<PAGE>

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

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

                                 FORM 10-Q/A

(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, 1997.

                                      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, NY 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 12,693,282 shares outstanding of the Registrant's Common
Stock, par value $.01 per share, as of May 8, 1997.


<PAGE>

Item 1.   Financial Statements

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

<TABLE>
<CAPTION>
                                                                              March 31,                
                                                                                1997                    December 31,     
                                                                             (Unaudited)                   1996
                                                                            -------------              --------------
      A S S E T S                                                       (As Restated-See Note 7)
      -----------
<S>                                                                     <C>                            <C>
Current assets:
  Cash and cash equivalents                                                     $ 2,410                    $   868
  Accounts receivable - net of allowance for
    doubtful accounts of $637 and $557, respectively                              8,674                      7,911
  Franchise and other notes receivable - current                                  3,437                      3,375
  Inventories                                                                     3,438                      3,678
  Due from related parties - current                                                123                        124
  Prepaid expenses and other current assets                                         946                        883
                                                                                --------                   --------
      Total current assets                                                       19,028                     16,839

Property and equipment - net of accumulated depreciation                         10,315                     10,818

Franchise and other notes receivable - net of allowance
       for doubtful accounts of $562                                             16,480                     16,089

Other assets                                                                      2,461                      2,523

                                                                                ---------                  ---------
                                                                                $48,284                    $46,269
                                                                                =========                  ========
      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                                             $ 7,633              $ 9,151
  Notes Payable - shareholders and directors                                      1,000                2,000
  Accounts payable and accrued liabilities                                        5,482                8,267
  Franchise related obligations - current                                         1,075                1,224
                                                                                ---------           ---------
      Total current liabilities                                                  15,190               20,642

Long-term debt                                                                    3,850                4,033
Convertible debentures, net of debt discount of $3,895                            4,105                    -
Deferred franchise income                                                           228                  328
Excess of fair value of assets acquired over cost                                 1,612                1,709
Commitments and contingencies

Shareholders' equity:
  Preferred stock, $.01 par value per share;
    authorized 5,000,000 shares                                                       -                    -
  Common stock, $.01 par value per share; authorized
    28,000,000 shares; issued 12,387,535                                            124                  124
Additional paid-in capital                                                       30,419               24,982
(Deficit)                                                                        (7,244)              (5,549)
                                                                                ---------           ---------
                                                                                 23,299               19,557
                                                                                ---------            --------
                                                                                $48,284              $46,269
                                                                                =========            ========
</TABLE>

The accompanying notes are an integral part of the consolidated condensed 
financial statements.

                                      2


<PAGE>

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

<TABLE>
<CAPTION>
                                                                                   For the Three Months Ended
                                                                                             March 31,
                                                                          -------------------------------------------------        
                                                                                 1997                          1996

                                                                          ------------------------            -------
                                                                          (As Restated-See Note 7)
<S>                                                                       <C>                                 <C>

Systemwide sales (Unaudited)                                                    $36,658                       $30,885
                                                                                ========                      ========
Revenues:
   Net sales - Company-owned stores                                             $ 6,004                       $ 7,273
   Franchise royalties                                                            2,113                         1,830
   Net gains and fees from the conveyance of Company-owned
     assets to franchisees                                                          810                           534
   Other income                                                                     547                           390
                                                                                --------                      --------
Total Revenue                                                                     9,474                        10,027
                                                                                ---------                     --------

Costs and expenses:
    Cost of sales                                                                 1,621                         1,891
    Selling expenses                                                              3,849                         4,817
    General and administrative expenses                                           3,344                         2,736
    Interest expense                                                                334                           320
Amortization of debt discount                                                     2,021                             -
                                                                                ---------                     --------
Total Costs and Expenses                                                         11,169                         9,764
                                                                                ---------                     --------

(Loss) income  before provision for income taxes                                 (1,695)                          263
Provision for income taxes                                                            -                           105
                                                                                --------                      --------
Net (loss) income                                                               $(1,695)                      $   158
                                                                                ========                      ========

Weighted average number of common shares and
  common share equivalents outstanding                                           13,239                        12,381
                                                                                ========                      ========
(Loss) earnings per common shares and common share equivalents                  $  (.13)                      $   .01
                                                                                =========                     ========

</TABLE>

The accompanying notes are an integral part of the consolidated condensed 
financial statements.

                                      3


<PAGE>

                    STERLING VISION, INC. AND SUBSIDIARIES
               CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (Unaudited)
                            (Dollars in Thousands)
<TABLE>

<CAPTION>
                                                                                     For the Three Months Ended
                                                                                               March 31,
                                                                                   --------------------------------
                                                                                    1997                       1996
                                                                                   -----                      -----
                                                                       (As Restated -See Note 7)
<S>                                                                    <C>                                  <C>

Cash flows from operating activities:
   Net income                                                                   $(1,695)                     $   158
Adjustments to reconcile net income to net
   cash (used in) operating activities:
          Depreciation and amortization                                             408                          317
          Amortization of debt discount                                           2,001                            -
          Allowance for doubtful accounts                                            91                            -
          Net gain from the conveyance
             of Company-owned assets
             to franchisees                                                        (700)                        (465)
          Deferred income taxes payable                                               -                           69
          Accrued interest                                                           21                            -
          Amortization of fair value of assets acquired over cost                   (97)                           -
          Changes in assets and liabilities:
             Accounts receivable                                                   (825)                        (951)
             Inventories                                                            240                           91
             Prepaid expenses and other
               current assets                                                       (63)                         (27)
             Other assets                                                            21                         (277)
             Accounts payable and accrued liabilities                            (2,785)                        (988)
             Franchise related obligations                                         (149)                          18
             Deferred franchise income                                             (100)                           -
                                                                                --------                     --------
Net cash (used in) operating activities                                          (3,632)                      (2,055)
                                                                                --------                     --------

Cash flows from investing activities:
   Franchise notes receivable issued                                               (982)                        (955)
   Repayment of franchise and other notes receivable                                502                          450
   Purchase of property and equipment                                              (205)                        (594)
   Conveyance of property and equipment                                           1,041                          664
                                                                                --------                     --------
Net cash provided by (used in) investing activities                                 356                         (435)
                                                                                --------                     --------
</TABLE>
                                                  Continued on next page

The accompanying notes are an integral part of the consolidated condensed
financial statements.

                                      4


<PAGE>


                    STERLING VISION, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                 (Unaudited)
                            (Dollars in Thousands)
<TABLE>
<CAPTION>

                                                                                       For the Three Months Ended
                                                                                                 March 31,
                                                                                 --------------------------------------------
                                                                                    1997                        1996
                                                                                   -----                       ------
                                                                       (As Restated -See Note 7)
<S>                                                                    <C>                                  <C>
Cash flows from financing activities:
   Sale of common stock and other
       capital contributions                                                          -                          625
   Repayments of term loans                                                        (498)                        (498)
   Borrowings on revolving credit note                                                -                          225
   Repayment of revolving credit note                                            (1,000)                           -
   Payments on other debt                                                        (1,224)                         (61)
   Borrowings of other debt                                                           -
   Distributions to shareholders                                                      -                            -
   Issuance of Convertible Debenture                                              7,540                            -
                                                                                --------                     --------      
Net cash provided by financing activities:                                        4,818                          291
                                                                                --------                     --------

Net increase (decrease) in cash and
   cash equivalents                                                               1,542                       (2,199)

Cash and cash equivalents -
   beginning of period                                                              868                       15,493
                                                                                --------                     --------

Cash and cash equivalents -
   end of period                                                                $ 2,410                      $13,294
                                                                                ========                     ========

Supplemental disclosure of cash flow information:

Cash paid during the period for:
   Interest                                                                     $   334                      $   314
                                                                                ========                     ========
   Taxes                                                                        $    43                      $    38
                                                                                ========                     ========

</TABLE>

The accompanying notes are an integral part of the consolidated condensed 
financial statements.

                                      5



<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 Condensed
Financial Statements and Notes thereto included in the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1996. There have been no
changes in significant accounting policies since December 31, 1996.

NOTE 2

         Income tax provisions are based on estimated annual effective tax
rates. The effective income tax rate used for the three months ended March 31,
1997 was approximately 40%.

         A reconciliation between the statutory Federal income tax rate and the
effective income tax rate based on continuing operations for the three months
ended March 31, 1997 is as follows:

                                                      1997          1996
                                                      ----          ----
      Statutory Federal income tax rate                0%           34%

      State and local income tax rate, net of
         Federal income tax benefit                    0             6

      Reduction in tax rate due to net operating
         loss carry forward                            0             -
                                                     ====           ====

      Effective income tax rate                        0%           40%
                                                     =====          ====

NOTE 3

         As part of the initial public offering (the "Offering") of its common
stock, par value $.01 per share (the "Common Stock") in December 1995, the
Registrant granted the underwriters (the "Underwriters") a 30-day option to

purchase up to an aggregate of 330,000 additional shares of Common Stock, on
the terms and conditions set forth in the Company's Prospectus, dated December
20, 1995, to cover over-allotments, if any. In January 1996, the Registrant
issued to the Underwriters an additional 100,000 shares of its Common Stock at
$7.50 per share pursuant to such over-allotment option. Proceeds, net of
commissions and expenses totaling approximately $125,000, were approximately
$625,000.

         During the calendar year ended December 31, 1996, the Registrant issued
80,040 shares of its Common Stock to certain of the franchisees of those
franchised stores in existence on the date of the consummation of the
Offering, in consideration of their future performance of, and compliance
with, the terms of their respective Franchise Agreements. The fair value of
such shares is being amortized over the vesting period of three years.

NOTE 4

         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
Convertible Debentures (collectively, the "Debentures") and an aggregate of
800,000 warrants (collectively, the "Warrants"), each Warrant entitling the
holder thereof to purchase one share of Common Stock at a price to be
determined in accordance with a specified formula and, for each two Warrants
exercised within a specified period of time,

                                      6

<PAGE>

an additional warrant (collectively, the "Bonus Warrants") to purchase one
additional share of the Common Stock at a price of $7.50 per share. The
Company used the net proceeds (approximately $7,500,000) of the Private
Placement to: (i) repay a portion of the loans made to it by certain principal
shareholders of the Company ($1,000,000, together with interest thereon, in
the approximate amount of $50,000); and (ii) pay down the Company's revolving
line of credit ($1,000,000) with The Chase Manhattan Bank (the "Bank").

         The Debentures bear no interest and mature on August 25, 1998. They are
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 ("Nasdaq") for the 5 trading
days immediately preceding the date of conversion; provided, however, that the
Company has the right to redeem that portion of the Debentures requested to be
converted in the event the Conversion Price is $6.00 or less. In such event,
the redemption price will be equal to 115% of the face amount of that portion
of the Debentures requested to be converted. The Debentures are convertible
subject to the following limitations: 25% of the original principal amount is
convertible beginning on the date of issuance provided a registration
statement, pursuant to which the underlying shares of Common Stock will be
registered under the Securities Act of 1933, as amended (the "Act"), is then
in effect; 50% of the original principal amount is convertible beginning three
months after the date of issuance; 75% of the original principal amount is

convertible beginning six months after the date of issuance; and the entire
original principal amount is convertible beginning nine months after the date
of issuance. Notwithstanding the foregoing, if, at any time, the intra-day bid
price of the Common Stock (as reported on Nasdaq) equals or exceeds $10, the
entire principal amount of the Debentures will be convertible at any time
thereafter.

         In addition to the foregoing, the Debentures provide for the automatic
conversion of any Debentures not previously converted as of the maturity date,
provided that, as of such date: (i) the Company's registration statement with
respect to the underlying shares continues to be effective; and (ii) no Event
of Default exists under the Debentures. In the event that the Company does not
have a registration statement with respect to the underlying shares or an
event of default exists under the Debentures, the holders of the Debentures
would be entitled to a cash payment, (in lieu of shares of the Company's
Common Stock) in an amount equal to the aggregate principal of those
Debentures not previously converted. The Debentures are classified on the
Company's Consolidated Condensed Balance Sheet as Long Term Debt. (See Note
7).

         The Warrants entitle the holders thereof to purchase an aggregate of
800,000 shares of Common Stock at an exercise price per share equal to the
lower of $6.50 or the average of the Conversion Price of any Debentures
converted, by the holder, prior to the date of exercise. The Warrants are
exercisable until February 26, 2000. If a holder of a Warrant exercises a
Warrant at any time during the 2 year period following the effectiveness of
the registration statement, such holder will receive, for each two Warrants
exercised within such time, an additional Bonus Warrant entitling the holder
thereof to purchase one additional share of Common Stock at an exercise price
of $7.50 per share, which Bonus Warrants have a term of 3 years from the date
of grant.

         The Company has filed a registration statement on behalf of the holders
of the Debentures with respect to all of the shares of Common Stock underlying
the Debentures, the Warrants and the Bonus Warrants, not to exceed, in any
event, an aggregate amount equal to 19.999% of the number of shares of Common
Stock issued and outstanding on February 26, 1997; and the Company has agreed
to maintain the effectiveness of such registration statement until the earlier
of: (i) 3 years; and (ii) the date all of the shares underlying the Debentures
have been sold and the Warrants and the Bonus Warrants have been exercised.

         The Company was required to obtain the consent of the Bank to complete
the Private Placement and, in connection therewith, the Bank, on February 26,
1997, amended the Company's Term Loan and Revolving Credit Agreement, dated
April 5, 1994, as amended, (the "Credit Agreement") by: (i) extending the
maturity date of the Company's line of credit to May 30, 1997; (ii) requiring
a $1,000,000 pay down of the line of credit; (iii) permanently reducing the
line of credit by such amount; (iv) granting waivers with respect to the
Company's anticipated non-compliance with certain financial covenants
contained in the Credit Agreement through February 26, 1997; and (v) amending,
for the period ending December 31, 1997, certain financial covenants contained
in the Credit Agreement.

NOTE 5


         On April 1, 1997, the Company acquired all of the issued and
outstanding shares of the capital stock of Singer Specs, Inc. ("Singer"), a
Delaware corporation, 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. As of the closing, Singer was the: (i) operator of four retail
optical stores (collectively, the "Company Stores"); (ii) franchisor of an
additional, approximately 27 other retail optical stores, all of which company
operated and franchised stores are located in the States of Pennsylvania,
Delaware, New Jersey and Virginia, and a store that will be opened in the U.S.
Virgin Islands; and (iii) owner of a commercial building located in
Philadelphia, Pennsylvania.

                                      7


<PAGE>


         The Singer Agreement provided for such Shareholders to convey all of
said capital stock to the Company, free and clear of any and all claims, liens
and/or encumbrances, in exchange for shares of the Company's Common Stock .

         The Singer Agreement provides: (i) that the assets of each of the
Company Stores be conveyed to corporations owned by one or more of the
Shareholders, which entities, simultaneously with the closing, each entered
into a Sterling Optical Center Franchise Agreement; (ii) that the Company
file, with the Securities and Exchange Commission ("SEC"), a registration
statement seeking registration of the Common Stock issued to the Shareholders,
as discussed below; (iii) the pledge, by the Shareholders, of all of their
shares of the Common Stock, to secure their obligations under the Singer
Agreement; (iv) the Shareholders being restricted from selling a portion of
their shares of said Common Stock, all as more particularly set forth in the
Singer Agreement; and (v) the requirement that the Company, under certain
circumstances, pay to the Shareholders the difference between the market price
of its Common Stock (upon which the purchase price was calculated) and the
selling price (net of 50% of commissions) of any such shares sold by such
Shareholders. This transaction, which is not reflected on the Company's
Consolidated Condensed Financial Statements as of March 31, 1997, will be
accounted for as a purchase, effective April 1, 1997, in accordance with
Accounting Principle Board Pronouncements ("APB") 16 and 17, with allocations
made based upon the estimated, fair market value of the assets acquired.

         The Company was required to obtain the consent of the Bank to complete
the aforesaid transactions and, in connection therewith, the Bank, on April 1,
1997, amended the Credit Agreement by: (i) extending the maturity date of the
line of credit to November 15, 1998; (ii) requiring that such line of credit
be further reduced by the sum of $75,000 per month, commencing April 15, 1997
and continuing until the maturity date; and (iii) granting a waiver,
permitting the Company to purchase all of the issued and outstanding capital
stock of Singer.

         On April 21, 1997, the Company entered in a Note Amendment and

Conversion Agreement (the "BEC Agreement") with BEC Group, Inc. ("BEC"), the
holder of two promissory notes (each having a term of 25 months and in the
original principal amount of $1,050,000 and $200,000, respectively) issued by
the Company in connection with its acquisition (the "Pembridge Transaction"),
on August 26, 1994, from Pembridge Optical Partners, Inc., of the assets of
eight retail optical stores. Pursuant to the BEC Agreement: (i) the Company is
afforded the right to prepay the principal balance of (but not accrued
interest on) each of said promissory notes in registered shares of its Common
Stock; and (ii) the Company, in certain circumstances, may be required to pay
to BEC the difference between market price of its Common Stock (upon which the
number of shares to be used to BEC was calculated) and the selling price of
any such shares sold by BEC.

         On May 9, 1997, the Company filed, with the SEC, a registration
statement on Form S-3 seeking registration, under the Act, of an aggregate of
3,213,464 shares of its Common Stock, as follows: (i) 2,477,506 shares being
registered on behalf of the investors in the Private Placement (see Note 4);
(ii) 305,747 shares being registered on behalf of the Shareholders, as
discussed above; (iii) 152,211 shares being registered on behalf of BEC, as
discussed above; and (iv) 278,000 shares being registered on behalf of the
holders of certain options granted to the former President of the Company and
certain warrants issued to the Underwriters.

NOTE 6

         In February 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS 128"). SFAS 128 changes the computational guidelines for earnings per
share information. The Company will adopt the provisions of SFAS 128 in its
December 31, 1997 consolidated financial statements. SFAS 128 will eliminate
the presentation of primary earnings per share and replace it with basic
earnings per share. Basic earnings per share differs from primary earnings per
share because common stock equivalents are not considered in computing basic
earnings per share. Fully diluted earnings per share will be replaced with
diluted earnings per share. Diluted earnings per share is similar to fully
diluted earnings per share, except in determining the number of dilutive
shares outstanding for options and warrants, in that the proceeds that would
be received upon the conversion of all dilutive options and warrants, are
assumed to be used to repurchase the Company's Common Stock at the average
market price of such stock during the period. For fully diluted earnings per
share, the higher of the average market price or closing market price is used.
If SFAS 128 had been in effect, the Company would have reported a basic and 
diluted loss per share of $.13 for the three month period ended March 31, 1997.

NOTE 7

         At the March 13, 1997 meeting of the Emerging Issues Task Force, the
staff of the Securities and Exchange Commission (the "SEC") issued an
announcement regarding accounting for the issuance of convertible debt
securities. The announcement dealt with, among other things, the belief, by
the SEC, that any beneficial conversion features on future conversions of debt
securities


                                      8

<PAGE>

increase the effective interest rate of the securities and should, therefor,
be reflected as a charge to earnings. During the quarter ended March 31, 1997,
the Company issued $8 million principal amount of its Convertible Debentures
due August 25, 1998 (the "Debentures"), together with Warrants to purchase up
to 800,000 shares of the Company's Common Stock, and, for each two Warrants
exercised within a specified period of time, one additional Bonus Warrant
(collectively, the "Units"). The Debentures provide for conversion features
that permit the holders thereof to convert their Debentures to shares of the
Company's Common Stock at a discount from the market price at the time the
Debentures were issued. Although the date of this pronouncement was subsequent
to the Company's issuance of the Debentures, it is the Company's opinion that
the SEC intended this announcement to apply retroactively.

         Utilizing the conversion terms most beneficial to the purchasers of the
Units, the Company has recorded in the accompanying financial statements
amortization of debt discount of approximately $2,021,000, out of a total debt
discount, with respect to all of the Debentures, of $5,916,000, which will be 
credited to the Company's paid-in-capital (Shareholders' Equity) over the period
of time that the holders thereof actually convert the same to Common Stock. The
non-cash portion of the discount is $5,436,000. Accordingly, once all of the
Debentures have been so converted by the holders thereof, such discount will
have no effect on the Company's Shareholders' Equity. This amount
represents the intrinsic value of the beneficial conversion feature which is 
inherent in the conversion terms of the Debenture and the fair value of the
Warrants (with an assumed exercise price of $6.50) the Bonus Warrants (with an
assumed exercise price of $7.50), issued with the Debentures and the issuance
cost of the Units. This discount is being amortized over the minimum period the
debentures become convertible.

        The Debentures were originally classified on the Company's Consolidated
Condensed Balance Sheet as Common Stock to be issued, net of costs of issuance
of approximately $500,000, because the Company believed the likelihood that the
Debentures would not be converted was remote. Since such date, however, the
Company has determined that the Debentures should have been classified on the
Company's Consolidated Balance Sheet as Long Term Debt.

         As a result of the foregoing, the Company is restating the financials
statements contained in this Quarterly Report on Form 10Q-A for the three
month period ended March 31, 1997. The impact of such restatement on the
Company's Consolidated Condensed Statement of Operations and Balance Sheet is 
as follows:

                                                    Three Months Ended
                                                       March 31, 1997
                                               -------------------------------
                                                  As            As Originally
                                               Restated            Reported
                                               --------         --------------

Net (loss) income                             $(1,695,000)         $ 326,000
                                              ===========          =========
Earnings (loss) per common shares and
      common share equivalents                      $(.13)              $.02
                                                    =======             ====

                                                        March 31, 1997
                                               -------------------------------
                                                                As Originally
                                               As Restated        Reported
                                               -----------      --------------
Convertible Debentures                         $  4,105,000                 -
Shareholders' Equity                           $ 23,299,000      $ 27,404,000


NOTE 8 - 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 operated
and franchised stores. The Company holds the master lease on substantially all
franchised locations and, as part of the franchise agreement, sublets the
subject premises to the franchisee. Most master lease are subject to common area
changes and additional rent based upon sales volume. As is required by SFAS 13
"Accounting for Leases", the Company amortizes its rent expense on a
straight-line basis over the life of the related lease.

           The Company is a guarantor of a loan to a franchisee by a third party
lender in the principal amount of $425,000.

                                      9

<PAGE>


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

         All statements contained herein which are not historical facts
including, but not limited to, statements regarding the Company's future
development plans, the Company's ability to generate cash from its operations
and the operations of Insight Laser Centers, Inc. ("Insight"), and any losses
related thereto, are based upon current expectations. These statements are
forward looking in nature and involve a number of risks and uncertainties.
Actual results may differ materially. Among the factors that could cause
actual results to differ materially are the following: competition in the
retail optical and managed care industries; the ability of the Company to
acquire, at favorable prices, retail optical chains; the uncertainty of the
acceptance of Photorefractive Keractectomy ("PRK"); the availability of new
and better ophthalmic laser technologies or other technologies that serve the
same purpose as PRK; the ability of the Company to finalize favorable
affiliation agreements with ophthalmologists offering PRK; cost over-runs; the
failure of the Bank to grant waivers under the Credit Agreement and the
possible defaults related therefrom; and general business and economic
conditions.

Results of Operations

For the Three Months Ended March 31, 1997 compared to March 31, 1996

         Systemwide sales represent combined retail sales generated by
Company-owned and franchised stores, as well as revenues generated by
VisionCare of California ("VCC"), a wholly-owned subsidiary of the Company
licensed by the California Department of Corporations as a specialized health
maintenance organization, and Insight. There were 309 and 231 Sterling Stores
in operation as of March 31, 1997 and March 31, 1996, respectively, of which
256 and 160, respectively, were franchised. Such stores operate under various
tradenames including Sterling Optical, Site for Sore Eyes, IPCO Optical,

Benson Optical, Superior Optical, Southern Optical, Nevada Optical, Duling
Optical, Monfried Optical and Kindy Optical. Systemwide sales increased by
$5,773,000, or 18.7%, to $36,658,000 for the three months ended March 31,
1997, as compared to $30,885,000 for the same period in 1996. 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 month periods ended March 31, 1997
and 1996), systemwide sales decreased by $996,000, or 3.9%, to $24,413,000 for
the three months ended March 31, 1997, as compared to $25,409,000 for the same
period in 1996. The Company believes that such decrease resulted, in part,
from general business conditions. There were 167 stores that operated as
either a Company-owned or franchised store during the entirety of both of the
three month periods ended March 31, 1997 and 1996.

         Aggregate sales generated from the operation of Company-owned stores
decreased by $1,269,000, or 17.5%, to $6,004,000 for the three months ended
March 31, 1997, as compared to $7,273,000 for the same period in 1996. Such
decrease was primarily due to the conveyance of the assets of Company-owned
stores to franchisees. Historical comparisons of aggregate sales generated by
Company-owned stores can become distorted due to the conveyance of
Company-owned store assets to franchisees. When Company-owned store assets are
conveyed to franchisees, sales generated by such franchised store are no
longer reflected in Company-owned store sales; however, the Company receives
on-going royalties based upon a percentage of the sales generated by such
franchised stores. On a same store basis, aggregate sales generated by
Company-owned stores in operation during the entirety of both of the three
month periods ended March 31, 1997 and 1996, decreased by $365,000, or 8.7%,
to $3,842,000 for the three months ended March 31, 1997, as compared to
$4,207,000 for the same period in 1996.

         Aggregate sales generated from the operation of franchised stores
increased by $7,042,000, or 29.8%, to $30,654,000 for the three months ended
March 31, 1997, as compared to $23,612,000 for the same period in 1996, due
primarily to an increase in the number of Company-owned stores conveyed to
franchisees, as well as certain franchised stores acquired, on May 30, 1996,
from Vision Centers of America, Ltd. ("VCA") and its affiliates (the "VCA
Transaction"). On a same store basis, aggregate sales generated by franchised
stores in operation during the entirety of both of the three month periods
ended March 31, 1997 and 1996, decreased by $632,000, or 3.0%, to $20,570,000
for the three month period ended March 31, 1997, as compared to $21,202,000
for the same period in 1996.

         Aggregate ongoing franchise royalties increased by $283,000, or 15.5%,
to $2,113,000 for the three months ended March 31, 1997, as compared to
$1,830,000 for the same period in 1996, due primarily to an increase in the
number of Company-owned stores conveyed to franchisees and the acquisition of
certain franchised stores acquired in the VCA Transaction.

         Net gains on the conveyance of the assets of six Company-owned stores
to franchisees increased by $276,000, or 51.2%, to $810,000 for the three months
ended March 31, 1997, as compared to net gains on the conveyance of the assets
of two Company-owned stores to franchisees, in the aggregate amount of $534,000
for the same period in 1996.

                                      10



<PAGE>


         The Company's gross profit margin decreased by 1 percentage point, to
73%, for the three months ended March 31, 1997, as compared to 74% for the
same period in 1996. This decrease resulted primarily from the Company having
instituted, in the Fall of 1996, a promotional program in response to certain
promotional incentives offered by certain major competitors of the Company. To
match such incentives, the Company offered similar types of promotional
programs to its customers, which resulted in lower gross profit margins. 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 by $968,000, or 20.1%, to $3,849,000 for the
three months ended March 31, 1997, as compared to $4,817,000 for the same
period in 1996, due primarily to the conveyance of the assets of Company-owned
stores to franchisees.

         General and administrative expenses (including interest expense,
depreciation and bad debt expense) increased by $622,000, or 20.4%, to
$3,678,000 for the three months ended March 31, 1997, as compared to
$3,056,000 for the same period in 1996. This increase was due primarily to the
following four factors: (i) an increase in administrative costs of
approximately $125,000 related to the business of Insight; (ii) approximately
$235,000 in administrative costs and legal fees related to the stores acquired
in the VCA Transaction; (iii) approximately $70,000 in higher occupancy
expenses related in the Company's relocation, in the second quarter of 1996,
of its administrative offices; and (iv) approximately $74,000 in costs related
to operating as a publicly held company. Interest expense, which is included
in general and administrative expenses, increased by $14,000, or 4.4%, to
$334,000 for the three months ended March 31, 1997, as compared to $320,000
for the same period in 1996. The Company's provision for doubtful accounts,
which is included in general and administrative expenses, increased by
$70,600, or 346.1%, to $91,000 for the three months ended March 31, 1997, as
compared to $20,400 for the same period in 1996.

         The Company's income before income taxes decreased by $1,958,000, to a
loss of $1,695,000 for the three months ended March 31, 1997, as compared to
net income of $263,000 for the same period in 1996, primarily as a result of a
non-cash charge against earnings, in the approximate amount of $2,021,000 as a
result of the Company's issuance and sale, in February, 1997, of its
Convertible Debentures Due August 25, 1998 (See Note 7 of Notes to Financial
Statements). During the second quarter of 1996, the Company consummated the
VCA Transaction and, as a result, certain aspects of the Company's operations
during the three months ended March 31, 1997 were not comparable to its
operations for the same period in 1996. Income from the Company's operations
(excluding income applicable to the operation of the stores acquired in the
VCA Transaction) decreased by $1,044,000, or 396.9%, to a loss of $781,000 for
the three months ended March 31, 1997, as compared to income of $263,000 for
the same period in 1996. This decrease was primarily due to the increase in
general and administrative expenses (including interest expense, depreciation

and bad debt expense), as explained above, (excluding such expenses applicable
to the operation of the stores acquired in the VCA Transaction) and a decrease
in the net gains on the conveyance of the assets of Company-owned stores to
franchisees (excluding such gains applicable to the conveyance of the assets
of five Company-owned stores acquired in the VCA Transaction).

Liquidity and Capital Resources

         The Company is a party to the Credit Agreement with the Bank which, as
of March 31, 1997, provided for term loans, in the aggregate principal amount
of $4,143,285, and a $1,375,000 revolving line of credit.

         The term loans are divided into two separate classes or tranches
(collectively, the "Tranches"). Tranche A was in the original principal amount
of $5,000,000 and is being amortized over five years with equal monthly
payments of principal. Interest is fixed at 8.07% per annum on the outstanding
balance and is payable monthly. Tranche B was in the original principal amount
of $2,500,000 and is being amortized over five years with equal monthly
payments of principal. Interest is calculated on the outstanding balance at
3/4% over the prime rate in effect from time to time and is payable monthly.
As of March 31, 1997, the outstanding principal balance of Tranche A was
$2,083,342, and the outstanding principal balance of Tranche B was $1,041,655.
In addition, on November 30, 1995, the Bank converted an existing demand loan
into a term loan to be repaid over the remaining term of the Tranches, with
interest payable monthly at a fixed rate of 7.9% per annum. Such loan, in the
original amount of $1,670,000, was incurred by the Company to fund the
acquisition of substantially all of the assets of Benson Optical Co., Inc.,
OCA Acquisition Corp. and Superior Optical Company, Inc. ("the Benson
Transaction"). As of March 31, 1997, the outstanding principal balance of such
loan was $1,018,288.

         In addition to the term loans mentioned above, the Bank initially also
provided a $1,000,000 revolving line of credit. The Company is required to pay
1/4% per annum on the unused portion of this line of credit, regardless of
whether any actual borrowings occur. On November 30, 1995, the Bank: (i)
converted an existing bridge loan, in the principal amount of $1,670,000, into
the term loan mentioned above, which will be amortized over the remaining term
of the Tranches; (ii) increased the Company's line of credit by an additional
$1,500,000, of which $1,375,000 was outstanding as of March 31, 1997; and
(iii) extended the maturity date of the line of credit to April 5, 1997. On
February 26, 1997, the Bank amended the Credit Agreement (as explained

                                      11

<PAGE>


above) which required, in part, a $1,000,000 payment and permanent reduction
in the amount of the line of credit, and included an extension of the maturity
date of such line of credit to May 30, 1997. Loans outstanding under the line
of credit bear interest at the prime rate in effect from time to time.

         Pursuant to the terms of the Credit Agreement, the Company must comply
with certain financial covenants relating to: (i) the ratio of total assets to

total revenues; (ii) minimum net worth plus subordinated indebtedness; (iii)
the ratio of total unsubordinated liabilities to net worth; (iv) its current
ratio; (v) its debt service coverage ratio; (vi) maximum net loss; and (vii)
the ratio of funded debt to net operating cash flow, all as such terms are
defined in the Credit Agreement. For the three months ended March 31, 1997,
the Company did not maintain the required ratios described in (iv), (v) and
(vii) above, primarily due to the: (i) net loss, before tax benefit, incurred
for the calendar year ended December 31, 1996; (ii) increase in the Company's
short-term debt, in the amount of $2,000,000, of amounts borrowed from certain
of the Company's principal shareholders (as discussed below) the aggregate
outstanding principal balance which, as of March 31, 1997, was $1,000,000; and
(iii) classification, as a current liability, of the long-term portion of the
Company's debt to the Bank, in the amount of $2,154,501. The Company has
requested a waiver from the Bank with respect to such non-compliance with the
Credit Agreement; and although the Company anticipates receiving such waiver
from the Bank subsequent to the filing of this Form 10-Q, there can be no
assurance that the Bank will issue such waiver to the Company. Such default
gives the Bank the right to accelerate the payment of the then outstanding
balance of the Company's term loans and line of credit. In the event of such
acceleration of such term loans and line of credit, the Company, in all
likelihood, would not have adequate cash available to repay such loans. In
such event, the Company would attempt to meet such needs through either
additional borrowings, sale of franchise notes receivable or additional sales
of equity, although there can be no assurance that the Company would be
successful in obtaining any such additional borrowings, selling any of its
franchise notes receivable and/or selling additional equity, or on what terms
such transactions could be effected.

         On November 29, 1996, the Company borrowed from each of Drs. Robert
Cohen, Alan Cohen and Edward Cohen (collectively, the "Cohen Brothers") the
sum of $666,666.66, each of which loans was for a term of ninety (90) days and
bears interest at a rate of 1.0% above the Bank's prime rate, in effect, from
time to time. As a condition to the Company borrowing such funds, the Bank
amended the Credit Agreement to: (i) permit the Company to borrow such funds
from the Cohen Brothers; (ii) place additional restrictions on the Company's
ability to acquire other retail optical chains without the Bank's approval;
(iii) expand the default provisions contained in the Credit Agreement; and
(iv) place additional restrictions on the Company's ability to sell its excess
franchisee promissory notes. As of March 31, 1997, the aggregate outstanding
principal balance of such loans was $1,000,000. The Cohen Brothers orally
agreed to extend the maturity date of the balance of such loans to May 30,
1997.

         On February 26, 1997, the Company entered into Convertible Debentures
and Warrants Subscription Agreements (see Note 4) with certain investors in
connection with the Private Placement. The Company utilized the net proceeds
(approximately $7,500,000) of the Private Placement to: (i) repay $1,000,000
of the loans made to it by the Cohen Brothers, as discussed above, together
with interest thereon, in the approximate amount of $50,000; and, (ii) pay
down the Company's revolving line of credit with the Bank ($1,000,000). In
addition, the Company intends to use the balance of such proceeds for general
corporate purposes.

         As of March 31, 1997 and December 31, 1996, the Company had $3,838,000

and $(3,803,000), respectively, in working capital, and $2,410,000 and
$868,000, respectively, of cash and cash equivalents. As of the date hereof,
the Company has ceased the construction of any new Insight Laser Centers,
including the one in San Francisco, California (which was anticipated to open
during the first quarter of 1997). During the twelve months ending December
31, 1997, the Company anticipates having the following capital requirements:
renovating six existing Company-owned stores; the continuing upgrade of the
Company's management information system in conjunction with the point-of-sale
computer systems being installed in its Company-owned stores, in the
aggregate, approximate amount of $250,000; acquiring retail optical stores,
subject to the availability of qualified opportunities and which would require
the approval of the Bank, in furtherance of the Company's business strategy,
in amounts that cannot be projected by the Company at this time, (except for a
$300,000 loan which was made by the Company in connection with the Singer
Transaction (see Note 5); and opening new retail optical stores in furtherance
of the Company's business strategy, also in amounts that cannot be projected
by the Company at this time.

         The Company experienced negative cash flow during the three months
ended March 31, 1997 resulting, primarily, from losses attributable to the
operations of Insight and a substantial reduction in the Company's accounts
payable. By the end of 1996, the following measures were taken by the Company,
which management believes will reduce the magnitude of the losses it sustained
for the calendar year ended December 31, 1996 and improve the Company's
operations and cash flow in 1997: (i) closed or failed to renew the leases for
nine of the stores acquired from Benson Optical Co., Inc. in November 1995
(collectively, the "Benson Stores"), some of which were unprofitable; (ii)
franchised eleven Benson Stores which are currently producing royalty income;
(iii) eliminated virtually all administrative overhead in connection with
Insight; (iv) reduced overhead at the Company's Insight

                                      12

<PAGE>


Laser Center located in New York City; and (v) reduced general and
administrative expenses, exclusive of those incurred by Insight, by
approximately $1,000,000. Although the Company anticipates a positive cash flow,
for 1997, from its retail optical store operations, it nevertheless anticipates
that Insight will continue to operate at a loss for the twelve months ending
December 31, 1997 and, therefore, the Company believes that such operating cash
flow will be insufficient to result in a positive cash flow for the Company for
this period. As of the date of the filing of this Form 10-Q, the following
additional measures have been taken by the Company, which management believes
will improve the Company's operations and cash flow in 1997: (i) completed the
Private Placement (see Note 4) which provided net proceeds of approximately
$7,500,000 to the Company, of which, approximately $5,400,000 will be available
to the Company for general corporate purposes; (ii) entered into an agreement to
repay, in the form of registered shares of its Common Stock (in lieu of cash)
that portion of its short-term debt incurred in connection with the Pembridge
Transaction (see Note 5); (iii) amended the Credit Agreement with the Bank which
extended the maturity date of the line of credit and provided for a monthly
repayment of such credit line (see Note 5); (iv) hired a new President and Chief

Operating Officer, with over thirty years experience in the international
eyecare industry; and (v) expanded the Company's managed care department which
recently finalized an agreement with the nation's largest provider based
network, whereby the Company will be the exclusive optical provider for its 4.6
million member group. The Company anticipates that this agreement and similar
types of agreements, which the Company is presently negotiating, should increase
sales at both Company-owned and franchised stores. Although the Company believes
that its financial condition will improve for the twelve months ending December
31, 1997, the Company also anticipates that it may not be in compliance with
certain of its existing financial covenants as contained in its Credit Agreement
with the Bank. Consequently, the Company was required, as of December 31, 1996,
to reclassify, as a current liability, the long-term portion of its debt to the
Bank. In the event of a default, the Bank has the right to accelerate the
payment of the then outstanding principal balances of the Company's term loans
and line of credit. In any event, the loans due to the Cohen Brothers are due to
mature on May 30, 1997. Accordingly, the Company believes that its current cash
resources and cash flow from operations would be sufficient to fund its
anticipated capital expenditures in 1997, unless the Bank exercises its right to
accelerate the repayment of the aforementioned term loans and line of credit.
Further, the Credit Agreement currently restricts the Company's ability to
obtain additional financing except in certain circumstances. In the event of
such acceleration of such term loans and line of credit, the Company, in all
likelihood, would not have adequate cash available to repay such loans; however,
the Company, in such event, would attempt to meet such needs through either
additional borrowings, the sale of franchise notes receivable or additional
sales of equity, although there can be no assurance that the Company would be
successful in obtaining any such additional borrowings, selling any of its
franchise notes receivable and/or selling additional equity, or on what terms
such transactions could be effected. In addition, the Company: (i) is currently
negotiating with a financial institution to finance its franchise notes
receivable; (ii) is currently negotiating with the Bank to amend certain of its
existing financial covenants as contained in the Credit Agreement; and (iii)
will request, from the Cohen Brothers, an extension of time to repay the
outstanding principal balances of such loans, although there can be no assurance
that any of such transactions will be consummated.

                                      13


<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
--------
10.70           Eleventh Amendment and Waiver, dated April 1, 1997, to the
                Credit Agreement between the Company and Chase Manhattan Bank
                (incorporated by reference to Exhibit 10.70 to the Company's
                Current Report on Form 8-K, dated April 7, 1997).

10.71           Agreement and Plan of Reorganization, dated February 19, 1997,
                as amended, among the Company and Messrs., David, Alan and
                Sidney Singer (incorporated by reference to Exhibit 10.71 to the
                Company's Current Report on Form 8-K, dated April 7, 1997).

11              Computation of Earnings Per Common Share.

27              Financial Data Schedule.

b.) Reports on Form 8-K

    1)  On February 26, 1997, the Company filed a Report on Form 8-K with
respect to its Private Placement.


                                      14

<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 thereunto duly authorized.

                                             STERLING VISION, INC.
                                             (Registrant)

                                                      
                                                 /s/ Mary Ellen Lyons
                                             BY: ---------------------------
                                                 Mary Ellen Lyons

                                             
                                                 Signing on behalf of the
                                                 Registrant as its Chief
                                                 Accounting Officer.

                                             Date: April 15, 1998



                                      17