principally due to the conveyance of the assets of four
Company-owned stores to franchisees for the three months ended March 31, 1999,
as compared to the conveyance of the assets of two Company-owned stores to
franchisees during the comparable period in 1998.

     The Company's gross profit margin increased by 1.6%, to 71.2% for the three
months ended March 31, 1999, as compared to 69.6% for the three months ended
March 31, 1998. In the future, the Company's gross profit margin may fluctuate
depending upon the extent and timing of changes in the product mix in
Company-owned stores, competition and promotional incentives.

     Selling expenses decreased to $3,790,000, or 60.7% of net sales for the
three months ended March 31, 1999, as compared to $3,690,000, or 63.5% of net
sales for the comparable period in 1998. This percentage decrease was
principally due to lower operating costs at the store level for the three months
ended March 31, 1999, as compared to the comparable period in 1998, offset in
part by an increase in payroll related expenses.

     General and administrative expenses (including depreciation and interest
expense) decreased by $229,000, or 6.7%, to $3,175,000 for the three months
ended March 31, 1999, as compared to $3,404,000 for the comparable period in
1998. This decrease was principally due to a decrease in field-related payroll
expenses as a result of fewer stores

                                      -13-


<PAGE>




being in operation for the three months ended March 31, 1999, as compared to
1998, and a decrease in other overhead expenses related to improved cost
control.

     Loss from Company-managed stores increased by $186,000, or 255%, to
$(113,000) for the three months ended March 31, 1999, as compared to a gain of
$73,000 for the comparable period in 1998.

     The Company's income before taxes increased by $1,439,000 to $468,000 for
the three months ended March 31, 1999, as compared to a loss of $(971,000) for
the comparable period in 1998. This increase was principally due to the
reduction of approximately $1,073,000 of amortization of debt discount costs for
the three months ended March 31, 1999, and approximately $274,000 of increased
gains and fees from the conveyance of Company-owned store assets to franchisees.

Liquidity and Capital Resources

     For the three months ended March 31, 1999, cash flows generated from
operating activities were $50,000, as compared to cash flows used in operating
activities of $(1,687,000) for the three months ended March 31, 1998.

     For the three months ended March 31, 1999, cash flows provided by investing
activities were $1,427,000, as compared to $652,000 for the comparable period in
1998.

     For the three months ended March 31, 1999, cash flows used in financing
activities were $(1,223,000), comprised primarily of payments on debt.

     The Company believes that, in the furtherance of its business strategies,
the Company's future capital requirements will include renovating and/or
remodeling Company-owned stores, acquiring retail optical stores, subject to the
availability of qualified opportunities, and continued upgrading of the
Company's management information systems. Additionally, the Company is likely to
continue to provide purchase money financing in connection with its sale of
Company-owned store assets to franchisees, which is likely to defer the receipt
of cash relating to the sales of such assets.

     The Company believes that it will continue to improve cash flows during
1999 based on the following factors, among others: (i) closing certain
under-performing Company-owned stores, (ii) improvement in store profitability
through increased monitoring of store-by-store operations and actual results as
compared to expected results, (iii) an expected increase in operations and cash
flows of the Company's Insight Laser and ambulatory surgery center businesses,
and (iv) a reduction of administrative overhead expenses, if necessary.

     As of December 31, 1998, the Company was not in compliance with the
financial covenants of its loan agreement with STI although STI, on April 13,
1999, (i) waived all such defaults through December 31, 1999; (ii) agreed to the
elimination of all prepayment penalties contained in the Loan Agreement; and
(iii) agreed to apply the balance of the Additional Funds ($500,000 plus accrued
interest) to the balance of the loan, all in exchange for the Company's payment,
to STI, of a fee of $150,000, which fee was charged against the Additional Funds
to be credited to the balance of the loan. However, there can be no assurance
that the Company would be able to obtain such a waiver in future periods, should
such financial or other covenants not be met by the Company.

     The Company believes that, based on its current position and the
implementation of the plans described above, sufficient resources will be
available for the Company to continue in operations through the end of 1999.
However, there can be no assurance that the Company will be able to generate
positive cash flows and, if it does, that such cash flows will be sufficient to
adequately fund its ongoing operations and future plans. If the Company cannot
generate sufficient cash flows from operations, it may be required to seek
alternative debt and/or equity financing. However, there can be no assurance
that such debt and/or equity financing will be available to the Company when
necessary, or at terms that are attractive to the Company.

                                      -14-


<PAGE>




Impact of the Year 2000 Issue

     The Year 2000 Issue is the result of potential problems with computer
systems and/or any equipment with computer chips that use dates, where the date
has been stored as just two digits (e.g. 97 for 1997). On January 1, 2000, any
clock or date recording mechanism (including date sensitive software) which uses
only two digits to represent the year, may recognize a date using 00 as the year
1900, rather than the year 2000. This could result in a system failure or
miscalculations, thus causing disruption of operations. As a result, systems may
be unable to accurately process certain date-based information.

     The Company has reviewed the Year 2000 Issue with its management
information systems providers and consultants. The Company believes that the
Year 2000 Issue will not have a material impact on the operations of the Company
since its computer programs were written utilizing four digits to define the
applicable year. However, the Company cannot determine, as of the date hereof,
the impact of the Year 2000 Issue on any of its vendors and/or franchisees,
which might materially impact the operations of the Company.




                                      -15-


<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.   Not applicable.

Item 2. Changes in Securities.   Not applicable.

Item 3. Defaults Upon Senior Securities.  Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders.  Not applicable.

Item 5. Other Information.  Not applicable.

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

A.    Exhibits

                                  EXHIBIT INDEX

Exhibit Number

    27.      Financial Data Schedule.

    10.84    First Amendment to Convertible Preferred Stock and Warrants
             Subscription Agreement, dated January 4, 1999 (Incorporated by
             reference to Exhibit 10.78 to the Company's Current Report on
             Form 8-K, dated January 4, 1999).

    10.85    Second Amendment to Convertible Preferred Stock and Warrants
             Subscription Agreement, dated March 4, 1999 (Incorporated by
             reference to Exhibit 10.79 to the Company's Current Report on
             Form 8-K, dated March 4, 1999).

    10.86    Waiver, dated April 13, 1999, to the Registrant's Loan
             Agreement with STI Credit Corp., dated June 30, 1997, as
             previously amended on October 9, 1997 and April 14, 1998.
             (Incorporated by reference.)

B.   Reports on Form 8-K

     1.   On January 14, 1999, the Registrant filed a Report on Form 8-K with
          respect to the First Amendment to its Convertible Preferred Stock and
          Warrants Subscription Agreements.

     2.   On March 4, 1999, the Registrant filed a Report on Form 8-K with
          respect to the Second Amendment to its Convertible Preferred Stock
           and Warrants Subscription Agreement.

                                      -16-


<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.

                                        STERLING VISION, INC.
                                        (Registrant)

                                        BY:  /s/ Robert Cohen
                                             --------------------------------
                                             Robert Cohen
                                             Chairman of the Board

                                        BY:  /s/William J. Young
                                             ----------------------------------
                                             William J. Young
                                             Chief Financial Officer/Treasurer



                                             Dated:  May 24, 1999




                                      -17-