U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                    FORM 10-K

              Annual Report Pursuant to Section 13 or 15 (d) of the
                      Securities and Exchange Act of 1934

                   For the fiscal year ended December 31, 2003

                         Commission File Number 1-14128

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

        NEW YORK                                       11-3096941
(State of incorporation)                (I.R.S. Employer Identification Number)

                         100 Quentin Roosevelt Boulevard
                              Garden City, NY 11530
                        Telephone Number: (516) 390-2100
                        (Address and Telephone Number of
                          Principal Executive Offices)
                         ------------------------------

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock,
   par value $0.01 per share

     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
                              -----               -----

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  Registrant's   knowledge,  in  the  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

     Indicate by check mark whether the  registrant is an  accelerated  filer as
defined in Rule 12b-2 of the Act.

                          Yes                 No    X
                              -----               -----

     The aggregate market value of the voting and non-voting  common equity held
by non-affiliates  computed by reference to the price at which the common equity
was last sold, as of June 30, 2003, was $2,262,794.

Number of shares outstanding as of March 22, 2004:

          67,786,152 shares of Common Stock, par value $0.01 per share


Documents incorporated by reference:  None

<PAGE>
                                     Part I
                                     ------
Item 1.  Business


GENERAL

     Emerging   Vision,   Inc.  (the   "Registrant"   and,   together  with  its
subsidiaries,  hereinafter  the "Company" or  "Emerging")  is one of the largest
chains of retail optical stores and one of the largest  franchise optical chains
in the United States,  based upon management's  beliefs,  domestic sales and the
number  of  locations  of  Company-owned  and  franchised  stores  (collectively
referred to herein after as "Sterling Stores").  The Registrant was incorporated
under  the laws of the State of New York in  January  1992  and,  in July  1992,
purchased  substantially all of the assets of Sterling Optical Corp., a New York
corporation then a debtor-in-possession  under Chapter 11 of the U.S. Bankruptcy
Code.


STORE OPERATIONS

     The Company and its  franchisees  operate  retail  optical stores under the
trade names  "Sterling  Optical,"  "Site For Sore Eyes,"  "Duling  Optical"  and
"Singer  Specs,"  although most stores  (other than the Company's  Site for Sore
Eyes stores  located in Northern  California)  operate under the name  "Sterling
Optical." The Company also operates  VisionCare of California,  Inc. ("VCC"),  a
specialized  health  care  maintenance  organization  licensed  by the  State of
California   Department  of  Managed   Health  Care,   which  employs   licensed
optometrists who render services in offices located immediately  adjacent to, or
within, most Sterling Stores located in California.

     Most  Sterling  Stores  offer  eye  care  products  and  services  such  as
prescription  and  non-prescription  eyeglasses,   eyeglass  frames,  ophthalmic
lenses, contact lenses,  sunglasses and a broad range of ancillary items. To the
extent permitted by individual state regulations, an optometrist is employed by,
or  affiliated   with,  most  Sterling  Stores  to  provide   professional   eye
examinations to the public. The Company fills  prescriptions from these employed
or  affiliated  optometrists,  as  well as from  unaffiliated  optometrists  and
ophthalmologists.  Most  Sterling  Stores have an  inventory of  ophthalmic  and
contact  lenses,  as well as  on-site  lab  equipment  for  cutting  and  edging
ophthalmic  lenses to fit into eyeglass  frames,  which,  in many cases,  allows
Sterling Stores to offer same-day service.

     Occasionally,  the Company sells the assets of certain of its Company-owned
stores to qualified franchisees and, in certain instances,  realizes a profit on
the conveyance of the assets of such stores. Through these sales, along with the
opening of new stores by qualified  franchisees,  the Company  seeks to create a
stream of royalty  payments based upon a percentage of the gross revenues of the
franchised locations,  and grow both the Sterling Optical and Site For Sore Eyes
brand names.  The Company  currently  derives its revenues  from the sale of eye
care products and services at Company-owned stores, membership fees paid to VCC,
and ongoing  royalty fees based upon a percentage  of the gross  revenues of its
franchised stores.

     As of December  31,  2003,  there were 172  Sterling  Stores in  operation,
consisting  of 14  Company-owned  stores  (five of which were  being  managed by
franchisees)  and 158  franchised  stores.  The Company  currently is focused on
expanding its franchised  store  operations.  Sterling  Stores are located in 20
states, the District of Columbia, Canada and the U.S. Virgin Islands.

     The  following  chart  sets  forth  the  breakdown  of  Sterling  Stores in
operation as of December 31, 2003 and 2002:

                                                            December 31,
                                                       2003(*)          2002
                                                      -----------------------
I. COMPANY-OWNED STORES:

   Company-owned stores...............................   9               15
   Company-owned stores managed by franchisees........   5                8
                                                       ---              ---
      Total...........................................  14               23
                                                       ===              ===

     (*)Existing  store locations:  California (1),  Maryland (1), Nebraska (1),
New York (9), North Dakota (1), and Wisconsin (1).


                                       2
<PAGE>

II. FRANCHISED STORES:

   Franchised stores.................................  158              159

     (*)Existing  store locations:  California (39),  Delaware (5), Florida (1),
Illinois (1), Kentucky (1),  Maryland (14),  Massachusetts  (1),  Minnesota (1),
Montana  (1),  Nevada (1),  New Jersey  (7),  New York (40),  North  Dakota (5),
Ontario,  Canada (2),  Pennsylvania  (14), South Dakota (1), Texas (1), Virginia
(8), Washington, D.C. (2), West Virginia (1), Wisconsin (10) and the U.S. Virgin
Islands (2).


     Sterling  Stores  generally range in size from  approximately  1,000 square
feet to 2,000  square feet,  are similar in  appearance  and are operated  under
certain  uniform  standards and operating  procedures.  Many Sterling Stores are
located in enclosed  regional  shopping malls and smaller strip centers,  with a
limited number of Sterling  Stores being housed in  freestanding  buildings with
adjacent  parking  facilities.  Sterling Stores are generally  clustered  within
geographic  market areas to maximize the benefit of  advertising  strategies and
minimize the cost of supervising operations.

     In response to the eyewear market  becoming  increasingly  fashion-oriented
during  the  past  decade,  most  Sterling  Stores  carry a large  selection  of
ophthalmic eyeglass frames. The Company frequently  test-markets  various brands
of sunglasses,  ophthalmic  lenses,  contact lenses and designer  frames.  Small
quantities of these items are usually  purchased  for selected  stores that test
customer  response and interest.  If a product test is  successful,  the Company
attempts to negotiate a system-wide preferred vendor discount for the product in
an effort to maximize system-wide sales and profits.


FRANCHISE SYSTEM

     An integral part of the Company's  franchise  system  includes  providing a
high level of marketing,  financial,  training and administrative support to its
franchisees.  The  Company  provides  "grand  opening"  assistance  for each new
franchised  location by consulting  with its  franchisees  with respect to store
design, fixture and equipment requirements and sources,  inventory selection and
sources,  and  marketing  and  promotional  programs,  as well as  assistance in
obtaining  managed care  contracts.  Specifically,  the Company's  grand opening
assistance helps to establish business plans and budgets,  provides  preliminary
store design and plan approval prior to construction of a franchised  store, and
provides training,  an operations manual and a comprehensive  business review to
aid the  franchisee  in  attempting  to  maximize  its sales and  profitability.
Further, on an ongoing basis, the Company provides training through regional and
national seminars,  offers assistance in marketing and advertising  programs and
promotions, offers online communication,  franchisee group discussion as well as
updated  training  modules  and  product  information  through  its  interactive
Franchisee  Intranet,  and consults with its franchisees as to their  management
and operational strategies and business plans.

     Preferred Vendor Network. With the collective buying power of Company-owned
and  franchised  Sterling  Stores,  the  Company  has  established  a network of
preferred  vendors (the  "Preferred  Vendors")  whose  products may be purchased
directly  by  franchisees  at group  discount  prices,  thereby  providing  such
franchisees  with the  opportunity for higher gross margins.  Additionally,  the
Company  negotiates  and  executes  cooperative  advertising  programs  with its
Preferred Vendors for the benefit of all Company-owned and franchised stores.

     Franchise  Agreements.  Each franchisee  enters into a franchise  agreement
(the "Franchise Agreement") with the Company, the material terms of which are as
follows:

     a. Term. Generally,  the term of each Franchise Agreement is ten years and,
subject to certain conditions, is renewable at the option of the franchisee.

     b.  Initial  Fees.  Generally,  franchisees  (except  for  any  franchisees
converting their existing retail optical store to a Sterling Store (a "Converted
Store"), and those entering into agreements for more than one location) must pay
the Company a  non-recurring,  initial  franchise  fee of  $20,000.  The Company
charges each franchisee of a Converted Store a non-recurring,  initial franchise
fee of $10,000 per location.  For each  franchisee  entering into agreements for
more than one location,  the Company charges a non-recurring,  initial franchise
fee of $15,000 for the second location,  and $10,000 for each location in excess
of two.

                                       3
<PAGE>

     c. Ongoing Royalties.  Franchisees are obligated to pay the Company ongoing
royalties  in an  amount  equal  to a  percentage  (generally  8%) of the  gross
revenues  generated by their Sterling  Store.  Franchisees of Converted  Stores,
however, pay ongoing royalties,  on their store's historical average base sales,
at reduced  rates  increasing  (in most cases) from 2% to 6% for the first three
years of the term of the Franchise Agreement. In addition, most of the Franchise
Agreements  acquired  by the  Company  from  Singer  Specs,  Inc.  (the  "Singer
Franchise  Agreements")  provide for ongoing royalties calculated at 7% of gross
revenues.  Franchise  Agreements  entered into prior to January 1994 provide for
the payment of ongoing  royalties on a monthly  basis,  while those entered into
after January 1994 provide for their  payment on a weekly  basis,  in each case,
based upon the gross revenues for the preceding period. Gross revenues generally
include all revenues  generated  from the  operation  of the  Sterling  Store in
question,  excluding refunds to customers,  sales taxes, a limited amount of bad
debts and, to the extent  required  by state law,  fees  charged by  independent
optometrists.

     d.  Advertising  Fund  Contributions.  Most  franchisees  must make ongoing
contributions  to an  advertising  fund  (the  "Advertising  Fund")  equal  to a
percentage  of their  store's gross  revenues.  Except for the Singer  Franchise
Agreements,  which  generally  provide  for  contributions  equal to 7% of gross
revenues,  for Franchise  Agreements entered into prior to August 1993, the rate
of contribution  is generally 4% of the store's gross revenues,  while Franchise
Agreements  entered into after August 1993 generally  provide for  contributions
equal to 6% of the store's  gross  revenues.  Generally,  50% of these funds are
expended at the  direction of each  individual  franchisee  (for the  particular
Sterling  Store  in  question),   with  the  balance  being  expended  on  joint
advertising  campaigns for all franchisees  located within  specific  geographic
areas.

     e. Termination.  Franchise Agreements may be terminated if a franchisee has
defaulted on its payment of monies due to the Company,  or in its performance of
the other terms and  conditions of the Franchise  Agreement.  During 2003,  nine
franchised  stores were closed,  and the assets of (as well as possession of) an
additional two franchised  stores were reacquired by the Company.  Substantially
all of the assets  located  in such  stores  were  voluntarily  surrendered  and
transferred  back to the  Company  in  connection  with the  termination  of the
related Franchise Agreements.  In such instances,  it is generally the Company's
intention to re-convey the assets of such a store to a new franchisee, requiring
the new  franchisee to enter into the  Company's  then current form of Franchise
Agreement.


MARKETING AND ADVERTISING

     The Company's marketing strategy emphasizes  professional eye examinations,
competitive   pricing   (primarily  through  product   promotions),   convenient
locations,  excellent  customer  service,  customer-oriented  store  design  and
product displays,  knowledgeable sales associates,  and a broad range of quality
products,  including privately-labeled contact lenses presently being offered by
the  Company  and  certain  of  its   franchisees.   Examinations   by  licensed
optometrists  are generally  available on the premises of, or directly  adjacent
to, substantially all Sterling Stores.

     The   Company    continually    prepares   and   revises   its    in-store,
point-of-purchase  displays,  which  provide  various  promotional  messages  to
customers.  Both  Company-owned  and franchised  Sterling Stores  participate in
advertising  and  in-store   promotions,   which  include  visual  merchandising
techniques to draw attention to the products  displayed in the Sterling Store in
question.  The Company is also  continually  refining its  interactive web site,
which further markets the "Sterling  Optical" and "Site for Sore Eyes" brands in
an effort to increase  traffic to its stores and, in many  instances,  also uses
direct  mail   advertising  as  well  as  opt-in  email   advertising  to  reach
prospective, as well as existing, consumers.

     The Company  annually budgets  approximately 4% to 6% of system-wide  sales
for  advertising  and  promotional  expenditures.   Generally,  franchisees  are
obligated to contribute a percentage of their Sterling Store's gross revenues to
the Company's segregated advertising fund accounts,  which the Company maintains
for advertising,  promotional and public relations programs.  In most cases, the
Company permits each franchisee to direct the expenditure of  approximately  50%
of such contributions,  with the balance being expended to advertise and promote
all Sterling  Stores located within the geographic area of the Sterling Store in
question, and/or on national promotions and campaigns.


INSIGHT MANAGED VISION CARE

     Managed care is a  substantial  and growing  segment of the retail  optical
business.  The Company,  under the trade name  "Insight  Managed  Vision  Care,"
contracts with payors (i.e. health maintenance organizations, preferred provider
organizations,  insurance companies, Taft-Hartley unions, and mid-sized to large
companies)  that offer eye care  benefits to their  covered  participants.  When
Sterling  Stores provide  services or products to a covered  participant,  it is
generally at a discount from the everyday  advertised  retail price.  Typically,


                                       4
<PAGE>

participants  will be eligible for greater eye care benefits at Sterling  Stores
than those offered at eye care providers that are not participating in a managed
care  program.  The  Company  believes  that  the  additional  customer  traffic
generated by covered participants,  along with purchases by covered participants
above and beyond their eye care  benefits,  more than offsets the reduced  gross
margins being realized on these sales.  The Company believes that convenience of
store  locations and hours of operation  are key factors in  attracting  managed
care  business.  As the Company  increases  its presence  within  markets it has
already  entered,  as well as expands into new  markets,  it believes it will be
more  attractive to managed care payors due to the  additional  Sterling  Stores
being operated by the Company and its franchisees.


COMPETITION

     The optical  business is highly  competitive  and includes chains of retail
optical stores,  superstores,  individual  retail outlets,  the operators of web
sites  and  a  large  number  of   independent   opticians,   optometrists   and
ophthalmologists  who  provide  professional  services  and may,  in  connection
therewith,  dispense  prescription eyewear. As retailers of prescription eyewear
generally  service local  markets,  competition  varies  substantially  from one
location or geographic area to another. Since 1994, certain major competitors of
the Company have been offering promotional incentives to their customers and, in
response thereto, the Company generally offers the same or similar incentives to
its customers.

     The Company believes that the principal  competitive  factors in the retail
optical   business  are  convenience  of  location,   on-site   availability  of
professional eye examinations, rapid service, quality and consistency of product
and service, price, product warranties, a broad selection of merchandise and the
participation  in  third-party,  managed  care  provider  programs.  The Company
believes that it competes favorably in each of these areas.


GOVERNMENT REGULATION

     The Company and its operations are subject to extensive federal,  state and
local laws,  rules and  regulations  affecting  the health care industry and the
delivery of health care, including laws and regulations prohibiting the practice
of  medicine  and  optometry  by persons not  licensed  to practice  medicine or
optometry,  prohibiting  the unlawful  rebate or unlawful  division of fees, and
limiting  the  manner  in  which  prospective  patients  may be  solicited.  The
regulatory  requirements  that the Company  must satisfy to conduct its business
vary from state to state. In particular, some states have enacted laws governing
the ability of  ophthalmologists  and  optometrists  to enter into  contracts to
provide  professional  services with business  corporations or lay persons,  and
some states  prohibit the Company from  computing  its  continuing  royalty fees
based  upon a  percentage  of  the  gross  revenues  of the  fees  collected  by
affiliated  optometrists.  Various  federal  and  state  regulations  limit  the
financial  and  non-financial   terms  of  agreements  with  these  health  care
providers;  and the revenues  potentially  generated by the Company differ among
its various health care provider affiliations.

     The  Company  is also  subject  to certain  regulations  adopted  under the
Federal  Occupational  Safety  and  Health  Act  with  respect  to its  in-store
laboratory  operations.  The Company believes that it is in material  compliance
with all such applicable laws and regulations.

     As a  franchisor,  the  Company  is subject  to  various  registration  and
disclosure  requirements  imposed by the Federal  Trade  Commission  and by many
states  in which  the  Company  conducts  franchising  operations.  The  Company
believes that it is in material  compliance  with all such  applicable  laws and
regulations.

     The  Company  must  comply  with  the  Health  Insurance   Portability  and
Accountability Act of 1996 ("HIPAA"), which governs our participation in managed
care  programs.  We also must comply with the privacy  regulations  under HIPAA,
which went into effect in April 2003.  In addition,  all states have passed laws
that govern or affect our arrangements with the optometrists who practice in our
vision centers. Some states, such as California, have particularly extensive and
burdensome  requirements  that  affect the way we do  business.  In  California,
optometrists who practice  adjacent to our retail locations are providers to and
subtenants of a subsidiary, which is licensed as a single-service HMO.


ENVIRONMENTAL REGULATION

     The  Company's  business  activities  are  not  significantly  affected  by
environmental regulations, and no material expenditures are anticipated in order
for the Company to comply with any such environmental regulations.  However, the
Company  is  subject  to  certain  regulations  promulgated  under  the  Federal
Environmental  Protection Act with respect to the grinding,  tinting, edging and
disposal of ophthalmic lenses and solutions,  with which the Company believes it
is in material compliance.

                                       5
<PAGE>

EMPLOYEES

     As of March 22, 2004, the Company employed  approximately  132 individuals,
of which  approximately 75% were employed on a full-time basis. Except for those
individuals  employed at  Company-owned  Sterling Stores located in the New York
metropolitan  area,  no  employees  are  covered  by any  collective  bargaining
agreement.  The Company  considers its labor relations with its associates to be
in good standing and has not experienced any  interruption of its operations due
to  disagreements.  The Company has an employment  agreement with one of its key
executives.


Item 2.  Properties

     The Company's headquarters,  consisting of approximately 7,000 square feet,
are located in an office building situated at 100 Quentin  Roosevelt  Boulevard,
Garden City,  New York 11530,  under a sublease  that expires in November  2006.
This  facility  houses the  Company's  principal  executive  and  administrative
offices.

     The Company leases the space occupied by all of its Company-owned  Sterling
Stores and certain of its franchised  Sterling Stores.  The remaining leases for
its  franchised  Sterling  Stores  are  held  in the  names  of  the  respective
franchisees,  of which, the Company holds a collateral  assignment on certain of
those leases.

     Sterling Stores are generally located in commercial areas,  including major
shopping malls, strip centers,  freestanding buildings and other areas conducive
to retail trade.  Generally,  Sterling  Stores range in size from 1,000 to 2,000
square feet.


Item 3.  Legal Proceedings

     Information  with respect to the Company's  legal  proceedings  required by
Item 103 of Regulation S-K is set forth in Note 11 to the Consolidated Financial
Statements  included in Item 8 of this Report,  and is incorporated by reference
herein.


Item 4.  Submission of Matters to a Vote of Security Holders

     There were no matters  submitted  to a vote by the  Company's  shareholders
during the fourth quarter ended December 31, 2003.















                                       6

<PAGE>
                                     PART II
                                     -------

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

     The  Registrant's  Common Stock was listed on the OTC Bulletin  Board under
the trading symbol "ISEE.OB" as of August 23, 2001, and was previously listed on
the Nasdaq National Market System.  Over-the-counter  market quotations  reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions. The range of the high and low closing
sales prices for the Registrant's  Common Stock for each quarterly period of the
last two years, is as follows:

                             2003                        2002
                      -------------------         -----------------
Quarter Ended:          High       Low              High      Low
--------------        -------     -------         -------   -------

March 31               $0.13      $0.04            $0.14     $0.07
June 30                $0.09      $0.04            $0.11     $0.05
September 30           $0.17      $0.06            $0.10     $0.04
December 31            $0.25      $0.09            $0.10     $0.03


     The approximate  number of  shareholders of record of the Company's  Common
Stock as of March 22, 2004 was 308.

     There was one  shareholder  of record of the Company's  Senior  Convertible
Preferred Stock as of March 22, 2004.

     Historically,  the Company has not paid dividends on its Common Stock,  and
has no intention to pay dividends on its Common Stock in the foreseeable future.
It is the  present  policy  of the  Registrant's  Board of  Directors  to retain
earnings, if any, to finance the Company's operations and growth.


RECENT SALES OF UNREGISTERED SECURITIES

     On December 31,  2003,  the Company  issued  warrants,  to certain  Subject
Shareholders, to purchase an aggregate of 59,210,028 shares of its Common Stock,
at exercise  prices  ranging from  $0.0465 per share to $0.0489 per share,  as a
settlement with such Subject  Shareholders  for certain damages they suffered in
connection with their participation in certain Rescission Transactions (see Note
14 to the Consolidated Financial Statements in Item 8 of this Report for further
information).  The issuance of all of the  aforementioned  securities was exempt
from  registration  requirements  pursuant to an exemption under Section 4(2) of
the Securities Act of 1933, as amended.


Item 6.  Selected Financial Data


USE OF NON-GAAP FINANCIAL MEASURE

     In this document,  at times we refer to EBITDA. EBITDA is calculated as net
earnings  before   interest,   taxes,   depreciation   and   amortization,   and
extraordinary items, and excludes non-cash charges related to equity securities.
We refer to EBITDA  because it is a widely  accepted  financial  indicator  of a
company's ability to service or incur indebtedness.

     EBITDA does not represent cash flow from operations as defined by generally
accepted accounting principles,  is not necessarily indicative of cash available
to fund all cash flow needs,  should not be  considered  an  alternative  to net
income or to cash flow from  operations (as determined in accordance  with GAAP)
and should not be considered an indication of our operating  performance or as a
measure of liquidity.  EBITDA is not necessarily  comparable to similarly titled
measures for other companies.


SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

     The  following  Selected  Financial  Data has been derived from the audited
consolidated  financial  statements  of  the  Company  and  should  be  read  in
conjunction  with those  statements,  which are  included  in this  Report.  The


                                       7
<PAGE>

consolidated  financial  statements  have been audited by Arthur  Andersen  LLP,
independent  public  accountants,  with respect to the years ended  December 31,
2001, 2000 and 1999. The consolidated  financial  statements for the years ended
December  31,  2003 and  2002  were  audited  by  Miller  Ellin &  Company  LLP,
independent public accountants.

<TABLE>
<CAPTION>
                                                                            (In thousands, except for per share data)
                                                                                    Year Ended December 31,
                                                             ----------------------------------------------------------------------
Statement of Operations Data:                                    2003          2002          2001           2000          1999
                                                             ------------- ------------- -------------- ------------- -------------
<S>                                                          <C>           <C>           <C>            <C>           <C>
System-wide sales (1)                                        $   93,165    $  104,448    $  124,589     $  128,775    $  140,321
                                                             ===========   ===========   ===========    ===========   ===========

Total revenues                                               $   13,980    $   17,425    $   20,653     $   23,058    $   29,580
                                                             ===========   ===========   ===========    ===========   ===========
Loss from continuing operations                              $   (2,948)   $   (4,721)   $   (5,088)    $  (14,628)   $   (2,691)
                                                             ===========   ===========   ===========    ===========   ===========
(Loss) income from discontinued operations                   $      (19)   $       74    $    1,312     $  (15,533)   $      430
                                                             ===========   ===========   ===========    ===========   ===========
Loss on disposal of discontinued operations                  $        -    $        -    $        -     $   (8,831)   $        -
                                                             ===========   ===========   ===========    ===========   ===========
Net loss                                                     $   (2,967)   $   (4,647)   $   (3,776)    $  (38,992)   $   (2,261)
                                                             ===========   ===========   ===========    ===========   ===========

Per Share Information - basic and diluted
Loss from continuing operations                              $    (0.05)   $    (0.17)   $    (0.19)    $    (2.04)   $    (0.41)
                                                             ===========   ===========   ===========    ===========   ===========
(Loss) income from discontinued operations                   $        -    $     0.01    $     0.05     $    (0.66)   $     0.03
                                                             ===========   ===========   ===========    ===========   ===========
Loss on disposal of discontinued operations                  $        -    $        -    $        -     $    (0.37)   $        -
                                                             ===========   ===========   ===========    ===========   ===========
                                                                                         -
Net loss per share                                           $    (0.05)   $    (0.16)   $    (0.14)    $    (3.07)   $    (0.38)
                                                             ===========   ===========   ===========    ===========   ===========

Weighted-average common shares outstanding                       56,507        28,641        26,409         23,627        15,232
                                                             ===========   ===========   ===========    ===========   ===========

Balance Sheet Data:

Working capital deficit                                      $   (1,590)   $   (4,632)   $   (1,011)   $   (3,987)   $   (4,795)
Total assets                                                      6,639         6,650        11,057        22,531        30,312
Total debt                                                          931         1,494         1,299           754         7,347


Other Data:

EBITDA (2)                                                        2,220        (3,971)       (3,400)      (12,592)        2,163
</TABLE>

<TABLE>
<CAPTION>

Quarterly Data:
                                         First Quarter          Second Quarter          Third Quarter          Fourth Quarter
                                         2003     2002         2003        2002       2003        2002        2003       2002
                                      -------------------    -------------------    -------------------    ---------------------
<S>                                   <C>        <C>         <C>        <C>         <C>        <C>         <C>         <C>
Net revenues                          $  3,752   $  4,802    $  3,389   $  3,936    $  3,486   $  4,807    $  3,353    $  3,880
Net income (loss) from continuing
   operations                         $    581   $   (533)   $    511   $   (397)   $    543   $ (1,895)   $ (4,583)   $ (1,896)
(Loss) income from discontinued
   operations                         $   (222)  $      -    $      2   $   (120)   $     56   $    287    $    145    $    (93)
Net income (loss)                     $    359   $   (533)   $    513   $   (517)   $    599   $ (1,608)   $ (4,438)   $ (1,989)
----------------------------------------------------------------------------------------------------------------------------------
EBITDA (2)                            $    718   $   (368)   $    722   $   (218)   $    588   $ (1,323)   $    192    $ (2,062)

</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>
Sterling Store Data:                                                    (In thousands, except for number of stores)
                                                                                   Year Ended December 31,
                                                             ---------------------------------------------------------------------
                                                                 2003          2002          2001          2000          1999
                                                             ------------- ------------- ------------- ------------- -------------
<S>                                                          <C>           <C>           <C>           <C>           <C>
Company-owned stores bought, opened or reacquired                     3             4            15             3            11
Company-owned stores sold or closed                                  (9)          (14)          (10)          (13)          (16)
Company-owned stores at end of period                                 9            15            25            20            30
Company-owned stores being managed by Franchisees at end
   of period                                                          5             8             9            12             6
Franchised stores being managed by Company at end of period           -             -             1             3             5
Franchised stores at end of period                                  158           159           169           201           218

Average sales per store (3):
Company-owned stores                                         $      351    $      337    $      377    $      396    $      420
Franchised stores                                            $      545    $      591    $      564    $      546    $      495
Average franchise royalties per franchised store (3)         $       40    $       47    $       43    $       42    $       38
</TABLE>

     (1)  System-wide  sales  represent   combined  retail  sales  generated  by
Company-owned and franchised stores, as well as revenues generated by VCC.

     (2)  EBITDA  is  calculated  as  net  earnings  before   interest,   taxes,
depreciation and amortization,  and  extraordinary  items, and excludes non-cash
charges related to equity securities (see "Management's  Discussion and Analysis
of Financial  Condition  and Results of  Operations - Use of Non-GAAP  Financial
Measures").  The following is a reconciliation  of net income to EBITDA (amounts
in thousand):


        Reconciliation of Non-GAAP Financial Measure

        This table includes the reconciliation of net loss from continuing
        operations to EBITDA for the year ended December 31, 2003.


                                                  -------------
                                                       2003
                                                  -------------
    Net loss from continuing operations            $   (2,948)
    Add back:
       Interest expense                                   197
       Income taxes                                        57
       Non-cash equity charges                          4,636
       Depreciation and amortization                      278
                                                  ------------
                              EBITDA               $    2,220
                                                  ============

     (3) Average sales per store and average franchise  royalties per franchised
store are computed based upon the  weighted-average  number of Company-owned and
franchised stores in operation, respectively, for each of the specified periods.
For periods of less than a year, the averages have been annualized.

                                       9
<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

     This Report  contains  certain  forward-looking  statements and information
relating  to the  Company  that  are/is  based on the  beliefs of the  Company's
management,  as well as assumptions made by, and information currently available
to, the Company's management.  When used in this Report, the words "anticipate",
"believe",  "estimate", "expect", and similar expressions, as they relate to the
Company or the Company's  management,  are intended to identify  forward-looking
statements. Such statements reflect the current view of the Company with respect
to future events,  are not guarantees of future  performance  and are subject to
certain  risks and  uncertainties.  These risks and  uncertainties  may include,
among other items: potential conflicts of interest that could occur with certain
of our directors;  the retention of certain members of our management  team; our
inability to control the management of our franchised stores; the effects of new
state, local and federal  regulations that affect the health care industry;  our
ability to continue to enter favorable  arrangements with health care providers;
increased competition from other eyewear providers; the acceptance of refractive
laser  surgery;  product  demand  and  market  acceptance  risks;  the effect of
economic conditions;  the impact of competitive products,  services and pricing;
product  development,  commercialization  and  technological  difficulties;  our
ability,  or lack  thereof,  to secure  additional  financing in the future,  if
necessary,  due to the  potential  lack of  liquidity of our common  stock;  the
potential  limitation on the use of our net  operating  loss  carry-forwards  in
accordance  with Section 382 of the Internal  Revenue Code of 1986,  as amended,
based on certain  changes in ownership that have occurred or could in the future
occur;  the  possibility  that we will be unable  to  successfully  execute  our
business plan; and the outcome of pending and future  litigation.  Should one or
more  of  these  risks  or  uncertainties  materialize,   or  should  underlying
assumptions  prove  incorrect,  actual  results may vary  materially  from those
described herein as "anticipated",  "believed",  "estimated", or "expected". The
Company does not intend to update these forward-looking statements.


COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

     Net sales for Company-owned stores,  including revenues generated by VCC, a
specialized  health  care  maintenance  organization  licensed  by the  State of
California Department of Managed Health Care, decreased by $2,859,000, or 28.9%,
to  $7,047,000  for the year ended  December 31, 2003, as compared to $9,906,000
for the comparable period in 2002. The decrease in net sales was a direct result
of  management's  commitment to continue to close  non-profitable  Company-owned
stores.  There were 9 stores  being  operated by the Company as of December  31,
2003  compared to 15 stores as of December 31, 2002.  On a same store basis (for
stores that operated as a Company-owned store during the entirety of both of the
years ended  December  31, 2003 and 2002),  comparative  net sales  decreased by
$179,000,  or 5.4%,  to  $3,135,000  for the year ended  December 31,  2003,  as
compared to $3,314,000 for the comparable  period in 2002.  Management  believes
this decrease was primarily a result of the struggling U.S. economy.

     Franchise royalties  decreased by $391,000,  or 5.7%, to $6,425,000 for the
year ended  December  31, 2003,  as compared to  $6,816,000  for the  comparable
period in 2002.  Management believes this decrease was primarily a result of the
struggling U.S. economy,  particularly the weak retail sales experienced  during
the months of the War in Iraq, combined with increased  competition in capturing
customers on certain managed care programs.

     Other  franchise  related  fees (which  includes  initial  franchise  fees,
renewal  fees and fees  related  to the  transfer  of store  ownership  from one
franchisee  to another)  increased by $216,000,  or 304.2%,  to $287,000 for the
year ended December 31, 2003, as compared to $71,000 for the  comparable  period
in 2002.  This increase was a direct result of the Company  entering into 14 new
franchise agreements for the year ended December 31, 2003.

     Interest on franchise notes receivable decreased by $161,000,  or 51.6%, to
$151,000 for the year ended  December 31, 2003,  as compared to $312,000 for the
comparable period in 2002. This decrease was primarily due to numerous franchise
notes maturing  during the past 12 months and only two new notes being generated
during 2003.

     Other income decreased by $250,000, to $70,000, for the year ended December
31,  2003,  as compared  to $320,000  for the  comparable  period in 2002.  This
decrease  was  primarily  a result of  one-time  sales of certain  assets of the
Company to third parties during 2002 that did not occur during 2003.

     Excluding  revenues  generated by VCC, the  Company's  gross profit  margin
decreased by 0.6%, to 76.4% for the year ended December 31, 2003, as compared to
77.0% for the  comparable  period  in 2002.  The gross  profit  margin  remained
consistent  with prior year.  The Company  continued to  effectively  manage and
control its inventory,  continued purchasing at lower average product costs, and
continued  receiving strong discounts from certain of the Company's key vendors.
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,
competitive pricing, and promotional incentives.

                                       10
<PAGE>

     Selling,  general and administrative  expenses decreased by $7,231,000,  or
39.0%,  to  $11,333,000  for the year ended  December 31,  2003,  as compared to
$18,564,000  for the comparable  period in 2002. This decrease was primarily due
to management's  continuing plans to reduce administrative expenses and to close
non-profitable  Company-owned  stores.  Included were reductions in salaries and
related  expenses  of  $1,734,000,   facility  and  other  overhead  charges  of
$3,117,000 and professional  fees of $684,000.  Additionally,  the provision for
doubtful accounts decreased by $1,651,000 as certain large notes receivable were
deemed uncollectible in 2002. The Company did not experience a similar situation
in 2003.

     Provision for store closings  decreased by $920,000,  or 100.0%,  to $0 for
the year ended  December  31, 2003,  as compared to $920,000 for the  comparable
period  in  2002.  In 2002,  management  made  the  decision  to close 15 of its
Company-owned stores. In connection therewith,  the Company recorded a provision
based on the  estimated  costs  (including  lease  termination  costs  and other
expenses)  that would be incurred in the closing of the stores.  The Company did
not incur any additional  costs related to these store closures during 2003, nor
did management make the decision to close any additional stores.

     Charges related to long-lived  assets  decreased by $163,000,  or 94.2%, to
$10,000 for the year ended  December 31,  2003,  as compared to $173,000 for the
comparable  period in 2002. In connection  with  management's  decision to close
non-profitable  Company-owned  stores,  the Company  impaired  assets related to
those stores during 2002. No such assets were deemed impaired during 2003.

     Interest expense decreased by $10,000,  or 4.8%, to $197,000,  for the year
ended  December 31, 2003, as compared to $207,000 for the  comparable  period in
2002.  The decrease  was a result of the Company  paying off the majority of its
debt  obligations in April 2003 with the proceeds  received from its shareholder
rights  offering,  offset by the  amortization  of the  remaining  debt discount
resulting from the aforementioned debt payment in April 2003.


COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

     Net sales for Company-owned stores,  including revenues generated by VCC, a
specialized  health  care  maintenance  organization  licensed  by the  State of
California Department of Managed Health Care, decreased by $1,742,000, or 15.0%,
to $9,906,000  for the year ended  December 31, 2002, as compared to $11,648,000
for the comparable period in 2001. The decrease in net sales was a direct result
of  management's  commitment to continue to close  non-profitable  Company-owned
stores.  There were 15 stores  being  operated by the Company as of December 31,
2002,  compared to 25 stores as of December 31, 2001. On a same store basis (for
stores that operated as a Company-owned store during the entirety of both of the
years ended  December  31, 2002 and 2001),  comparative  net sales  decreased by
$377,000,  or 8.2%,  to  $4,204,000  for the year ended  December 31,  2002,  as
compared to $4,581,000 for the comparable  period in 2001.  Management  believed
this decrease was primarily a result of the struggling  U.S.  economy,  combined
with continuing national threats that significantly  impacted the New York area,
in which most of our Company-owned stores operated.

     Franchise  royalties  decreased by $1,044,000,  or 13.3%, to $6,816,000 for
the year ended  December 31, 2002, as compared to $7,860,000  for the comparable
period in 2001.  This  decrease  was a result of the fact that  there were fewer
franchised  stores in operation  during 2002 as compared to 2001. As of December
31, 2002, there were 159 franchised  stores in operation,  as compared to 169 as
of  December  31,  2001.  Additional  factors  driving  the  decrease  were  the
struggling  U.S.  economy,  and certain  other out of the  ordinary  threats and
incidents  that took place in areas of the United States in which a large number
of our  franchise  stores  operated,  including  New York,  Maryland,  Virginia,
Washington D.C., and California,  which significantly affected retail traffic in
those areas.

     Net gains on the conveyance of  Company-store  assets to  franchisees,  and
other franchise  related fees (which includes  initial  franchise fees,  renewal
fees and fees related to the transfer of store  ownership from one franchisee to
another) decreased by $69,000,  or 49.3%, to $71,000 for the year ended December
31,  2002,  as compared  to $140,000  for the  comparable  period in 2001.  This
decrease was a direct  result of a lower amount of initial  franchise,  transfer
and  renewal  fees for the year ended  December  31,  2002,  as  compared to the
comparable  period in 2001.  The Company did not convey the assets of any of its
Company-owned stores to franchisees during 2002 or 2001.

     Interest on franchise notes receivable decreased by $635,000,  or 67.1%, to
$312,000 for the year ended  December 31, 2002,  as compared to $947,000 for the
comparable  period  in  2001.  This  decrease  was  principally  due to  several
franchise  notes maturing  during 2002,  along with the fact that certain of the
Company's  franchisees  filed for  bankruptcy or experienced  other  significant
personal financial difficulties, leaving them unable to fulfill their commitment
under their respective promissory notes to the Company.

     Other  income  increased  by  $262,000,  to  $320,000,  for the year  ended
December 31,  2002,  as compared to $58,000 for the  comparable  period in 2001.
This  increase  was  primarily  a result  of the sale of  certain  assets of the
Company  to  third  parties,  along  with the  settlement  of  certain  existing
liabilities at lesser amounts than anticipated.


                                       11
<PAGE>

     The Company's gross profit margin  increased by 3.4%, to 77.0% for the year
ended December 31, 2002, as compared to 73.6% for the comparable period in 2001.
This  increase  was a result  of  improved  inventory  management  and  control,
improved  purchasing  at lower average  product  costs,  and improved  discounts
obtained in 2002 from certain of the Company's vendors.

     Selling,  general and administrative  expenses decreased by $2,129,000,  or
10.3%,  to  $18,564,000  for the year ended  December 31,  2002,  as compared to
$20,693,000  for the comparable  period in 2001. This decrease was primarily due
to  management's  plans  to  reduce  administrative   expenses,   and  to  close
non-profitable  Company-owned  stores.  Included were reductions in salaries and
related expenses of $2,216,000, facility and other overhead charges of $263,000,
and  depreciation  and  amortization  of $863,000.  These items were offset by a
$1,691,000  increase in the provision for doubtful  accounts  related to certain
franchise  receivables and notes that management  deemed  uncollectible  due to,
among other reasons,  certain of the Company's  franchisees filing bankruptcy or
experiencing  other significant  personal financial  difficulties,  leaving them
unable to fulfill their financial  obligations to the Company. A smaller portion
of this provision  related to certain managed care  receivables that were deemed
uncollectible.

     Provision for store  closings  decreased by $44,000,  to $920,000,  for the
year ended December 31, 2002, as compared to $964,000 for the comparable  period
in 2001. In 2002,  management made the decision to close an additional 15 of its
Company-owned stores. In connection therewith,  the Company recorded a provision
based on the  estimated  costs  (including  lease  termination  costs  and other
expenses) that would be incurred in the closing of the stores.

     Interest expense increased by $130,000, or 168.8%, to $207,000 for the year
ended  December 31, 2002,  as compared to $77,000 for the  comparable  period in
2001.  This  increase was a direct  result of interest  paid,  during  2002,  in
connection with $2,000,000 in financing  arrangements obtained by the Company in
January 2002.


USE OF NON-GAAP FINANCIAL MEASURE

     In this document,  at times we refer to EBITDA. EBITDA is calculated as net
earnings  before   interest,   taxes,   depreciation   and   amortization,   and
extraordinary items, and excludes non-cash charges related to equity securities.
We refer to EBITDA  because it is a widely  accepted  financial  indicator  of a
company's ability to service or incur indebtedness.

     EBITDA does not represent cash flow from operations as defined by generally
accepted accounting principles,  is not necessarily indicative of cash available
to fund all cash flow needs,  should not be  considered  an  alternative  to net
income or to cash flow from  operations (as determined in accordance  with GAAP)
and should not be considered an indication of our operating  performance or as a
measure of liquidity.  EBITDA is not necessarily  comparable to similarly titled
measures for other companies.

Reconciliation of Non-GAAP Financial Measure

     This  table  includes  the  reconciliation  of  net  loss  from  continuing
operations to EBITDA for the year ended December 31, 2003.

                                                  -------------
                                                       2003
                                                  -------------
    Net loss from continuing operations            $   (2,948)
    Add back:
       Interest expense                                   197
       Income taxes                                        57
       Non-cash equity charges                          4,636
       Depreciation and amortization                      278
                                                  ------------
                              EBITDA               $    2,220
                                                  ============



                                       12
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     For the year ended  December  31,  2003,  cash flows  provided by investing
activities  were  $469,000,  principally  due to the  proceeds  received  on the
Company's  franchise  notes  receivable,  offset,  in part,  by limited  capital
expenditures made by the Company during 2003.

     For the year ended  December  31,  2003,  cash flows  provided by financing
activities  were $718,000,  principally due to the completion of the shareholder
rights offering, offset by the repayment of the Company's debt and related party
borrowings.

     In April 2003,  the Company  completed  its  shareholder  rights  offering,
resulting  in net  proceeds  of  $1,859,000,  of which,  as a result of  certain
Rescission  Transactions  entered  into as of  December  31,  2003,  $520,000 is
repayable  to  certain  of  the  Company's  shareholders  pursuant  to  numerous
promissory  notes that bear  interest  at a rate of 6% per annum and are due and
payable in April 2007.  With a portion of the  proceeds,  the  Company  paid off
$417,000,  $407,000  and  $100,000,  respectively,  representing  the  remaining
principal  amounts  due under a  secured  term  note,  a credit  facility  and a
director loan.

     As of  December  31,  2003,  the Company had  negative  working  capital of
$1,590,000  (compared to $4,632,000 as of December 31, 2002) and cash on hand of
$1,383,000.  During  2003,  the Company used  $449,000 of cash in its  operating
activities. This usage was a result of $965,000 of costs paid out related to the
Company's  store  closure  plan,  a  net  decrease  of  $556,000  and  $980,000,
respectively,  in accounts payable and accrued liabilities,  and other long-term
liabilities  that  existed as of December  31, 2002, a net increase in franchise
and other  receivables of $234,000,  offset by EBITDA of $2,220,000 for the year
ended December 31, 2003.

     The Company  plans to  continue  to improve  its cash flows  during 2004 by
improving store  profitability  through  increased  monitoring of store-by-store
operations,  continuing  to  implement  reductions  of  administrative  overhead
expenses where necessary and feasible,  actively supporting development programs
for  franchisees,  and adding new  franchised  stores to the system.  Management
believes  that with the  successful  execution  of the  aforementioned  plans to
improve  cash  flows,  its  existing  cash  and the  collection  of  outstanding
receivables,  there will be  sufficient  liquidity  available for the Company to
continue in operation through the first quarter of 2005.  However,  there can be
no  assurance  that  the  Company  will  be  able to  successfully  execute  the
aforementioned plans.


MANAGEMENT'S DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     High-quality   financial   statements   require  rigorous   application  of
high-quality accounting policies.  Management believes that its policies related
to revenue recognition,  legal contingencies and allowances on franchise,  notes
and  other  receivables  are  critical  to an  understanding  of  the  Company's
consolidated  financial  statements  because their  application  places the most
significant demands on management's  judgment,  with financial reporting results
relying on estimation about the effect of matters that are inherently uncertain.

     Management's  estimate  of  the  allowances  on  receivables  is  based  on
historical sales,  historical loss levels, and an analysis of the collectibility
of  individual  accounts.  To the extent  that  actual bad debts  differed  from
management's  estimates  by  10  percent,  consolidated  net  loss  would  be an
estimated $174,000 higher/lower, based upon 2003 results, depending upon whether
the actual write-offs are greater or lesser than estimated.

     Management's  estimate of the valuation allowance on deferred tax assets is
based on whether it is more likely  than not that the  Company's  net  operating
loss  carry-forwards  will be  utilized.  Factors  that could  impact  estimated
utilization of the Company's net operating loss  carry-forwards  are the success
of its stores and franchisees,  as well as the Company's operating efficiencies,
which  would allow it to generate  taxable  income in the future.  To the extent
that  management  lowered its  valuation  allowance on deferred tax assets by 10
percent,  consolidated net loss would be an estimated $2,160,000 lower, based on
2003 results.

     The Company  recognizes  revenues in accordance with SAB 103.  Accordingly,
revenues  are  recorded  when  persuasive  evidence  of an  arrangement  exists,
delivery has occurred or services have been rendered, the Company's price to the
buyer is fixed and determinable,  and collectibility is reasonably  assured.  To
the extent that  collectibility  of royalties and/or interest on franchise notes
is not reasonably assured, the Company recognizes such revenues when the cash is
received.  To the extent that revenues that were recognized on a cash basis were
recognized  on an accrual  basis,  consolidated  net loss would be an  estimated
$374,000 lower, based upon 2003 results.


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Debt Extinguishments and Accounting for Leases

     Effective  January  1,  2003,  the  Company  adopted  Financial  Accounting
Standards Board ("FASB")  Statement of Financial  Accounting  Standards ("SFAS")
No. 145,  "Rescission of FASB  Statements  No. 4, 44, and 64,  Amendment of FASB
Statement No. 13, and Technical  Corrections."  SFAS No. 145 requires  gains and
losses  on  extinguishments  of debt to be  classified  as  income  or loss from
continuing  operations,  rather  than as an  extraordinary  item  as  previously
required.  Extraordinary  treatment is required for certain  extinguishments  as
provided in Accounting Principles Board Opinion No. 30. SFAS No. 145 also amends
SFAS No. 13 to require that certain  modifications  to capital leases be treated
as a  sale-leaseback,  and to  modify  the  accounting  for  subleases  when the
original  lessee  remains a secondary  obligor.  The  Company  has adopted  this
Statement and has determined  that it does not have, nor is it expected to have,
a material impact on its financial position or results of operations.

Costs to Exit an Activity

     Effective  January 1, 2003, the Company  adopted SFAS No. 146,  "Accounting
for  Costs  Associated  with  Exit  or  Disposal  Activities,"  which  addresses
financial  accounting and reporting for costs  associated  with exit or disposal
activities,  and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity  (including Certain Costs Incurred in a  Restructuring)."  SFAS No. 146
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be recognized  when the liability is incurred.  This  Statement did not
have a material impact the Company's financial position or results of operations
in 2003 as there were no additional stores that management made the decisions to
close/exit.

                                       13
<PAGE>

Financial Instruments

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
150 establishes  standards for how an issuer  classifies and measures  financial
instruments with  characteristics  of both  liabilities and equity.  It requires
that an issuer classify a financial  instrument within its scope as a liability.
SFAS 150 was effective for financial  instruments entered into or modified after
May 31, 2003,  and  otherwise is effective at the beginning of the first interim
period  beginning  after June 15, 2003.  The adoption of this  Statement did not
have, nor is it expected to have, a material  impact on the Company's  financial
position or results of operations.

Consolidation of Variable Interest Entities

     In  December   2003,   the  FASB  issued   FASB   Interpretation   No.  46,
"Consolidation   of   Variable   Interest   Entities."   Application   of   this
Interpretation is required in a company's financial  statements for interests in
variable interest entities ("VIEs") that are considered special-purpose entities
for the  year  ended  December  31,  2003.  The  Company  has  certain  sublease
arrangements with its franchisees;  however, the Company does not have an equity
interest in the franchisees'  corporations.  Additionally,  the franchisees have
full  control  over  the   decision-making  in  their  franchise.   The  Company
continually  monitors  the  creditworthiness  of its  franchisees  in  order  to
evaluate  their  ability to continue  profitable  operations.  As a result,  the
Company has determined that the provisions of this Interpretation did not have a
material impact on its financial position or results of operations.

Retirement Plans and Benefits

     In December 2003, the FASB issued FASB Staff  Position  106-1,  "Accounting
and  Disclosure   Requirements  Related  to  the  Medicare   Prescription  Drug,
Improvement and Modernization Act of 2003," which introduces a prescription drug
benefit  under  Medicare,  as well as a federal  subsidy to  sponsors of retiree
health care benefit  plans that  provide a benefit that is at least  actuarially
equivalent  to  Medicare.  As the Company does not have a  post-retirement  drug
plan,  the Company has  determined  the Staff  Position does not have a material
impact on its financial position or results of operations.

     In December  2003,  the FASB revised FASB  Statement  No. 132,  "Employers'
Disclosures  about Pensions and Other  Postretirement  Benefits." This Statement
requires additional disclosures about the assets,  obligations,  cash flows, and
net periodic  benefit cost of defined  benefit  pension  plans and other defined
benefit  postretirement  plans. The Statement  requires that this information be
provided  separately  for  pension  plans and for other  postretirement  benefit
plans.  The Company has adopted this Statement and has  determined  that it does
not have a material impact on its financial position or results of operations.


Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

     The Company  presently has  outstanding  certain  equity  instruments  with
beneficial  conversion terms.  Accordingly,  the Company,  in the future,  could
incur non-cash charges to equity (as a result of the exercise of such beneficial
conversion  terms),  which  would  have a  negative  impact on future  per share
calculations.

     The Company believes that the level of risk related to its cash equivalents
is not material to the Company's financial condition or results of operations.



                                       14
<PAGE>

Item 8.  Financial Statements and Supplementary Data



                                TABLE OF CONTENTS


                                                                         PAGE
                                                                        -------

REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS                               16 - 17

CONSOLIDATED FINANCIAL STATEMENTS

   Consolidated Balance Sheets as of December 31, 2003 and 2002           18

   Consolidated Statements of Operations for the Years Ended
      December 31, 2003, 2002 and 2001                                    19

   Consolidated Statements of Shareholders' Equity (Deficit) for the
      Years Ended December 31, 2003, 2002 and 2001                        20

   Consolidated Statements of Cash Flows for the Years Ended
      December 31, 2003, 2002 and 2001                                    21

   Notes to Consolidated Financial Statements                             22



     Information required by schedules called for under Regulation S-X is either
not applicable or is included in the consolidated  financial statements or notes
thereto.





                                       15
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Emerging Vision, Inc.:


     We have audited the  accompanying  consolidated  balance sheets of Emerging
Vision,  Inc. (a New York  corporation) and  subsidiaries  (the "Company") as of
December  31,  2003  and  2002,  and  the  related  consolidated  statements  of
operations,  shareholders'  equity  (deficit)  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  The consolidated  financial  statements of the
Company for the year ended  December 31, 2001 was audited by other  auditors who
have ceased  operations  and whose  report,  dated April 8, 2002,  expressed  an
unqualified opinion on those financial statements.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our opinion,  the 2003 and 2002 financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of Emerging
Vision,  Inc. and subsidiaries as of December 31, 2003 and 2002, and the results
of their  operations and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States.



                                           /s/ MILLER, ELLIN & COMPANY LLP

New York, New York
March 22, 2004




                                       16
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Emerging Vision, Inc.:


     We have audited the  accompanying  consolidated  balance sheets of Emerging
Vision,  Inc. (a New York  corporation) and subsidiaries as of December 31, 2001
and 2000, and the related consolidated  statements of operations,  shareholders'
equity  and cash  flows for the three  years  ended  December  31,  2001.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States.  Those standards require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all material respects,  the financial  position of Emerging Vision,  Inc. and
subsidiaries  as of  December  31,  2001  and  2000,  and the  results  of their
operations  and their cash flows for the three years ended  December 31, 2001 in
conformity with accounting principles generally accepted in the United States.



                                              /s/ ARTHUR ANDERSEN LLP

Melville, New York
April 8, 2002




     THIS REPORT IS A COPY OF A PREVIOUSLY ISSUED ARTHUR ANDERSEN REPORT AND HAS
NOT BEEN REISSUED BY ARTHUR  ANDERSEN.  PURSUANT TO SEC RELEASE NO.  33-8070 AND
RULE 437A UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  EMERGING  VISION,  INC.
HAS NOT RECEIVED  WRITTEN  CONSENT AFTER  REASONABLE  EFFORT TO USE THIS REPORT.
BECAUSE  ARTHUR  ANDERSEN LLP HAS NOT CONSENTED TO THE INCLUSION OF THEIR REPORT
IN THIS  REPORT,  YOU WILL NOT BE ABLE TO RECOVER  AGAINST  ARTHUR  ANDERSEN LLP
UNDER SECTION 11 OF THE SECURITIES  ACT FOR ANY UNTRUE  STATEMENTS OF A MATERIAL
FACT CONTAINED IN THE FINANCIAL STATEMENTS AUDITED BY ARTHUR ANDERSEN LLP OR ANY
OMISSIONS TO STATE A MATERIAL FACT REQUIRED TO BE STATED THEREIN.



                                       17
<PAGE>

                     EMERGING VISION, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                                                                         December 31,
                                                                                                    2003             2002
                                                                                               --------------   --------------
                                     ASSETS
<S>                                                                                             <C>              <C>
Current assets:
     Cash and cash equivalents                                                                  $     1,383      $       664
     Franchise receivables, net of allowance of $844 and $1,063, respectively                         1,281            1,133
     Other receivables, net of allowance of $118 and $101, respectively                                 291              447
     Current portion of franchise notes receivable, net of allowance
        of $241 and $442, respectively                                                                  449              612
     Inventories, net                                                                                   392              456
     Prepaid expenses and other current assets                                                          389              321
                                                                                                ------------     ------------
                     Total current assets                                                             4,185            3,633
                                                                                                ------------     ------------

Property and equipment, net                                                                             481              693
Franchise notes and other receivables, net of allowance of
   $541 and $1,486, respectively                                                                        470              781
Goodwill                                                                                              1,266            1,266
Other assets                                                                                            237              277
                                                                                                ------------     ------------
                     Total assets                                                               $     6,639      $     6,650
                                                                                                ============     ============

                      LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
     Current portion of long-term debt                                                          $       207      $       626
     Accounts payable and accrued liabilities                                                         5,389            6,153
     Accrual for store closings                                                                         144            1,109
     Related party borrowings                                                                            35              377
                                                                                                ------------     ------------
                     Total current liabilities                                                        5,775            8,265
                                                                                                ------------     ------------

Long-term debt                                                                                          143              260
                                                                                                ------------     ------------
Related party borrowings                                                                                546              231
                                                                                                ------------     ------------
Franchise deposits and other liabilities                                                                937            1,709
                                                                                                ------------     ------------

Commitments and contingencies (Note 11)

Shareholders' deficit:
     Preferred stock, $0.01 par value per share; 5,000,000 shares authorized:
        Senior Convertible Preferred Stock, $100,000 liquidation preference per
        share; 1 share issued and outstanding                                                            74               74
     Common stock, $0.01 par value per share; 150,000,000 shares authorized;
        67,682,087 and 29,922,957 shares issued, respectively, and 67,499,750
        and 29,740,620 shares outstanding, respectively                                                 677              299
     Treasury stock, at cost, 182,337 shares                                                           (204)            (204)
     Additional paid-in capital                                                                     125,987          120,345
     Accumulated deficit                                                                           (127,296)        (124,329)
                                                                                                ------------     ------------
                     Total shareholders' deficit                                                       (762)          (3,815)
                                                                                                ------------     ------------
                     Total liabilities and shareholders' deficit                                $     6,639      $     6,650
                                                                                                ============     ============
</TABLE>

     The accompanying notes are an integral part of these  consolidated  balance
sheets.


                                       18
<PAGE>
                     EMERGING VISION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
                                                                                             For the Year Ended December 31,
                                                                                      ----------------------------------------------
                                                                                           2003            2002            2001
                                                                                      --------------- --------------- --------------
<S>                                                                                   <C>             <C>             <C>
Revenues:
    Net sales                                                                         $     7,047     $     9,906     $    11,648
    Franchise royalties                                                                     6,425           6,816           7,860
    Other franchise related fees                                                              287              71             140
    Interest on franchise notes receivable                                                    151             312             947
    Other income                                                                               70             320              58
                                                                                      ------------    ------------    ------------
                                                                                           13,980          17,425          20,653
                                                                                      ------------    ------------    ------------
Costs and expenses:

    Cost of sales                                                                             844           2,282           3,077
    Selling, general and administrative expenses                                           11,333          18,564          20,693
    Provision for store closings                                                                -             920             964
    Charges related to long-lived assets                                                       10             173             930
    Non-cash charge for issuance of warrants as a result of Rescission Transactions         4,544               -               -
    Interest expense                                                                          197             207              77
                                                                                      ------------    ------------    ------------
                                                                                           16,928          22,146          25,741
                                                                                      ------------    ------------    ------------

Loss from continuing operations before provision for income taxes                          (2,948)         (4,721)         (5,088)
Provision for income taxes                                                                      -               -               -
                                                                                      ------------    ------------    ------------
Loss from continuing operations                                                            (2,948)         (4,721)         (5,088)
                                                                                      ------------    ------------    ------------

(Loss) income from discontinued operations                                                    (19)             74           1,312
                                                                                      ------------    ------------    ------------

Net loss                                                                              $    (2,967)    $    (4,647)    $    (3,776)
                                                                                      ============    ============    ============

Per share information - basic and diluted (Note 3):

    Loss from continuing operations                                                   $     (0.05)    $     (0.17)    $     (0.19)
    (Loss) income from discontinued operations                                                  -            0.01            0.05
                                                                                      ------------    ------------    ------------
       Net loss per share                                                             $     (0.05)    $     (0.16)    $     (0.14)
                                                                                      ============    ============    ============

Weighted-average number of common shares outstanding - basic and diluted                   56,507          28,641          26,409
                                                                                      ============    ============    ============
</TABLE>

     The  accompanying   notes  are  an  integral  part  of  these  consolidated
statements.

                                       19
<PAGE>
<TABLE>
<CAPTION>
                     EMERGING VISION, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                        (In Thousands, Except Share Data)

                                                                Senior Convertible
                                                                  Preferred Stock            Common Stock
                                                               Shares        Amount        Shares      Amount
                                                               ------        ------     -----------   --------

<S>                                                            <C>         <C>          <C>           <C>
BALANCE - DECEMBER 31, 2000................................         3      $  287       25,559,231    $   256
Issuance of common shares for consulting services (Note 14)         -           -        1,628,078         16
Acquisition of treasury shares.............................         -           -                -          -
Net loss...................................................         -           -                -          -
                                                               -------     -------      -----------   --------
BALANCE - DECEMBER 31, 2001................................         3         287       27,187,309        272
Issuance of warrrants in connection with financing
   arrangements............................................         -           -                -          -
Exercise of stock warrants.................................         -           -        2,500,000         25
Issuance of common shares upon conversion of Senior
   Covertible Preferred Stock..............................        (2)       (213)         235,648          2
Net loss...................................................         -           -                -          -
                                                               -------     -------      -----------   --------
BALANCE - DECEMBER 31, 2002................................         1          74       29,922,957        299
Exercise of stock options and warrants.....................         -           -          759,130          8
Issuance of commons shares in connection with Rights
   Offering (Note 14)......................................         -           -       50,000,000        500
Issuance of warrants in connection with Rights Offering
   (Note 14)...............................................         -           -                -          -
Issuance of stock options to officers and directors (Note 2)        -           -                -          -
Rescission of common shares and warrants issued in Rights
   Offering (Note 14)......................................         -           -      (13,000,000)      (130)
Issuance of warrants as a result of Rescission Transactions
   (Note 14)...............................................         -           -                -          -
Vesting of warrants issued to Balfour & Goldin (Note 14)...         -           -                -          -
Net loss...................................................         -           -                -          -
                                                               -------     -------      -----------   --------
BALANCE - DECEMBER 31, 2003................................         1      $   74       67,682,087    $   677
                                                               =======     =======      ===========   ========

     The  accompanying   notes  are  an  integral  part  of  these  consolidated
statements.
</TABLE>

<TABLE>
<CAPTION>
                     EMERGING VISION, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - (CONTINUED)
              FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
                        (In Thousands, Except Share Data)

                                                                Treasury Stock,     Additional                   Total
                                                                    at cost          Paid-In   Accumulated    Shareholders'
                                                               Shares      Amount    Capital     Deficit    Equity (Deficit)
                                                               -------      -----     --------   ---------  ----------------
<S>                                                            <C>         <C>       <C>        <C>            <C>
BALANCE - DECEMBER 31, 2000                                    177,001     $(203)     119,453    (115,888)        3,905
Issuance of common shares for consulting services (Note 14)          -         -          473           -           489
Acquisition of treasury shares.............................      5,336        (1)           -           -            (1)
Net loss...................................................          -         -            -      (3,776)       (3,776)
                                                               -------     -----     --------   ---------      ---------
BALANCE - DECEMBER 31, 2001................................    182,337      (204)     119,926    (119,664)          617
Issuance of warrrants in connection with financing
   arrangements............................................          -         -          190           -           190
Exercise of stock warrants.................................          -         -            -           -            25
Issuance of common shares upon conversion of Senior
   Covertible Preferred Stock..............................          -         -          229         (18)            -
Net loss...................................................          -         -            -      (4,647)       (4,647)
                                                               -------     -----     --------   ---------      --------
BALANCE - DECEMBER 31, 2002................................    182,337      (204)     120,345    (124,329)       (3,815)
Exercise of stock options and warrants.....................          -         -           37           -            45
Issuance of commons shares in connection with Rights
   Offering (Note 14)......................................          -         -          838           -         1,338
Issuance of warrants in connection with Rights Offering
   (Note 14)...............................................          -         -          521           -           521
Issuance of stock options to officers and directors (Note 2)         -         -           13           -            13
Rescission of common shares and warrants issued in Rights
   Offering (Note 14)......................................          -         -         (390)          -          (520)
Issuance of warrants as a result of Rescission Transactions
   (Note 14)...............................................          -         -        4,544           -         4,544
Vesting of warrants issued to Balfour & Goldin (Note 14)...          -         -           79           -            79
Net loss...................................................          -         -            -      (2,967)       (2,967)
                                                               -------     -----     --------   ---------      --------
BALANCE - DECEMBER 31, 2003................................    182,337     $(204)    $125,987   $(127,296)     $   (762)
                                                               =======     =====     ========   =========      ========

     The  accompanying   notes  are  an  integral  part  of  these  consolidated
statements.
</TABLE>

                                       20
<PAGE>

                     EMERGING VISION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
<TABLE>
<CAPTION>
                                                                                              For the Year Ended December 31,
                                                                                      -------------- ---------------- --------------
                                                                                           2003            2002            2001
                                                                                      -------------- ---------------- --------------
<S>                                                                                   <C>            <C>              <C>
Cash flows from operating activities:
     Net loss from continuing operations                                              $    (2,948)   $    (4,721)     $    (5,088)
         Adjustments to reconcile net loss from continuing operations
                to net cash used in operating activities:
            Depreciation and amortization                                                     278            489            1,351
            Provision for doubtful accounts                                                   179          1,829              138
            Provision for store closings                                                        -            920              964
            Provision for inventories                                                           -              -              100
            Amortization of excess of fair value of assets acquired over cost                   -              -             (317)
            Non-cash compensation charges related to options and warrants                   4,739             87              165
            Charges related to long-lived assets                                               10            173              930
        Changes in operating assets and liabilities:
            Franchise and other receivables                                                  (234)           328            1,007
            Inventories                                                                        64            290              150
            Prepaid expenses and other current assets                                         (68)          (227)             381
            Other assets                                                                       32             78               15
            Accounts payable and accrued liabilities                                         (556)          (430)          (5,365)
            Franchise deposits and other liabilities                                         (980)           142             (134)
            Accrual for store closings                                                       (965)          (775)               -
                                                                                      ------------   ------------     ------------
Net cash used in operating activities                                                        (449)        (1,817)          (5,703)
                                                                                      ------------   ------------     ------------

Cash flows from investing activities:
     Franchise notes receivable issued                                                        (21)           (71)               -
     Proceeds from franchise and other notes receivable                                       558          1,409            1,961
     Purchases of property and equipment                                                      (68)          (280)            (345)
                                                                                      ------------   ------------     ------------
Net cash provided by investing activities                                                     469          1,058            1,616
                                                                                      ------------   ------------     ------------

Cash flows from financing activities:
     Proceeds from the issuance of common stock upon the
         exercise of stock options and warrants                                                45             25                -
     Proceeds from borrowings                                                                 769          2,141              750
     Payments on borrowings                                                                (1,435)        (1,843)            (205)
     Net proceeds from Rights Offering                                                      1,339              -                -
     Acquisition of treasury shares                                                             -              -               (1)
                                                                                      ------------   ------------     ------------
Net cash provided by financing activities                                                     718            323              544
                                                                                      ------------   ------------     ------------
Net cash provided by (used in) continuing operations                                          738           (436)          (3,543)
                                                                                      ------------   ------------     ------------
Net cash (used in) provided by discontinued operations                                        (19)            47             (619)
                                                                                      ------------   ------------     ------------
Net increase (decrease) in cash and cash equivalents                                          719           (389)          (4,162)
Cash and cash equivalents - beginning of year                                                 664          1,053            5,215
                                                                                      ------------   ------------     ------------
Cash and cash equivalents - end of year                                               $     1,383    $       664      $     1,053
                                                                                      ============   ============     ============

Supplemental disclosures of cash flow information:
   Cash paid during the year for:
        Interest                                                                      $        71    $       118      $        49
                                                                                      ============   ============     ============
        Taxes                                                                         $        72    $        75      $        69
                                                                                      ============   ============     ============

     Non-cash investing and financing activities:
        Signing of promissory notes in exchange from rescission of units (Note 14)    $       520    $         -      $         -
        Franchise store assets reacquired                                                       -              -              501
        Issuance of common shares for consulting services                                       -              -              165
        Issuance of common shares to settle vendor payable related to discontinued              -              -              324
operations

</TABLE>
     The  accompanying   notes  are  an  integral  part  of  these  consolidated
statements.

                                       21
<PAGE>

                     EMERGING VISION, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND BUSINESS:

Business

     Emerging   Vision,   Inc.  (the   "Registrant"   and,   together  with  its
subsidiaries,  hereinafter  the "Company" or  "Emerging")  is one of the largest
chains of retail optical stores and one of the largest  franchise optical chains
in the United States,  based upon management's  beliefs,  domestic sales and the
number  of  locations  of  Company-owned  and  franchised  stores  (collectively
referred to herein after as "Sterling Stores").  The Registrant was incorporated
under  the laws of the State of New York in  January  1992  and,  in July  1992,
purchased  substantially all of the assets of Sterling Optical Corp., a New York
corporation then a debtor-in-possession  under Chapter 11 of the U.S. Bankruptcy
Code.

     On March 28, 2001,  the Board of Directors  decided that the Company should
focus its efforts and resources on growing its retail optical business and, as a
result, approved a plan to discontinue all other operations then being conducted
by the Company.  In  connection  with this  decision,  during 2001,  the Company
completed its plan of disposal of substantially all of the net assets of Insight
Laser  Centers,  Inc.  ("Insight  Laser") - which  operated  three laser  vision
correction  centers in the New York  metropolitan  area,  Insight  Laser Centers
N.Y.I, Inc. (the "Ambulatory Center") - the owner of the assets of an ambulatory
surgery center  located in Garden City,  New York,  and its Internet  Division -
which  was  to  provide  a  web-based  portal  designed  to  take  advantage  of
business-to-business opportunities in the optical industry.

     As of December  31,  2003,  there were 172  Sterling  Stores in  operation,
consisting  of 14  Company-owned  stores  (five of which were  being  managed by
franchisees) and 158 franchised stores.

Basis of Presentation

     The  Consolidated  Financial  Statements  reflect  the  operations  of  the
Company's retail optical store operation as continuing  operations.  The results
of operations  and cash flows of Insight Laser,  the  Ambulatory  Center and the
Internet  Division are reflected as  discontinued  operations in accordance with
Accounting  Principles  Board ("APB") Opinion No. 30,  "Reporting the Results of
Operations - Reporting  the Effects of Disposal of a Segment of a Business,  and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions."


NOTE 2 - Summary of Significant Accounting Policies:

Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amount of assets and  liabilities and the
disclosure  of  contingent  assets  and  liabilities  as of the  dates  of  such
financial  statements,  and the reported amounts of revenues and expenses during
the  reporting  periods.  Actual  results  could  differ  from those  estimates.
Significant  estimates  made by  management  include,  but are not  limited  to,
allowances on  franchise,  notes and other  receivables,  and accruals for store
closings and costs of current and potential litigation.

Principles of Consolidation

     The  Consolidated  Financial  Statements  include the  accounts of Emerging
Vision, Inc. and its operating subsidiaries,  all of which are wholly-owned. All
intercompany balances and transactions have been eliminated in consolidation.

Revenue Recognition

     The Company  charges  franchisees a  nonrefundable  initial  franchise fee.
Initial franchise fees are recognized at the time all material services required
to be provided  by the Company  have been  substantially  performed.  Continuing
franchise  royalty  fees are  based  upon a  percentage  of the  gross  revenues
generated by each  franchised  location  and are recorded as earned,  subject to
meeting all of the requirements of SEC Staff  Accounting  Bulletin No. 103 ("SAB
103"),  "Update  of  Codification  of  Staff  Accounting   Bulletins."  SAB  103
supercedes SAB 101, "Revenue Recognition in Financial  Statements," and replaced
it, as well as other previously issued bulletins, with a codified format for the
updated information.


                                       22
<PAGE>

The Company derives its revenues from the following four principal sources:

     Net sales - Represents sales from eye care products and related services.

     Franchise  royalties - Represents  continuing  franchise  fees based upon a
percentage of the gross revenues generated by each franchised location.

     Other  franchise  related fees - Represents  the net gains from the sale of
Company-owned  store assets to  franchisees;  and certain fees  collected by the
Company under the terms of franchise agreements (including,  but not limited to,
initial franchise fees, transfer fees and renewal fees).

     Interest on franchise  notes - Represents  interest  charged to franchisees
pursuant to promissory notes issued in connection with their  acquisition of the
assets of a Sterling Store, or a qualified  refinancing of their  obligations to
the Company.

     The Company  recognizes  revenues in accordance with SAB 103.  Accordingly,
revenues  are  recorded  when  persuasive  evidence  of an  arrangement  exists,
delivery has occurred or services have been rendered, the Company's price to the
buyer is fixed or determinable, and collectibility is reasonably assured. To the
extent that  collectibility  of royalties  and/or interest on franchise notes is
not reasonably  assured,  the Company  recognizes such revenues when the cash is
received.

     The Company  also  follows  the  provisions  of Emerging  Issues Task Force
("EITF")  Issue  01-09,  "Accounting  for  Consideration  Given by a Vendor to a
Customer  (Including a Reseller of the Vendor's  Products),"  and,  accordingly,
accounts  for  discounts,  coupons  and  promotions  (that  are  offered  to its
customers) as a direct reduction of sales.

Cash and Cash Equivalents

     Cash  represents cash on hand at  Company-owned  stores and cash on deposit
with  financial  institutions.  All highly liquid  investments  with an original
maturity  (from date of purchase) of three months or less are  considered  to be
cash  equivalents.  The  Company's  cash  equivalents  are  invested  in various
investment-grade money market accounts.

Fair Value of Financial Instruments

     In  determining  the fair value of its financial  instruments,  the Company
uses a variety of methods and  assumptions  that are based on market  conditions
and risks  existing as of each balance sheet date. For the majority of financial
instruments,  including receivables,  goodwill,  long-term debt and equity-based
compensation,  standard market  conventions  and techniques,  such as discounted
cash flow analysis,  option pricing  models,  replacement  cost and  termination
cost,  are used to determine  fair value.  All methods of  assessing  fair value
result in a general approximation of value, and such value may never actually be
realized.

Inventories, net

     Inventories,  net,  are  stated at the lower of cost or market  value,  and
consist  primarily of contact  lenses,  ophthalmic  lenses,  eyeglass frames and
sunglasses.

Property and Equipment, net

     Property  and  equipment,  net,  are  recorded  at cost,  less  accumulated
depreciation and amortization. Depreciation is recorded on a straight-line basis
over the estimated useful lives of the respective classes of assets.

Goodwill

     Through December 31, 2001, goodwill was being amortized, on a straight-line
basis, over its estimated useful life of 20 years, and, as of December 31, 2003,
accumulated amortization of the goodwill was approximately $1,297,000.

     In 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  142,  "Goodwill  and  Other
Intangible  Assets." This Statement provided that goodwill and intangible assets
with indefinite lives should no longer be amortized,  but should be reviewed, at
least annually, for impairment. In accordance with the adoption of SFAS No. 142,
beginning  January 1, 2002,  the Company  ceased  amortizing  its  existing  net
goodwill of $1,266,000,  resulting in the exclusion of approximately $268,000 of
amortization  expense  for each of the years ended  December  31, 2003 and 2002.
Management performed a review of its existing goodwill and determined that it is
not impaired as of December 31, 2003.


                                       23
<PAGE>

Impairment of Long-Lived Assets

     The Company  follows the  provisions of SFAS No. 144,  "Accounting  for the
Impairment  or Disposal of  Long-Lived  Assets."  This  Statement  requires that
long-lived  assets  and  certain   identifiable   intangibles  be  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying  amount of the  assets  may not be  recoverable,  but  amends the prior
accounting and reporting standards for segments of a business to be disposed of.
The Company  periodically  evaluates its long-lived  assets (on a store-by-store
basis) based on, among other factors,  the estimated,  undiscounted  future cash
flows  expected to be  generated  from such assets in order to  determine  if an
impairment  exists.  For the years ended  December 31, 2003,  2002 and 2001, the
Company recorded  impairment charges of $0, $0 and $574,000,  respectively,  for
stores it will  continue to operate,  and wrote off $0,  $173,000 and  $356,000,
respectively,  of long-lived  assets related to stores that  management has made
the decision to close (Note 7). All of the aforementioned  amounts are reflected
in the  Consolidated  Statements of Operations  for the years ended December 31,
2003,  2002 and 2001,  respectively,  and a new basis,  if any, for the impaired
assets was established.

Advertising Costs

     The Company expenses  advertising costs as incurred.  Advertising costs for
Company-owned stores aggregated  approximately  $177,000,  $364,000 and $536,000
for the years ended December 31, 2003, 2002 and 2001, respectively.

Comprehensive Income

     The  Company   follows  the   provisions   of  SFAS  No.  130,   "Reporting
Comprehensive   Income,"   which   establishes   rules  for  the   reporting  of
comprehensive income and its components.  For the years ended December 31, 2003,
2002 and 2001, the Company's operations did not give rise to items includible in
comprehensive  loss that were not already included in net loss.  Therefore,  the
Company's  comprehensive  loss  is the  same  as its net  loss  for all  periods
presented.

Income Taxes

     The Company  accounts  for income  taxes in  accordance  with SFAS No. 109,
"Accounting for Income Taxes." Under the asset and liability method specified by
SFAS No.  109,  the  deferred  income tax amounts  included in the  Consolidated
Balance Sheets are  determined  based on the  differences  between the financial
statement  and tax basis of assets and  liabilities,  as measured by the enacted
tax rates,  that will be in effect when these differences  reverse.  Differences
between assets and liabilities  for financial  statement and tax return purposes
are  principally  related to accrued  expenses,  the allowances for  receivable,
equity-based awards and net operating loss carry-forwards.

Guarantee Disclosures

     The Company  follows the provision of FASB  Interpretation  ("FIN") No. 45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees of  Indebtedness  of Others," which  clarifies the required
disclosures  to be made by a guarantor  in their  interim  and annual  financial
statements  about its obligations  under certain  guarantees that it has issued.
FIN No. 45 also  requires a guarantor  to  recognize,  at the  inception  of the
guarantee,  a liability  for the fair value of the  obligation  undertaken.  The
provisions  of  this  Interpretation  did  not  have a  material  impact  on the
Company's  financial  position  or  results  of  operations,  as  the  Company's
guarantees were to subsidiary companies.

Stock-Based Compensation

     The Company  accounts for  stock-based  compensation in accordance with the
provision of SFAS No. 148, "Accounting for Stock-Based Compensation - Transition
and Disclosure - an amendment of SFAS No. 123." This  Statement  amends SFAS No.
123,  "Accounting for Stock-Based  Compensation," to provide alternative methods
of  transition  for a  voluntary  change  to the  fair  value  based  method  of
accounting for stock-based employee  compensation.  In addition,  this Statement
amends  the  disclosure  requirements  of  SFAS  No.  123 to  require  prominent
disclosures in both annual and interim financial  statements about the method of
accounting for stock-based  employee  compensation  and the effect of the method
used on reported results. The Company has adopted the provisions of SFAS No. 148
prospectively  from January 1, 2003.  Prior to 2003,  the Company  accounted for
stock-based   employee   compensation  under  the  recognition  and  measurement
provisions of Accounting  Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations.

     Stock-based  compensation cost of approximately $13,000 is reflected in the
accompanying  Statement of Operations for the year ended December 31, 2003, as a
result of the grant,  on May 30, 2003,  of an aggregate of 700,000 stock options


                                       24
<PAGE>

to the Company's directors and Co-Chief Operating Officers.  The following table
illustrates  the  effect on net loss and net loss per share as if the fair value
method had been  applied to all  outstanding  and  unvested  awards in each year
presented:
<TABLE>
<CAPTION>
                                                                          2003                    2002                    2001
                                                                          ----                    ----                    ----
<S>                                                                      <C>                    <C>                     <C>
Net loss, as reported                                                    $  (2,967)             $  (4,647)              $  (3,776)
Add: Stock-based compensation expense included in reported net
     loss                                                                       13                      -                       -
Deduct: Stock-based compensation expense determined under the
     fair value method                                                        (917)                (3,653)                 (5,140)
                                                                  -----------------      -----------------       -----------------
Pro forma                                                                $  (3,871)             $  (8,300)              $  (8,916)
                                                                         ==========             ==========              ==========

Net loss per share - basic and diluted, as reported:                     $   (0.05)             $   (0.17)              $   (0.14)
Pro forma                                                                $   (0.07)             $   (0.29)              $   (0.34)
</TABLE>

     The Company  recognized no expense related to its issuance of stock options
and warrants to certain non-employee consultants to the Company in 2003, 2002 or
2001.

Concentration of Credit Risk

     The Company operates retail optical stores in North America,  predominantly
in the United States,  and its receivables are primarily from  franchisees  that
also operate retail optical stores in the United States.

Segment Information

     SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information,"   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 years ended December 31,
2003,  2002 and 2001, the Company's  continuing  operations were classified into
one  principal  industry  segment - retail  optical (Note 1).  Accordingly,  the
disclosures required by SFAS No. 131 have not been provided.

Reclassifications

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

New Accounting Pronouncements

     Effective January 1, 2003, the Company adopted SFAS No. 145, "Rescission of
FASB  Statements  No. 4, 44, and 64,  Amendment  of FASB  Statement  No. 13, and
Technical   Corrections."   SFAS  No.   145   requires   gains  and   losses  on
extinguishments  of debt to be  classified  as income  or loss  from  continuing
operations,  rather  than  as an  extraordinary  item  as  previously  required.
Extraordinary  treatment is required for certain  extinguishments as provided in
APB No.  30.  SFAS No.  145 also  amends  SFAS No. 13 to  require  that  certain
modifications  to capital leases be treated as a  sale-leaseback,  and to modify
the  accounting  for  subleases  when the  original  lessee  remains a secondary
obligor.  The Company has adopted this Statement and has determined that it does
not have,  nor is it  expected  to have,  a  material  impact  on its  financial
position or results of operations.

     Effective  January 1, 2003, the Company  adopted SFAS No. 146,  "Accounting
for  Costs  Associated  with  Exit  or  Disposal  Activities,"  which  addresses
financial  accounting and reporting for costs  associated  with exit or disposal
activities,  and  nullifies  EITF Issue No.  94-3,  "Liability  Recognition  for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including  Certain Costs Incurred in a  Restructuring)."  SFAS No. 146 requires
that a liability  for a cost  associated  with an exit or  disposal  activity be
recognized  when  the  liability  is  incurred.  This  Statement  did not have a
material  impact the  Company's  financial  position or results of operations in
2003 as there were no additional  stores that  management  made the decisions to
close/exit.

     In May  2003,  the  FASB  issued  SFAS No.  150,  "Accounting  for  Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
150 establishes  standards for how an issuer  classifies and measures  financial
instruments with  characteristics  of both  liabilities and equity.  It requires
that an issuer classify a financial  instrument within its scope as a liability.
SFAS 150 was effective for financial  instruments entered into or modified after
May 31, 2003,  and  otherwise is effective at the beginning of the first interim
period  beginning  after June 15, 2003.  The adoption of this  Statement did not
have, nor is it expected to have, a material  impact on the Company's  financial
position or results of operations.


                                       25
<PAGE>

     In December  2003, the FASB issued FIN No. 46,  "Consolidation  of Variable
Interest  Entities."  Application  of  this  Interpretation  is  required  in  a
company's  financial  statements  for  interests in variable  interest  entities
("VIEs")  that  are  considered  special-purpose  entities  for the  year  ended
December  31,  2003.  The  Company has certain  sublease  arrangements  with its
franchisees;  however,  the  Company  does not have an  equity  interest  in the
franchisees' corporations.  Additionally, the franchisees have full control over
the  decision-making in their franchise.  The Company  continually  monitors the
creditworthiness  of its  franchisees  in order to  evaluate  their  ability  to
continue profitable operations. As a result, the Company has determined that the
provisions  of  this  Interpretation  did  not  have a  material  impact  on its
financial position or results of operations.

     In December 2003, the FASB issued FASB Staff  Position  106-1,  "Accounting
and  Disclosure   Requirements  Related  to  the  Medicare   Prescription  Drug,
Improvement and Modernization Act of 2003," which introduces a prescription drug
benefit  under  Medicare,  as well as a federal  subsidy to  sponsors of retiree
health care benefit  plans that  provide a benefit that is at least  actuarially
equivalent  to  Medicare.  As the Company does not have a  post-retirement  drug
plan,  the Company has  determined  the Staff  Position does not have a material
impact on its financial position or results of operations.

     In December  2003,  the FASB revised FASB  Statement  No. 132,  "Employers'
Disclosures  about Pensions and Other  Postretirement  Benefits." This Statement
requires additional disclosures about the assets,  obligations,  cash flows, and
net periodic  benefit cost of defined  benefit  pension  plans and other defined
benefit  postretirement  plans. The Statement  requires that this information be
provided  separately  for  pension  plans and for other  postretirement  benefit
plans.  The Company has adopted this Statement and has  determined  that it does
not have a material impact on its financial position or results of operations.


NOTE 3 - PER SHARE INFORMATION:

     In accordance with SFAS No. 128,  "Earnings Per Share",  basic net loss per
common share ("Basic EPS") is computed by dividing the net loss  attributable to
common shareholders by the weighted-average number of common shares outstanding.
Diluted net loss per common  share  ("Diluted  EPS") is computed by dividing the
net loss attributable to common shareholders by the  weighted-average  number of
common shares and dilutive common share  equivalents and convertible  securities
then  outstanding.  SFAS No. 128 requires the presentation of both Basic EPS and
Diluted EPS on the face of the Company's Consolidated  Statements of Operations.
There were  72,149,264,  9,223,227  and  10,350,892  stock  options and warrants
excluded from the  computation  of Diluted EPS for the years ended  December 31,
2003, 2002 and 2001, respectively, as their effect on the computation of Diluted
EPS would have been  anti-dilutive.  Additionally,  for the years ended December
31, 2003, 2002 and 2001, respectively,  there were 0.74, 0.74 and 2.51 shares of
our Senior  Convertible  Preferred Stock  outstanding,  convertible into 98,519,
98,519 and  334,167  shares of the  Company's  Common  Stock.  Similarly,  these
preferred  shares were not "assumed  converted" as the effect on the computation
of Diluted EPS would also have been anti-dilutive.

     The  following  table sets forth the  computation  of basic and diluted per
share information:
<TABLE>
<CAPTION>
                                                                                                     (In thousands)
                                                                                     -----------------------------------------------
Numerator:                                                                              2003              2002             2001
----------                                                                              ----              ----             ----
<S>                                                                                  <C>              <C>              <C>
     Loss from continuing operations                                                 $    (2,948)     $    (4,721)     $    (5,088)
     Induced conversion of Senior Convertible Preferred Stock                                  -              (18)               -
                                                                                     ------------     ------------     ------------
       Numerator for basic and diluted loss per share -
                  loss attributable to common shareholders                                (2,948)          (4,739)          (5,088)
                                                                                     ------------     ------------     ------------


Basic and Diluted:

     Loss attributable to common shareholders                                             (2,948)          (4,739)          (5,088)
     (Loss) income from discontinued operations                                              (19)              74            1,312
                                                                                     ------------     ------------     ------------
          Net loss attributable to common shareholders                               $    (2,967)     $    (4,665)     $    (3,776)
                                                                                     ============     ============     ============

Denominator:

     Denominator for basic and diluted per share information -
          weighted-average shares outstanding                                             56,507           28,641           26,409
                                                                                     ============     ============     ============
</TABLE>
                                       26
<PAGE>
<TABLE>
<CAPTION>

Basic and Diluted Per Share Information:
<S>                                                                                  <C>              <C>              <C>
     Loss attributable to common shareholders                                        $     (0.05)     $     (0.17)     $     (0.19)
     (Loss) income from discontinued operations                                                -             0.01             0.05
                                                                                     ------------     ------------     ------------
          Net loss attributable to common shareholders                               $     (0.05)     $     (0.16)     $     (0.14)
                                                                                     ============     ============     ============
</TABLE>

NOTE 4 - Franchise Notes Receivable:

     Franchise  notes held by the Company  consist  primarily of purchase  money
notes related to  Company-financed  conveyances of Company-owned store assets to
franchisees,  and certain franchise notes receivable  obtained by the Company in
connection with acquisitions in prior years. Substantially all notes are secured
by the underlying  assets of the related  franchised  store, as well as, in most
cases, the personal  guarantee of the principal owners of the franchisee.  As of
December 31, 2003, these notes generally provide for interest at 12%.

     Scheduled  maturities of notes  receivable as of December 31, 2003,  are as
follows (in thousands):


                            2004                                      $     690
                            2005                                            226
                            2006                                            159
                            2007                                            100
                            2008                                            246
                            Thereafter                                      280
                                                                       ---------
                                                                          1,701
                            Less: allowance for doubtful accounts          (782)
                                                                       ---------
                                                                       $    919
                                                                       =========

NOTE 5 - VALUATION AND QUALIFYING ACCOUNTS:

     Franchise  receivables,  franchise  notes  receivable,  and  other  Company
receivables,  are shown on the Consolidated Balance Sheets net of allowances for
doubtful  accounts.  The following is a breakdown,  by major  component,  of the
change in those allowances, along with the accruals for store closings and costs
of disposal of discontinued operations:
<TABLE>
<CAPTION>
                                                                                                         (In thousands)
                                                                                                       As of December 31,
                                                                                     --------------- -------------- ---------------
Franchise Receivables:                                                                   2003             2002            2001
                                                                                         ----             ----            ----
<S>                                                                                  <C>              <C>              <C>
     Balance, beginning of year                                                      $    1,063       $    3,095       $    3,521
          Charged to expense                                                                 84              484              138
          Reductions, including write-offs                                                 (303)          (4,293)            (564)
          Additions                                                                           -            1,777                -
                                                                                     -----------      -----------      -----------
     Balance, end of year                                                            $      844       $    1,063       $    3,095
                                                                                     ===========      ===========      ===========

Franchise Notes Receivables:

     Balance, beginning of year                                                      $    1,928       $    3,326       $    3,019
          Charged to expense                                                                 20            1,195                -
          Reductions, including write-offs                                               (1,173)          (2,788)               -
          Additions                                                                           7              195              307
                                                                                     -----------      -----------      -----------
     Balance, end of year                                                            $      782       $    1,928       $    3,326
                                                                                     ===========      ===========      ===========
</TABLE>
                                       27
<PAGE>
<TABLE>
<CAPTION>
Other Company Receivables:
<S>                                                                                  <C>              <C>              <C>
     Balance, beginning of year                                                      $      101       $      171       $      323
          Charged to expense                                                                 75              150                -
          Reductions, including write-offs                                                 (117)            (249)            (152)
          Additions                                                                          59               29                -
                                                                                     -----------      -----------      -----------
     Balance, end of year                                                            $      118       $      101       $      171
                                                                                     ===========      ===========      ===========

Accrual for Store Closings:

     Balance, beginning of year                                                      $    1,109       $      964       $        -
          Charged to expense                                                                  -              920              964
          Reductions                                                                       (965)            (775)               -
                                                                                     -----------      -----------      -----------
     Balance, end of year                                                            $      144       $    1,109       $      964
                                                                                     ===========      ===========      ===========

Accrual for Costs of Disposal of Discontinued Operations:

     Balance, beginning of year                                                      $      159       $      141       $    4,719
          Charged to expense                                                                166              268              425
          Reductions                                                                       (325)            (250)          (5,003)
                                                                                     -----------      -----------      -----------
     Balance, end of year                                                            $        -       $      159       $      141
                                                                                     ===========      ===========      ===========
</TABLE>

NOTE 6 - PROPERTY AND EQUIPMENT, NET:
<TABLE>
<CAPTION>
Property and equipment, net, consists of the following:                                                                   Estimated
                                                                                           (In thousands)                  Useful
                                                                                         As of December 31,                 Lives


                                                                                       2003               2002
                                                                                       ----               ----
<S>                                                                               <C>                <C>                  <C>
Furniture and fixtures                                                            $      256         $      327           5 years
Machinery and equipment                                                                1,379              1,358           3-5 years
Leasehold improvements                                                                   981                998           10 years*
                                                                                  -----------        -----------
                                                                                       2,616              2,683
      Less: accumulated depreciation                                                  (2,135)            (1,990)
                                                                                  -----------        -----------
                   Property and equipment, net                                    $      481         $      693
                                                                                  ===========        ===========
</TABLE>
     * Based  upon the  lesser of the  assets'  useful  lives or the term of the
lease of the related property.

     The net book value of assets held under capital leases included in property
and equipment aggregated $21,000 and $68,000 (net of accumulated depreciation of
$76,000  and  $29,000)  as  of  December   31,  2003  and  2002,   respectively.
Depreciation  expense for the years ended  December 31, 2003,  2002 and 2001 was
$268,000, $463,000 and $885,000, respectively.


NOTE 7 - ACCRUAL FOR STORE CLOSINGS:

     Effective  January 1, 2003, the Company  adopted the provisions of SFAS No.
146,  "Accounting for Costs Associated with Exit or Disposal  Activities," which
supercedes  EITF  Issue  94-3,  "Liability   Recognition  for  Certain  Employee
Termination  Benefits  and  Other  Costs  to Exit an  Activity."  In  accordance
therewith,  the Company records a liability for the cost associated with an exit
or disposal activity when the liability is incurred. Prior to January 1, 2003, a
provision  was  recorded  at the  time  the  determination  was  made to close a
particular  store and was based on the  expected  net  proceeds,  if any,  to be
generated  from the  disposition  of the  store's  assets,  as  compared  to the
carrying  value  (after  consideration  of  impairment,  if any) of such store's
assets and the estimated  costs  (including  lease  termination  costs and other
expenses)  that were  anticipated  to be incurred in the closing of the store in
question. For the years ended December 31, 2002 and 2001, the Company recorded a
provision for 15 and 11 store  closings,  respectively,  totaling  approximately
$920,000  (comprised  of $792,000 in lease  termination  costs and  $128,000 for
other  associated  expenses)  and  $964,000  (comprised  of  $766,000  in  lease
termination costs and $198,000 for other associated expenses), respectively, and
such provision is separately stated in the accompanying  Consolidated Statements
of Operations  for the years ended 2002 and 2001.  As of December 31, 2003,  one


                                       28
<PAGE>

store remained to be closed and $144,000  remained  accrued as accrual for store
closings on the accompanying  Consolidated Balance Sheet. The Company closed the
remaining  store  during  the first  quarter  of 2004.  No  provision  for store
closings was provided for during the year ended December 31, 2003.


NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

     Accounts  payable  and accrued  liabilities  consist of the  following  (in
thousands):
<TABLE>
<CAPTION>
                                                                                 As of December 31,
                                                              --------------------------- ---------------------------
                                                                         2003                        2002
                                                                         ----                        ----
<S>                                                                    <C>                         <C>
Accounts payable                                                       $  2,460                    $  2,889
Accrued payroll and fringe benefits                                         569                         540
Accrued professional fees                                                   260                         220
Accrued advertising                                                       1,346                         987
Accrued rent under sublease                                                 262                         250
Other accrued expenses                                                      492                       1,267
                                                                       ---------                   ---------
                                                                       $  5,389                    $  6,153
                                                                       =========                   =========
</TABLE>

NOTE 9 - INCOME TAXES:

     The Company's  effective tax rate differs from the statutory Federal income
tax rate of 34%, primarily due to the impact of recording a valuation  allowance
to offset the potential  future tax benefit  resulting  from net operating  loss
carry-forwards for all years presented.

     As  of  December   31,  2003  and  2002,   net  deferred  tax  assets  were
approximately  $21,600,000 and $20,600,000,  respectively,  resulting  primarily
from the future tax benefit of net operating loss carry-forwards.  In accordance
with SFAS No. 109, the Company has provided a full valuation  allowance  against
its net  deferred  tax  assets as of  December  31,  2003 and  2002,  due to the
uncertainty as to their future  realizability.  The valuation  allowance against
the net deferred tax assets  increased by  approximately  $1,000,000  during the
year ended December 31, 2003 and decreased by approximately  $700,000 during the
year ended December 31, 2001.

     As of December 31, 2003, the Company had net operating loss  carry-forwards
totaling approximately $47,000,000 available to offset future taxable income for
federal  income tax purposes.  The net operating loss  carry-forwards  expire in
varying  amounts  through 2022 and may be limited in accordance with Section 382
of the Internal  Revenue Code of 1986, as amended,  based on certain  changes in
ownership that have occurred, or could in the future occur.


NOTE 10 - LONG-TERM DEBT (INCLUDING RELATED PARTY BORROWINGS):

     As of December 31, 2003,  principal payments due on the Company's long-term
debt, capital leases and related party borrowings are as follows (in thousands):
<TABLE>
<CAPTION>
<C>                       <C>                  <C>                 <C>                     <C>
                                                Capital            Related Party
                                                Leases               Borrowings            Other Debt
                          Year                    (1)                 (2)&(3)                (3)&(4)
                          ----                    ---                 -------                -------

                          2004                 $       12             $       35            $      195
                          2005                          -                     39                    23
                          2006                          -                     43                     8
                          2007                          -                    455                   112
                          2008                          -                      9                     -
                                               ----------             ----------            ----------
                                               $       12             $      581            $      338
                                               ==========             ==========            ==========
</TABLE>

     1) Total  capital lease  obligations  as of December 31, 2003 and 2002 were
$12,000 and $57,000,  respectively.  Capital leases are recorded at the lower of
the  present  value of the  minimum  lease  payments  or the  fair  value of the
underlying  assets,  and are  payable in  monthly  installments,  together  with
interest at various  rates  ranging from 6.47% to 6.89%.  These leases mature at
various dates through July 2004.


                                       29
<PAGE>

     2) On December 31, 2002,  the Company  refinanced  certain past due amounts
owed to Cohen's Fashion Optical ("CFO"), a retail optical chain owned by certain
of the  principal  shareholders  and  directors  of the Company  (Note 13). As a
result, the Company signed a 5-year,  $200,000 promissory note, in favor of CFO,
bearing interest at a rate of 10% per annum.

     3)  Effective  April  14,  2003,  in  connection  with  certain  Rescission
Transactions  consummated  by the  Company on December  31, 2003 (Note 14),  the
Company signed numerous promissory notes with certain of its shareholders, three
of whom are also directors of the Company.  The notes, which aggregate $520,000,
bear interest at a rate of 6% per annum,  and all sums  (principal and interest)
under the notes are due and payable in April 2007.

     4) The Company is obligated under various other notes payable, all of which
are due, and will be fully paid, in 2004.


NOTE 11 - COMMITMENTS AND CONTINGENCIES:

Operating Lease Commitments

     The Company  leases  locations for both its  Company-owned  and  franchised
stores, as well as its executive and administrative  offices. As of December 31,
2003, minimum future rental payments for Company-owned  stores and the Company's
executive  and  administrative  offices,  as well as for  stores  leased  by the
Company and  subleased  to  franchisees,  in the  aggregate,  are as follows (in
thousands):
<TABLE>
<CAPTION>
                                               ------------------- ----------------- ----------------------
                                                  Total Lease          Sublease           Net Company
                                                  Obligations          Rentals            Obligations
                                               ------------------- ----------------- ----------------------
                                               ------------------- ----------------- ----------------------

<S>                             <C>              <C>                 <C>                 <C>
                                2004             $     5,356         $     4,921         $       435
                                2005                   3,461               3,145                 316
                                2006                   2,477               2,228                 249
                                2007                   1,938               1,738                 200
                                2008                   1,453               1,303                 150
                                Thereafter             3,202               2,887                 315
                                                 -----------         -----------         -----------
                                                 $    17,887         $    16,222         $     1,665
                                                 ===========         ===========         ===========
</TABLE>

     The Company holds the master lease on certain of its  franchised  locations
and, as part of the  franchise  agreement,  sublets the subject  premises to the
franchisee. In addition to the fixed rent payable under such master leases, most
master leases require  payment of a pro rata portion of common area  maintenance
expenses and real estate taxes,  as well as percentage rent based upon the sales
volume of the store in  question.  As  required by SFAS No. 13  "Accounting  for
Leases," the Company  recognizes its rent expense on a straight-line  basis over
the  life  of the  related  lease.  Rent  expense  was  approximately  $812,000,
$1,740,000 and $2,048,000;  net of sublease rentals of approximately $6,697,000,
$7,676,000 and $8,443,000, for the years ended December 31, 2003, 2002 and 2001,
respectively.

Employment Agreement

     The  Company has an  employment  agreement  with one of its key  employees,
which extends  through  February  2005. The  employment  agreement  provides for
certain base  compensation  and other  miscellaneous  benefits.  The  employment
agreement  also  provides  for an  incentive  bonus  based  upon  the  Company's
achievement  of certain  EBITDA  targets,  as defined.  In connection  with this
employment agreement, the Company granted an aggregate of 150,000 employee stock
options at an exercise price of $0.075 (which was equal to the fair market value
of the  Company's  Common  Stock on the date of  grant),  which  options  vested
immediately.  The  employee  exercised  all of such  options in  February  2003.
Additionally, the 50,000 options previously granted to the employee (on July 16,
2001), in connection with his previous employment agreement,  became immediately
vested.  These  options,  which  have an  exercise  price of $0.26 and are still
outstanding, expire 10 years from the date of grant. The aggregate future annual
base  compensation  relating to this  employment  agreement for the years ending
December 31, 2004 and 2005 is approximately $182,000 and $21,000, respectively.

Litigation

     In 1999,  Apryl  Robinson  commenced an action in Kentucky  against,  among
others,  the  Company,  seeking an  unspecified  amount of damages and  alleging
numerous claims, including fraud and misrepresentation.  The claims that are the
subject of this  action  were  subsequently  tried in an action in New York that
resulted in a judgment in favor of the Company, and against Ms. Robinson and Dr.
Larry Joel, a co-defendant  in such action.  Subsequently,  Ms. Robinson and Dr.


                                       30
<PAGE>

Joel  filed for  bankruptcy  in  Kentucky,  and  received a  discharge  from the
trustee.  Presently,  there is a motion pending in the U.S.  Bankruptcy Court to
vacate Dr.  Joel's  discharge  based  upon,  among  other  things,  fraud on the
Bankruptcy  Court.  A trial on this  motion is  anticipated  to  commence in the
spring of 2004.

     In 1999, Berenter Greenhouse and Webster, the advertising agency previously
utilized by the Company,  commenced an action,  against the Company,  in the New
York State Supreme  Court,  New York County,  for amounts  alleged to be due for
advertising and related fees. The amounts claimed by the plaintiff are in excess
of $200,000.  In response to this action,  the Company  filed  counterclaims  of
approximately $500,000,  based upon estimated overpayments allegedly made by the
Company pursuant to the agreement  previously  entered into between the parties.
As of the date hereof, these proceedings were still in the discovery stage.

     In April 2000, the Company  commenced an action in the Supreme Court of the
State of New Jersey against  Preit-Rubin,  Inc. and Cumberland Mall  Associates,
the landlord of the former  Sterling  Optical Store located in Cumberland  Mall,
Vineland,  New Jersey,  seeking damages of approximately $200,000 as a result of
the defendants  alleged wrongful eviction of the Company from this location.  In
response  thereto,  the  defendants  asserted   counterclaims  of  approximately
$100,000  plus legal fees based upon the Company's  alleged  breach of the lease
pursuant to which it occupied  such store.  Thereafter,  the  defendant  filed a
motion for summary judgment seeking a dismissal of the Company's  claims,  which
motion was decided by the Court,  in a favor of the defendant.  In May 2003, the
Company  and  Preit-Rubin  settled the action,  the terms of which  provide,  in
material part,  that the Company pay  Preit-Rubin  the aggregate sum of $187,500
and, upon the parties' full  performance of their respective  obligations  under
such settlement,  the action will be dismissed with prejudice. The final payment
($15,000) under the terms of the settlement will be made in April 2004.

     In July 2001,  the Company  commenced  an  Arbitration  Proceeding,  in the
Ontario  Superior  Court  of  Justice,  against  Eye-Site,  Inc.  and  Eye  Site
(Ontario),  Ltd.,  as the  makers  of two  promissory  notes  (in the  aggregate
original  principal  amount of  $600,000)  made by one or more of the  makers in
favor of the Company,  as well as against  Mohammed Ali, as the guarantor of the
obligations of each maker under each note. The notes were issued, by the makers,
in connection with the makers'  acquisition of a Master Franchise  Agreement for
the Province of Ontario, Canada, as well as their purchase of the assets of, and
a Sterling  Optical Center  Franchise for, four of the Company's  retail optical
stores  then  located  in  Ontario,   Canada.   In  response,   the   defendants
counterclaimed for damages, in the amount of $1,500,000, based upon, among other
items,  alleged  misrepresentations  made by  representatives  of the Company in
connection  with  these  transactions.  The  Company  believes  that  it  has  a
meritorious  defense  to  each  counterclaim.  As  of  the  date  hereof,  these
proceedings were in the discovery stage.

     In February 2002, Kaye Scholer,  LLP, the law firm  previously  retained by
the Company as its outside  counsel,  commenced  an action in the New York State
Supreme Court seeking  unpaid legal fees of  approximately  $122,000.  As of the
date hereof,  the Company has answered the complaint in such action. The Company
believes that it has a meritorious defense to such claim.

     In May 2002, a class action was commenced in the California Superior Court,
Los Angeles  County,  against the Company and  VisionCare  of  California,  Inc.
("VCC"),  a wholly owned  subsidiary of the Company,  by Consumer  Cause,  Inc.,
seeking a preliminary  and permanent  injunction  enjoining the defendants  from
their  continued  alleged  violation of the California  Business and Professions
Code (the "California Code"), and restitution based upon the defendants' alleged
illegal  charging  of  dilation  fees  during the four year  period  immediately
preceding  the  date of the  plaintiff's  commencement  of such  action.  In its
complaint, the plaintiff alleged that VCC's employment of licensed optometrists,
as well as its  operation  (under the name  Sterling  VisionCare)  of optometric
offices in locations which are usually situated adjacent to the Company's retail
optical stores located in the State of California,  violated certain  provisions
of the California Code and was seeking to permanently enjoin VCC from continuing
to operate in such manner.  In November 2002,  the  plaintiffs  filed an amended
complaint removing VCC as a defendant in this action. In January 2003, on motion
of the Company,  the Court dismissed this action,  with  prejudice,  and without
liability to the Company.  In April 2003, the plaintiff filed a Notice of Appeal
of the decision of the lower court  dismissing this action.  In August 2003, the
Company filed its reply brief, as  supplemental  on two occasions,  opposing the
plaintiff's  appeal.  As of the date  hereof,  a decision  with  respect to such
appeal is pending.

     In October 2002, an action was commenced against the Company and its wholly
owned subsidiary, Sterling Vision of Eastland, Inc. (the "Tenant"), in the North
Carolina General Court of Justice, in which Charlotte Eastland Mall, LLC, as the
Landlord of the Tenant's  former  Sterling  Optical Center located in Charlotte,
North Carolina, is seeking,  among other things, damages against the Company, in
the approximate  amount of $81,000,  under its Limited  Guaranty of the Tenant's
obligations under the Lease for such Center.  The Company believes that it has a
meritorious  defense to such action.  As of the date hereof,  these  proceedings
were in the discovery stage.

     In November 2002, ADD of North Dakota, ADD of Jamestown,  Inc., each former
franchisees  of the Company,  and Aron  Dinesen,  their  principal  shareholder,
commenced an action against the Company,  in the United States  District  Court,
District of North Dakota,  Southeastern Division,  alleging, among other things,
that  the  Company  breached  certain  of its  obligations  under  each of their
respective  Franchise  Agreements.  In response thereto,  the defendant asserted


                                       31
<PAGE>

counterclaims  based upon the  defendants  alleged breach of each such franchise
agreement and of certain of the other  agreements  executed by the defendants in
connection therewith.  The Company believes that it has a meritorious defense to
plaintiffs' claims in such action. As of the date hereof, these proceedings were
in the discovery stage.

     In December 2002, Pyramid Champlain Company ("Pyramid") commenced an action
against the  Company,  in the Supreme  Court of the State of New York,  Onondaga
County,  in which  Pyramid,  as the landlord of the  Company's  former  Sterling
Optical Center located in Plattsburg, New York, was seeking, among other things,
damages against the Company,  in the approximate  amount of $230,000,  under the
lease for such  Center.  While the Company  believed  that it had a  meritorious
defense to such action,  in November 2003,  the Company  settled the action with
Pyramid,  the terms of which  provided  that the Company  pay,  to Pyramid,  the
aggregate  sum of $125,000,  in  consideration  for  Pyramid's  dismissal of the
action, with prejudice, and the exchange of mutual general releases.

     On or about January 15, 2003, Wells Fargo Financial Leasing, Inc. commenced
an action  against the Company,  in the United States  District  Court,  Eastern
District of New York, as the lessor of certain office equipment allegedly leased
to the Company, and was seeking therein, among other things, damages against the
Company,  in the  approximate  amount of $100,000,  in respect of claims arising
under such lease.  In August  2003,  the  Company  and Wells  Fargo  settled the
action, the terms of which provide, in material part, that the Company pay Wells
Fargo the aggregate sum of $75,000 and,  upon the parties' full  performance  of
their respective obligations under such settlement, the action will be dismissed
with  prejudice.  The final payment  ($8,000)  under the terms of the settlement
will be made in April 2004.

     On or about May 12, 2003,  General  Electric Capital  Corporation  ("GECC")
commenced an action against Sterling Vision of California, Inc. and the Company,
in the Supreme Court of the State of New York,  County of Nassau,  as the lessor
of certain office  equipment  allegedly leased to Sterling Vision of California,
Inc.,  and  is  seeking  therein,   among  other  things,  damages  against  the
defendants,  in the approximate amount of $266,000, in respect of claims arising
under  such  lease.  On June 3,  2003,  the  plaintiff's  motion for an order of
seizure and preliminary injunction, which was not opposed by the defendants, was
granted by the Court.  While the defendants believe that they have a meritorious
defense to such  action,  a  settlement,  in  principal,  of the action has been
reached with GECC,  the terms of which provide that the Company will pay to GECC
the  aggregate  sum of $85,000,  in  consideration  for GECC's  dismissal of the
action, with prejudice,  and the exchange of mutual general releases.  There can
be no assurance, however, that this settlement will be consummated.

     On May 20, 2003,  Irondequoit  Mall,  LLC  commenced an action  against the
Company and Sterling Vision of Irondequoit,  Inc. alleging,  among other things,
that the Company had  breached its  obligations  under its guaranty of the lease
for the former  Sterling  Optical  store  located in  Rochester,  New York.  The
defendants  believe that they have a meritorious  defense to such action.  As of
the date hereof, these proceedings were in the discovery stage.

     On May 21, 2003, SMB Operating  Company,  LLC ("SMB"),  the landlord of the
Company's former Sterling Optical store located in Edina,  Minnesota,  commenced
an action against the Company and its subsidiary,  Sterling Vision of Southdale,
Inc.,  alleging that the Company had breached its obligations under its guaranty
of  the  lease  for  such  store.  While  the  Company  believed  that  it had a
meritorious  defense to such action,  in December 2003, the Company  settled the
action with SMB, the terms of which  provided  that the Company pay, to SMB, the
aggregate sum of $70,000,  in  consideration  for SMB's dismissal of the action,
with prejudice, and the exchange of mutual general releases.

     On or  about  July  1,  2003,  Eighth  Street  Tower  Corporation  ("ESTC")
commenced an action against the Company,  in the District Court of the County of
Hennepin,  State of  Minnesota,  in which ESTC, as the Landlord of the Company's
former Sterling  Optical store located in Minneapolis,  Minnesota,  was seeking,
among other things,  damages against the Company,  in the approximate  amount of
$55,000,  under the lease for such store. While the Company believed that it had
a meritorious  defense to such action, in December 2003, the Company settled the
action with ESTC,  the terms of which provide that the Company pay, to ESTC, the
aggregate sum of $45,000,  in consideration  for ESTC's dismissal of the action,
with prejudice,  and the exchange of mutual general releases.  The final payment
under this settlement was made in March 2004.

     In  October  2003,  Developers   Diversified  Realty  Corporation  ("DDRC")
commenced an action against the Company,  in the District Court of the County of
Wapello,  State of Iowa, in which DDRC, as the Landlord of the Company's  former
Sterling Optical store located in Ottumwa, Iowa, is seeking, among other things,
damages against the Company,  in the approximate  amount of $200,000,  under the
lease for such store. The Company believes that it has a meritorious  defense to
such action.  As of the date hereof,  these  proceedings  were in the  discovery
stage.

     In October 2003, Luzerne Optical  Laboratories,  Ltd. ("Luzerne") commenced
an action  against  the  Company  in the Court of Common  Pleas of the County of
Luzerne,  State of  Pennsylvania,  which  action was  thereafter  removed to the
Federal Court, Middle District of Pennsylvania.  In this action, plaintiff seeks
to recover,  from the  Company,  the  approximate  sum of  $240,000  for certain
laboratory services allegedly provided to the Company. The Company believes that
is has a  meritorious  defense  to such  action.  As of the date  hereof,  these
proceedings were in the discovery stage.


                                       32
<PAGE>

     In December 2003,  Westminster Mall Company commenced an action against the
Company and Sterling  Vision of  Westminster,  Inc., the Company's  wholly-owned
subsidiary, in the District Court of the County of Jefferson, State of Colorado,
in which the plaintiff, as the Landlord of the Company's former Sterling Optical
store located in Westminster,  Colorado, is seeking, among other things, damages
against such subsidiary  under the lease for such store, and against the Company
under its guaranty of such lease,  in the  approximate  amount of $229,000.  The
Company  believes  that it has a meritorious  defense to such action.  As of the
date hereof, these proceedings were in the discovery stage.

     In  addition to the  foregoing  in the  ordinary  course of  business,  the
Company is a defendant in certain  lawsuits  alleging  various claims  incurred,
certain of which claims are covered by various  insurance  policies,  subject to
certain  deductible  amounts  and  maximum  policy  limits.  In the  opinion  of
management,  the  resolution of these claims should not have a material  adverse
effect,  individually  or in the  aggregate,  upon  the  Company's  business  or
financial  condition.  Other than as set forth above,  management  believes that
there  are no other  legal  proceedings,  pending  or  threatened,  to which the
Company is, or may be, a party,  or to which any of its properties are or may be
subject to, which,  in the opinion of management,  will have a material  adverse
effect on the Company. Additionally, with respect to the landlord-tenant actions
described herein,  the Company has already accounted for the estimated  possible
costs  (including  possible  judgments)  associated with such actions as part of
accounts payable and accrued liabilities,  and the accrual for store closings as
of December 31, 2003.

Guarantees

     In connection  with the Company's sale of the Ambulatory  Center on May 31,
2001 (Note 1), the Company agreed to guarantee  certain of the potential ongoing
liabilities of the Ambulatory  Center.  As of December 31, 2002, the Company had
accrued $159,000 for estimated  guaranteed  liabilities in 2002. During the year
ended  December 31, 2003,  the Company  accrued an additional  $225,000 for such
estimated guaranteed liabilities, representing the estimated cash flow losses of
the Ambulatory Center during 2003, based on information provided by the owner.

     In September  2003, the Company  entered into a series of agreements,  with
the owner of the Ambulatory Center and the landlord of the premises, pursuant to
which the Company's  future  guarantee is now  expressly  limited to that of the
minimum base rent and additional rent, payable under the lease for the premises,
as  adjusted  in  accordance  with  the  agreements.   In  connection  with  the
agreements,  the Company agreed to settle its outstanding  liabilities allegedly
due under its guarantee,  which  liabilities  were settled at lower amounts than
the Company had originally accrued for. As of December 31, 2003, the Company had
$0 remaining as accounts  payable and accrued  liabilities  on the  accompanying
Consolidated Balance Sheets.

     As of December 31, 2003,  the Company was a guarantor of certain  leases of
retail optical stores franchised and subleased to its franchisees.  In the event
that all of such  franchisees  defaulted  on  their  respective  subleases,  the
Company would be obligated  for aggregate  lease  obligations  of  approximately
$4,372,000.  The Company  continually  evaluates  the  credit-worthiness  of its
franchisees  in order to determine  their  ability to continue to perform  under
their  respective  subleases.  Additionally,  in the  event  that  a  franchisee
defaults under its sublease, the Company has the right to take over operation of
the respective location.


NOTE 12 - EXECUTIVE COMPENSATION:

     On May 30, 2003, the Compensation  Committee (the "Committee") of the Board
granted 100,000 stock options to each of the three Co-Chief  Operating  Officers
of the Company. The options have an exercise price of $0.05, a term of 10 years,
and were  immediately  exercisable.  On November 11, 2003 and November 13, 2003,
respectively,  two of the Company's  Co-Chief  Operating  Officers exercised the
aforementioned  100,000  stock  options  granted  to  each of  them.  One of the
Co-Chief  Operating Officers (who is also the Company's Chief Financial Officer)
has an employment  agreement  that provides for an incentive  bonus based on the
Company's  achievement of certain earnings targets, as defined in his agreement.
The  Committee  also  resolved  that each of the  Company's  two other  Co-Chief
Operating  Officers would also receive an incentive bonus based on substantially
the same terms as provided to the other Co-Chief Operating Officer,  pursuant to
his employment  agreement.  For the year ended  December 31, 2003,  there was an
aggregate of $77,924 of such bonuses reflected in the accompanying  Consolidated
Statement  of  Operations.  Such  amount is also  reflected  recorded as part of
accounts  payable  and  accrued  liabilities  on the  accompanying  Consolidated
Balance Sheet for 2003.


NOTE 13 - RELATED PARTY TRANSACTIONS:

     In June 2001, due to the  significant  losses being incurred by the Company
in  connection  with the  operation  thereof,  the Company  subleased  its store
(together  with  certain of the assets  located  therein) in Nyack,  New York to
General Vision Services LLC ("GVS"),  a retail optical chain owned by certain of
the principal  shareholders  and directors of the Company,  and members of their


                                       33
<PAGE>

respective  immediate  families.  In connection with this transfer,  the Company
agreed to provide a rent subsidy of $2,500 per month  through May 31, 2003.  The
Company  continues to sublet this store to GVS;  however,  the Company no longer
provides a rent subsidy.

     On December 3, 2001 and  December  20, 2001,  respectively,  the  Company's
Board of Directors  authorized the Company to borrow  $150,000 and $300,000 from
Horizons Investors Corp. ("Horizons"),  a New York corporation principally owned
by a director and principal  shareholder of the Company. The loan was payable on
demand, together with interest calculated at the prime rate plus 1%. The Company
repaid these loans (which aggregated $450,000 as of December 31, 2001), in full,
on January 23, 2002.

     On  December 6, 2001,  the  Company's  Board of  Directors  authorized  the
Company to borrow  $300,000 from Broadway  Partners LLC, a partnership  owned by
certain of the children of certain of the Company's  principal  shareholders and
directors.  The loan was payable on demand, together with interest calculated at
the prime rate plus 1%. The Company  repaid this loan  ($300,000  as of December
31, 2001), in full, on January 23, 2002.

     During 2003,  2002 and 2001,  the Company  purchased  from City Lens,  Inc.
("City Lens"), an ophthalmic lens laboratory owned,  directly or indirectly,  by
certain of the principal  shareholders  and  directors of the Company,  together
with certain members of their immediate families,  ophthalmic lenses and certain
lens  refinishing  services for its  Company-owned  stores.  For the years ended
December 31, 2003,  2002 and 2001,  respectively,  the total cost of such lenses
and services purchased from City Lens, was approximately  $26,000,  $228,000 and
$243,000. The Company believes that the cost of such lenses and services were as
favorable  to the  Company  as those  which  could  have been  obtained  from an
unrelated third party.

     In April 2002, the Company sold  substantially  all of the assets of one of
its stores  located in New York City,  together with all of the capital stock of
its wholly-owned subsidiary, Sterling Vision of 125th Street, Inc., which is the
tenant under the master lease for such store, to GVS, for the sum of $55,000.

     On July 23, 2002,  the Board of Directors  authorized the Company to borrow
$300,000  from one of its principal  shareholders  and  directors.  The loan was
payable on August 10, 2002,  together  with interest in an amount equal to 1% of
the  principal  amount of such loan.  The Company  repaid this loan, in full, on
August 8, 2002.

     On December 31, 2002, the Company refinanced certain past due amounts, owed
to CFO. As a result, the Company signed a 5-year,  $200,000  promissory note, in
favor of CFO, bearing interest at a rate of 10% per annum.

     On April 4, 2003,  the Board of Directors  authorized the Company to borrow
$100,000  from one of its principal  shareholders  and  directors.  The loan was
payable  immediately  after the closing of the Company's  Rights  Offering (Note
14),  together with interest in an amount equal to 1% of the principal amount of
such loan.  The Company  repaid this loan,  in full,  on April 22, 2003,  with a
portion of the proceeds from the Rights Offering.

     Effective   April  14,  2003,   in  connection   with  certain   Rescission
Transactions consummated by the Company on December 31, 2003, the Company signed
promissory notes with three of its directors, who are also shareholders,  of the
Company. The notes, which aggregate $408,000,  bear interest at a rate of 6% per
annum, and all sums (principal and interest) under the notes are due and payable
in April 2007.

     Until January 10, 2002,  the Company  subleased,  from a limited  liability
company owned by certain of the  Company's  principal  shareholders,  and shared
with CFO and  others,  an office  building  located  in East  Meadow,  New York.
Occupancy costs were  appropriately  allocated based upon the applicable  square
footage  leased by the  respective  tenants of the building.  For the year ended
December 31, 2001, the Company paid approximately  $440,000 for rent and related
charges for these  offices.  On January 10,  2002,  the Company  relocated to an
office  building  located in Garden City,  New York, and entered into a sublease
with CFO for one of the two floors then being subleased to CFO.  Occupancy costs
are being allocated between the Company and CFO based upon the respective square
footages  being  occupied.  For the years ended  December 31, 2003 and 2002, the
Company paid  approximately  $171,000 and $158,000,  respectively,  for rent and
related charges under this new sublease.  Management believes that such sublease
is at fair market value.

     One of the Company's  Co-Chief  Operating  Officers  serves on the Board of
Directors of Newtek Business Services,  Inc.  ("NBSI"),  a company that provides
various  financial  services to both small and mid-sized  business.  The Company
utilizes  the  bank and  non-bank  card  processing  services  of one of  NBSI's
affiliated companies.  During the year ended December 31, 2003, the Company paid
approximately $23,000 to such affiliate for such services provided.  The Company
believes  that the cost of such  services  were as  favorable  to the Company as
those which could have been obtained from an unrelated third party.


                                       34
<PAGE>

During the ordinary course of business, largely due to the fact that the
entities occupy office space in the same building, and in an effort to obtain
savings with respect to certain administrative costs, the Company and CFO will
at times share in the costs of minor expenses. Management believes that these
expenses have been appropriately accounted for by herein.

     In the opinion of the Company's  management,  all of the above transactions
were conducted at "arms-length."


NOTE 14 - SHAREHOLDERS' EQUITY:

Conversion of Senior Convertible Preferred Stock

     In April 1998,  the Company  issued a series of its  Preferred  Stock,  par
value $0.01 per share (the "Senior Convertible Preferred Stock"),  together with
warrants (all of which expired in February 2001) to acquire shares of its Common
Stock.  Each  share of Senior  Convertible  Preferred  Stock  had a  liquidation
preference of $100,000,  and was originally  convertible  into Common Stock at a
price of $5.00 per share. In December 1999, the conversion  price was reduced to
$0.75 per share for all of the remaining holders of Senior Convertible Preferred
Stock.

     On June 8, 2002,  one of the remaining two holders of the Company's  Senior
Convertible  Preferred  Stock  exercised  its right to convert an  aggregate  of
approximately  $177,000 stated value of Senior Convertible Preferred Stock, into
an aggregate of 235,648 shares of the Company's Common Stock.

     As of December 31,  2003,  there were  approximately  0.74 shares of Senior
Convertible  Preferred Stock  outstanding  with a stated value of  approximately
$74,000,  convertible  into Common Stock at a rate of $0.75.  The sole remaining
holder of the  Company's  Senior  Convertible  Preferred  Stock has the right to
vote, as a single class, with the Common Stock, on an as-converted basis, on all
matters on which the holders of the Company's Common Stock are entitled to vote.

Treasury Stock Purchases

     On October 31,  2000,  the Company  announced a program to  repurchase,  in
accordance with the applicable  requirements  of the Securities  Exchange Act of
1934,  as amended,  up to  1,000,000  shares of its Common  Stock at  prevailing
prices  in  open  market  transactions   effected  during  the  one-year  period
commencing  November 1, 2000. As of December 31, 2003,  the Company had acquired
182,337 shares of its Common Stock pursuant to such program.

Issuance of Common Stock for Consulting Services

     In July 2001,  the  Company  issued  1,000,000  unregistered  shares of its
Common Stock (the fair value of which was approximately $325,000) to Rare Medium
Group and Rare  Medium,  Inc.  (collectively  "Rare"),  the Company  that was to
develop the Company's  anticipated  Internet-based  portal business (Note 1), as
part of a settlement whereby the Company's  disputes with Rare,  regarding their
respective  obligations under the Company's  various  agreements with Rare, were
settled.

     On January 16, 2001,  the Company  entered  into an  agreement  with Goldin
Associates,   L.L.C.   ("Goldin")  whereby  Goldin  agreed  to  provide  interim
management services to the Company,  for an initial six-month period, all at the
direction  of the Board of  Directors  of the  Company  or its  other  officers,
pursuant  to  delegated  authority.  The fee for such  services  was $50,000 per
month, plus an additional fee comprised of unregistered shares totaling 1.65% of
the outstanding Common Stock of the Company as of January 22, 2001, and warrants
to purchase up to an aggregate of 3.35% of the  outstanding  Common Stock of the
Company.  As a result,  the Company  issued 418,719  unregistered  shares of its
Common Stock (the fair value of which was approximately $108,000 and was charged
directly  to  operations)  to Goldin,  along with  warrants to purchase up to an
additional  850,126  shares of Common Stock,  all at an exercise price of $0.01,
subject to the Company achieving certain earnings targets (the "Incentive Fee").

     The  terms of the  Incentive  Fee  provide  that the  warrants  may only be
exercised according to the following schedule:  (1) warrants to purchase 279,146
shares of the Company's Common Stock  immediately  following a year in which the
Company  shall  realize  earnings  before  interest,   taxes,  depreciation  and
amortization  and  certain  other  items  ("EBITDA"),  as  defined,  of at least
$1,000,000;  (2)  warrants  to  purchase  an  additional  279,146  shares of the
Company's Common Stock  immediately  following a year in which the Company shall
realize  EBITDA  of at  least  $2,000,000;  and  (3)  warrants  to  purchase  an
additional 291,834 shares of the Company's Common Stock immediately  following a
year in which the Company shall  realize  EBITDA of at least  $3,000,000.  These
warrants  would become  exercisable  only if the  applicable  EBITDA targets are
achieved  prior to December 31, 2004. On December 31, 2003,  558,292 of Goldin's
warrants vested as the Company achieved  $2,000,000 of EBITDA,  as defined,  for
the year ended December 31, 2003. As a result of the vesting of these  warrants,
the Company incurred a charge to earnings of approximately $53,000, representing
the fair value of the warrants that vested.  The future vesting and valuation of

                                       35
<PAGE>

the  remaining  unvested  warrants,  if and when they become  exercisable,  will
result in charges to the Company's results of operations in future periods.  All
vested warrants will expire on January 22, 2008.

     On April 26, 2001, the Company's  Board of Directors  approved the terms of
an  agreement  whereby  it agreed  to issue to  Balfour  Investors  Incorporated
("Balfour"), in exchange for certain advisory services rendered to the Company's
Board of Directors,  209,359  unregistered  shares of its Common Stock (the fair
value  of  which  was   approximately   $57,000  and  was  charged  directly  to
operations),  together with warrants to purchase up to 425,063 additional shares
of  Common  Stock at an  exercise  price of  $0.01.  The  warrants  will  become
exercisable  according  to the  following  schedule:  (1)  warrants  to purchase
139,573  shares of the Company's  Common Stock  immediately  following a year in
which the Company shall realize EBITDA, as defined, of at least $1,000,000;  (2)
warrants to purchase an additional  139,573 shares of the Company's Common Stock
immediately  following a year in which the Company  shall  realize  EBITDA of at
least $2,000,000;  and (3) warrants to purchase an additional  145,917 shares of
the  Company's  Common Stock  immediately  following a year in which the Company
shall realize  EBITDA of at least  $3,000,000.  Further,  these  warrants  would
become  exercisable only if the applicable  EBITDA targets are achieved prior to
December 31, 2004. On December 31, 2003, 279,146 of Balfour's warrants vested as
the  Company  achieved  $2,000,000  of EBITDA,  as  defined,  for the year ended
December 31,  2003.  As a result of the vesting of these  warrants,  the Company
incurred a charge to earnings of  approximately  $27,000,  representing the fair
value of the  warrants  that  vested.  The future  vesting and  valuation of the
remaining unvested warrants, if and when they become exercisable, will result in
charges to the Company's  results of operations  in future  periods.  All vested
warrants will expire on April 26, 2008.

Increase in Authorized Number of Shares of Common Stock

     On  April  29,  2002,  the  Board  unanimously  voted to  recommend  to the
shareholders  that the  Company's  Certificate  of  Incorporation  be amended to
increase the number of authorized  shares of its Common Stock from 50,000,000 to
150,000,000 shares, and to increase the total number of authorized shares of its
capital stock from  55,000,000 to  155,000,000.  On July 11, 2002, the Company's
shareholders  approved  of such  amendment,  which was  thereafter  filed by the
Company.

Shareholder Rights Offering

     On  April  29,  2002,  the  Board  unanimously  approved  of the  Company's
initiation of a shareholder rights offering (the "Rights Offering),  whereby the
Company would attempt to raise approximately $2,000,000 of gross proceeds.

     On February  12,  2003, a  registration  statement  filed by the Company in
connection  with its  shareholder  rights  offering (the "Rights  Offering") was
declared  effective  by the  Securities  and  Exchange  Commission.  The  Rights
Offering  consisted of 50,000,000  units, with each unit consisting of one share
of the Company's  Common Stock,  and a warrant,  having a term of 12 months,  to
purchase one  additional  share of Common  Stock at an exercise  price of $0.05,
which was  determined  based on certain  closing  price and volume  requirements
during the subscription  period.  The terms of the Rights Offering provided that
each  shareholder  was granted 1.67  non-transferable  rights for every share of
Common  Stock owned as of the record date,  February  25,  2003.  Each right was
exercisable for one unit at a price of $0.04.

     On April 14, 2003, the subscription  period ended and the Company completed
the Rights Offering.  Approximately  92,700,000 units were subscribed for in the
Rights  Offering,  and, as a result,  50,000,000 new shares of Common Stock, and
warrants to purchase 50,000,000  additional shares of Common Stock, were issued,
resulting in gross proceeds of $2,000,000.  The issuance costs  associated  with
the Rights Offering were  approximately  $141,000.  The net proceeds received in
the Rights  Offering  (approximately  $1,859,000)  were  allocated  based on the
relative  fair  values  of the  Common  Stock  and  the  warrants.  Accordingly,
approximately  $1,338,000  was  allocated to the Common Stock and  approximately
$521,000 was allocated to the warrants.  On December 31, 2003,  effective  April
14, 2003, 13,000,000 of the units were rescinded by the Company, and the Company
made promissory notes of $520,000 in the aggregate to such shareholders to repay
the original  subscription  price paid (see  "Rescission  of Units and Warrants"
below).

Rescission of Units and Warrants

     Subsequent to the Rights Offering,  the Company  determined that the use of
certain of its tax attributes,  including its net operating loss carry-forwards,
may have  been  substantially  restricted  as a result  of the  consummation  of
certain  transactions  in the  Rights  Offering.  In an  effort  to  avoid  such
restrictions,  on December 31, 2003 (effective  April 14, 2003), the Company and
certain  of  its  shareholders  (the  "Subject  Shareholders")  agreed  to,  and
effectuated,  (a) the  rescission,  ab initio,  of the exercise,  by the Subject
Shareholders,  of  13,000,000  of the  oversubscription  rights  of the  Subject
Shareholders (and,  accordingly,  of the issuance, to such Subject Shareholders,
of the  units  associated  therewith),  and (b) the  rescission,  surrender  and
cancellation of all of the remaining warrants (33,210,028 in the aggregate) that
were acquired by the Subject Shareholders in the Rights Offering  (collectively,
the "Rescission Transactions").  In connection with the Rescission Transactions,
the Company agreed to repay each Subject  Shareholder the original  subscription
amount of $0.04  (previously  paid by each Subject  Shareholder) for each of the
rescinded  units (together with interest at a rate of 6% per annum from the date

                                       36
<PAGE>

of the original  acquisition  thereof),  which,  in the aggregate for all of the
Subject Shareholders,  totaled $520,000. This sum (plus interest) is payable, by
the Company,  on or before April 14,  2007,  pursuant to a series of  promissory
notes  issued  to the  Subject  Shareholders.  Additionally,  as a result of the
Rescission  Transactions,  the Company's  outstanding  Common Stock decreased by
13,000,000 shares.

     Furthermore, in order to limit the potential that future transactions could
have a similar effect on the Company's tax  attributes,  the Company amended its
by-laws to  provide  the Board of  Directors  with the  ability to void  certain
transactions  in  Company  securities  that  may  impair  or  limit  the  future
utilization   of  its  tax   attributes,   including  its  net  operating   loss
carry-forwards.

     Notwithstanding  the  consummation of the Rescission  Transactions  and the
amendment of the by-laws,  there can be no assurance  that the Company has been,
or will in the  future  be,  successful  in  preventing  an  event  which  could
materially  impair or limit the Company's  utilization of its net operating loss
carry-forwards and other tax attributes.

Settlement with Subject Shareholders

     Recognizing  that  the  Subject   Shareholders  that  participated  in  the
Rescission  Transactions (see "Rescission of Units and Warrants" above) suffered
certain  damages in  connection  therewith,  on December 31,  2003,  the Company
granted to the Subject Shareholders,  in the aggregate, new warrants to purchase
59,210,028  shares of  Company  Common  Stock.  The  exercise  prices of the new
warrants  issued to each of the  Subject  Shareholders  ranged  from  $0.0465 to
$0.0489.  These exercise  prices were  calculated with the intention of allowing
the Subject  Shareholders to purchase equity of the Company on substantially the
same economic terms that they would have been  originally  entitled  pursuant to
the Rights Offering, but for the Rescission  Transactions.  The new warrants are
not exercisable until April 15, 2006. In connection with the issuance of the new
warrants to the Subject Shareholders,  the Company incurred a one-time, non-cash
charge of  approximately  $4,544,000,  which is reflected as non-cash charge for
issuance of warrants as a result of Rescission  Transactions on the accompanying
Statement of Operations for the year ended December 31, 2003.


NOTE 15 - STOCK OPTIONS AND WARRANTS:

Sterling Stock Option Plan

     In April 1995, the Company adopted a Stock Incentive Plan (the "Plan") that
permits the  issuance of options to selected  employees  and  directors  of, and
consultants to, the Company. The Plan, as amended,  reserves 7,000,000 shares of
Common Stock for grant and provides that the term of each award be determined by
the Compensation  Committee of the Board of Directors (the "Committee")  charged
with  administering  the  Plan.  Under the  terms of the  Plan,  options  may be
qualified or  non-qualified  and granted at exercise  prices and for terms to be
determined by the Committee.  Additionally,  certain options  previously  issued
under the Plan provide that  notwithstanding  the  termination  of the Company's
employment of any such employee/holder, he/she will retain the right to exercise
those options that have previously  vested in his/her favor until such time that
the options expire in accordance with the terms of the original grant.

     A summary of the options  previously  issued under the Plan is presented in
the table below:
<TABLE>
<CAPTION>
                                                          2003                          2002                          2001
                                               --------------------------   ----------------------------  --------------------------
                                                               Weighted                       Weighted                     Weighted
                                                                Average                        Average                      Average
                                                               Exercise                       Exercise                     Exercise
                                                  Shares         Price          Shares          Price        Shares          Price
                                               --------------------------   ----------------------------  --------------------------
<S>                                            <C>            <C>           <C>               <C>         <C>             <C>
Options outstanding, beginning of period         4,270,468    $     3.98       5,398,133      $     4.07    5,590,966     $     6.54
     Granted                                       700,000    $     0.05         150,000      $     0.08    2,194,000     $     0.32
     Exercised                                    (350,000)   $     0.06               -      $        -            -     $        -
     Canceled, forfeited or expired                (14,833)   $     0.33      (1,277,665)     $     3.90  (2,386,833)     $     6.39
                                               -----------    ----------    ------------      ----------  -----------     ----------

Options outstanding, end of period               4,605,635    $     3.69       4,270,468      $     3.98    5,398,133     $     4.07
                                               ===========    ==========    ============      ==========  ===========     ==========

Options exercisable, end of period               4,545,140    $     3.74       4,118,809      $     4.12    4,320,300     $     4.80
                                               ===========    ==========    ============      ==========  ===========     ==========
</TABLE>
     Of the total  options  outstanding  as of  December  31,  2003,  there were
461,500  held  by  current  employees  of the  Company,  and  4,144,135  held by
directors of the Company, outside consultants and former employees. Of the total


                                       37
<PAGE>

options  granted during 2003,  300,000 were granted to employees of the Company,
and 400,000  were  granted to  directors  of the  Company.  There were no grants
during 2003 to outside consultants and former employees.

     The following table summarizes  information about stock options outstanding
and exercisable as of December 31, 2003:
<TABLE>
<CAPTION>
                                                Options Outstanding                                     Options Exercisable
                                                     Weighted-             Weighted-                                    Weighted-
                                                      Average               Average                                      Average
       Range of                                      Remaining              Exercise                                    Exercise
    Exercise Prices          Outstanding         Contractual Life            Price              Exercisable               Price
  -------------------       --------------     ----------------------    ---------------      ---------------       ----------------
    <C>                        <C>                       <C>               <C>                    <C>                  <C>
    $0.05 to $0.08               500,000                 9.42              $    0.05                500,000            $    0.05
    $0.15 to $0.23               150,000                 7.22              $    0.22                150,000            $    0.22
    $0.24 to $0.36             1,313,501                 6.78              $    0.29              1,253,006            $    0.29
    $1.32 to $1.98                 5,000                 5.83              $    1.88                  5,000            $    1.88
    $1.99 to $2.99                 3,000                 5.73              $    2.75                  3,000            $    2.75
    $3.00 to $4.50               615,000                 4.97              $    3.27                615,000            $    3.27
    $4.51 to $6.77               890,467                 3.82              $    5.97                890,467            $    5.97
    $6.78 to $8.25             1,128,667                 4.76              $    8.17              1,128,667            $    8.17
</TABLE>

     The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following assumptions:

                                  2003              2002             2001
                                  ----              ----             ----

Expected life (years)               1                1                 5
Interest rate                     2.20%            2.21%             4.80%
Volatility                         98%              114%             114%
Dividend yield                      -                -                 -


Stock Purchase Warrants

     In December 1999, the Company issued 2,500,000 warrants to MY2000,  LLC, an
entity acting as an  independent  advisor to the Company in connection  with its
planned Internet business and strategy (Note 1), to purchase 2,500,000 shares of
the Company's  Common Stock at a price of $2.00 per share, the fair value on the
date of issuance,  1,500,000 of which  remained  unexercised  as of December 31,
2003, and expire on December 2, 2004.

     In the first  quarter of 2000,  the Company  issued  1,677,570  warrants to
investors that participated in a certain private  placement by the Company.  The
exercise  price of the  warrants  is $7.59  and  they are all  exercisable.  The
warrants  expire on various dates between  February 13, 2005 and March 22, 2005.
Additionally,  the  Company  issued an  aggregate  of  500,000  warrants  to the
placement  agents.  These  warrants  also have an exercise  price of $7.59,  are
currently exercisable, and expire on February 13, 2005.

     In January 2001, the Company  issued 850,126  warrants to Goldin (Note 14),
558,292 of which  vested on  December  31,  2003.  The  remaining  warrants  are
exercisable  upon the achievement of a certain earnings target by the Company by
December 31, 2004, and expire on January 22, 2008.

     In April 2001, the Company  issued  425,063  warrants to Balfour (Note 14),
279,146 of which  vested on  December  31,  2003.  The  remaining  warrants  are
exercisable  upon the achievement of a certain earnings target by the Company by
December 31, 2004, and expire on April 26, 2008.

     In  connection  with the Rights  Offering,  the Company  issued  50,000,000
warrants, exercisable immediately at an exercise price of $0.05, and expiring on
April 14,  2004.  Subsequently,  13,000,000  of such  warrants  were  rescinded,
32,210,028  were  surrendered,  and 409,130 were  exercised.  As of December 31,
2003, 3,380,842 of such warrants remained outstanding and exercisable.

     As a result of certain Rescission  Transactions entered into by the Company
on  December  31,  2003 (Note 14),  the  Company  issued  warrants  to  purchase
59,210,028 shares of Company Common Stock to certain Subject  Shareholders.  The
exercise prices of the warrants  issued ranged from $0.0465 to $0.0489,  are not
exercisable until April 15, 2006, and expire on April 14, 2008.

                                       38
<PAGE>

NOTE 16 - 401(K) EMPLOYEE SAVINGS PLANS:

     Emerging  Vision,  Inc. and VisionCare of California,  Inc., each sponsor a
401(k)  Employee  Savings  Plan (the  "401(k)  Plan") to provide  all  qualified
employees  of  these  entities  with   retirement   benefits.   Presently,   the
administrative  costs of each  401(k) Plan are paid  entirely by such  qualified
employees, no matching contributions having been provided by the Company.


NOTE 17 - FOURTH QUARTER CHARGES:

     In the fourth  quarter of 2003,  the  Company  recognized  non-cash  equity
compensation  charges of  approximately  $4,623,000  related to the  issuance of
warrants as a result of the Rescission  Transactions  (Note 14), and the vesting
of  certain  warrants  issued,  in  2001,  to  Goldin  and  Balfour  (Note  14).
Additionally,  the  Company  recorded  a  provision  for  doubtful  accounts  of
approximately  $142,000  related to certain of its franchise,  notes and managed
care  receivables  that  management  deemed  uncollectible,  recognized  bonuses
totaling  approximately  $77,000  payable to certain of the Company's  executive
officers,  and incurred approximately $164,000 of expenses associated with both,
the evaluation of an offer (which offer was subsequently rescinded),  by certain
of its  directors  and  certain of their  family  members,  to take the  Company
private, and the Rescission Transactions entered into on December 31, 2003.











                                       39
<PAGE>


Item 8A. Controls and Procedures

     The  Company's   Co-Chief  Operating   Officers   (Co-Principal   Executive
Officers),  one of whom is also its Chief Financial Officer (Principal Financial
Officer),  conducted  an  evaluation  of  the  effectiveness  of  the  Company's
disclosure  controls  and  procedures.  Based on this  evaluation,  our Co-Chief
Operating  Officers   (Co-Principal   Executive  Officers)  concluded  that  the
Company's  disclosure  controls and procedures were effective as of December 31,
2003 in alerting them in a timely manner to material  information required to be
included in our SEC reports.  In addition,  no change in the Company's  internal
control  over  financial  reporting  occurred  during the fourth  quarter of the
fiscal  year  ended  December  31,  2003  that has  materially  affected,  or is
reasonably  likely to materially  affect,  the Company's  internal  control over
financial reporting.


Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

Not applicable.












                                       40
<PAGE>

                                    PART III
                                    --------

Item 10. Directors and Executive Officers of the Registrant

     The Board presently  consists of five directors.  The directors of Emerging
Vision,  Inc. ("EVI" or the "Company") are divided into two classes,  designated
as Class 1 and Class 2, respectively. Directors of each Class are elected at the
Annual Meeting of the  Shareholders of EVI held in the year in which the term of
such  Class  expires,  and  serve  thereafter  for two  years,  or  until  their
respective   successors   are  duly  elected  and  qualified  or  their  earlier
resignation,  removal from office,  retirement or death. Mr. Benito R. Fernandez
and Mr.  Christopher  G.  Payan  presently  serve as Class 1  Directors  and are
scheduled to hold office  until the 2004 Annual  Meeting of  Shareholders.  Drs.
Robert  and  Alan  Cohen,  and Mr.  Joel L.  Gold,  presently  serve  as Class 2
Directors and are scheduled to hold office until their respective successors are
duly elected and  qualified or their earlier  resignation,  removal from office,
retirement or death.

             INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS

     The directors and executive officers of EVI are as follows:

Name                                   Age           Position

Alan Cohen, O.D.                       53            Chairman of the Board of
                                                     Directors
Robert Cohen, O.D.                     60            Director
Benito R. Fernandez                    62            Director
Joel L. Gold                           62            Director
Christopher G. Payan                   29            Co-Chief Operating Officer,
                                                     Chief Financial Officer,
                                                     Senior Vice President,
                                                     Secretary and Director
Samuel Z. Herskowitz                   34            Co-Chief Operating Officer
                                                     and Chief Marketing Officer
Myles Lewis                            36            Co-Chief Operating Officer
                                                     and Senior Vice President -
                                                     Business Development
Dr. Nicholas Shashati                  44            President - VisionCare of
                                                     California, Inc. ("VCC")
Brian P. Alessi                        28            Controller and Treasurer

     Dr. Alan Cohen has served as a director of the Company since its inception;
and,  as of May  31,  2002,  became  the  Company's  Chairman  of the  Board  of
Directors.  He also served as Chief  Operating  Officer of the Company from 1992
until October 1995, when he became Vice Chairman of the Board of Directors,  and
as the Company's President,  Chief Executive Officer and Chief Operating Officer
from  October  1998  through  April 17,  2000,  when he became  President of the
Company's retail optical store division,  which position Dr. Cohen resigned from
on January 9, 2001. Dr. Cohen,  together with his brother,  Dr. Robert Cohen, is
the owner of Meadows  Management,  LLC ("Meadows"),  which, until April 9, 2000,
rendered consulting services to the Company.  From 1974 to the present, Dr. Alan
Cohen has been engaged in the retail and wholesale  optical  business.  For more
than 10 years,  Dr. Cohen has also been a director,  principal  shareholder  and
officer  of Cohen  Fashion  Optical,  Inc.  and its  affiliates  ("CFO"),  which
currently  maintains  its  principal  offices in Garden  City,  New York.  Since
January 15, 2001, Dr. Cohen has served as President of General Vision  Services,
LLC ("GVS"),  and, since October 2003, has served as an officer of Vision World,
LLC ("Vision World"), each of which currently maintains its principal offices in
New  York  City.  Dr.  Cohen  and  his  brother,  Dr.  Robert  Cohen,  are  also
shareholders of CFO and members of GVS and Vision World. CFO and GVS each engage
in, among other things, the operation (and, in the case of CFO,  franchising) of
retail  optical  stores similar to those operated and franchised by the Company.
GVS and Vision World also  administer  third party benefit  programs  similar to
those being  administered  by the  Company.  Dr.  Cohen is also an officer and a
director of several  privately  held  management  and real estate  companies and
other businesses.  Dr. Cohen graduated from the Pennsylvania School of Optometry
in 1972, where he received a Doctor of Optometry degree.

     Dr.  Robert  Cohen  served as  Chairman  of the Board of  Directors  of the
Company from its inception  through April 7, 2000, when he resigned as Chairman,
but not as a director.  He also served as Chief Executive Officer of the Company
from its inception until October 1995. Dr. Cohen, together with his brother, Dr.
Alan  Cohen,  is the owner of  Meadows,  which,  until  April 9, 2000,  rendered
consulting services to the Company.  From 1968 to the present,  Dr. Robert Cohen
has been engaged in the retail and wholesale optical business.  For more than 10
years,  Dr.  Cohen has also served as  President  and a director  of CFO.  Since
January 15, 2001,  Dr. Cohen has served as the Chief  Executive  Officer of GVS,
and, since October 2003, has served as an officer of Vision World. Dr. Cohen and
his brother, Dr. Alan Cohen, are also shareholders of CFO and members of GVS and
Vision World.  Dr. Cohen is also an officer and a director of several  privately
held  management  and real estate  companies  and other  businesses.  Dr.  Cohen
graduated from the Pennsylvania School of Optometry in 1968, where he received a
Doctor of Optometry degree.

                                       41
<PAGE>

     Benito R.  Fernandez  was appointed as a director of the Company as of June
12, 2001. Since 1986, Mr. Fernandez has been the President of Horizons,  located
in Albany,  New York,  an entity  which owns,  develops  and manages real estate
properties,  and which also acts as agent for  various  companies  in the health
field, as well as the President of Horizons  Hotels Corp.,  located in San Juan,
Puerto Rico, which owns and manages hotel properties.  In addition,  since 1980,
Mr.  Fernandez  has been the President of the Brooklyn  Manor Group,  located in
Brooklyn,  New York, an entity which owns and manages a health care facility and
acts as a consultant to various health related facilities;  and, since 1973, has
been the  President  of Typhoon  Fence of L.I.,  Inc.,  the  operator of a fence
construction company located in Long Island, New York. Mr. Fernandez,  who was a
former member of the Federal Reserve Bank of New York Advisory  Council of Small
Business and Agriculture,  graduated from the City University of the City of New
York in 1966,  where he received his B.A..  In 1999, he received The South Bronx
Board of Trades and The Somos Uno Foundation Award for outstanding  professional
leadership in economic development;  in 1995, he received the Bedford Stuyvesant
Y.M.C.A.  Man of the Year Award;  and, in 1990,  he received  the New York State
Puerto  Rican/Hispanic   Legislator  Task  Force  Conference  Center  Award  for
excellence in advancing business opportunities for Puerto Ricans and Latinos.

     Joel L. Gold has served as a director of the Company since  December  1995.
He is currently  Executive Vice  President of Investment  Banking of Berry Shino
Securities,  Inc.,  an  investment  banking firm located in New York City.  From
January 1999 until  December  1999, he was an Executive  Vice President of Solid
Capital Markets,  an investment banking firm also located in New York City. From
September  1997 to January  1999,  he served as a Senior  Managing  Director  of
Interbank  Capital  Group,  LLC, an investment  banking firm also located in New
York City.  From April 1996 to September  1997,  Mr. Gold was an Executive  Vice
President  of LT Lawrence & Co.,  and from March 1995 to April 1996,  a Managing
Director of Fechtor Detwiler & Co., Inc., a  representative  of the underwriters
for the Company's  initial public offering.  Mr. Gold was a Managing Director of
Furman Selz  Incorporated  from January  1992 until March 1995.  From April 1990
until  January 1992,  Mr. Gold was a Managing  Director of Bear Stearns and Co.,
Inc. ("Bear  Stearns").  For  approximately 20 years before he became affiliated
with Bear Stearns,  he held various positions with Drexel Burnham Lambert,  Inc.
He is currently a director, and serves on the Audit and Compensation Committees,
of Geneva Financial Corp., a publicly held specialty, consumer finance company.

     Christopher G. Payan joined the Company as its Vice President of Finance in
July 2001. In October 2001, he was appointed as its Senior Vice President, Chief
Financial  Officer,  Secretary  and  Treasurer;  and,  on April  29,  2002,  was
appointed as one of its Chief Operating  Officers.  On March 24, 2004, Mr. Payan
was appointed to the Company's board of directors and resigned as its Treasurer.
From March 1995  through July 2001,  Mr.  Payan was employed by Arthur  Andersen
LLP, at the time, one of the world's largest professional  services firms, where
he provided  various  audit,  accounting,  operational  consulting  and advisory
services to various small and mid-sized  private and public companies in various
industries.  Mr.  Payan also  serves on the  boards of  directors  of  Hauppauge
Digital, Inc. and Newtek Business Services, Inc. Mr. Payan is a certified public
accountant.

     Samuel Z.  Herskowitz  joined the  Company in January  1996 and,  effective
April 29, 2002, was appointed as one of its Chief Operating Officers, as well as
its Chief Marketing  Officer.  From 1996 to April 1997, Mr. Herskowitz served as
the Director of Operations of EVI's then wholly-owned subsidiary,  Insight Laser
Centers, Inc. In April 1997, Mr. Herskowitz became responsible for the Company's
corporate  communications and, in January 1998, was appointed to the position of
Director of  Marketing  and  Advertising  of the Company,  in which  position he
served until April 1999, when he became the Company's Vice President - Marketing
and Advertising.  From 1993 to December 1996, Mr. Herskowitz was the Director of
Public  Relations  for  Rosenblum  Eye  Centers  located in New York  City.  Mr.
Herskowitz received a Masters in Business  Administration from Baruch College of
the City University of New York in May 1995.

     Myles S. Lewis joined the Company in October  1999 as its Vice  President -
Managed  Care  and,  effective  April  29,  2002,  was  appointed  as one of the
Company's  Chief  Operating  Officers  and its Senior Vice  President - Business
Development.  From  October  1998 to  September  1999,  Mr. Lewis served as Vice
President of Managed Care for Vista  Eyecare,  Inc.,  located in  Lawrenceville,
Georgia,  as well as  President  of  ProCare  Eye  Exam,  Inc.,  Vista's  health
maintenance  organization located in the State of California.  From January 1993
to  September  1998,  Mr. Lewis was  employed by New West  Eyeworks,  located in
Tempe,  Arizona,  in various  executive  capacities,  including Vice President -
Managed Care,  President of Vista Eyecare  Network,  LLC, a managed care company
owned by New West Eyeworks,  and Director of Strategic  Projects and Operations.
Mr. Lewis graduated from Arizona State  University in 1991,  where he received a
Bachelors of Science degree in Management.

     Dr. Nicholas Shashati has been the Director of Professional Services of the
Company since July 1992 and, since March 1, 1998, the President of the Company's
wholly owned  subsidiary,  VCC. Dr. Shashati earned a Doctor of Optometry degree
from Pacific University of California in 1984, and received a Bachelor of Visual
Science  degree from  Pacific  University  and a Bachelor  of Science  degree in
Biology  from San  Diego  State  University.  Dr.  Shashati  is  licensed  as an
optometrist  in the States of New York,  California,  Arizona and Oregon.  He is
Chairperson  for the Quality  Assurance  Committee of the Company,  as well as a
Practice Management Consultant.

                                       42
<PAGE>

     Brian P. Alessi joined the Company as its  Assistant  Controller in October
2001. In February  2002, he was  appointed as its  Controller,  and on March 24,
2004 was appointed Treasurer of the Company.  From December 1999 through October
2001, Mr. Alessi was employed by Arthur  Andersen LLP, where he provided  audit,
accounting and consulting  services to small and mid-sized  companies in various
industries.  From August 1997 through  December 1999, Mr. Alessi was employed by
Yohalem  Gillman & Company LLP, where he provided audit and accounting  services
to small and mid-sized private companies,  and tax services to individuals.  Mr.
Alessi  graduated  from the  University  of Miami in 1997,  where he  received a
Bachelors of Business Administration degree in Accounting.


                        AUDIT COMMITTEE FINANCIAL EXPERT

     Our Board of Directors has determined that the Audit Committee of the Board
does not have an "audit committee  financial expert," as that term is defined in
Item 401(h) of Regulation S-K.


             SECTION 16(a) BENEFICAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
EVI's  executive  officers  and  directors,  and  persons  who own more than ten
percent of a  registered  class of EVI's equity  securities,  to file reports of
ownership and changes in ownership with the  Securities and Exchange  Commission
(the  "SEC").  Executive  officers,  directors  and  greater  than  ten  percent
shareholders are required, by SEC regulation,  to furnish EVI with copies of all
Section 16(a) forms they may file.

     Based  solely on a review of the copies of such forms  furnished to EVI, or
written representations that no Forms 5 were required, EVI believes that, during
the year  ended  December  31,  2003,  all  Section  16(a)  filing  requirements
applicable  to its  executive  officers,  directors and greater than ten percent
beneficial  owners were complied with,  except that Drs.  Robert and Alan Cohen,
and Horizons filed certain of their Forms 4 after the required deadlines.








                                       43
<PAGE>


Item 11. Executive Compensation

     The following Summary  Compensation Table sets forth the compensation,  for
the three years ended  December 31,  2003,  of each of the  Company's  four most
highly compensated executive officers that were serving as executive officers of
the  Company  and/or  VCC as of  December  31,  2003  (collectively,  the "Named
Executive Officers"):
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE
                                                                                          Long-Term
                                                                                        Compensation
                                                                                          Securities
                                             Fiscal       Annual Compensation          Underlying Stock         All Other
          Name and Principal Position         Year       Salary          Bonus             Options            Compensation
       ----------------------------------- --------- -------------------------------- ------------------ -----------------------
       <S>                                   <C>      <C>                <C>              <C>                <C>
       Christopher G. Payan,                 2003     $175,000 (2)       $ 26,000 (4)     100,000 (5)        $   32,200 (7)
       Senior Vice President, Co-Chief       2002     $169,000 (2)       $      -         150,000 (6)        $    6,000 (8)
       Operating Officer, Chief              2001     $ 57,000 (3)       $      -          50,000 (5)        $        -
       Financial Officer and
       Secretary (1)
       ----------------------------------- --------- -------------------------------- ------------------ -----------------------
                                             2003     $156,000 (10)      $ 26,000 (4)     100,000 (12)       $    6,000 (13)
       Myles S. Lewis,                       2002     $156,000 (10)      $      -               -            $    3,000 (13)
       Co-Chief Operating Officer and        2001     $118,000 (11)      $      -          50,000 (5)        $    1,000 (14)
       Senior Vice President - Business
       Development (9)
       ----------------------------------- --------- -------------------------------- ------------------ -----------------------
                                             2003     $125,000 (16)      $ 26,000 (4)     100,000 (12)       $   10,000 (18)
       Samuel Z. Herskowitz,                 2002     $125,000 (16)      $      -               -            $   11,000 (18)
       Co-Chief Operating Officer and        2001     $110,000 (16)      $      -          37,500 (17)       $    8,000 (18)
       Chief Marketing Officer (15)
       ----------------------------------- --------- -------------------------------- ------------------ -----------------------
       Dr. Nicholas Shashati,                2003     $102,000 (19)      $      -               -            $   23,000 (21)
       President - VisionCare of             2002     $102,000 (19)      $      -               -            $   24,000 (21)
       California                            2001     $102,000 (19)      $      -         100,000 (20)       $   24,000 (21)
       =================================== ========= ================================ ================== =======================
</TABLE>

     (1) Mr. Payan  became Vice  President of Finance of the Company on July 16,
2001, Senior Vice President, Chief Financial Officer, Treasurer and Secretary of
the Company in October 2001, and one of the Company's Chief  Operating  Officers
on April 29, 2002. On March 24, 2004, Mr. Payan resigned as Treasurer.
     (2) Represents salary paid to Mr. Payan.
     (3)  Represents  salary paid to Mr. Payan for the period from July 16, 2001
through December 31, 2001.
     (4) Represents bonus payable related to the year ended December 31, 2003.
     (5) All of these options are fully vested and exercisable.
     (6) All of these options were exercised in February 2003.
     (7)  Represents  car allowance  payments made to Mr. Payan,  along with the
payment  for  certain  additional  services  provided  in  connection  with  the
Company's  evaluation of an offer,  during 2003, by certain of its directors and
principal  shareholders,  and some of their immediate family members, to acquire
all of the outstanding capital stock of the Company.
     (8) Represents car allowance payments made to Mr. Payan.
     (9) Mr. Lewis was  originally  employed as the  President of the  Company's
Insight  Managed  Care  Division  for the period from  October 12, 1999  through
January 19, 2001,  when he resigned  from the Company.  Mr. Lewis was rehired on
April 30, 2001 as the Company's Vice President - Business Development.  On April
29, 2002, Mr. Lewis became one of the Company's Chief Operating Officers and its
Senior Vice President - Business Development.
     (10) Represents salary paid to Mr. Lewis.
     (11)  Represents  salary paid to Mr.  Lewis for the period from  January 1,
2001  through  January 19,  2001 and for the period from April 30, 2001  through
December 31, 2001.
     (12) All of these options were exercised in November 2003.
     (13) Represents car allowance payments made to Mr. Lewis.
     (14) Represents  health insurance  payments made on behalf of Mr. Lewis for
the period from January 1, 2001 through January 19, 2001 and for the period from
April 30, 2001 through December 31, 2001.

                                       44
<PAGE>

     (15) Mr.  Herskowitz served as Director of Marketing and Advertising of the
Company  until  January 2, 2001,  when he became Vice  President - Marketing and
Advertising. On April 29, 2002, Mr. Herskowitz became one of the Company's Chief
Operating Officers and its Chief Marketing Officer.
     (16) Represents salary paid to Mr. Herskowitz.
     (17)  Two-thirds  of these  options  are fully  vested;  and an  additional
one-third will vest on April 26, 2004.
     (18) Represents car allowance payments made to Mr. Herskowitz.
     (19) Represents salary paid to Dr. Shashati by VCC.
     (20)  Two-thirds  of these  options  are fully  vested;  and an  additional
one-third will vest on April 26, 2004.
     (21)  Includes  car  allowance  payments  made to Dr.  Shashati  by VCC and
additional salary paid to Dr. Shashati by the Company.


                        OPTION GRANTS IN LAST FISCAL YEAR

     On May 30, 2003, the  Compensation  Committee of the Board granted  100,000
stock options to each of the three Co-Chief  Operating  Officers of the Company.
The  options  had an  exercise  price of  $0.05,  a term of 10  years,  and were
immediately   exercisable.   On  November   11,  2003  and  November  13,  2003,
respectively,  two of the Company's  Co-Chief  Operating  Officers exercised the
aforementioned 100,000 stock options granted to each of them.

     The following table sets forth information  concerning the options granted,
during 2003, to the Named Executive Officers of the Company:


<TABLE>
<CAPTION>

                                                  % of Total                                     Potential Realizable Value of
                                   Number of        Options                                      Assumed Annual Rates of Stock
                                    Shares        Granted to                                           Price Appreciation
                                  Underlying     Employees in     Exercise                              for Option Term
                                Options Granted   Fiscal Year      Price      Expiration Date
               Name                                              Per Share
                                                                                                       5%               10%
    --------------------------- ---------------- -------------- ------------- ---------------- -----------------------------------
    <S>                             <C>              <C>           <C>          <C>                 <C>               <C>
    Christopher G. Payan            100,000          33.3%         $0.05        5/29/13             $3,000            $8,000
    --------------------------- ---------------- -------------- ------------- ---------------- ------------------ ----------------
    --------------------------- ---------------- -------------- ------------- ---------------- ------------------ ----------------
    Myles S. Lewis                  100,000          33.3%         $0.05        5/29/13 (1)         $3,000            $8,000
    --------------------------- ---------------- -------------- ------------- ---------------- ------------------ ----------------
    --------------------------- ---------------- -------------- ------------- ---------------- ------------------ ----------------
    Samuel Z. Herskowitz            100,000          33.3%         $0.05        5/29/13 (2)         $3,000            $8,000
    --------------------------- ---------------- -------------- ------------- ---------------- ------------------ ----------------
    --------------------------- ---------------- -------------- ------------- ---------------- ------------------ ----------------
</TABLE>

     (1) All options were exercised on November 11, 2003.
     (2) All options were exercised on November 13, 2003.

     Reference is made to Note 15 to the Consolidated  Financial  Statements for
more detailed information regarding the Company's equity compensation plans. The
following  provides  certain  information  with respect to the Company's  equity
compensation plans as of December 31 2003:
<TABLE>
<CAPTION>
<C>                              <C>                               <C>                              <C>
-------------------------------- --------------------------------- -------------------------------- --------------------------------
                                              (A) (B) (C)
-------------------------------- --------------------------------- -------------------------------- --------------------------------
-------------------------------- --------------------------------- -------------------------------- --------------------------------
                                                                                                      Number of securities available
                                     Number of securities to be                                         for future issuance under
                                      issued upon exercise of          Weighted-average exercise         equity compensation plan
                                  outstanding options and warrants   price of outstanding options     (excludes securities reflected
          Plan Category                                                        and warrants                     in column (A)
-------------------------------- --------------------------------- -------------------------------- --------------------------------
-------------------------------- --------------------------------- -------------------------------- --------------------------------
Authorized by shareholders                     4,605,635                           $3.69                          2,394,365
-------------------------------- --------------------------------- -------------------------------- --------------------------------
-------------------------------- --------------------------------- -------------------------------- --------------------------------
Not authorized by shareholders                 67,543,629                          $0.33                              -
-------------------------------- --------------------------------- -------------------------------- --------------------------------
</TABLE>



                                       45
<PAGE>

                 AGGREGATE OPTIONS EXERCISED IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                 Shares                        Number of Securities
                                  Acquired                    Underlying Unexercised       Value of Unexercised In-the-Money
                                 on             Value         Options at FY-End (#)             Options at FY-End ($)*
               Name              Exercise     Realized
                                    (#)          ($)        Exercisable/Unexercisable          Exercisable/Unexercisable
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
    <S>                           <C>        <C>                  <C>                                  <C>
    Christopher G. Payan          150,000    $     -               150,000/-0-                         $5,500/$0
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
    Myles S. Lewis                100,000    $ 19,000               50,000/-0-                           $0/$0
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
    Samuel Z. Herskowitz          100,000    $ 18,000             55,000/12,500                          $0/$0
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
    Dr. Nicholas Shashati            -       $     -              106,667/33,333                         $0/$0
    ---------------------------- ----------- ------------ ------------------------------- ------------------------------------
</TABLE>
     * Based on the OTC Bulletin  Board  closing price for the last business day
of the fiscal year ($0.105).

     The stock  options  granted to the Named  Executive  Officers have exercise
prices as follows:  Christopher G. Payan:  100,000 options at $0.05,  and 50,000
options at $0.26; Myles S. Lewis: 50,000 options at $0.33; Samuel Z. Herskowitz:
37,500 options at $0.33,  20,000 options at $6.31,  and 10,000 options at $3.25;
and Dr. Nicholas  Shashati:  100,000 options at $0.33,  20,000 options at $6.31,
10,000 options at $3.25, and 10,000 options at $7.50.


                              EMPLOYMENT CONTRACTS

     Effective  February  11,  2002,  the Company and Mr.  Christopher  G. Payan
entered  into  a  three-year  employment  agreement  pursuant  to  which  he was
appointed as the Company's Senior Vice President,  Co-Chief  Operating  Officer,
Chief  Financial  Officer,  Secretary  and  Treasurer  (Mr.  Payan  resigned  as
Treasurer only on March 24, 2004).  Pursuant to the  agreement,  Mr. Payan would
initially  be paid an annual base salary of $175,000 per year,  would  receive a
monthly  automobile  allowance of $600, and would be entitled to an annual bonus
in an amount equal to 5% by which the earnings of the Company  before  interest,
taxes,  depreciation  and  amortization  and certain  other  items,  as defined,
exceeds $2,000,000, in any year ending December 31st.

     In addition, pursuant to the terms of said agreement, Mr. Payan was granted
150,000 employee stock options,  all of which were immediately vested (and which
Mr. Payan subsequently  exercised on February 20, 2003), and the 50,000 employee
stock options granted to Mr. Payan on July 16, 2001 became immediately vested.


                       OPERATION OF THE BOARD OF DIRECTORS

     During the fiscal year ended  December 31, 2003, the Board held one meeting
in person, seven meetings telephonically, and acted by unanimous written consent
one time. Each director  attended at least 75% of the meetings held by the Board
during the period in which such director served,  including the meetings held by
the Committees on which such director served.

Committees of the Board

     The standing committees of the Board include the Executive  Committee,  the
Audit Committee,  the Compensation Committee and the Independent  Committee.  In
addition,  on June 10, 2003 and December 22, 2003, the Board established Special
Independent Committees.

     The Executive  Committee,  whose members are currently Benito R. Fernandez,
Robert Cohen and Joel L. Gold, is generally authorized to exercise the powers of
the Board in connection with the management of the Company;  provided,  however,
that  the  Executive  Committee  does  not  have  the  authority  to  submit  to
shareholders  any  action  that  needs  shareholder  approval  under  law,  fill
vacancies in the Board or in any Committee,  fix the  compensation  of directors
for serving on the Board or on any Committee, amend or repeal the By-Laws of the
Company or adopt new by-laws of the Company, or amend the Company's  Certificate
of  Incorporation.  The  Executive  Committee did not meet during the year ended
December 31, 2003.

                                       46
<PAGE>

     The Audit Committee,  whose members  currently are Robert Cohen,  Benito R.
Fernandez  and  Joel  L.  Gold,   recommends  the  selection  of  the  Company's
independent  auditors,  receives reports from such  independent  auditors on any
material recommendations made to management, and reviews, with the auditors, any
material  questions  or  problems  with  respect  to  the  accounting   records,
procedures  or  operations  of the Company which have not been resolved to their
satisfaction after having been brought to the attention of management. The Audit
Committee,  which was  established  in December  1995, and during the year ended
December 31, 2003 met two times telephonically.

     The Compensation Committee,  whose members currently are Alan Cohen, Benito
R. Fernandez and Joel L. Gold  administers  EVI's 1995 Stock  Incentive Plan and
recommends  to the Board the salaries and bonuses of the  executive  officers of
the Company.  The  Compensation  Committee was established in December 1995 and,
during the year ended December 31, 2003, met one time telephonically.

     The Independent Committee,  whose members currently are Benito R. Fernandez
and Joel L. Gold, is generally  authorized to review any  transaction (or series
of  transactions)  involving more than $10,000 in any single  instance,  or more
than  $50,000  in the  aggregate  (other  than  compensation  matters  which are
determined by the  Compensation  Committee)  between the Company and: (i) any of
its directors,  officers, principal shareholders and/or each of their respective
affiliates;  or (ii) any  employee  of, or  consultant  to, the Company who also
renders services to CFO and/or GVS, retail optical  companies owned, in part, by
certain  directors  and  shareholders  of  the  Company,   whether  or  not  for
compensation.  The  Independent  Committee was established in December 1995 and,
during the year ended December 31, 2003 met once telephonically.

     Special  Independent  Committees,  whose sole  member is Joel L. Gold,  was
established   for  the  sole  purposes  of  (i)   evaluating  the  fairness  and
reasonableness  of, and negotiating the terms of, the offer (the "Offer"),  from
Horizons  Investors Corp.,  Drs. Robert and Alan Cohen, and certain of the Cohen
family members,  to acquire all of the outstanding capital stock of the Company,
which Offer was made on June 5, 2003, and subsequently  withdrawn on November 6,
2003,  and  (ii)   negotiating  the  terms  of  the  rescission  and  settlement
transactions  described in Note 14. The Special Independent Committees that were
established on June 10, 2003 and December 22, 2003, respectively, each acted one
time by written consent during the year ended December 31, 2003.


                              DIRECTOR COMPENSATION

     Directors  who are not  employees  or  executive  officers  of the  Company
receive  $1,500  for each board  meeting  attended  in  person,  $1,000 for each
committee  meeting  attended  in person,  and $500 for each board and  committee
meeting attended telephonically. In the event that multiple meetings are held on
the same day, directors will receive compensation for one meeting.  Further, all
directors  are  reimbursed  for  certain   expenses  in  connection  with  their
attendance at board and committee meetings.

     Other than with respect to the reimbursement of expenses, directors who are
employees  or  executive  officers  of the Company  will not receive  additional
compensation for serving as a director.

     On May 30, 2003, the  Compensation  Committee of the Board granted  100,000
stock options to each of the non-employee  directors of the Company. The options
have an  exercise  price  of  $0.05,  a term of 10  years,  and are  immediately
exercisable. None of these options were exercised.




                                       47
<PAGE>


Item 12. Security Ownership of Certain Beneficial Owners and Management

 I.      COMMON STOCK:

     The following table sets forth certain  information,  as of March 22, 2004,
regarding the beneficial  ownership of the Common Stock by: (i) each shareholder
known by the Company to be the beneficial owner of more than five percent of the
outstanding  shares of EVI's Common  Stock;  (ii) each  director of the Company;
(iii) each Named Executive Officer of the Company (as said term is defined under
the  caption  "Executive  Compensation"  above);  and  (iv)  all  directors  and
executive officers of the Company as a group. The percentages in the "Percent of
Class"  column  do not  give  effect  to  shares  included  in  the  "Beneficial
Ownership"  column as a result of the  ownership of options or warrants.  Unless
otherwise  indicated,  the Company  believes that the  beneficial  owners of the
Common Stock listed below,  based on information  provided by such owners,  have
sole  investment  and voting power with  respect to such shares.  The address of
Benito R. Fernandez is 2830 Pitkin Avenue, Brooklyn, New York 11208. The address
of Joel L. Gold is c/o Berry Shino Securities,  45 Broadway,  New York, New York
10006. The address of Nicholas Shashati is c/o Sterling VisionCare,  9663 Tierra
Grande Street,  San Diego,  California  92126.  The address of all other persons
listed below is 100 Quentin Roosevelt Boulevard, Garden City, New York 11530.

<TABLE>
<CAPTION>
<C>                                                 <C>                               <C>
--------------------------------------------------- --------------------------------- -----------------------------------
                       Name                               Beneficial Ownership                 Percent of Class
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------

Christopher G. Payan  (a) (b)                                        1,212,500   (1)                                1.0%
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------

Myles S. Lewis (b)                                                     150,000   (2)                                   *
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------

Samuel Z. Herskowitz (b)                                               155,000   (3)                                   *
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------

Dr. Nicholas Shashati (b)                                              106,667   (4)                                   *
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------

Dr. Alan Cohen (a)                                                   3,373,769   (5)                                3.9%
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------

Dr. Robert Cohen (a)                                                 2,886,887   (6)                                3.2%
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------

Horizons Investors Corp. (a)                                        23,926,531   (7)                               35.0%
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------

Joel L. Gold (a)                                                       221,500   (8)                                   *
--------------------------------------------------- --------------------------------- -----------------------------------
--------------------------------------------------- --------------------------------- -----------------------------------
All current directors and executive officers as a
group                                                                 32,032,854 (9)                               45.5%
--------------------------------------------------- --------------------------------- -----------------------------------
</TABLE>

----------------------
* less than 1%
(a)      Director
(b)      Executive officer

     (1) This  number  includes  the right to acquire  150,000  shares of Common
Stock upon the exercise of presently  exercisable,  outstanding options, and the
right to acquire  450,500  shares of Common Stock upon the exercise of presently
exercisable, outstanding warrants.

     (2) This number includes the right to acquire 50,000 shares of Common Stock
upon the exercise of presently exercisable, outstanding options.

     (3) This number includes the right to acquire 55,000 shares of Common Stock
upon the exercise of presently exercisable, outstanding options, but excludes an
additional 12,500 options that are subject to certain vesting requirements.

     (4) This number  represents  the right to acquire  106,667 shares of Common
Stock upon the  exercise of  presently  exercisable,  outstanding  options,  but
excludes  an  additional  33,333  options  that are  subject to certain  vesting
requirements.

     (5) This  number  includes  the right to acquire  750,000  shares of Common
Stock upon the  exercise of  presently  exercisable,  outstanding  options,  but
excludes  (i) the right to  acquire  5,562,753  shares of Common  Stock upon the
exercise of outstanding  warrants that are not exercisable until April 15, 2006;
and (ii) 26,700  shares owned by Dr.  Cohen,  as custodian for each of Erica and
Nicole Cohen, to which Dr. Cohen also disclaims beneficial ownership.

                                       48
<PAGE>

     (6) This  number  includes  the right to acquire  750,000  shares of Common
Stock upon the  exercise of  presently  exercisable,  outstanding  options,  but
excludes the right to acquire 4,293,729 shares of Common Stock upon the exercise
of outstanding warrants that are not exercisable until April 15, 2006.

     (7) This  number  represents  shares  of  Common  Stock  owned by  Horizons
Investors Corp.  ("Horizons"),  a New York corporation  principally owned by Mr.
Fernandez, and includes the right to acquire 200,000 shares of Common Stock upon
the exercise of presently  exercisable,  outstanding  options,  but excludes the
right to  acquire  31,067,776  shares  of  Common  Stock  upon the  exercise  of
outstanding warrants that are not exercisable until April 15, 2006.

     (8) This number  includes  1,500 shares of Common Stock owned by Mr. Gold's
children  and the right to  acquire  220,000  shares of  Common  Stock  upon the
exercise  of  presently  exercisable,   outstanding  options,  but  excludes  an
additional  5,000 shares of Common Stock owned by Mr.  Gold's wife, to which Mr.
Gold disclaims beneficial ownership.

     (9) This number  includes the right to acquire  2,732,167  shares of Common
Stock upon the  exercise  of  presently  exercisable,  outstanding  options  and
warrants,  but excludes (i) the right to acquire  45,833  shares of Common Stock
upon  the   exercise  of  options  that  remain   subject  to  certain   vesting
requirements;  and (ii) the right to acquire  40,924,258  shares of Common Stock
upon the exercise of warrants that are not exercisable  until April 15, 2004. In
accordance with Rule 13d-3(d)(1)  under the Securities  Exchange Act of 1934, as
amended,  the 2,732,167 shares of Common Stock for which the Company's directors
and executive  officers,  as a group,  hold  currently  exercisable  options and
warrants,  have been added to the total number of issued and outstanding  shares
of Common Stock solely for the purpose of  calculating  the  percentage  of such
total number of issued and outstanding shares of Common Stock beneficially owned
by such directors and executive officers as a group.


                       SENIOR CONVERTIBLE PREFERRED STOCK:

     Set forth below is the name,  address,  stock ownership and voting power of
each person or group of persons  known by the Company to  beneficially  own more
than 5% of the outstanding shares of its Senior Convertible Preferred Stock:
<TABLE>
<CAPTION>
<C>                                                       <C>                 <C>
--------------------------------------------------------- ------------------- ----------------
                          Name                                Beneficial        Percent of
                                                              Ownership            Class
--------------------------------------------------------- ------------------- ----------------
--------------------------------------------------------- ------------------- ----------------
                                                                  0.74 (1)         100%
Rita Folger
1257 East 24th Street
Brooklyn, NY 11210
--------------------------------------------------------- ------------------- ----------------
</TABLE>

     (1) These shares are  convertible  into an  aggregate  of 98,519  shares of
Common  Stock;  and the holder  thereof  will be entitled to cast that number of
votes at any meeting of shareholders.




                                       49

<PAGE>

Item 13. Certain Relationships and Related Transactions

Cohen's Fashion Optical

     Drs.  Robert and Alan Cohen are  officers and  directors  of Cohen  Fashion
Optical,  Inc. ("CFO"),  including its affiliate,  Real Optical,  LLC. ("REAL").
CFO, which has been in existence  since 1978,  owns a chain of  company-operated
and  franchised  retail  optical  stores doing  business under the name "Cohen's
Fashion  Optical."  As of March 24,  2003,  CFO had 74  franchised  stores and 6
company-owned  stores (including one store operated by an affiliate of CFO under
the name "Cohen's  Optical").  In addition,  CFO also licenses to retail optical
stores the right to operate  under the name  "Cohen's Kids Optical" or "Ultimate
Spectacle."  As of March 26,  2004,  there were two  Ultimate  Spectacle  stores
located  in the State of New York;  and REAL,  as of such date,  operated  three
stores (under the name "Cohen's Fashion Optical"),  all of which were located in
New York State.  CFO and REAL stores are similar to the Company's retail optical
stores.  CFO has been  offering  franchises  since 1979 and currently has retail
optical  stores  in  the  States  of   Connecticut,   Florida,   New  Hampshire,
Massachusetts,  New Jersey and New York. In the future, Cohen's Fashion Optical,
Cohen's Kids Optical or Ultimate  Spectacle  stores may be located in additional
states.  As of March 26, 2004,  approximately  15 CFO stores were located in the
same  shopping  center  or mall as, or in close  proximity  to,  certain  of the
Company's  retail  optical  stores.  It is possible that one or more  additional
Cohen's  Fashion  Optical  stores,  Cohen's  Kids  Optical  stores  or  Ultimate
Spectacle  stores  may,  in the  future,  be  located  near  one or  more of the
Company's retail optical stores,  thereby  competing  directly with such Company
stores.  In addition,  the Company's  stores and certain of CFO's stores jointly
participate,  as providers,  under certain third party benefit plans obtained by
either the Company or CFO,  which  arrangement is anticipated to continue in the
future.

     In January 2002, the Company  subleased from CFO, for a term of five years,
a portion  of the space then  being  leased by CFO in a building  located at 100
Quentin Roosevelt Boulevard, Garden City, New York and, in connection therewith,
relocated its principal executive offices to such premises.  Occupancy costs are
being  allocated  between the Company and CFO based upon the  respective  square
footages being occupied. The Company believes that its rent with respect to such
premises is equal to the fair market rental value of such space.

     On December 31, 2002, the Company refinanced certain past due amounts, owed
to CFO, in an effort to improve its current cash flow position. As a result, the
Company  signed a 5-year,  $200,000  promissory  note, in favor of CFO,  bearing
interest  at a  rate  of  10%  per  annum,  and  is  payable  in  equal  monthly
installments of principal and interest.

     During the ordinary  course of  business,  largely due to the fact that the
entities  occupy office space in the same  building,  and in an effort to obtain
savings with respect to certain  administrative  costs, the Company and CFO will
at times share in the costs of minor  expenses.  Management  believes that these
expenses have been appropriately accounted for herein.

General Vision Services

     In January 2001,  General Vision Services,  LLC ("GVS"), a Delaware limited
liability company located in New York City and beneficially  owned, in principal
part,  by Drs.  Robert and Alan Cohen and  certain  members of their  respective
immediate families  (collectively,  the "Cohen Family"),  acquired substantially
all of the assets of General  Vision  Services,  Inc. As of March 26, 2004,  GVS
operated  approximately  24 retail optical  stores,  principally  located in New
Jersey and in the New York  metropolitan  area,  which stores are similar to the
retail optical stores operated and franchised by the Company.  In addition,  GVS
solicits and  administers  third party benefit  programs  similar to those being
administered by the Company.  It is possible that a GVS store, or another retail
optical store which provides third party benefit plans  administered by GVS, may
now or in the future be located near one or more of the Company's retail optical
stores and may be competing directly with such store.

     Furthermore,  the Company, CFO and GVS jointly participate in certain third
party benefit plans, and certain of the Company's  retail optical stores,  CFO's
stores and GVS' stores  participate as providers under third party benefit plans
obtained by either the Company, CFO or GVS and, in all likelihood, will continue
to do so in the future.

     In June 2001,  the Company  subleased to GVS its retail  optical store (and
the furniture,  fixtures and equipment located  therein),  located in Nyack, New
York,  at a rent per month equal to the rent and  additional  rent payable under
the Master Lease for such store,  less a monthly  rental  credit,  until May 31,
2003, of $2,500. Pursuant to the terms of such sublease, the Company transferred
and conveyed to GVS all of such store's  furniture,  fixtures and equipment from
and after June 15,  2003.  The  Company  continues  to sublet this store to GVS,
however the Company no longer provides a rent subsidy.

     Further,  in  April  2002,  EVI  sold  to  GVS,  for  the  sum of  $55,000,
substantially  all of the assets of one of its stores  located in New York City,
together with all of the capital stock of its wholly-owned subsidiary,  Sterling
Vision of 125th  Street,  Inc.,  which is the tenant  under the Master Lease for
such store.

                                       50
<PAGE>

     During 2003,  2002 and 2001,  the Company  purchased  from City Lens,  Inc.
("City Lens"), an ophthalmic lens laboratory owned by GVS, ophthalmic lenses and
certain lens refinishing  services for its Company-owned  stores.  For the years
ended  December  31,  2003,  2002 and 2001,  the total  cost of such  lenses and
services  purchased  from  City Lens was  approximately  $26,000,  $228,000  and
$243,000,  respectively.  The Company  believes that the cost of such lenses and
services  were as  favorable  to the  Company  as those  which  could  have been
obtained from an unrelated third party.

Vision World

     In October 2003,  Vision World,  LLC, a Delaware limited  liability company
located in New York City and  beneficially  owned,  in principal  part,  by Drs.
Robert  and Alan  Cohen  and  certain  members  of the  Cohen  Family,  acquired
substantially  all of the assets of Eyeglass Services  Industries,  Inc.'s third
party administration business. Vision World solicits and administers third party
benefit  programs  similar to those being  administered  by the  Company.  It is
possible  that a Vision  World  store,  or another  retail  optical  store which
provides third party benefit plans  administered by Vision World,  may now or in
the future be located near one or more of the Company's  retail  optical  stores
and may be competing directly with such store.

Additional Agreements and Transactions Between the Company and the Cohen Family

     On December 6, 2001,  the Company  borrowed  from  Broadway  Partners,  LLC
("Broadway"),  a New York  partnership  owned by certain of Dr.  Robert and Alan
Cohen's  children,  the sum of  $300,000,  which loan,  together  with  interest
thereon,  calculated  at 1% above  the prime  rate of  interest,  was  repaid to
Broadway, in full, on January 23, 2002.

     On July 23, 2002, the Board  authorized the Company to borrow $300,000 from
Dr.  Robert  Cohen.  The loan was  payable on August  10,  2002,  together  with
interest  in an amount  equal to 1% of the  principal  amount of such loan.  The
Company repaid this loan, in full, on August 8, 2002.

     On April 4, 2003, the Board  authorized the Company to borrow $100,000 from
Dr.  Robert  Cohen.  The loan was payable  immediately  after the closing of the
Company's  Rights  Offering,  together with interest in an amount equal to 1% of
the  principal  amount of such loan.  The Company  repaid this loan, in full, on
April 22, 2003, with a portion of the proceeds from the Rights Offering.

Newtek Business Services

     Christopher G. Payan, one of the Company's Chief Operating Officers, serves
on the board of directors of Newtek Business Services,  Inc. ("NBSI"), a company
that provides various financial services to both small and mid-sized businesses.
The Company  utilizes the bank and non-bank card  processing  services of one of
NBSI's  affiliated  companies.  During the year ended  December  31,  2003,  the
Company paid approximately $23,000 to such affiliate for such services provided.
The Company  believes  that the cost of such  services  was as  favorable to the
Company as those which could have been obtained from an unrelated third party.

Horizons Investors Corp. and Matters Relating to Benito R. Fernandez

     On December 3, 2001 and  December  20,  2001,  the  Company  borrowed  from
Horizons the sums of $150,000 and $300,000,  respectively,  each of which loans,
together with  interest  thereon,  calculated  at 1% above the prime rate,  were
repaid by the Company, in full, on January 23, 2002.

     On January 23,  2002,  the Company and  Horizons  entered  into a series of
agreements  pursuant to which Horizons  established,  in favor of the Company, a
credit  facility,  in the  maximum  amount  of  $1,000,000  and,  in  connection
therewith,  the Company  obtained from Horizons  advances  thereunder,  totaling
$450,000.  In connection with the closing of the Company's Rights Offering,  the
Company repaid these amounts, in full, on April 22, 2003.

     In  connection  with the  above  financing  arrangements,  EVI  issued,  to
Horizons,  five-year warrants to purchase up to 2,500,000 shares of EVI's Common
Stock at an exercise  price of $0.01 per share.  Horizons  exercised  2,000,000,
250,000 and 250,000 of such  warrants on May 1, 2002,  July 22, 2002 and October
22, 2002, respectively.

Transactions Among the Company, Horizons Investors Corp. , and the Cohen Family

     On December 31, 2003,  the Company  entered into  agreements,  with each of
Horizons  and  certain of the  members of the Cohen  Family  (collectively,  the
"Subject  Shareholders"),  pursuant to which the Company and each of the Subject
Shareholders agreed to, and effectuated,  (a) the rescission,  ab initio, of the
exercise,  by the Subject  Shareholders,  of 13,000,000 of the over-subscription
rights of the Subject Shareholders (and,  accordingly,  of the issuance, to such

                                       51
<PAGE>

Subject Shareholders,  of the units associated therewith) granted to them in the
Rights  Offering,  and (b) the rescission,  surrender and cancellation of all of
the remaining  warrants  (33,210,028 in the aggregate) that were acquired by the
Subject  Shareholders  in the Rights  Offering  (collectively,  the  "Rescission
Transactions").  In connection  with the  Rescission  Transactions,  the Company
agreed to repay each Subject  Shareholder  the original  subscription  amount of
$0.04  (previously  paid by each Subject  Shareholder) for each of the rescinded
units  (together  with  interest  at a rate of 6% per annum from the date of the
original  acquisition  thereof),  which, in the aggregate for all of the Subject
Shareholders,  totaled  $520,000.  This sum (plus  interest) is payable,  by the
Company,  on or before April 14, 2007,  pursuant to a series of promissory notes
issued to the Subject Shareholders.

     Recognizing  that the  Subject  Shareholders  suffered  certain  damages in
connection  with the  Rescission  Transactions,  on December 31,  2003,  (i) the
Company and the Shareholders entered into settlement agreements with each of the
Subject  Shareholders,  pursuant to which the Subject Shareholders  released any
and all claims  that they may have had  against  the  Company as a result of the
consummation  of  the  Rescission   Transactions,   and  (ii)  the  Company,  in
consideration  for such releases,  granted to the Subject  Shareholders,  in the
aggregate,  new warrants to purchase  59,210,028  shares of the Company's common
stock.  The exercise  prices of the new  warrants  issued to each of the Subject
Shareholders  ranged  from  $0.0465  to  $0.0489.  These  exercise  prices  were
calculated  with the intention of allowing the Subject  Shareholders to purchase
equity of the Company on  substantially  the same economic terms that they would
have been  originally  entitled  pursuant  to the Rights  Offering,  but for the
Rescission  Transactions.  The new warrants are not exercisable  until April 15,
2006, and expire on April 14, 2008.


Item 14.  Principal Accountant Fees and Services

     The  following  is a summary of the fees  billed to us by  Miller,  Ellin &
Company LLP, our independent  auditors,  for professional  services rendered for
the years ended December 31, 2003 and 2002:



Fee Category                             2003                        2002
------------                             ----                        ----

Audit fees (1)                        $  92,500                   $ 160,468
Audit-related fees                            -                           -
Tax fees (2)                                  -                      45,000
All other fees                            9,532                           -
                                      ---------                   ---------
     Total fees                       $ 102,032                   $ 205,468
                                      =========                   =========

     (1) Audit fees consist of aggregate fees billed for  professional  services
rendered  for the audit of our  annual  financial  statements  and review of the
interim financial  statements included in quarterly reports or services that are
normally  provided by the independent  auditors in connection with statutory and
regulatory  filings or  engagements  for the years ended  December  31, 2003 and
2002.

     (2) Tax fees consist of  aggregate  fees billed for  professional  services
rendered for the preparation of our  consolidated  federal and state tax returns
that are normally  provided by the  independent  auditors in connection with IRS
regulations for the years ended December 31, 2003 and 2002.







                                       52
<PAGE>
                                     PART IV
                                     -------

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as a part of this Report:

1.      Financial Statements.

              Consolidated Balance Sheets as of December 31, 2003 and 2003

              Consolidated Statements of Operations for the Years Ended
                 December 31, 2003, 2002 and 2001

              Consolidated Statements of Shareholders' Equity (Deficit) for the
                 Years Ended December 31, 2003, 2002 and 2001

              Consolidated Statements of Cash Flows for the Years Ended
                 December 31, 2003, 2002 and 2001

              Notes to Consolidated Financial Statements

2. Financial Statement Schedules:

     All financial  statement  schedules have been omitted  because they are not
applicable,  are not  required,  or the  information  required  to be set  forth
therein is included in the Consolidated Financial Statements or Notes thereto.

3.      Exhibits

                                                   EXHIBIT INDEX

Exhibit
Number

     3.1 Restated  Certificate of Incorporation of Sterling Vision,  Inc., filed
on December 20, 1995  (incorporated by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K/A for the year ended December 31, 1995)

     3.2 Amended and Restated By-Laws of Sterling  Vision,  Inc., dated December
18, 1995  (incorporated  by  reference  to Exhibit 3.2 to the  Company's  Annual
Report on Form 10-K/A for the year ended December 31, 1995)

     3.3  Certificate  of  Amendment  of the  Certificate  of  Incorporation  of
Sterling Vision,  Inc., filed on January 26, 2000  (incorporated by reference to
Exhibit  3.3 to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 2002)

     3.4 Form of Certificate of Amendment of the Certificate of Incorporation of
Sterling Vision,  Inc., filed on February 8, 2000  (incorporated by reference to
Exhibit 10.94 to the Company's  Current  Report on Form 8-K,  dated  February 8,
2000)

     3.5 Form of Certificate of Amendment of the Certificate of Incorporation of
Sterling Vision,  Inc., filed on February 10, 2000 (incorporated by reference to
Exhibit 10.96 to the Company's  Current  Report on Form 8-K,  dated  February 8,
2000)

     3.6  Certificate  of  Amendment  of the  Certificate  of  Incorporation  of
Sterling  Vision,  Inc.,  filed on April 17, 2000  (incorporated by reference to
Exhibit  3.6 to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 2002)

     3.7  Certificate  of  Amendment  of the  Certificate  of  Incorporation  of
Emerging  Vision,  Inc.,  filed on July 15, 2002  (incorporated  by reference to
Exhibit  3.7 to the  Company's  Annual  Report on Form  10-K for the year  ended
December 31, 2002)

     3.8 First  Amendment  to Amended and Restated  By-Laws of Emerging  Vision,
Inc.,  dated November 13, 2003  (incorporated by reference to Exhibit 3.8 to the
Company's Current Report in Form 8-K, dated December 31, 2003.

                                       53
<PAGE>

     4.1  Specimen of Common  Stock  Certificate  (incorporated  by reference to
Exhibit 4.1 to the Company's Registration Statement No. 33-98368)

     4.2 Form of  Warrant,  dated  December  16,  1999,  issued to  MY2000,  LLC
(incorporated  by reference to Exhibit 10.93 to the Company's  Current Report on
Form 8-K/A, dated December 16, 1999)

     4.3 Form of Warrant issued to Purchasers in the Company's Private Placement
of Units  consisting  of Series B  Convertible  Preferred  Stock and Warrants to
purchase Common Stock (incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement No. 333-37160)

     4.4 Form of Warrant  issued to Placement  Agents  (and/or their  respective
designees) in connection with the Company's Private  Placement  (incorporated by
reference to Exhibit 4.3 to the Company's Registration Statement No. 333-37160)

     4.5  Warrant  Certificate  and  Agreement,  dated as of January  16,  2001,
between  Emerging  Vision,  Inc. and Goldin  Associates,  LLC  (incorporated  by
reference to Exhibit 10.117 to the Company's  Quarterly  Report on Form 10-Q for
the quarter ended June 30, 2001)

     4.6 Warrant Certificate and Agreement,  dated as of April 26, 2001, between
Emerging  Vision,  Inc.  and Balfour  Investors  Incorporated  (incorporated  by
reference to Exhibit 10.118 to the Company's  Quarterly  Report on Form 10-Q for
the quarter ended June 30, 2001)

     4.7 Form of Warrant issued to Subscribers in connection  with the Company's
Rights  Offering  (incorporated  by  reference  to Exhibit 4.5 to the  Company's
Registration Statement No. 333-100697)

     4.8 * Form of Warrant  issued to Subject  Shareholders  in connection  with
Settlement Agreements

     10.1 Sterling  Vision,  Inc.'s 1995 Stock Incentive Plan  (incorporated  by
reference to Exhibit 10.2 to the Company's Registration Statement No. 33-98368)

     10.2 Form of Sterling Vision,  Inc.'s Franchise Agreement  (incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement No. 33-98368)

     10.3 Form of  Franchisee  Stockholder  Agreement to be entered into between
Sterling Vision, Inc. and certain of its Franchisees  (incorporated by reference
to Exhibit 10.47 to the Company's Registration Statement No. 33-98368)

     10.4 First Amendment to Sterling  Vision,  Inc.'s 1995 Stock Incentive Plan
(incorporated by reference to Exhibit 10.63 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996, File No. 1-14128)

     10.5 Exchange Agreement,  dated April 14, 1998, between the Company and the
Original  Holders of the  Registrant's  Convertible  Debentures Due February 17,
1999  (incorporated by reference to Exhibit 10.78 to the Company's  Current Form
on 8-K, dated April 14, 1998)

     10.6  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)

     10.7  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)

     10.8  Third   Amendment  to  Convertible   Preferred   Stock  and  Warrants
Subscription  Agreement,  dated December 7, 1999  (incorporated  by reference to
Exhibit 10.90 to the Company's  Current  Report on Form 8-K,  dated  December 7,
1999)

     10.9  Asset  Purchase  Agreement,  dated as of May 31,  2001,  by and among
Insight Laser Centers  N.Y.I,  Inc.,  Insight  Amsurg  Centers,  Inc.,  Emerging
Vision, Inc. and Amsurg Acquisition Corp.  (incorporated by reference to Exhibit
10.114 to the Company's Current Report on Form 8-K, dated June 13, 2001)

     10.10 Form of Settlement  Agreement and General Release,  dated as of April
1, 2002,  between  Emerging  Vision,  Inc. and each of V.C.  Enterprises,  Inc.,
Bridget Licht, Sitescope,  Inc.,  Eyemagination Eyeworks, Inc. and Susan Assael,
including  the  form of Area  Representation  Agreement  annexed  thereto  as an
Exhibit  (incorporated  by reference to Exhibit  10.37 to the  Company's  Annual
Report on Form 10-K for the year ended December 31, 2001)

                                       54
<PAGE>

     10.11 Warrant  Agreement,  dated February 10, 2003, by and between Emerging
Vision,  Inc. and Mellon  Investor  Services LLC  (incorporated  by reference to
Exhibit 10.38 to the Company's Registration Statement No. 333-100697)

     10.12  Employment  Agreement,  effective as of February  11, 2002,  between
Emerging  Vision,  Inc. and Christopher G. Payan  (incorporated  by reference to
Exhibit  10.17 to the  Company's  Annual Report on Form 10-K for they year ended
December 31, 2002)

     10.13 * Form of  Rescission  Agreement  between  the  Company  and  certain
Subject Shareholders

     10.14 * Form of  Promissory  Note made by the  Company  in favor of Subject
Shareholders in connection with Rescission Agreements

     10.15 * Form of  Settlement  Agreement  between  the  Company  and  certain
Subject Shareholders as a result of Rescission Transactions

     21.1 * List of Subsidiaries

     23.1 * Consent of Independent Public Accountants

     31.1 *  Certification  of Co-Chief  Operating  Officer and Chief  Financial
Officer pursuant to Securities  Exchange Act Rules 13a-14 and 15d-14, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     31.2 * Certification of Co-Chief  Operating  Officer pursuant to Securities
Exchange Act Rules 13a-14 and 15d-14

     31.3 * Certification of Co-Chief  Operating  Officer pursuant to Securities
Exchange Act Rules 13a-14 and 15d-14

     32.1 *  Certification  of Co-Chief  Operating  Officers and Chief Financial
Officer  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002


*  Exhibit being filed herewith


(b)     Reports on Form 8-K:

     1. On November 6, 2003,  the Company filed a Report on Form 8-K  announcing
the  rescission  of the  unsolicited  offer to  acquire  all of the  outstanding
capital stock of the Company.

     2. On February 17, 2004,  the Company  filed a Report on Form 8-K regarding
the issuance of a press release, on February 16, 2004,  regarding the rescission
of units and warrants in connection with the Company's Rights Offering.


                                       55

<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  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.


                                      EMERGING VISION, INC.


                                      By: /s/ Christopher G. Payan
                                         ---------------------------------------
                                          Christopher G. Payan
                                          Senior Vice President,
                                          Co-Chief Operating Officer and
                                          Chief Financial Officer
                                          (Co-Principal Executive Officer and
                                          Principal Financial Officer)

                                      Date:  April 5, 2004


     Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.


Signature                      Title                                   Date
---------                      -----                                   ----

/s/ Christopher G. Payan   Senior Vice President,                 April 5, 2004
------------------------   Co-Chief Operating Officer,
Christopher G. Payan       Chief Financial Officer
                           and Director
                           (Co-Principal Executive Officer
                           and Principal Financial Officer)

/s/ Samuel Z. Herskowitz   Co-Chief Operating Officer and         April 5, 2004
------------------------   Chief Marketing Officer
Samuel Z. Herskowitz       (Co-Principal Executive Officer)

/s/ Myles S. Lewis         Co-Chief Operating Officer and         April 5, 2004
------------------------   Senior Vice President - Business
Myles S. Lewis             Development
                           (Co-Principal Executive Officer)


/s/ Brian P. Alessi        Corporate Controller                   April 5, 2004
------------------------   and Treasurer
Brian P. Alessi            (Principal Accounting Officer)


/s/ Dr. Alan Cohen         Chairman of the Board of Directors     April 5, 2004
------------------------
Dr. Alan Cohen


/s/ Dr. Robert Cohen       Director                               April 5, 2004
------------------------
Dr. Robert Cohen


                           Director                               April _, 2004
------------------------
Benito R. Fernandez


/s/ Joel L. Gold           Director                               April 5, 2004
------------------------
Joel L. Gold


                                       56
<PAGE>

                                                                     EXHIBIT 4.8


     The  securities  represented  by this  Certificate  (including  the Warrant
Shares  described  below) have not been  registered  under the Securities Act of
1933, as amended (the "Securities Act"). These securities have been acquired for
investment  purposes  only and not with a view to  distribution,  and may not be
sold,  transferred,  pledged or  hypothecated  in the  absence  of an  effective
registration  statement for such securities  under the Securities Act or unless,
in the opinion of counsel for the holder of this  Certificate,  such transaction
is exempt from the registration requirements of the Securities Act.


                              Emerging Vision, Inc.

                        WARRANT CERTIFICATE AND AGREEMENT


                          Dated as of December 31, 2003


                        Warrants to Purchase Common Stock


     Emerging  Vision,  Inc., a New York  corporation  (the  "Company"),  hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged,  ____________________,  a  __________________,
(the  "Investor"),  is the registered owner of  _____________  warrants (each, a
"Warrant" and,  collectively,  the  "Warrants"),  each of which will entitle the
Investor,  at any time after the date hereof, to purchase one share, as adjusted
from time to time as  provided  for herein,  of the Common  Stock of the Company
(each such purchased share being a "Warrant Share" and all such shares being the
"Warrant Shares"),  at the exercise price of $ _____ per share (as adjusted from
time to time as provided herein, the "Exercise  Price"),  at any time within the
period (such period being the  "Exercise  Period")  commencing on April 15, 2006
(the "Vesting Date"), and ending at the close of business on April 14, 2008 (the
"Expiration Date"), all subject to the following terms and conditions:


     SECTION 1. Certain Definitions.  As used in this Warrant  Certificate,  the
following terms have the respective meanings set forth below:

     "Affiliate"  of any  Person  or entity  means  any  other  Person or entity
directly or  indirectly  controlling,  controlled by or under direct or indirect
common control with such Person or entity, any member of the immediate family of
such  Person,  or  any  officer,   director,   employee,   agent  or  authorized
representative of such entity.

     "Common  Stock" shall mean shares of the Common  Stock of the Company,  par
value $.01 per share.


                                       1
<PAGE>

     "Date of Exercise" of any Warrant  shall mean the date on which the Company
shall have received both: (i) the original of this Warrant Certificate, with the
Form of Election to Purchase attached hereto,  appropriately  filled in and duly
signed; and (ii) payment of the Exercise Price for such Warrant,  either in cash
or pursuant to the provisions of Section 4(e) hereof.

     "Form of Assignment"  shall mean the form of Assignment of Warrant attached
to this Warrant Certificate.

     "Form of Election to Purchase"  shall mean the form of Election to Purchase
attached to this Warrant Certificate.

     "Market  Price",  as of any date,  shall be deemed to be the last  reported
sale  price or,  in case no such  reported  sale  takes  place on such day,  the
average of the last reported sale prices for the last three (3) trading days, in
either case, as officially quoted on the OTC Bulletin Board, or by the principal
securities  exchange  on which the Common  Stock is then  listed or  admitted to
trading  or, if the Common  Stock is not quoted on the OTC  Bulletin  Board,  or
listed or admitted to trading on any national securities exchange, as determined
in good faith by resolution  of the Board of Directors of the Company,  based on
the best information then available to it. Should the Market Price be determined
by the Board of  Directors  of the  Company  pursuant  to the last clause of the
previous sentence,  such determination  shall, absent manifest error, be binding
upon the holder of the Warrants.

     "Person"  shall mean an  individual,  a  partnership,  a joint  venture,  a
corporation,   a  limited   liability   company,   a  trust,  an  unincorporated
organization,  or a government or any department or agency thereof, or any other
entity.

     "Warrant  Certificate"  shall mean this Warrant  Certificate  and Agreement
including all Exhibits and Attachments hereto.


     SECTION 2. Registration.

     (a)  Registration  on Company's  Records.  The Company shall  register each
Warrant  upon  records to be  maintained  by the Company for that purpose in the
name of the  record  holder of such  Warrant  from time to time.  Subject to the
provisions  of Section 3 hereof,  the Company may deem and treat the  registered
holder of each  Warrant as the  absolute  owner  thereof  for the purpose of any
exercise  thereof,  any  distribution  to the holder  thereof  and for all other
purposes.

     (b) Notation on Warrant Shares.  Unless and until registered by the Company
under the Act, the Warrant  Shares issued upon the exercise of the Warrant shall
be  subject  to a stop  transfer  order  and  the  certificate  or  certificates
evidencing such Warrant Shares shall bear the following legend:


                                       2
<PAGE>

     "THE SHARES OF COMMON STOCK  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN
REGISTERED  UNDER,  AND ARE  RESTRICTED  SECURITIES  WITHIN THE  MEANING OF, THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR
OTHERWISE  DISPOSED  OF  EXCEPT  IN  ACCORDANCE  WITH SUCH ACT AND THE RULES AND
REGULATIONS  PROMULGATED  THERREUNDER AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS.  THE  ISSUER  OF  THESE  SECURITIES  WILL  NOT  TRANSFER  SUCH
SECURITIES  EXCEPT UPON RECEIPT OF EVIDENCE  SATISFACTORY TO THE ISSUER THAT THE
REGISTRATION  PROVISIONS  OF SUCH ACT HAVE BEEN  COMPLIED  WITH OR AN OPINION OF
COUNSEL TO THE  EFFECT  THAT SUCH  REGISTRATION  IS NOT  REQUIRED  AND THAT SUCH
TRANSFER WILL NOT VIOLATE ANY APPLICABLE FEDERAL OR STATE SECURITIES LAWS."

     (c) Agreement to Register Warrant Shares.  As a material  inducement to the
Investor in acquiring the Warrants, the Company hereby agrees that, in the event
that it shall,  during the Exercise Period,  receive,  from Investor,  a written
request  for  the  Company  to  register  its  Warrant   Shares  (the  "Investor
Registration  Request"),  which  request shall be  accompanied  by an opinion of
counsel to the  Investor  that  provides  that,  at any time during the Exercise
Period, an exemption from registration  (e.g.,  pursuant to Rule 144 promulgated
by the Securities and Exchange Commission (the "SEC") pursuant to the Securities
Act of 1933 (the  "Securities  Act")) of the Warrant Shares (upon valid exercise
of the Warrants) shall not then be available to the Investor,  the Company shall
thereafter use its reasonable, good faith efforts to register the Warrant Shares
under the Securities Act pursuant to, and in accordance  with, the provisions of
Exhibit A annexed hereto and incorporated herein by this reference.


     SECTION 3. Transfers and Exchanges of Warrants and Warrant Shares.

     (a) Registration of Transfers and Exchanges. Subject to: (i) the provisions
of the last sentence of Section 3(c) below; and (ii) the Company's prior receipt
of an opinion of counsel (in form and substance  reasonably  satisfactory to it)
indicating  that such transfer is permitted  under the Securities Act and/or any
other  applicable state securities laws, the Company shall register the transfer
of any Warrants  upon records to be  maintained  by the Company for that purpose
upon  surrender of the original of this  Warrant  Certificate,  with the Form of
Assignment  attached  hereto,  duly filled in and signed,  to the Company at the
office  specified  in  or  pursuant  to  Section  4(d)  hereof.  Upon  any  such
registration of transfer, a new Warrant  Certificate,  in substantially the form
of this Warrant  Certificate,  evidencing the Warrants so  transferred  shall be
issued  to the  transferee  and a new  Warrant  Certificate,  in  similar  form,
evidencing the remaining Warrants not so transferred, if any, shall be issued to
the then registered holder thereof.

     (b)  Warrants  Exchangeable  for  Different  Denominations.   This  Warrant
Certificate is  exchangeable,  upon the surrender hereof by the holder hereof at
the office of the Company  specified in or pursuant to Section 4(d) hereof,  for
one or more new Warrant  Certificates,  each in  substantially  the form of this
Warrant  Certificate,  evidencing,  in the aggregate,  the right to purchase the


                                       3
<PAGE>

number of Warrant Shares which may then be purchased hereunder, each of such new
Warrant  Certificates to be dated the date of such exchange and to represent the
right to purchase  such number of Warrant  Shares as shall be designated by said
holder hereof at the time of such surrender.

     (c)  Transferability.  Subject to the first sentence of Section 3(a) above,
the last  sentence of this  Section  3(c) and to  restrictions  contained in the
Securities  Act and any  applicable  state  securities or "blue sky" laws,  each
Warrant represented by this Warrant Certificate is transferable,  in whole or in
part,  at the option of the holder  hereof,  when this  Warrant  Certificate  is
surrendered,  together with the Form of Assignment  attached hereto, duly filled
in and signed, at the offices of the Company specified in or pursuant to Section
4(d)  hereof.  Upon  such  surrender,   the  Company  shall  issue  new  Warrant
Certificate(s)  pursuant to Section 3(a) hereof.  Notwithstanding the foregoing,
no Warrant may be  transferred  by the Investor,  other than to its  Affiliates,
each  of  whom  will  be  thereafter   restricted   (prohibited)   from  further
transferring the same.


     SECTION 4. Vesting, Duration and Exercise of Warrants.


     (a)  Vesting.  Each of the  Warrants  may be  exercised  from and after the
Vesting Date, and until the Expiration Date.

     (b) Exercise.  Each of the Warrants  shall be exercisable by the registered
holder thereof on any business day before 5:00 P.M.,  Eastern  Standard Time, on
or prior to the  Expiration  Date. At 5:00 P.M.,  Eastern  Standard Time, on the
Expiration  Date,  each Warrant not exercised  prior thereto shall be and become
void and of no value.

     (c) Subject to the  provisions of this Warrant  Certificate,  including the
adjustment  to the number of Warrant  Shares  issuable  on the  exercise of each
Warrant and to the Exercise Price thereof, all pursuant to Section 8 hereof, the
holder of each Warrant, on or prior to the Expiration Date, shall have the right
to purchase  from the Company  (and the Company  shall be obligated to issue and
sell to such holder of a Warrant), at the Exercise Price, one fully paid Warrant
Share which is non-assessable.

     (d) Upon surrender of this Warrant  Certificate,  with the Form of Election
to  Purchase  duly  filled in and  signed,  to the Company at its offices at 100
Quentin  Roosevelt  Boulevard,  Suite 508,  Garden City,  New York 11530 (to the
attention  of its  Secretary,  with  a copy  to  the  attention  of its  General
Counsel),  or at such other address as the Company may specify in writing to the
then  registered  holder(s) of the Warrants,  and payment of the Exercise  Price
multiplied  by the number of Warrant  Shares then  issuable upon the exercise of
the Warrants being  exercised,  in lawful money of the United States of America,
all as  specified  by the  holder  of this  Warrant  Certificate  in the Form of
Election  to  Purchase,  the  Company  shall  promptly  cause to be  issued  and
delivered  to, or upon the  written  order  of,  the  registered  holder of such
Warrants,  and in such name or names as such registered holder may designate,  a
certificate  for the Warrant  Shares issued upon such exercise of such Warrants.
Any Person so  designated to be named therein shall be deemed to have become the
holder of  record of such  Warrant  Shares  as of the Date of  Exercise  of such
Warrants.


                                       4
<PAGE>

     (e) In addition  to the method of payment set forth in Section  4(d) above,
and in lieu of any  cash  payment  required  thereunder,  the  holder(s)  of the
Warrants  shall have the right,  at any time and from time to time  (subject  to
such holder(s) then having Warrants to purchase a sufficient number of shares of
Common  Stock as to allow for the  payment  as  provided  for  hereinbelow),  to
exercise the Warrants (in a broker assisted, cashless exercise transaction or by
such other method as may then be reasonably  acceptable to the Company), in full
or in part, by surrendering this Warrant Certificate, in the manner specified in
Section 4(d) above, as payment of the aggregate Exercise Price for the number of
Warrants  then being  exercised  by such  holder.  The number of  Warrants to be
surrendered  in  payment  of the  aggregate  Exercise  Price  for the  number of
Warrants then being  exercised by such holder shall be determined by multiplying
the number of Warrants to be exercised by the Exercise Price,  and then dividing
the product  thereof by an amount  equal to the Market Price per share of Common
Stock.  Solely for the  purposes of this  Section  3(e),  Market  Price shall be
either:  (i) the Market Price on the date on which the Form of Election attached
hereto is deemed to have been sent to the Company  pursuant to the provisions of
Section 11 hereof (the "Notice  Date");  or (ii) the average of the Market Price
for each of the five trading days preceding the Notice Date, whichever of (i) or
(ii) is greater.

     (f)  The  Warrants   evidenced  by  this  Warrant   Certificate   shall  be
exercisable,  either as an entirety or for a portion thereof,  from time to time
after the Vesting  Date,  for the number of Warrants  evidenced  by this Warrant
Certificate.  If  less  than  all of the  Warrants  evidenced  by  this  Warrant
Certificate  are exercised at any time, the Company shall issue, at its expense,
a new  Warrant  Certificate,  in  substantially  the same  form as this  Warrant
Certificate,  for the  remaining  number of Warrants  evidenced  by this Warrant
Certificate.

     SECTION 5.  Payment of Taxes.  The Company  will pay all transfer and stock
issuance  taxes  attributable  to the initial  issuance,  only,  of the Warrants
and/or the Warrant Shares,  or the initial  issuance or delivery of certificates
for Warrant Shares or other securities in respect of the Warrant Shares upon the
exercise of Warrants,  provided  that the Company  shall not be obligated to pay
any taxes due or  payable as a result of the  transfer,  by the  holder,  of any
Warrants or Warrant Shares.

     SECTION  6.  Mutilated  or Missing  Warrant  Certificate.  If this  Warrant
Certificate shall be mutilated,  lost, stolen or destroyed,  upon request by the
registered  holder of the Warrants,  the Company will issue, in exchange for and
upon cancellation of the mutilated Warrant  Certificate,  or in substitution for
the lost, stolen or destroyed Warrant Certificate, a new Warrant Certificate, in
substantially  the same  form as this  Warrant  Certificate,  of like  tenor and
representing the equivalent number of Warrants,  but, in the case of loss, theft
or  destruction,  only upon receipt of evidence  satisfactory  to the Company of
such loss, theft or destruction of this Warrant Certificate and, if requested by
the Company, an indemnity also satisfactory to it.

     SECTION 7. Reservation and Issuance of Warrant Shares.

     (a) The  Company  will at all times have  authorized,  and reserve and keep
available,  free from  preemptive  rights,  for the  purpose of  enabling  it to
satisfy  any  obligation  to  issue  Warrant  Shares  upon the  exercise  of the
Warrants,  the number of shares of Warrant Shares  deliverable upon the exercise


                                       5
<PAGE>

of the Warrants.  The Company will not, however, be required to cause any of the
Warrant  Shares to be listed (upon  issuance or notice of issuance) on any stock
exchange.

     (b) Before  taking any action which could cause an  adjustment  pursuant to
Section 8 hereof  reducing the Exercise  Price below the then par value (if any)
of the Warrant Shares,  the Company will use its reasonable,  good faith efforts
to take any  corporate  action  which may be necessary in order that the Company
may validly and legally  issue,  at the Exercise  Price as so adjusted,  Warrant
Shares that are fully paid and non-assessable.

     (c) The Company  covenants that all Warrant  Shares will,  upon issuance in
accordance with the terms of this Warrant Certificate,  be: (i) duly authorized,
fully  paid and  nonassessable;  (ii) free from all taxes  with  respect  to the
issuance thereof and from all liens,  charges and security  interests created by
the Company; and (iii) subject only to the restrictions on transfer contained in
the Securities Act,  applicable  state securities or "blue sky" laws and Section
3(c) hereof, freely transferable.


     SECTION 8. Anti-Dilution and Protective Provisions.

     (a)  Adjustment of Exercise  Price.  The Exercise Price shall be subject to
adjustment  in the event that:  (i) any  dividends  on any class of stock of the
Company  payable in Common  Stock or  securities  convertible  into Common Stock
shall be paid by the  Company;  or (ii) the  Company  shall  subdivide  its then
outstanding shares of Common Stock into a greater number of shares; or (iii) the
Company shall combine outstanding shares of Common Stock, by reclassification or
otherwise.  In any such event, the Exercise Price in effect immediately prior to
such event shall (until adjusted again pursuant hereto) be adjusted  immediately
after such event to a price  (calculated to the nearest full cent) determined by
dividing (x) the number of shares of Common Stock outstanding  immediately prior
to such event, multiplied by the then Exercise Price, by (y) the total number of
shares of Common Stock  outstanding  immediately after such event (including the
maximum  number of shares of Common Stock  issuable in respect of any securities
convertible into Common Stock), and the resulting quotient shall be the adjusted
Exercise Price per Warrant Share.  Notwithstanding the foregoing,  no adjustment
of the Exercise Price shall be made if the amount of such  adjustments  shall be
less than one cent per Warrant Share, but in such case any adjustment that would
otherwise  be required to be made shall be carried  forward and shall be made at
the time and together with the next subsequent  adjustment which,  together with
any adjustment or adjustments so carried forward,  shall amount to not less than
one cent per Warrant Share.

     (b)  Adjustment  of Number of Warrant  Shares  Purchasable  on  Exercise of
Warrants.  Upon each  adjustment of the Exercise  Price pursuant to Section 8(a)
hereof,  the  Investor  shall  thereafter  (until  another such  adjustment)  be
entitled to purchase,  at the adjusted  Exercise  Price,  the adjusted number of
Warrant  Shares,  calculated to the nearest full share,  obtained by multiplying
the then number of Warrant Shares  specified  herein (as adjusted as a result of
all  adjustments in the Exercise Price in effect prior to such  adjustment),  by
the Exercise Price in effect prior to such adjustment,  and dividing the product
so obtained by the adjusted Exercise Price.


                                       6
<PAGE>

     (c) Notice as to Adjustment.  Upon any adjustment of the Exercise Price and
an increase or  decrease in the number of shares of Warrant  Shares  purchasable
upon the  exercise of the  Warrants,  then,  and in each such case,  the Company
shall,  within ten (10) days after the effective date of such  adjustment,  give
written  notice  thereof to  Investor,  which  notice  shall state the  adjusted
Exercise Price and the increased or decreased number of shares  purchasable upon
the exercise of the Warrants,  setting forth in reasonable  detail the method of
calculation and the facts upon which such calculation is based.

     (d) Effect of Reorganization, Reclassification, Merger, Etc. If at any time
while any Warrant is  outstanding  there should be (any such  transaction  being
hereinafter referred to as a "Change of Control") (i) any capital reorganization
or reclassification of the capital stock of the Company (other than the issue of
any shares of Common Stock in subdivision of outstanding  shares of Common Stock
by reclassification or otherwise and other than a combination of shares provided
for in Section 8(a) hereof),  or (ii) any consolidation or merger of the Company
with another  entity,  or any sale,  conveyance,  lease or other transfer by the
Company  of all or  substantially  all of its  assets to any other  entity,  the
Investor  shall,  during the  remainder of the Exercise  Period,  be entitled to
receive,  upon  payment  of the  Exercise  Price,  the  amount  of cash or other
consideration, and the number of shares of stock or other securities or property
(of  the  Company,  or of the  successor  entity  resulting  from  such  merger,
consolidation  or similar  transaction,  or of the entity to which the assets of
the Company have been sold, conveyed,  leased or otherwise  transferred,  as the
case may be, in such  Change of  Control),  to which the  holder of the  Warrant
Shares (and any other securities and property) of the Company,  deliverable upon
the  exercise  of such  Warrant,  would have been  entitled  (upon such  capital
reorganization,  reclassification of capital stock, consolidation, merger, sale,
conveyance,  lease or other  transfer)  if all  Warrants  herein  had been fully
exercised immediately prior to such capital reorganization,  reclassification of
capital stock, consolidation, merger, sale, conveyance, lease or other transfer;
and, in any such case,  appropriate  adjustment (as reasonably determined by the
Board of  Directors  of the  Company)  shall be made in the  application  of the
provisions set forth in this Warrant  Certificate with respect to the rights and
interests thereafter of the Investor to the end that the provisions set forth in
this Warrant Certificate (including the adjustment of the Exercise Price and the
number of shares issuable upon the exercise of the Warrants) shall thereafter be
applicable, as near as may be reasonably practicable,  in relation to any shares
or other property thereafter deliverable upon the exercise of the Warrants as if
the   Warrants   had  been   exercised   immediately   prior  to  such   capital
reorganization,  reclassification of capital stock, such consolidation,  merger,
sale, conveyance,  lease or other transfer, and the Investor had carried out the
terms  of  the  exchange  as  provided  for  by  such  capital   reorganization,
reclassification, consolidation or merger. The Company shall not effect any such
capital reorganization,  consolidation, merger or transfer unless, upon or prior
to the  consummation  thereof,  the successor  entity or the entity to which the
property of the Company has been sold, conveyed, leased or otherwise transferred
shall assume, by written  instrument,  the obligation to deliver to the Investor
such shares of stock,  securities,  cash or property as in  accordance  with the
foregoing  provisions  Investor shall be entitled to purchase and/or receive (as
if such Warrants had been fully exercised  immediately prior to the consummation
of any such transaction).


                                       7
<PAGE>

     (e) Prior Notice as to Certain Events. In case at any time: (i) the Company
shall  pay any  dividend  upon its  Common  Stock  payable  in stock or make any
distribution to the holders of its Common Stock; or (ii) the Company shall offer
for  subscription  pro rata to the  holders of its Common  Stock any  additional
shares of stock of any class or any other  rights;  or (iii)  There shall be any
capital  reorganization or reclassification of the capital stock of the Company,
or  consolidation or merger of the Company with, or sale,  conveyance,  lease or
other transfer of all or substantially  all of its assets to, another entity; or
(iv) there shall be a  voluntary  or  involuntary  dissolution,  liquidation  or
winding up of the Company;  then, in any one or more of such cases,  the Company
shall give prior  written  notice to Investor of the date on which (A) the books
of the Company  shall close or a record shall be taken for such stock  dividend,
distribution   or   subscription    rights,   or   (B)   such    reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding up shall take place,  as the case may be. Such notice shall also specify
the date as of which the holders of the Common Stock of record shall participate
in such dividend,  distribution or  subscription  rights or shall be entitled to
exchange their Common Stock for securities or other  property  deliverable  upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation,  or winding up, as the case may be. Such  written  notice  shall be
given at least  twenty (20) days prior to the action in  question,  and not less
than  twenty  (20)  days  prior to the  record  date or the  date on  which  the
Company's transfer books are closed in respect thereto.

     (f) Certain Obligations of the Company.  The Company will not, by amendment
of its certificate of incorporation or through any  reorganization,  transfer of
assets, consolidation,  merger, dissolution,  issue or sale of securities or any
other voluntary action,  avoid or seek to avoid the observance or performance of
any of the  terms of this  Warrant  Certificate,  and will at all  times in good
faith  assist  in the  carrying  out of all such  terms.  Without  limiting  the
generality of the foregoing, the Company (i) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully  paid and  non-assessable  shares of Common  Stock  upon the  exercise  of
Warrants, from time to time, outstanding,  and (ii) will not (A) transfer all or
substantially all of its properties and assets to any other person or entity, or
(B) consolidate with or merge into any other entity where the Company is not the
continuing or surviving  entity, or (iii) permit any other entity to consolidate
with or merge into the Company where the Company is the  continuing or surviving
entity but, in connection with such  consolidation  or merger,  the Common Stock
then  issuable  upon the  exercise  of the  Warrants  shall be  changed  into or
exchanged for shares or other securities or property of any other entity unless,
in any such  case,  the other  entity  acquiring  such  properties  and  assets,
continuing  or  surviving  after  such  consolidation  or merger or  issuing  or
distributing  such shares or other  securities or property,  as the case may be,
shall expressly  assume in writing and be bound by all the terms of this Warrant
Certificate.

     SECTION 9. No Stock Rights. No holder of this Warrant Certificate, as such,
shall be entitled  to vote or be deemed the holder of Common  Stock or any other
securities  of the Company  which may at any time be  issuable  on the  exercise
hereof,  nor shall  anything  contained  herein be  construed to confer upon the
holder of this Warrant Certificate,  as such, the rights of a stockholder of the
Company or the right to vote for the  election of  directors  or upon any matter


                                       8
<PAGE>

submitted to stockholders at any meeting thereof, or give or withhold consent to
any corporate action or to receive notice of meetings or other actions affecting
stockholders   (except  as  provided   herein),   or  to  receive  dividends  or
subscription  rights or  otherwise,  until the Date of Exercise of any  Warrants
shall have  occurred.  Nothing in this  Section 9 shall  limit the rights of the
Investor in the event of the occurrence of a Change of Control.

     SECTION 10. Fractional  Shares.  The Company shall not be required to issue
fractions  of  shares  of Common  Stock  upon the  exercise  of  Warrants  or to
distribute certificates that evidence fractional shares of Common Stock. In lieu
of fractional  shares of Common Stock,  the Company shall pay to the then holder
of this Warrant Certificate (as of the Date of Exercise) an amount in cash equal
to the  same  fraction  of the  Market  Value  of the  shares  of  Common  Stock
calculated with respect to such Date of Exercise.

     SECTION 11. Additional Restrictions; Immediate Vesting.

     11.1 Investor hereby  acknowledges  that the Company's Amended and Restated
Bylaws  contain a provision,  in Section 5 thereof (a copy of such  provision is
annexed hereto as Exhibit B), that is intended to void transactions by which any
shareholder now owning, or hereafter acquiring, a 5% or greater equity ownership
interest in the Company would increase his or her equity  ownership  interest in
the Company,  if the transaction would, in the Company's  opinion,  result in an
"ownership  change," as defined in Section 382 of the  Internal  Revenue Code of
1986,  as  amended   (together  with  the  rules  and  regulations   promulgated
thereunder,  the "Code");  the  occurrence  of which  "ownership  change"  could
potentially limit the Company's use of its net operating loss carry-forwards and
similar  corporate tax attributes  (collectively,  the "NOL").  Investor  hereby
acknowledges  and agrees that such Bylaw  provision is and shall be binding upon
Investor and, accordingly,  and notwithstanding anything to the contrary in this
Warrant,  any and all  transactions,  by the  Investor,  involving  this Warrant
and/or  the  Warrant  Shares  (including,  without  limitation,   exercises  and
transfers of this Warrant,  and sales,  transfers and assignments of the Warrant
Shares),  that,  in  the  Company's  reasonable  opinion,  would  result  in  an
"ownership  change" (as  defined in Section  382 of the Code),  shall be made in
breach of the provisions of this Warrant,  shall be prohibited,  void ab initio,
and shall not be recognized by, nor be binding upon or enforceable  against, the
Company.

     11.2 In the  event  that at any  time  there  shall  be a  final,  binding,
non-appealable  determination (whether by process or at the Company's election),
by the Internal  Revenue  Service and/or any  administrative  agency or court of
competent jurisdiction, that an "ownership change" (as defined in Section 382 of
the  Code)  shall  have  occurred,  other  than as a  result  of the  Investor's
violation of Section 5 of the Company's  Amended and Restated  Bylaws and/or the
provisions  of Section 11.1 hereof,  then the Company shall provide the Investor
with prompt written notice thereof and,  notwithstanding  anything herein to the
contrary,  the  Vesting  Date  shall be  deemed  to be the  date on  which  such
determination shall be made, and the Investor shall thereafter have the right to
enter  into   transactions   involving  this  Warrant  and  the  Warrant  Shares
(including,  without  limitation,  exercises and transfers of this Warrant,  and
sales, transfers and assignments of the Warrant Shares), in each case subject to
the  terms  and  conditions  hereof,  until  the  Expiration  Date,  free of the
restrictions contained in Section 5 of the Company's Amended and Restated Bylaws
and/or Section 11.1 hereof.


                                       9
<PAGE>

     11.3 In the event that,  prior to the Exercise Period (and Vesting Date), a
Change of Control  shall be  consummated,  then the  Company  shall  provide the
Investor with prompt written notice thereof and, notwithstanding anything herein
to the  contrary,  the Vesting Date shall be deemed to be the date on which such
Change of Control shall be consummated,  and the Investor shall  thereafter have
the  right  to  exercise  any and all of the  Warrants  as if such  date was the
original Vesting Date set forth herein, but subject, however, to the other terms
and conditions hereof.

     SECTION   12.   Notices.   All   notices,   requests,   demands  and  other
communications  relating to this Warrant  Certificate  shall be in writing,  and
shall be  forwarded  by first  class mail,  return  receipt  requested,  postage
prepaid,  or by personal delivery  (including  deliveries by express,  overnight
courier  service)  addressed:  (a)  if  to  the  registered  holder  hereof,  to
it/him/her at the address furnished by the registered holder to the Company; and
(b) if to the  Company,  to it at 100 Quentin  Roosevelt  Boulevard,  Suite 508,
Garden City, New York 11530, Attention: Secretary of the Company (with a copy to
be  simultaneously  forwarded to the attention of the Company's General Counsel)
or to such other  address as any party shall  notify the other party in writing,
and shall be effective,  in the case of written notice by mail, three days after
placement  into the mails (first  class,  postage  prepaid),  and in the case of
personal delivery, on the same day as receipt is confirmed.

     SECTION 13. Binding Effect.  This Warrant Certificate shall be binding upon
and inure to the sole and  exclusive  benefit  of the  Company,  its  successors
and/or  assigns,  and the registered  holder or holders from time to time of the
Warrants and the Warrant Shares, and each of their respective  successors and/or
assigns.

     SECTION 14. Survival of Rights and Duties.  This Warrant  Certificate shall
terminate  and be of no further  force and  effect on the  earlier of 5:00 P.M.,
Eastern  Standard Time, on the  Expiration  Date or the date on which all of the
Warrants  have been  exercised,  except  that the  provisions  of  Section 2 and
Section 3 shall continue in full force and effect after such termination date.

     SECTION 15. Governing Law. This Warrant  Certificate  shall be construed in
accordance  with,  and governed by the  internal  laws of, the State of New York
(i.e., without regard to its conflicts of law rules).

     SECTION 16.  Counterparts.  This Warrant Certificate may be executed in two
or more counterparts  each of which,  when taken together,  shall constitute one
and the same instrument.




         [The remainder of this page has been intentionally left blank.]




                                       10
<PAGE>


     IN WITNESS WHEREOF,  the Company has caused this Warrant  Certificate to be
executed by its officer thereunto duly authorized as of the date hereof.




                                          EMERGING VISION, INC.,
                                          a New York corporation


                                          By:___________________________
                                              Christopher Payan
                                              Co-Chief Operating Officer and
                                              Chief Financial Officer



Accepted and agreed to this 31st day of December, 2003.

INVESTOR:


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








                                       11
<PAGE>


                          FORM OF ELECTION TO PURCHASE


     (To Be  Executed  by the  holder of  Warrants  if such  holder  Desires  to
Exercise Warrants Evidenced by the Foregoing Warrant Certificate)



To Emerging Vision, Inc.:

     The  undersigned  hereby  irrevocably  elects  to  exercise   _____________
Warrants  evidenced by the foregoing  Warrant  Certificate  for, and to purchase
thereunder,  ___________________  full  shares of  Common  Stock  issuable  upon
exercise of said Warrants, hereby delivers to the Company a check, in the amount
of $_________  (as provided for in the foregoing  Warrant  Certificate)  and any
applicable   taxes  payable  by  the   undersigned   pursuant  to  such  Warrant
Certificate.

     The undersigned requests that certificates for such shares be issued in the
name of


                                            PLEASE INSERT SOCIAL SECURITY
                                            OR TAX IDENTIFICATION NUMBER


-------------------------------             ------------------------------
(Please print name and address)             ------------------------------

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

     If the total  said  number  of  Warrants  shall not be all of the  Warrants
evidenced by the foregoing Warrant Certificate,  the undersigned requests that a
new Warrant  Certificate  evidencing  the Warrants not so exercised be issued in
the name of and delivered to

-----------------------------------------------------------------
                         (Please print name and address)
-----------------------------------------------------------------

         Name of holder
         of Warrant (Print):        ________________________________________
         (By:)                      ________________________________________
         (Title:)                   ________________________________________

Dated:   ______________, 20__








                                       12
<PAGE>


                               FORM OF ASSIGNMENT


     FOR  VALUE  RECEIVED,   ___________________________________  hereby  sells,
assigns and  transfers to each assignee set forth below all of the rights of the
undersigned in and to the number of Warrants (as defined in and evidenced by the
foregoing  Warrant  Certificate)  set forth  opposite the name of such  assignee
below,  and in and to the  foregoing  Warrant  Certificate  with respect to said
Warrants  and the shares of Common  Stock  issuable  upon the  exercise  of said
Warrants:



Name of Assignee              Address                      Number of Warrants
------------------        -----------------------        ----------------------







     If the total  number  of said  Warrants  shall  not be all of the  Warrants
evidenced by the foregoing Warrant Certificate,  the undersigned requests that a
new Warrant Certificate evidencing the Warrants not so assigned be issued in the
name of and delivered to the undersigned.


              Name of
              holder of Warrant (Print):         ____________________________
              (By:)                              ____________________________
              (Title:)                           ____________________________



Dated: _________________, 20__












                                       13

<PAGE>


                                    EXHIBIT A

     Upon the Company's receipt of the Investor  Registration  Request (together
with  the  opinion  of  counsel   described  in  Section  2(c)  of  the  Warrant
Certificate),  the Company hereby agrees to: (i) use its reasonable,  good faith
efforts to prepare for filing and file with the SEC under the Securities Act, as
soon as  practicable,  but in no event later than sixty (60) days  following its
receipt of the Investor  Registration  Request (and said opinion of counsel),  a
registration statement,  on an appropriate form (the "Registration  Statement"),
for the  purpose  of  registering  for  resale,  with the SEC,  on behalf of the
Investor (hereinafter referred to as the "Shareholder"), the Warrant Shares; and
(ii) use its reasonable,  good faith efforts to have the Registration  Statement
declared  effective as promptly  thereafter  as is reasonably  practicable.  The
Company further agrees to use its reasonable, good faith efforts to maintain the
effectiveness of the Registration  Statement,  and to promptly file with the SEC
any supplements or  post-effective  amendments  thereto which may be required in
order to  maintain  such  effectiveness,  for a period  of not less than two (2)
years from the date effective date of such registration  statement.  The Company
hereby agrees to bear all expenses  associated with the Registration  Statement,
other than the fees and  expenses  of the  Shareholder  (and its  attorneys  and
accountants)  incurred in the review of the  Registration  Statement  and/or the
sale of the Warrant Shares, and any  broker-dealers,  agents or underwriters who
participate in any sales of Warrant Shares by such Shareholder  thereunder.  The
Company  agrees to  furnish  to the  Shareholder  such  number of copies of such
Registration Statement, the preliminary prospectus and final prospectus included
therein and such other documents as the  Shareholder  may reasonably  request in
order to facilitate the  disposition of the Warrant  Shares.  If the Company has
delivered  preliminary or final prospectuses to the Shareholder and after having
done so the  prospectus  is  amended  to  comply  with the  requirements  of the
Securities Act, the Company shall immediately  notify the Shareholder in writing
and, if requested in writing by the Company,  the Shareholder  shall immediately
cease making offers of Warrant Shares and promptly  return all  prospectuses  to
the Company; provided,  however, that the Company shall use its reasonable, good
faith efforts to thereafter  promptly prepare and provide the Shareholder with a
sufficient number of revised prospectuses and, immediately  following receipt of
such revised prospectuses, the Shareholder shall be free to resume making offers
of the Warrant Shares.




                                       14
<PAGE>


                                    EXHIBIT B

             SECTION 5 TO THE COMPANY'S AMENDED AND RESTATED BYLAWS




     Section 5. Certain Prohibited Dispositions of Company Securities. Except as
may otherwise be approved by the Board of Directors of the Company,  in its sole
and absolute discretion, any purported sale, acquisition,  transfer, conversion,
exercise or other disposition of stock,  options,  warrants and other securities
in or of the Company, by any record or beneficial, direct or indirect, holder of
five (5%) percent or more of such securities  (whether prior to or subsequent to
any such  sale,  transfer,  acquisition  or  other  disposition),  that,  in the
Company's determination (made in its sole and absolute discretion), would result
in an "ownership change," as that term is defined in Section 382 of the Internal
Revenue  Code of 1986,  as amended  (the  "Code") and the  Treasury  Regulations
promulgated  thereunder,  shall be prohibited,  void ab initio, and shall not be
recognized by, nor be binding upon or enforceable against, the Company.















                                       15

<PAGE>
                                                                   EXHIBIT 10.13


                              RESCISSION AGREEMENT


     THIS RESCISSION  AGREEMENT (this "Agreement"),  is dated December 31, 2003,
and  shall be deemed  effective  on and as of April  14,  2003  (the  "Effective
Date"),  and is  between  Emerging  Vision,  Inc.  (the  "Company"),  a New York
corporation   having  a  principal  office  located  at  100  Quentin  Roosevelt
Boulevard,  Suite 508,  Garden City, New York 11530,  and the other signatory to
this Agreement (the "Shareholder").

                              W I T N E S S E T H:

     WHEREAS,  on February 25, 2003, the Company commenced a shareholders rights
offering  (the  "Rights  Offering")  of  50,000,000  units  (each a "Unit",  and
collectively, the "Units"), each consisting of one share of the Company's common
stock (the  "Company  Common  Stock") and one  warrant to purchase  one share of
Company  Common Stock at an exercise  price of $.05 (each an "RO  Warrant",  and
collectively,  the "RO  Warrants");  which Rights  Offering  closed on and as of
April 14, 2003; and

     WHEREAS,  in accordance with the terms of the Rights Offering,  the holders
of record  (on  February  25,  2003) of  Company  Common  Stock  (each a "Record
Holder", and collectively,  the "Record Holders") were granted 1.67 subscription
rights  (each  a  "Subscription  Right",  and  collectively,  the  "Subscription
Rights")  for each share of Company  Common Stock held (on February 25, 2003) by
the Record Holders; each of which Subscription Right entitled the Record Holders
to acquire one (1) Unit for a subscription price of $.04; and

     WHEREAS,  the terms of the  Rights  Offering  further  provided  that those
Record  Holders that  exercised all of the  Subscription  Rights granted to them
would have the right to  purchase  additional  Units,  on a pro rata basis (with
those  eligible  Record  Holders  electing to make such  purchase of  additional
Units),  if,  and to the  extent  that,  other  Record  Holders  failed to fully
exercise their respective  Subscription  Rights (such rights being  collectively
referred to as the "Oversubscription Rights"); and

     WHEREAS,  the  exercise,  by  certain of the Record  Holders  (such  Record
Holders being the "Significant Holders") and/or other individuals,  partnerships
and entities whose shares of Company Common Stock are,  pursuant to the Internal
Revenue  Code of 1986,  as  amended  (together  with the rules  and  regulations
promulgated  thereunder,  the  "Code"),  deemed  to  be  attributed  to,  and/or
aggregated  with,  the shares of Company  Common Stock held by, the  Significant
Holders  (each  a  "Significant   Holder  Affiliate",   and  collectively,   the
"Significant Holder  Affiliates"),  of their respective  Subscription Rights and
Oversubscription  Rights (and,  accordingly,  the acquisition thereby of Company
Common  Stock and RO  Warrants),  has  inadvertently  resulted in an  "ownership
change" (as defined in Section 382 of the Code); and

<PAGE>

     WHEREAS,  assuming,  arguendo,  that  such an  "ownership  change"  had not
occurred (as a result of the exercise,  by the  Significant  Holders  and/or the
Significant  Holder  Affiliates,  of their  respective  Subscription  Rights and
Oversubscription  Rights), such an "ownership change" could occur as a result of
the possible  future  exercise of the RO Warrants,  by the  Significant  Holders
and/or the Significant Holder Affiliates, which must be exercised, if at all, on
or prior to April 14, 2004;

     WHEREAS,  the  occurrence  of such an  "ownership  change"  (as  defined in
Section 382 of the Code) could, pursuant to such provision,  significantly limit
the Company's ability to use its net operating loss  carry-forwards  and similar
corporate tax attributes (collectively, the "NOL"); and

     WHEREAS,  the Company and the  Shareholder  (as a  Significant  Holder or a
Significant  Holder  Affiliate,  as the case may be) believe that it is in their
mutual  best  interest  to  endeavor  to  preserve,  as fully as  possible,  the
Company's ability to use the NOL; and

     WHEREAS,  consistent with various rulings of the Internal  Revenue Service,
the  Company  and the  Shareholder  now desire to (a)  rescind,  ab initio,  the
exercise (by the Shareholder) of those Subscription Rights and  Oversubscription
Rights of the  Shareholder  more  particularly  described  on Schedule A annexed
hereto  (collectively,  the "Rescinded Units"),  and (b) rescind,  surrender and
cancel all of the additional RO Warrants (that are not included in the Rescinded
Units)  that were  acquired by the  Shareholder  (collectively,  the  "Rescinded
Warrants"),  all in an effort to avoid such an "ownership change" (that occurred
in  connection  with the exercise of  Subscription  Rights and  Oversubscription
Rights in the Rights  Offering,  or that could occur as a result of the exercise
of the RO Warrants obtained therein).

     NOW,  THEREFORE,  the Company and the  Shareholder,  for good and  valuable
consideration,  receipt of which is hereby  acknowledged,  and  intending  to be
legally bound, hereby agree as follows:


                                    ARTICLE I
                       RESCISSION OF UNITS AND RO WARRANTS

     Section 1.1 Rescission of Units. Effective on and as of the Effective Date,
the   exercise  (by  the   Shareholder)   of  those   Subscription   Rights  and
Oversubscription  Rights  of the  Shareholder  more  particularly  described  on
Schedule A annexed hereto shall be deemed  rescinded,  ab initio,  shall be null
and void, and shall have no force or effect. Accordingly,  the Shareholder shall
have no rights in or to the  Rescinded  Units (and the shares of Company  Common
Stock and RO Warrants associated therewith).

     Section 1.2 Rescission of RO Warrants. Effective on and as of the Effective
Date, the acquisition (by the Shareholder) of those Rescinded  Warrants acquired
by  Shareholder  that are not  included  within  the  Rescinded  Units,  as more
particularly  described on Schedule A annexed hereto, shall be deemed rescinded,


                                       2
<PAGE>

surrendered and cancelled,  ab initio, shall be null and void, and shall have no
force or effect. Accordingly,  the Shareholder shall have no rights in or to the
Rescinded   Warrants  (and  the  shares  of  Company  Common  Stock   associated
therewith).

     Section 1.2 Repayment of Original  Subscription  Amount. The Company shall,
and, as of the Effective  Date,  shall be deemed to have had the  obligation to,
repay to  Shareholder  that sum equal to the product of (a) $.04,  multiplied by
(b) the total number of Rescinded Units that such Shareholder is surrendering to
the Company in connection  with the rescission  effectuated  hereby (all as more
particularly  set forth opposite such  Shareholder's  name on Schedule A annexed
hereto); which sum represents the original subscription amount paid by each such
Shareholder  for the purchase,  in the Rights  Offering,  of the Rescinded Units
(such sum, repayable to Shareholder,  being hereinafter collectively referred to
as the "Rescission  Amount").  The Rescission Amount shall be repayable,  by the
Company,  pursuant  to  the  terms  and  conditions  of a  Promissory  Note,  in
substantially  the form  annexed  hereto as Exhibit A, given,  contemporaneously
herewith, by the Company to the Shareholder (the "Note").

     Section 1.3 Additional  Rescinded  Units.  The  Shareholder and the Company
agree that the intent of this  Agreement is to effect a sufficient  reduction of
Shareholder's  ownership of Units,  to enable the Company to avoid an "ownership
change" under  Section 382 of the Code.  In the event that the Internal  Revenue
Service  should  determine that the aggregate  Rescinded  Units (as set forth on
Schedule A) shall be less than the amount needed to avoid an "ownership change",
then the  aggregate  number  of  additional  Units  required  to  avoid  such an
"ownership change" (collectively, the "Additional Rescinded Units") shall, as of
the  Effective  Date,  be deemed  rescinded  pursuant to this Section 1.4 of the
Agreement,  and the  Shareholder  shall,  as of the Effective Date, be deemed to
have  surrendered  the  Additional  Rescinded  Units  required  to avoid such an
"ownership  change",  with Shareholder  participating in such rescission (of the
Additional  Rescinded Units), and surrendering such Additional  Rescinded Units,
in the same  proportion  as each of the  Rescinded  Units of the  other  Company
shareholders that are  participating in this rescission  (pursuant to agreements
in the same form as this Agreement) relate to the total Rescinded Units. In such
event,  the  Rescission  Amounts  (payable  under the  Note),  shall,  as of the
Effective Date, be deemed increased by that amount equal to (a) $.04, multiplied
by (b) the total number of Additional Rescinded Units allocable to Shareholder.


                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

     Section 2.1  Representations  and  Warranties of  Shareholder.  Shareholder
represents and warrants to the Company,  as follows,  which  representations and
warranties  shall be unaffected by any actual or  constructive  knowledge of the
Company as to the accuracy thereof:

     (a) Ownership of Rescinded Units and Rescinded Warrants. Shareholder is the
sole and exclusive beneficial, record and legal owner of the Rescinded Units and
Rescinded  Warrants set forth  opposite  such  Shareholder's  name on Schedule A


                                       3
<PAGE>

annexed hereto  (collectively,  the "Subject  Units").  Shareholder  has, at all
times from and after the Effective  Date, up to the time  immediately  preceding
the execution and delivery of this Agreement,  had good and marketable  title to
the  Subject  Units,  free and  clear of any and all  liens,  claims  (including
adverse claims),  charges, pledges, options, security interests and/or any other
encumbrance, of any kind or nature (collectively,  "Encumbrances").  Shareholder
has made no prior  dispositions  of the  Subject  Units  (and/or  the  shares of
Company Common Stock and RO Warrants associated  therewith).  There have been no
dividends  or  rights,  of any  kind,  that have  been  made or  granted  to the
Shareholder on account of the Subject Units.

     (b)  Authority  and  Approval.  Shareholder  has all  requisite  power  and
authority  (corporate,  if applicable,  and  otherwise) to execute,  deliver and
perform this  Agreement,  and to consummate  the  rescission  transaction,  with
respect to the Subject Units, effectuated hereby.  Shareholder has duly executed
and delivered  this  Agreement,  and this  Agreement  constitutes  the valid and
binding  obligation of the Shareholder,  enforceable  against the Shareholder in
accordance  with  its  terms,  except  as such  enforcement  may be  limited  by
applicable bankruptcy, reorganization,  moritorium, insolvency and other similar
laws affecting creditors' rights generally or by equitable principles of general
application,  regardless  of whether  considered  in a  proceeding  at law or in
equity (collectively, the "Enforceability Exceptions").

     (c) No Consents. No consent, order, license,  approval or authorization of,
or exemption by, or  registration  or  declaration  or filing with,  any person,
corporation,  partnership,  trust,  incorporated or unincorporated  association,
joint  venture,  joint stock  company,  government  (or any agency or  political
subdivision  thereof)  or other  entity  of any kind (all  such  entities  being
hereinafter  collectively referred to as a "Person"), is required to be obtained
or  made  in  connection  with  the  execution,   delivery  and  performance  by
Shareholder  of  this  Agreement,   or  the  consummation  of  the  transactions
contemplated hereby.

     (d) No Conflicts. The execution, delivery and performance of this Agreement
by  Shareholder  will  not  (a)  violate  any  provision  of any  organizational
documents of  Shareholder,  if Shareholder is other than a natural  person;  (b)
result in the  creation of any  Encumbrances  against or  affecting  the Subject
Units, except as may otherwise be specifically  contemplated hereby; (c) violate
any  judgment,  order,  injunction,  decree or award of any  court,  arbitrator,
administrative  agency or governmental  or regulatory  body against,  or binding
upon, the Shareholder or any of its securities, properties or assets; and/or (d)
constitute  a  violation,  by the  Shareholder,  of any  statute,  law,  rule or
regulation of any  jurisdiction as and to the extent such statute,  law, rule or
regulation relates to or is otherwise binding upon Shareholder.

     (e) No Assurance.  Shareholder represents and warrants that the Company has
provided no  assurances  that the  consummation  of the  rescission  transaction
effectuated  hereby will, in fact,  result in the  preservation of the Company's
use of the NOL, and that  Shareholder  is entering into this  Agreement with the
express  understanding  that the  Company's  use of its NOL may have  heretofore


                                       4
<PAGE>

been, or may hereafter be,  limited,  notwithstanding  the  consummation  of the
transactions contemplated hereby or in connection herewith.

     (f) Investment Experience. Shareholder has such knowledge and experience in
financial  and business  matters as to be capable of  evaluating  the merits and
risks of entering  into this  Agreement.  Shareholder  has  received  all of the
information  requested from the Company that Shareholder  considers necessary or
appropriate  in connection  with  Shareholder's  evaluation  of, and decision to
enter into,  this  Agreement.  Shareholder is an "accredited  investor," as that
term is defined under Rule 501 of the Securities Act of 1933, as amended.


     Section 2.2  Representations  and  Warranties  of the Company.  The Company
represents and warrants to the Shareholder,  as follows,  which  representations
and warranties  shall be unaffected by any actual or  constructive  knowledge of
the Shareholder as to the accuracy thereof:

     (a)  Authority  and  Approval.  The  Company  has all  requisite  power and
authority  (corporate  and  otherwise)  to execute,  deliver  and  perform  this
Agreement,  and to consummate  the rescission  transaction,  with respect to the
Subject Units,  effectuated  hereby. The Company has duly executed and delivered
this Agreement,  and this Agreement constitutes the valid and binding obligation
of the Company,  enforceable  against the Company in accordance  with its terms,
except as such enforcement may be limited by the Enforceability Exceptions.

     (b) No Consents. No consent, order, license,  approval or authorization of,
or exemption by, or  registration  or  declaration or filing with, any Person is
required to be obtained or made in connection  with the execution,  delivery and
performance  by the  Company  of  this  Agreement,  or the  consummation  of the
transactions contemplated hereby.

     (c) No Conflicts. The execution, delivery and performance of this Agreement
by the  Company  will  not  (a)  violate  any  provision  of any  organizational
documents of the Company; (b) violate any judgment, order, injunction, decree or
award  of any  court,  arbitrator,  administrative  agency  or  governmental  or
regulatory body against,  or binding upon, the Company or any of its securities,
properties or assets; and/or (c) constitute a violation,  by the Company, of any
statute,  law, rule or regulation of any  jurisdiction as and to the extent such
statute,  law,  rule or regulation  relates to or is otherwise  binding upon the
Company; except, in each case, for violations that would not, individually, have
a material adverse effect on the Company or its assets.


                                   ARTICLE III
                                 INDEMNIFICATION

     Section 3.1  Indemnification  by the Company.  The Company shall indemnify,
defend and hold harmless,  jointly and severally, the Shareholder and its heirs,
executors,  beneficiaries,   trustees,  administrators,  legal  representatives,
successors and assigns (each a "Shareholder  Party") of, from,  against,  and in
respect  of or  relating  (directly  or  indirectly)  to  any  and  all  losses,


                                       5
<PAGE>

liabilities,  claims,  damages,  costs,  fees and  expense  (including,  without
limitation,  reasonable  attorneys'  fees  and  disbursements),  of any kind and
description, inchoate or otherwise (collectively, "Losses"), resulting (directly
or indirectly) from, relating to or incident to any material  misrepresentation,
breach  of  representation  or  warranty,  or breach  or  nonfulfillment  of any
covenant  or  obligation  on the  part  of the  Company  made or  given  in this
Agreement.

     Section 3.2  Indemnification  by Shareholder.  Shareholder hereby agrees to
indemnify,  defend and hold  harmless the Company and its  officers,  directors,
employees,  agents,  representatives,  successors and assigns of, from, against,
and in respect of or relating  (directly  or  indirectly)  to any and all Losses
resulting (directly or indirectly) from, relating to or incident to any material
misrepresentation,   breach  of  representation   or  warranty,   or  breach  or
nonfulfillment  of any covenant or  obligation  on the part of such  Shareholder
made or given in this Agreement

Section 3.3       Notice and Payment.

     (a) A party  entitled  to  indemnification  pursuant  to Section 3.1 or 3.2
hereof  (an  "Indemnified  Party")  shall  give  written  notice  to  the  party
responsible  for  indemnification  pursuant  to  Sections  3.1 or 3.2 hereof (an
"Indemnifying  Party") of any claim, suit,  liability or demand which gives rise
to   indemnification  by  an  Indemnifying  Party  pursuant  to  this  Agreement
(hereinafter referred to as an "Indemnification  Notice").  Such Indemnification
Notice  shall  describe  the claim in  reasonable  detail (the  "Indemnification
Claim") and shall indicate the amount  (estimated if necessary) of the loss that
has been or may be sustained by the  Indemnified  Party (the amount of each such
claim  being  the  "Indemnification   Claim  Amount",   and  collectively,   the
"Indemnification  Claims Amount").  The  Indemnifying  Party shall have ten (10)
days following its receipt of the Indemnification Notice to dispute, in writing,
the basis of the Indemnification  Claim and/or the Indemnification  Claim Amount
that is the subject of the  Indemnification  Notice (each an "Dispute  Notice"),
TIME BEING OF THE ESSENCE,  which Dispute Notice shall set forth,  in reasonable
detail,   the  basis  upon  which  the  Indemnifying   Party  is  disputing  the
Indemnification  Claim  and/or  the  Indemnification  Claim  Amount  that is the
subject of the Indemnification  Notice. In the event that the Indemnifying Party
shall fail to timely provide the Dispute Notice to the Indemnified  Party,  then
the Indemnifying  Party shall be deemed to be conclusively  liable in respect of
the Indemnification  Claim (to the extent of the Indemnification  Claim Amount),
and shall be deemed to have waived there right to dispute the same.

     (b) With respect to third party claims, the Indemnifying Party may elect to
compromise  or defend,  at its own  expense and by its own  counsel,  any matter
involving  the  asserted  liability  of the  Indemnifying  Party  so long as the
Indemnifying  Party  pursues  the  same  diligently  and in good  faith.  If the
Indemnifying  Party undertakes to compromise or defend such asserted  liability,
the Indemnifying  Party shall,  within 15 days (or sooner,  if the nature of the
asserted  liability so requires),  notify the Indemnified Party of its intent to
do so,  and  the  Indemnified  Party  shall  cooperate,  at the  expense  of the
Indemnifying Party, in the compromise of, or defense against,  any such asserted
liability.  Notwithstanding the foregoing,  the Indemnified Party shall have the
right to participate  in any matter  through  counsel of its own choosing at its
own  expense;  provided  that the  Indemnifying  Party's  counsel  shall be lead
counsel.  After the Indemnifying Party shall have notified the Indemnified Party
of its intention to undertake to defend or settle any such  asserted  liability,


                                       6
<PAGE>

and for so long as the Indemnifying Party diligently  pursues such defense,  the
Indemnifying  Party  shall  not be  liable  for any  additional  legal  expenses
incurred by the  Indemnified  Party in connection with any defense or settlement
of such asserted liability, except to the extent such participation is requested
by the  Indemnifying  Party,  in which  event  the  Indemnified  Party  shall be
reimbursed by the Indemnifying  Party for reasonable  additional legal expenses,
out-of-pocket  expenses and allocable share of employee compensation incurred in
connection with such  participation  for any employee whose  participation is so
requested.  If the  Indemnifying  Party  desires to accept a final and  complete
reasonable settlement of asserted liability and the Indemnified Party refuses to
consent to such reasonable  settlement,  then the Indemnified  Party's liability
under this Article 3 with respect to such asserted liability shall be limited to
the amount so offered (and  accepted) in settlement  and the  Indemnified  Party
shall reimburse the Indemnifying Party for any additional costs of defense which
it subsequently incurs with respect to such claim.

     (c) If the  Indemnifying  Party does not undertake to defend such matter to
which the Indemnified Party is entitled to indemnification  hereunder,  or fails
to diligently  pursue such defense,  the  Indemnified  Party may undertake  such
defense  through  counsel  of its own  choice,  at the cost and  expense  of the
Indemnifying  Party, and the Indemnified  Party may settle such matter,  and the
Indemnifying  Party shall reimburse the Indemnified Party for the amount paid in
such  settlement  and  any  other   liabilities  or  expenses  incurred  by  the
Indemnified  Party  in  connection  therewith;   provided,   however,  that  the
Indemnified Party shall not settle any such claim without the written consent of
the  Indemnifying  Party,  which consent shall not be  unreasonably  withheld or
delayed.

     (d) Other  than with  respect  to those  sums that  shall be  disputed,  in
writing,  by the Indemnifying Party in accordance with the provisions of Section
3.3 hereof,  all sums paid by the Indemnified  Party for which the  Indemnifying
Party is  obligated  to  reimburse  the  Indemnified  Party under this Article 3
(together with interest thereon from the date of the Indemnified Party's payment
of any  amounts  until  paid in full)  shall be paid  within ten days of demand,
together  with  interest  calculated  at the maximum rate allowed under New York
State law.

     Section  3.4  Survival.  The  respective  covenants,   representations  and
warranties  made  herein by the Company and the  Shareholder  shall  survive the
execution and delivery of this Agreement,  notwithstanding  any investigation or
examination  made by or on behalf of any of the Parties,  nor any knowledge with
respect thereto.


                                       7
<PAGE>


                                   ARTICLE IV
                               GENERAL PROVISIONS


     Section 4.1 Governing Law. This Agreement shall be governed,  construed and
enforced in accordance  with the laws of the State of New York,  notwithstanding
principles of conflicts of laws thereof.

     Section 4.2 Terms and Conditions.  The term "Agreement" as used herein,  as
well as the terms "herein,"  "hereof,"  "hereunder" and the like shall mean this
Agreement in its entirety and all Schedules and Exhibits annexed hereto,  all of
which are hereby made a part hereof.  The captions and section  headings  hereof
are for reference and  convenience  only and do not enter into or become part of
the context. All pronouns,  singular and plural, masculine,  feminine or neuter,
shall mean and include the person,  entity,  firm, or  corporation to which they
relate as the context may require.

     Section 4.3 Severability.  In the event that any term, covenant, condition,
agreement,  section or provision hereof shall be deemed invalid or unenforceable
by a court of  competent  and  final  jurisdiction,  this  Agreement  shall  not
terminate  or be deemed void or voidable,  but shall  continue in full force and
effect and there shall be  substituted  for such  stricken  provision a like but
legal and enforceable  provision which most nearly accomplishes the intention of
the parties hereto.

     Section  4.4  Notices.   All   notices,   requests,   demands,   and  other
communications  shall be  deemed  to have  been  duly  given if in  writing  and
delivered by hand or sent by reliable overnight delivery service (e.g.,  Federal
Express),  telecopier  (receipt  confirmed)  or  certified or  registered  mail,
postage  prepaid,  to the appropriate  address  indicated below or to such other
address as may be given in a notice sent to the other Parties hereto:

     If to the Company:

         Emerging Vision, Inc.
         100 Quentin Roosevelt Boulevard
         Suite 508
         Garden City, New York 11530
         Telephone: (516) 390-2134
         Telecopier: (516) 390-2110
         Attention: Co-Chief Operating Officer or Chief Financial Officer

         with a copy to:

         Attention: General Counsel
         Telecopier: (516) 465-6920



                                       8
<PAGE>

     If to the Shareholder:





     To the location set forth opposite Shareholder's name on Schedule A annexed
hereto.

     Section 4.6  Counterparts.  This  Agreement  may be executed in one or more
counterparts,  and may be  exchanged by  facsimile  transmission,  each of which
shall be deemed an original,  and all of which,  together,  shall constitute one
and the same instrument.

     Section 4.7 Schedules and Exhibits.  Each Schedule and Exhibit  referred to
in this Agreement is hereby  incorporated by reference and made an integral part
hereof,  and  may be  referred  to in  this  Agreement  and  any  other  related
instrument or document without being annexed hereto or thereto.

     Section 4.8 Binding Effect.  This Agreement shall be binding upon and shall
inure to the benefit or  detriment  of the parties  hereto and their  respective
heirs, personal representatives, permitted successors and assigns.

     Section 4.9  Assignment.  No party may assign any of its rights,  duties or
obligations  under this Agreement without the prior written consent of the other
parties,  and any  attempt  to do so shall be null and void and of no force  and
effect upon the non-consenting party.

     Section 4.10 Entire  Agreement;  Modification of Agreement.  This Agreement
embodies  the entire  agreement  of the parties  relating to the subject  matter
hereof  and the  matters  contemplated  herein,  and  supersedes  all  prior and
contemporaneous oral and/or written understandings, agreements, representations,
warranties,  statements,  advise and/or communications  between the parties, and
any  of  their  respective   officers,   directors,   shareholders,   employees,
representatives,  attorneys and accountants, with respect to said subject matter
and the matters  contemplated  herein.  No  amendment  or  modification  of this
Agreement  shall be valid or binding upon the parties unless made in writing and
signed by each of the parties.

     Section  4.11  Remedies  Cumulative.   All  remedies,  rights,  powers  and
privileges  conferred  hereunder upon the parties,  unless  otherwise  provided,
shall be cumulative and not restricted to those provided by law.

     Section 4.12 Expenses.  The Company shall pay all reasonable  out-of-pocket
costs and expenses  incurred by  Shareholder  in connection  with its review and
negotiation  of  this  Agreement  and  the   consummation  of  the  transactions
contemplated  hereby;  subject,  however,  to the Shareholder's  delivery to the
Company of reasonable, written substantiation of all such expenses.


                                       9
<PAGE>

     Section  4.13 No Third Party  Beneficiaries.  Nothing in this  Agreement is
intended  to create a benefit  in favor of, or an  obligation  to, any person or
entity not a party to this Agreement.

     Section  4.14  Waiver of Breach or  Violation  Not Deemed  Continuing.  The
waiver by any party of a breach or violation of any provision of this  Agreement
shall not operate as, or be construed to be, a waiver of any  subsequent  breach
or violation of any  provision  hereof.  No breach or violation of any provision
hereof may be waived, except by an agreement,  in writing, signed by the waiving
party.

     Section 4.15.  Construction.  The parties  acknowledge  and agree that this
Agreement is the result of arms-length  negotiations among the parties,  and has
been  reviewed by each party and their  respective  counsel.  Accordingly,  this
Agreement  shall be deemed the product of each party  hereto,  and no  ambiguity
shall be constructed in favor of or against any party.


                    BALANCE OF PAGE INTENTIONALLY LEFT BLANK













                                       10
<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered  this
Agreement as of the day and year first above written.


                                             THE COMPANY:



                                             EMERGING VISION, INC.



                                             By:________________________




                                             SHAREHOLDER:



                                             By:________________________









                                       11

<PAGE>


                                   SCHEDULE A

                          SHAREHOLDER; UNITS; WARRANTS


Name and
Address                    # of Rescinded Units and Warrants
---------                 -------------------------------------




















                                       12
<PAGE>


                                    EXHIBIT A

                                 PROMISSORY NOTE





















                                       13
<PAGE>
                                                                   EXHIBIT 10.14

                                PROMISSORY NOTE
                                ---------------


Principal Amount: $_____________                           Garden City, New York
                                                            As of April 14, 2003

     FOR VALUE RECEIVED,  EMERGING  VISION,  INC., a New York  corporation  with
offices at 100 Quentin  Roosevelt  Boulevard,  Suite 508,  Garden City, New York
11530   (the   "Maker"),    hereby   promises   to   pay   to   the   order   of
_______________________,    an    ______________    having    an    office    at
_________________________________  (the "Payee"), its successors and/or assigns,
on April 14, 2007, the sum of _________________  ($______________)  Dollars (the
"Principal Amount"),  together with interest accruing,  on the unpaid portion of
the  Principal  Amount,  at the rate of six (6%)  percent  per annum,  in United
States legal tender.

     Notwithstanding  the  foregoing,  in lieu of cash  payments  hereunder  (in
respect of the Principal  Amount and all accrued  interest  thereon),  the Maker
shall  have the  right,  from  time to time,  to pay all or any  portion  of the
Principal Amount (together with all accrued interest thereon),  by its issuance,
to the Payee, of that number of fully paid, non-assessable shares of the Maker's
Common Stock ("Company  Common Stock") equal to (such number of shares being the
"Share  Payment  Amount"):  (i) the total dollar amount of the Principal  Amount
(and interest  thereon) that the Maker then desires to pay to Payee,  divided by
(ii) the average of the last reported sales prices of the Company's Common Stock
(such  average  being the  "Average  Trading  Price"),  as  reported  on the OTC
Bulletin Board, during the fifteen (15) trading day period immediately preceding
the  date on which  the  Company  shall  make any  such  payment  (the  "Trading
Period");  provided,  however,  that within the Trading  Period there shall be a
minimum average trading volume of 750,000 shares of the Company's  Common Stock.
Any fractural  portion of the Share  Payment  Amount shall be paid only in cash,
and shall be in that  amount  equal to (i) the  fractional  portion of the Share
Payment Amount, multiplied by (ii) the Average Trading Price.

     This Note is subject to the following additional terms:

         1. Prepayment - Application of Payment.

     This Principal  Amount (and all interest  accrued  thereon) may be prepaid,
without penalty, in whole or in part, at any time.

     All payments  hereunder  shall first be applied to interest that shall have
accrued,  but shall  not have been  paid,  hereunder  at the time at which  such
payment is made,  and the balance of such payment shall be applied to reduce the
then outstanding Principal Amount, in the inverse order of maturity.

     Nothing contained in this Note, or in any other agreement between the Maker
and Payee, requires the Maker to pay, or Payee to accept,  interest in an amount
that would subject Payee to any penalty or forfeiture  under  applicable law. In
no event shall the total of all charges payable  hereunder,  whether of interest
or of such other charges that may or might be characterized as interest,  exceed
the  maximum  rate  permitted  to be charged  under the laws of the State of New

<PAGE>

York.  Should Payee receive any payment on account of this Note that is or would
be in excess of that permitted to be charged under said laws, such payment shall
have  been,  and  shall  be  deemed  to have  been,  made  in  error  and  shall
automatically  be applied to reduce the  outstanding  Principal  Amount  (and/or
interest thereon and charges due hereunder).

         2. Place of Payment; Waiver of Defenses and Notices.

     All  payments  hereunder  shall be payable at the offices of Payee,  as set
forth  hereinabove,  or at such  other  place as Payee  may,  from time to time,
designate  pursuant to Section 5 hereof, or at such other place as may be agreed
upon by the parties.

     This Note is payable  by Maker  without  deduction  by reason of set-off or
counterclaim or any defense whatsoever (except payment).

     The Maker hereby waives demand for payment, notice of dishonor and protest,
and notice of protest or any other notice of any kind.

         3.       Default; Remedies.

     In the event of:

     (i) the  nonpayment of any  installment  of the  Principal  Amount (and any
interest thereon) when due, and such nonpayment continues for a period in excess
of five (5) days  following the day written  notice of such  nonpayment has been
given to the Maker; or

     (ii) the appointment of a receiver for substantially all of the property of
the Maker,  which  appointment  remains  undischarged  for a period in excess of
thirty (30) days; or

     (iii) the making of an  assignment  for the  benefit of  creditors,  or the
filing of a petition or commencement  of any proceeding  under any bankruptcy or
insolvency laws by or against the Maker; or

     (iv) the issuance of any material judgment, warrant or order of attachment,
tax lien or levy, or execution or garnishment  against a material portion of the
property of the Maker,  which is not bonded,  discharged,  vacated or  satisfied
within one hundred eighty (180) days after the issuance thereof; or

     (v) the sale of all or substantially all of the assets of Maker, and/or the
merger, consolidation or other material business combination of or involving the
Maker;

     then,  on the  happening of any such event,  the same shall  constitute  an
Event of Default  hereunder and, in such event,  any remaining unpaid portion of
the  Principal  Amount  (and all  interest  thereon),  together  with all  other
liability of the Maker under this Note, at the option of Payee, shall become due
and payable  immediately  upon the giving of written  notice thereof by Payee to
the  Maker.  The  failure  to  assert  this  right  shall not be deemed a waiver
thereof.

     After maturity of the Principal  Amount,  stated or  accelerated,  interest
shall accrue at the maximum rate permitted by law, but this provision  shall not

<PAGE>


be deemed to  constitute  an  extension  of time for  payment  of the  Principal
Amount.

     If the Principal  Amount (and all interest  accrued  thereon)  shall not be
paid, in full, in accordance with the terms hereof,  the Maker agrees to pay all
costs and  expenses of  collection,  including  reasonable  attorneys'  fees and
expenses.

         4. Investment Representations.

     By accepting this Note,  Investor  shall be deemed to thereby  represent to
the Maker that, in addition to the  representations  and warranties of Payee set
forth  in that  certain  Rescission  Agreement,  being  executed  and  delivered
contemporaneously herewith, between the Maker and Payee, the Payee:

     (i) (a) has such knowledge and experience in financial and business matters
as to be  capable  of  evaluating  the  merits  and  risks  of  its  prospective
investment  in the Company  Common  Stock;  (b) believes it has received all the
information  it has  requested  from Maker and that it  considers  necessary  or
appropriate for deciding whether to obtain the Company Common Stock; (c) has had
the opportunity, to its satisfaction,  to discuss the business,  management, and
financial  affairs  with  Maker's  management;  (d) has the  ability to bear the
economic risks of its  prospective  investment in the Company Common Stock;  and
(e) is able, without materially impairing its financial  condition,  to hold the
Company Common Stock for an indefinite  period of time, and to suffer a complete
loss of its investment.

     (ii) The Payee qualifies as an "accredited  investor" within the meaning of
Regulation D of the rules and regulations  promulgated  under the Securities Act
of 1933, as amended (the "Securities Act").

     (iii) Company Common Stock that may be acquired by Payee  hereunder will be
acquired for investment for the Payee's own account,  not as a nominee or agent,
and not with a view of the sale or  distribution  of any part  thereof,  and the
Payee has no intention of selling,  granting any  participation in, or otherwise
distributing  the Company Common Stock other than in accordance  with applicable
federal and state  securities  laws,  and that it has no contract,  undertaking,
agreement,   or  arrangement  with  any  person  to  sell,  transfer,  or  grant
participation to such person or to any third person, with respect to the Company
Common Stock.

     (iv) Payee  understands and  acknowledges  that the offering of the Company
Common Stock  pursuant to this Note will not be registered  under the Securities
Act on the basis that the offering and sale of securities  contemplated  by this
Note are exempt from  registration  pursuant to Section 4(2) and/or Section 3(b)
of the  Securities  Act,  and  the  Maker's  reliance  upon  such  exemption  is
predicated upon the Payee's representations as set forth in this Note.

         5. Amendments.

     This  Note  may  not be  changed  or  terminated  orally,  but  only  by an
agreement,  in writing,  signed by the party  against  whom  enforcement  of any
waiver, change, modification or discharge is sought.


<PAGE>

         6. Notices.

     All notices,  requests or other communications  required hereunder shall be
in  writing  and shall be deemed  to have been duly  given or made if  delivered
personally or by courier  service which obtains a signed  receipt upon delivery,
or if mailed by United States certified mail,  postage  prepaid,  return receipt
requested, to the parties at the respective addresses first above written, or at
such other  addresses  as shall be specified in writing by either of the parties
to the  other in  accordance  with the  terms and  conditions  of this  Section.
Notices  shall be  deemed  effective,  if  delivered  personally  or by  courier
service, on the date delivered or, if mailed in accordance  herewith,  three (3)
days after the date of such mailing.

         7. Successors and Assigns.

     The terms and  provisions of this Note shall be binding upon,  and inure to
the  benefit  of,  the Maker and the  Payee,  and  their  respective,  permitted
successors,  assigns and legal  representatives.  Notwithstanding the foregoing,
Payee shall make no  assignment,  sale or other transfer of this Note and/or any
of its rights hereunder without the express, written consent of the Maker.

         8. Nonwaiver.

     No failure by Payee to insist upon exact  compliance with the terms of this
Note  shall be deemed  or  construed  as a waiver by such  party of the right to
require  exact  compliance  with  each  and  every  duty and  obligation  herein
contained in the future.

         9. Applicable Law and Jurisdiction.

     THIS NOTE SHALL BE CONSTRUED  AND  ENFORCED IN ALL  RESPECTS IN  ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT  GIVING EFFECT TO ANY  PRINCIPLES
RELATING  TO  CONFLICT  OF LAWS.  THE MAKER AND PAYYE (BY  ACCEPTING  THIS NOTE)
CONSENT  THAT ANY LEGAL OR  EQUITY  PROCEEDING  BROUGHT  IN  CONNECTION  WITH OR
ARISING OUT OF ANY MATTER  RELATING TO THIS NOTE,  SHALL BE INSTITUTED ONLY IN A
FEDERAL OR STATE COURT OF COMPETENT  JURISDICTION  WITHIN THE STATE OF NEW YORK,
COUNTY OF NASSAU.  THE MAKER  HEREBY  IRREVOCABLY  CONSENTS  AND  SUBMITS TO THE
JURISDICTION,  IN ANY SUCH  MATTER,  OF THE  COURTS OF THE STATE OF NEW YORK AND
WAIVES ANY  OBJECTION  IT MAY HAVE TO EITHER THE  JURISDICTION  OR VENUE OF SUCH
COURTS.


<PAGE>


     IN WITNESS  WHEREOF,  the Maker has executed and delivered  this Note as of
April 14, 2003.



                                            EMERGING VISION, INC.



                                            By: __________________________
                                                Christopher G. Payan
                                                Co-Chief Operating Officer &
                                                Chief Financial Officer

<PAGE>

                                                                   EXHIBIT 10.15


                              SETTLEMENT AGREEMENT


     THIS SETTLEMENT  AGREEMENT (this "Agreement"),  is dated December 31, 2003,
and is between  Emerging Vision,  Inc. (the  "Company"),  a New York corporation
having a principal office located at 100 Quentin Roosevelt Boulevard, Suite 508,
Garden City,  New York 11530,  and the other  signatory to this  Agreement  (the
"Shareholder").

                              W I T N E S S E T H:

     WHEREAS,  on February 25, 2003, the Company commenced a shareholders rights
offering  (the  "Rights  Offering")  of  50,000,000  units  (each a "Unit",  and
collectively, the "Units"), each consisting of one share of the Company's common
stock (the  "Company  Common  Stock") and one  warrant to purchase  one share of
Company  Common Stock at an exercise  price of $.05 (each an "RO  Warrant",  and
collectively,  the "RO  Warrants");  which Rights  Offering  closed on and as of
April 14, 2003; and

     WHEREAS,  the  acquisition,  by certain of the Company's  shareholders  who
participated in the Rights Offering (such  shareholders  being the  "Significant
Holders"),  of Units in the Rights Offering (and,  accordingly,  the acquisition
thereby of Company Common Stock and RO Warrants),  has inadvertently resulted in
an  "ownership  change," as such term is defined in Section 382 of the  Internal
Revenue  Code of 1986,  as  amended  (together  with the rules  and  regulations
promulgated thereunder, the "Code"); and

     WHEREAS,  the  occurrence  of such an  "ownership  change"  (as  defined in
Section 382 of the Code) could, pursuant to such provision,  significantly limit
the Company's ability to use its net operating loss  carry-forwards  and similar
corporate tax attributes (collectively, the "NOL"); and

     WHEREAS, the risk of the possible occurrence of an "ownership change," as a
result  of  the  consummation  of the  Rights  Offering,  and  of  the  negative
consequences  thereof  (with  respect  to the  Company's  use of the NOL),  were
unintentionally  (without  scienter)  omitted as risk factors from the Company's
prospectus,  which was prepared and delivered (to the eligible  shareholders  of
the Company) in connection with the Rights Offering (the "Omission"); and

     WHEREAS,  in an effort to endeavor to preserve,  as fully as possible,  the
Company's  ability to use the NOL and, in effect,  eliminate  the  Omission,  ab
initio,  contemporaneously  herewith (i) the Company and the Significant Holders
(including  Shareholder)  are,  simultaneously  herewith,  entering  into  those
certain  Rescission  Agreements  (such agreement with the Shareholder  being the
"Rescission Agreement"),  pursuant to which the acquisitions, by the Significant
Holders  (including  Shareholder),  of certain  of the Units,  and all of the RO
Warrants (that are not  associated  with the Units being  rescinded),  that were
acquired  thereby in the Rights  Offering (such  rescinded Units and RO Warrants
acquired  by  Shareholder  being  hereinafter  collectively  referred  to as the
"Rescinded  Units")),  are  being  rescinded  (the  "Rescission"),   such  that,


<PAGE>

consistent  with  various  rulings  of the  Internal  Revenue  Service,  such an
"ownership change" (that occurred in connection with the acquisition of Units in
the Rights  Offering,  or that could  occur upon the future  exercise  of the RO
Warrants) may be avoided;  and (ii) the Company's Board of Directors has adopted
an amendment to the  Company's  Amended and Restated  Bylaws (a copy of which is
annexed  hereto as Exhibit A; the "Bylaw  Amendment"),  that is intended to void
transactions  that would,  in the  Company's  opinion,  result in an  "ownership
change"; and

     WHEREAS,  the Company recognizes that: (i) notwithstanding such Rescission,
the  Shareholder  may have  sustained  damages as a result of the Omission  that
cannot be fully remediated by the Rescission; (ii) the rescission, surrender and
cancellation  of the RO Warrants (that are not  associated  with the Units being
rescinded in the Rescission) is being made without any monetary consideration to
Shareholder,  which may cause  Shareholder to be further damaged,  and (iii) the
Company's  adoption of the Bylaw Amendment,  and the contractual  agreement,  by
Shareholder,  to be  bound  thereby  (as set  forth  herein  and in the  Warrant
Agreement (as hereinafter  defined) may materially limit the Shareholder's right
to engage in  transactions  in or with  respect  to  Company  Common  Stock (and
instruments exercisable into Company Common Stock), and, accordingly,  may cause
Shareholder to sustain additional damages; and

     WHEREAS,  the Company and the  Shareholder now desire to resolve and settle
such potential claims, of Shareholder, for damages, in accordance with the terms
and conditions set forth in this Agreement.

     NOW,  THEREFORE,  the Company and the  Shareholder,  for good and  valuable
consideration,  receipt of which is hereby  acknowledged,  and  intending  to be
legally bound, hereby agree as follows:


                                    ARTICLE I
                         ISSUANCE OF SETTLEMENT WARRANTS

     Section  1.1.  Issuance  of  Settlement   Warrants.   In  full  settlement,
compromise  and  satisfaction  of any and all  possible  claims  of  Shareholder
arising as a result of, or in connection with, the Omission and/or the Company's
adoption of the Bylaw Amendment, the Company shall,  contemporaneously herewith,
issue to  Shareholder  that number of  warrants  set forth on Schedule A annexed
hereto  (collectively,  the  "Settlement  Warrants"),  each of  which  shall  be
exercisable  for one share of Company  Common  Stock,  at an exercise  price set
forth on Schedule A, and which shall be subject to the terms and  conditions set
forth in the form of Warrant Certificate and Agreement annexed hereto as Exhibit
B (the  "Warrant  Agreement");  which  Warrant  Agreement is being  executed and
delivered by the Company and the Shareholder  simultaneously herewith. The terms
and conditions  set forth in the Warrant  Agreement are  incorporated  herein by
this reference,  and shall be binding on the parties hereto as if such terms and
conditions were set forth at length herein.

     Section 1.2.  Additional  Rescinded  Units.  In the event,  pursuant to the
provisions of Section 1.4 of the Rescission Agreement, additional Units shall be
deemed  rescinded from  Shareholder  (collectively,  the  "Additional  Rescinded
Units"),  then the  number of  Settlement  Warrants  issued  hereunder  shall be
deemed,  on and as of the date  hereof,  to be increased by that number equal to
(such  number being the  "Additional  Settlement  Warrants"):  (a) the number of


                                       2
<PAGE>

Additional Units that shall so be deemed rescinded from Shareholder (pursuant to
Section 1.4 of the  Rescission  Agreement);  multiplied  by (b) two (2). In such
event,  the Warrant  Agreement shall be deemed amended to include the Additional
Settlement   Warrants,   and  the  Company  shall,  as  soon  as  is  reasonably
practicable,  cause the  certificate  evidencing  the  Warrant  Agreement  to be
amended accordingly (to add such Additional Settlement Warrants), and, upon, and
subject  to,  the  Shareholder's  surrender  to  the  Company  of  the  original
certificate  evidencing  the Warrant  Agreement,  together  with a  certificate,
executed  by  Shareholder,   containing  such  reasonable   representations  and
warranties  requested  by the  Company,  the Company and the  Shareholder  shall
promptly thereafter execute and deliver the same.

                                   ARTICLE II
                                     RELEASE

     Section 2.1  Shareholder's  Release of  Company.  As an  inducement  to the
Company to enter into this Agreement, the Shareholder,  by its execution hereof,
hereby  releases  and  discharges  the  Company  and  its  officers,  directors,
shareholders,  subsidiaries, affiliates, representatives,  employees, successors
and assigns of and from any and all  actions,  causes of action,  suits,  debts,
dues, sums of money, accounts, reckonings, bonds, bill, specialties,  covenants,
contracts, controversies,  agreements, promises, variances, trespasses, damages,
judgments,  extents,  executions,  claims, and demands whatsoever (collectively,
"Claims"),  in law, admiralty or equity, which against the Company and/or any of
officers, directors, shareholders,  subsidiaries,  affiliates,  representatives,
employees,  successors  and  assigns  which the  Shareholder  and/or  any of its
officers,   directors,    partners,    shareholders,    affiliates,    trustees,
beneficiaries, representatives, employees, administrators, heirs, successors and
assigns ever had, now have or hereafter can, shall or may, have for, upon, or by
reason of any and all matters,  causes,  things or claims, from the beginning of
the  world to the date of this  Agreement,  in  respect  of,  or that in any way
relate to, the Omission,  the Bylaw Amendment  and/or the Rescission,  except as
otherwise  specifically set forth herein, in the Rescission  Agreement and/or in
the agreements executed and delivered contemporaneously herewith and therewith.


                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     Section 3.1  Representations  and  Warranties of  Shareholder.  Shareholder
represents and warrants to the Company,  as follows,  which  representations and
warranties  shall be unaffected by any actual or  constructive  knowledge of the
Company as to the accuracy thereof:

     (a)  Holder of Claims.  Shareholder  is the sole and  exclusive  beneficial
legal  Holder of the Claims,  and has not made any  assignments  of, nor created
liens, claims (including adverse claims),  charges,  pledges,  options, security
interests  and/or  any other  encumbrance,  of any kind or nature  against,  the
Claims (collectively, "Encumbrances").

     (b)  Authority  and  Approval.  Shareholder  has all  requisite  power  and
authority  (corporate,  if applicable,  and  otherwise) to execute,  deliver and
perform  this  Agreement.  Shareholder  has duly  executed  and  delivered  this
Agreement,  and this Agreement  constitutes the valid and binding  obligation of
the  Shareholder,  enforceable  against the  Shareholder in accordance  with its
terms,  except as such  enforcement  may be  limited by  applicable  bankruptcy,


                                       3
<PAGE>

reorganization,   moritorium,   insolvency  and  other  similar  laws  affecting
creditors' rights generally or by equitable  principles of general  application,
regardless  of  whether   considered  in  a  proceeding  at  law  or  in  equity
(collectively, the "Enforceability Exceptions").

     (c) No Consents. No consent, order, license,  approval or authorization of,
or exemption by, or  registration  or  declaration  or filing with,  any person,
corporation,  partnership,  trust,  incorporated or unincorporated  association,
joint  venture,  joint stock  company,  government  (or any agency or  political
subdivision  thereof)  or other  entity  of any kind (all  such  entities  being
hereinafter  collectively referred to as a "Person"), is required to be obtained
or  made  in  connection  with  the  execution,   delivery  and  performance  by
Shareholder  of  this  Agreement,   or  the  consummation  of  the  transactions
contemplated hereby.

     (d) No Conflicts. The execution, delivery and performance of this Agreement
by  Shareholder  will  not  (a)  violate  any  provision  of any  organizational
documents of  Shareholder,  if Shareholder is other than a natural  person;  (b)
result in the  creation of any  Encumbrances  against or  affecting  the Claims,
except as may otherwise be  specifically  contemplated  hereby;  (c) violate any
judgment,  order,  injunction,   decree  or  award  of  any  court,  arbitrator,
administrative  agency or governmental  or regulatory  body against,  or binding
upon, the Shareholder or any of its securities, properties or assets; and/or (d)
constitute  a  violation,  by the  Shareholder,  of any  statute,  law,  rule or
regulation of any  jurisdiction as and to the extent such statute,  law, rule or
regulation relates to or is otherwise binding upon Shareholder.

     (e) No Assurance.  Shareholder represents and warrants that the Company has
provided no assurances  that the  consummation of the  transactions  effectuated
hereby or in connection herewith, including, without limitation, the Rescission,
will, in fact,  result in the  preservation of the Company's use of the NOL, and
that Shareholder is entering into this Agreement with the express  understanding
that the Company's use of its NOL may have heretofore been, or may hereafter be,
limited,  notwithstanding  the  consummation  of the  transactions  contemplated
hereby or in connection herewith.

     (f)  Investment   Experience.   Shareholder  (i)  has  such  knowledge  and
experience in financial and business  matters as to be capable of evaluating the
merits and risks of entering into this Agreement and its prospective  investment
in the Settlement Warrants; (ii) believes it has received all the information it
has requested  from the Company and that it considers  necessary or  appropriate
for  deciding  whether  to obtain  the  Settlement  Warrants;  (iii) has had the
opportunity,  to its  satisfaction,  to discuss the  business,  management,  and
financial  affairs with the Company's  management;  (iv) has the ability to bear
the economic risks of its prospective investment in the Settlement Warrants; and
(v) is able, without materially impairing its financial  condition,  to hold the
Settlement  Warrants for an indefinite  period of time, and to suffer a complete
loss of its investment.

     (ii) The  Shareholder  qualifies  as an  "accredited  investor"  within the
meaning  of  Regulation  D of the rules and  regulations  promulgated  under the
Securities Act of 1933, as amended (the "Securities Act").

     (iii)  Settlement  Warrants  acquired  by  Shareholder  hereunder  will  be
acquired for investment for the Shareholder's  own account,  not as a nominee or
agent, and not with a view of the sale or distribution of any part thereof,  and


                                       4
<PAGE>

the Shareholder has no intention of selling,  granting any  participation in, or
otherwise  distributing  the Settlement  Warrants other than in accordance  with
applicable  federal  and state  securities  laws,  and that it has no  contract,
undertaking,  agreement,  or arrangement with any person to sell,  transfer,  or
grant  participation to such person or to any third person,  with respect to the
Settlement Warrants.

     (iv)  Shareholder  understands  and  acknowledges  that the offering of the
Settlement  Warrants,  pursuant to this Agreement,  will not be registered under
the  Securities  Act on the  basis  that the  offering  and  sale of  securities
contemplated by this Agreement are exempt from registration  pursuant to Section
4(2) and/or Section 3(b) of the Securities Act, and the  Shareholder's  reliance
upon such exemption is predicated upon the Shareholder's  representations as set
forth in this Agreement.


     Section 3.2  Representations  and  Warranties  of the Company.  The Company
represents and warrants to the Shareholder,  as follows,  which  representations
and warranties  shall be unaffected by any actual or  constructive  knowledge of
the Shareholder as to the accuracy thereof:

     (a)  Authority  and  Approval.  The  Company  has all  requisite  power and
authority  (corporate  and  otherwise)  to execute,  deliver  and  perform  this
Agreement,  and to consummate  the rescission  transaction,  with respect to the
Surrendered  Warrants,  effectuated  hereby.  The Company has duly  executed and
delivered this Agreement,  and this Agreement  constitutes the valid and binding
obligation of the Company,  enforceable  against the Company in accordance  with
its terms,  except as such  enforcement  may be  limited  by the  Enforceability
Exceptions.

     (b) No Consents. No consent, order, license,  approval or authorization of,
or exemption by, or  registration  or  declaration or filing with, any Person is
required to be obtained or made in connection  with the execution,  delivery and
performance  by the  Company  of  this  Agreement,  or the  consummation  of the
transactions contemplated hereby.

     (c) No Conflicts. The execution, delivery and performance of this Agreement
by the  Company  will  not  (a)  violate  any  provision  of any  organizational
documents of the Company; (b) violate any judgment, order, injunction, decree or
award  of any  court,  arbitrator,  administrative  agency  or  governmental  or
regulatory body against,  or binding upon, the Company or any of its securities,
properties or assets;  and (c)  constitute a violation,  by the Company,  of any
statute,  law, rule or regulation of any  jurisdiction as and to the extent such
statute,  law,  rule or regulation  relates to or is otherwise  binding upon the
Company; except, in each case, for violations that would not, individually, have
a material adverse effect on the Company or its assets.


                                       5
<PAGE>


                                   ARTICLE IV
                                 INDEMNIFICATION

     Section 4.1  Indemnification  by the Company.  The Company shall indemnify,
defend and hold harmless,  jointly and severally, the Shareholder and its heirs,
executors,  beneficiaries,   trustees,  administrators,  legal  representatives,
successors and assigns (each a "Shareholder  Party") of, from,  against,  and in
respect  of or  relating  (directly  or  indirectly)  to  any  and  all  losses,
liabilities,  claims,  damages,  costs,  fees and  expense  (including,  without
limitation,  reasonable  attorneys'  fees  and  disbursements),  of any kind and
description, inchoate or otherwise (collectively, "Losses"), resulting (directly
or indirectly) from, relating to or incident to any material  misrepresentation,
breach  of  representation  or  warranty,  or breach  or  nonfulfillment  of any
covenant  or  obligation  on the  part  of the  Company  made or  given  in this
Agreement.

     Section 4.2  Indemnification  by Shareholder.  Shareholder hereby agrees to
indemnify,  defend and hold  harmless the Company and its  officers,  directors,
employees,  agents,  representatives,  successors and assigns of, from, against,
and in respect of or relating  (directly  or  indirectly)  to any and all Losses
resulting (directly or indirectly) from, relating to or incident to any material
misrepresentation,   breach  of  representation   or  warranty,   or  breach  or
nonfulfillment  of any covenant or  obligation  on the part of such  Shareholder
made or given in this Agreement

Section 4.3       Notice and Payment.

     (a) A party  entitled  to  indemnification  pursuant  to Section 4.1 or 4.2
hereof  (an  "Indemnified  Party")  shall  give  written  notice  to  the  party
responsible  for  indemnification  pursuant  to  Sections  4.1 or 4.2 hereof (an
"Indemnifying  Party") of any claim, suit,  liability or demand which gives rise
to   indemnification  by  an  Indemnifying  Party  pursuant  to  this  Agreement
(hereinafter referred to as an "Indemnification  Notice").  Such Indemnification
Notice  shall  describe  the claim in  reasonable  detail (the  "Indemnification
Claim") and shall indicate the amount  (estimated if necessary) of the loss that
has been or may be sustained by the  Indemnified  Party (the amount of each such
claim  being  the  "Indemnification   Claim  Amount",   and  collectively,   the
"Indemnification  Claims Amount").  The  Indemnifying  Party shall have ten (10)
days following its receipt of the Indemnification Notice to dispute, in writing,
the basis of the Indemnification  Claim and/or the Indemnification  Claim Amount
that is the subject of the  Indemnification  Notice (each an "Dispute  Notice"),
TIME BEING OF THE ESSENCE,  which Dispute Notice shall set forth,  in reasonable
detail,   the  basis  upon  which  the  Indemnifying   Party  is  disputing  the
Indemnification  Claim  and/or  the  Indemnification  Claim  Amount  that is the
subject of the Indemnification  Notice. In the event that the Indemnifying Party
shall fail to timely provide the Dispute Notice to the Indemnified  Party,  then
the Indemnifying  Party shall be deemed to be conclusively  liable in respect of
the Indemnification  Claim (to the extent of the Indemnification  Claim Amount),
and shall be deemed to have waived there right to dispute the same.

     (b) With respect to third party claims, the Indemnifying Party may elect to
compromise  or defend,  at its own  expense and by its own  counsel,  any matter
involving  the  asserted  liability  of the  Indemnifying  Party  so long as the
Indemnifying  Party  pursues  the  same  diligently  and in good  faith.  If the
Indemnifying  Party undertakes to compromise or defend such asserted  liability,
the Indemnifying  Party shall,  within 15 days (or sooner,  if the nature of the
asserted  liability so requires),  notify the Indemnified Party of its intent to
do so,  and  the  Indemnified  Party  shall  cooperate,  at the  expense  of the


                                       6
<PAGE>

Indemnifying Party, in the compromise of, or defense against,  any such asserted
liability.  Notwithstanding the foregoing,  the Indemnified Party shall have the
right to participate  in any matter  through  counsel of its own choosing at its
own  expense;  provided  that the  Indemnifying  Party's  counsel  shall be lead
counsel.  After the Indemnifying Party shall have notified the Indemnified Party
of its intention to undertake to defend or settle any such  asserted  liability,
and for so long as the Indemnifying Party diligently  pursues such defense,  the
Indemnifying  Party  shall  not be  liable  for any  additional  legal  expenses
incurred by the  Indemnified  Party in connection with any defense or settlement
of such asserted liability, except to the extent such participation is requested
by the  Indemnifying  Party,  in which  event  the  Indemnified  Party  shall be
reimbursed by the Indemnifying  Party for reasonable  additional legal expenses,
out-of-pocket  expenses and allocable share of employee compensation incurred in
connection with such  participation  for any employee whose  participation is so
requested.  If the  Indemnifying  Party  desires to accept a final and  complete
reasonable settlement of asserted liability and the Indemnified Party refuses to
consent to such reasonable  settlement,  then the Indemnified  Party's liability
under this Article 4 with respect to such asserted liability shall be limited to
the amount so offered (and  accepted) in settlement  and the  Indemnified  Party
shall reimburse the Indemnifying Party for any additional costs of defense which
it subsequently incurs with respect to such claim.

     (c) If the  Indemnifying  Party does not undertake to defend such matter to
which the Indemnified Party is entitled to indemnification  hereunder,  or fails
to diligently  pursue such defense,  the  Indemnified  Party may undertake  such
defense  through  counsel  of its own  choice,  at the cost and  expense  of the
Indemnifying  Party, and the Indemnified  Party may settle such matter,  and the
Indemnifying  Party shall reimburse the Indemnified Party for the amount paid in
such  settlement  and  any  other   liabilities  or  expenses  incurred  by  the
Indemnified  Party  in  connection  therewith;   provided,   however,  that  the
Indemnified Party shall not settle any such claim without the written consent of
the  Indemnifying  Party,  which consent shall not be  unreasonably  withheld or
delayed.

     (d) Other  than with  respect  to those  sums that  shall be  disputed,  in
writing,  by the Indemnifying Party in accordance with the provisions of Section
4.3 hereof,  all sums paid by the Indemnified  Party for which the  Indemnifying
Party is  obligated  to  reimburse  the  Indemnified  Party under this Article 4
(together with interest thereon from the date of the Indemnified Party's payment
of any  amounts  until  paid in full)  shall be paid  within ten days of demand,
together  with  interest  calculated  at the maximum rate allowed under New York
State law.

     Section  4.4  Survival.  The  respective  covenants,   representations  and
warranties  made  herein by the Company and the  Shareholder  shall  survive the
execution and delivery of this Agreement,  notwithstanding  any investigation or
examination  made by or on behalf of any of the Parties,  nor any knowledge with
respect thereto.


                                       7
<PAGE>


                                    ARTICLE V
                               GENERAL PROVISIONS


     Section 5.1 Governing Law. This Agreement shall be governed,  construed and
enforced in accordance  with the laws of the State of New York,  notwithstanding
principles of conflicts of laws thereof.

     Section 5.2 Terms and Conditions.  The term "Agreement" as used herein,  as
well as the terms "herein,"  "hereof,"  "hereunder" and the like shall mean this
Agreement in its entirety and all Schedules and Exhibits annexed hereto,  all of
which are hereby made a part hereof.  The captions and section  headings  hereof
are for reference and  convenience  only and do not enter into or become part of
the context. All pronouns,  singular and plural, masculine,  feminine or neuter,
shall mean and include the person,  entity,  firm, or  corporation to which they
relate as the context may require.

     Section 5.3 Severability.  In the event that any term, covenant, condition,
agreement,  section or provision hereof shall be deemed invalid or unenforceable
by a court of  competent  and  final  jurisdiction,  this  Agreement  shall  not
terminate  or be deemed void or voidable,  but shall  continue in full force and
effect and there shall be  substituted  for such  stricken  provision a like but
legal and enforceable  provision which most nearly accomplishes the intention of
the parties hereto.

     Section  5.4  Notices.   All   notices,   requests,   demands,   and  other
communications  shall be  deemed  to have  been  duly  given if in  writing  and
delivered by hand or sent by reliable overnight delivery service (e.g.,  Federal
Express),  telecopier  (receipt  confirmed)  or  certified or  registered  mail,
postage  prepaid,  to the appropriate  address  indicated below or to such other
address as may be given in a notice sent to the other Parties hereto:

     If to the Company:

         Emerging Vision, Inc.
         100 Quentin Roosevelt Boulevard
         Suite 508
         Garden City, New York 11530
         Telephone: (516) 390-2134
         Telecopier: (516) 390-2110
         Attention: Co-Chief Operating Officer or Chief Financial Officer

     with a copy to:

         Attention: General Counsel
         Telecopier: (516) 465-6920


         If to the Shareholder:







     To the location set forth opposite Shareholder's name on Schedule A annexed
hereto.


                                       8
<PAGE>

     Section 5.6  Counterparts.  This  Agreement  may be executed in one or more
counterparts,  and may be  exchanged by  facsimile  transmission,  each of which
shall be deemed an original,  and all of which,  together,  shall constitute one
and the same instrument.

     Section 5.7 Schedules and Exhibits.  Each Schedule and Exhibit  referred to
in this Agreement is hereby  incorporated by reference and made an integral part
hereof,  and  may be  referred  to in  this  Agreement  and  any  other  related
instrument or document without being annexed hereto or thereto.

     Section 5.8 Binding Effect.  This Agreement shall be binding upon and shall
inure to the benefit or  detriment  of the parties  hereto and their  respective
heirs, personal representatives, permitted successors and assigns.

     Section 5.9  Assignment.  No party may assign any of its rights,  duties or
obligations  under this Agreement without the prior written consent of the other
parties,  and any  attempt  to do so shall be null and void and of no force  and
effect upon the non-consenting party.

     Section 5.10 Entire  Agreement;  Modification of Agreement.  This Agreement
embodies  the entire  agreement  of the parties  relating to the subject  matter
hereof  and the  matters  contemplated  herein,  and  supersedes  all  prior and
contemporaneous  oral or written  understandings,  agreements,  representations,
warranties,  statements,  advise and/or communications  between the parties, and
any  of  their  respective   officers,   directors,   shareholders,   employees,
representatives,  attorneys and accountants, with respect to said subject matter
and the matters  contemplated  herein.  No  amendment  or  modification  of this
Agreement  shall be valid or binding upon the parties unless made in writing and
signed by each of the parties.

     Section  5.11  Remedies  Cumulative.   All  remedies,  rights,  powers  and
privileges  conferred  hereunder upon the parties,  unless  otherwise  provided,
shall be cumulative and not restricted to those provided by law.

     Section 5.12 Expenses.  The Company shall pay all reasonable  out-of-pocket
costs and expenses  incurred by  Shareholder  in connection  with its review and
negotiation  of  this  Agreement  and  the   consummation  of  the  transactions
contemplated  hereby;  subject,  however,  to the Shareholder's  delivery to the
Company of reasonable, written substantiation of all such expenses.

     Section  5.13 No Third Party  Beneficiaries.  Nothing in this  Agreement is
intended  to create a benefit  in favor of, or an  obligation  to, any person or
entity not a party to this Agreement.

     Section  5.14  Waiver of Breach or  Violation  Not Deemed  Continuing.  The
waiver by any party of a breach or violation of any provision of this  Agreement
shall not operate as, or be construed to be, a waiver of any  subsequent  breach
or violation of any  provision  hereof.  No breach or violation of any provision
hereof may be waived, except by an agreement,  in writing, signed by the waiving
party.



                                       9
<PAGE>

     Section 5.15.  Construction.  The parties  acknowledge  and agree that this
Agreement is the result of arms-length  negotiations among the parties,  and has
been  reviewed by each party and their  respective  counsel.  Accordingly,  this
Agreement  shall be deemed the product of each party  hereto,  and no  ambiguity
shall be constructed in favor of or against any party.

     Section 5.16. No Admission.  Nothing in this  Agreement is intended to, and
nor shall the same be deemed to be, the Company's  admission as to (i) the truth
and accuracy of any of the factual  statements set forth herein  relating to the
alleged Omission,  and/or (ii) any liability, of any kind or nature,  including,
without, limitation, in respect of the alleged Omission and passage of the Bylaw
Amendment.  All rights of the Company, except as otherwise specifically provided
herein, are hereby expressly reserved.


                    BALANCE OF PAGE INTENTIONALLY LEFT BLANK















                                       10
<PAGE>



     IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered  this
Agreement as of the day and year first above written.


                                                THE COMPANY:



                                                EMERGING VISION, INC.



                                                By:________________________



                                                SHAREHOLDER:



                                                By:________________________









                                       11
<PAGE>


                                   SCHEDULE A

                        SHAREHOLDER; SETTLEMENT WARRANTS


Name and
Address                    # of Settlement Warrants           Exercise Price
----------              -----------------------------        -----------------













<PAGE>

                                    EXHIBIT A


                                 BYLAW AMENDMENT


     Section 5. Certain Prohibited Dispositions of Company Securities. Except as
may otherwise be approved by the Board of Directors of the Company,  in its sole
and absolute discretion, any purported sale, acquisition,  transfer, conversion,
exercise or other disposition of stock,  options,  warrants and other securities
in or of the Company, by any record or beneficial, direct or indirect, holder of
five (5%) percent or more of such securities  (whether prior to or subsequent to
any such  sale,  transfer,  acquisition  or  other  disposition),  that,  in the
Company's determination (made in its sole and absolute discretion), would result
in an "ownership change," as that term is defined in Section 382 of the Internal
Revenue  Code of 1986,  as amended  (the  "Code") and the  Treasury  Regulations
promulgated  thereunder,  shall be prohibited,  void ab initio, and shall not be
recognized by, nor be binding upon or enforceable against, the Company.











                                       13
<PAGE>


                                    EXHIBIT B

                                WARRANT AGREEMENT























                                       14

<PAGE>
                                                                    EXHIBIT 21.1

LIST OF SUBSIDIARIES:

                               720 MARKET STREET REALTY CORPORATION
                               INSIGHT AMSURG CENTERS, INC.
                               INSIGHT IPA OF NEW YORK, INC.
                               INSIGHT LASER CENTERS, INC.
                               INSIGHT LASER CENTER N.C. II, INC.
                               INSIGHT LASER CENTERS, N.Y.I, INC.
                               INSIGHT LASER CENTER NY II, INC.
                               INSIGHT LASER CENTERS NEW YORK II, LTD.
                               INSIGHT LASER CENTERS OF BAY TERRACE, INC.
                               INSIGHT LASER CENTERS OF KING OF PRUSSIA, INC.
                               INSIGHT TOTAL MANAGED CARE, INC.
                               MACARTHUR CENTER REAL ESTATE
                               OPTI-PLEX OF NEW YORK, INC.
                               SIGHT FOR SORE EYES FRANCHISE
                               SINGER SPECS ADVERTISING, INC.
                               SITE FOR SORE EYES ADVERTISING, INC.
                               SITE FOR SORE EYES SACRAMENTO, INC.
                               STERLING ADVERTISING, INC.
                               STERLING BRYANT II CORP.
                               STERLING LABORATORIES, INC.
                               STERLING ROSLYN CORP.
                               STERLING VISION DKM ADVERTISING, INC.
                               STERLING VISION DKM OF SHEBOYGAN, INC.
                               STERLING VISION OF 125TH STREET
                               STERLING VISION OF 1900 BROADWAY
                               STERLING VISION OF 78TH STREET, INC.
                               STERLING VISION OF 794 LEXINGTON, INC.
                               STERLING VISION OF ANAHEIM, INC.
                               STERLING VISION OF ANNAPOLIS, INC.
                               STERLING VISION OF APACHE, INC.
                               STERLING VISION OF APPLETON, INC.
                               STERLING VISION OF BASHFORD MANOR, INC.
                               STERLING VISION OF BAY RIDGE, INC.
                               STERLING VISION OF BAY STREET, INC.
                               STERLING VISION OF BEAVER DAM, INC.
                               STERLING VISION OF BLASDELL, INC.
                               STERLING VISION OF BLUEFIELD, INC.
                               STERLING VISION OF BREA, INC.
                               STERLING VISION OF BRUNSWICK
                               STERLING VISION OF CALIFORNIA, INC.
                               STERLING VISION OF CAMBRIDGE SQUARE, INC.
                               STERLING VISION OF CAMP HILL, INC.
                               STERLING VISION OF CAPE GIRARDEAU, INC.

<PAGE>

                               STERLING VISION OF CAPITOLA, INC.
                               STERLING VISION OF CHARLESTOWN, INC.
                               STERLING VISION OF COLLINGTON PLAZA, INC.
                               STERLING VISION OF COLUMBIA MALL, INC.
                               STERLING VISION OF COLUMBUS MILLS, INC.
                               STERLING VISION OF CRESTWOOD
                               STERLING VISION OF DELAFIELD, INC.
                               STERLING VISION OF DENVER, INC.
                               STERLING VISION OF DULLES, INC.
                               STERLING VISION OF EAST MADISON, INC.
                               STERLING VISION OF EASTLAND, INC.
                               STERLING VISION OF EAU CLAIRE, INC.
                               STERLING VISION OF EAST ROCKAWAY, INC.
                               STERLING VISION OF EDISON, INC.
                               STERLING VISION OF FAIR OAKS, INC.
                               STERLING VISION OF FARGO, INC.
                               STERLING VISION OF FOND DU LAC, INC.
                               STERLING VISION OF FORESTVILLE, INC.
                               STERLING VISION OF FOX RUN, INC.
                               STERLING VISION OF FRANKLIN MALL, INC.
                               STERLING VISION OF FRANKLIN MILLS, INC.
                               STERLING VISION OF FULTON ST., INC.
                               STERLING VISION OF GASTONIA, INC.
                               STERLING VISION OF GREAT NORTHERN, INC.
                               STERLING VISION OF GREEN ACRES, INC.
                               STERLING VISION OF GREEN BAY, NC.
                               STERLING VISION OF HAGERSTOWN, INC.
                               STERLING VISION OF HAMPTON, INC.
                               STERLING VISION OF HAWTHORNE CENTER, INC.
                               STERLING VISION OF HEMPSTEAD, INC.
                               STERLING VISION OF ISLANDIA, INC.
                               STERLING VISION OF JAMESTOWN MALL, INC.
                               STERLING VISION OF JERSEY GARDENS, INC.
                               STERLING VISION OF KENNEDY BLVD., INC.
                               STERLING VISION OF KENOSHA, INC.
                               STERLING VISION OF KIRKWOOD MALL, INC.
                               STERLING VISION OF LANDOVER, INC.
                               STERLING VISION OF LEVITTOWN, INC.
                               STERLING VISION OF LIGHT STREET, INC.
                               STERLING VISION OF LIME RIDGE, INC.
                               STERLING VISION OF LOS GATOS, INC.
                               STERLING VISION OF MACARTHUR CENTER, INC.
                               STERLING VISION OF MAIN PLACE, INC.
                               STERLING VISION OF MAMARONECK, INC.
                               STERLING VISION OF METRO NORTH, INC.
                               STERLING VISION OF METRO N.Y., INC.

<PAGE>

                               STERLING VISION OF MID RIVERS, INC.
                               STERLING VISION OF MINOT, INC.
                               STERLING VISION OF MONDAWMIN, INC.
                               STERLING VISION OF MONTGOMERY, INC.
                               STERLING VISION OF M.V., INC.
                               STERLING VISION OF NANUET, INC.
                               STERLING VISION OF NAPA, INC.
                               STERLING VISION OF NEWPARK, INC.
                               STERLING VISION OF NEWPORT BEACH, INC.
                               STERLING VISION OF NILES, INC.
                               STERLING VISION OF NORTHPARK, INC.
                               STERLING VISION OF NORTHWEST PLAZA, INC.
                               STERLING VISION OF ONTARIO MILLS, INC.
                               STERLING VISION OF ORLANDO, INC.
                               STERLING VISION OF OWINGS MILLS, INC.
                               STERLING VISION OF PADDOCK MALL, INC.
                               STERLING VISION OF PALISADES, INC.
                               STERLING VISION OF PENN CENTER, INC.
                               STERLING VISION OF POTOMAC MILLS, INC.
                               STERLING VISION OF PRINCE GEORGES PLAZA, INC.
                               STERLING VISION OF REGO PARK, INC.
                               STERLING VISION OF RIVERSIDE, INC.
                               STERLING VISION OF ROSYLN, INC.
                               STERLING VISION OF ROTTERDAM, INC.
                               STERLING VISION OF SACRAMENTO, INC.
                               STERLING VISION OF SEACLIFF VILLAGE, INC.
                               STERLING VISION OF SF, INC.
                               STERLING VISION OF SOUTHDALE, INC.
                               STERLING VISION OF SOUTHPARK, INC.
                               STERLING VISION OF THE FALLS, INC.
                               STERLING VISION OF THOUSAND OAKS
                               STERLING VISION OF TINLEY PARK, INC.
                               STERLING VISION OF TOMS RIVER, INC.
                               STERLING VISION OF WALDEN, INC.
                               STERLING VISION OF WEST BEND, INC.
                               STERLING VISION OF WEST MADISON, INC.
                               STERLING VISION OF WESTMINSTER, INC.
                               STERLING VISION OF WESTPORT, INC.
                               STERLING VISION OF WHEATON PLAZA, INC.
                               STERLING VISION OF WHITE FLINT, INC.
                               STERLING VISION OF YUBA CITY, INC.
                               VISIONCARE OF CALIFORNIA, INC.



<PAGE>


                                                                    Exhibit 23.1





                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS




     We hereby consent to the incorporation of our audit report included in this
Form  10-K,  into  Emerging  Vision,   Inc.'s   previously  filed   registration
statements.



                                           /s/  Miller, Ellin & Company LLP




New York, New York
April 5, 2004







<PAGE>
                                                                    Exhibit 31.1

I, Christopher G. Payan, certify that:

     1. I have reviewed this Form 10-K of Emerging Vision, Inc.;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
statements of a material fact or omit to state a material fact necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the period presented in this report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

     a)  Designed  such  disclosure  controls  and  procedures,  or caused  such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant's internal control
over  financial  reporting  that occurred  during the  registrant's  most recent
fiscal quarter (the registrant's  fourth fiscal quarter in the case of an annual
report) that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most recent evaluation of internal control over financial  reporting,  to
the registrant's  auditors and the audit committee of the registrant's  board of
directors (or persons performing the equivalent function):

     a) All significant  deficiencies  and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     b) Any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's  internal control over
financial reporting.



Date:  April 5, 2004


  /s/ Christopher G. Payan
------------------------------------
Christopher G. Payan
Co-Chief Operating Officer and
Chief Financial Officer
(Co-Principal Executive Officer and
Principal Financial Officer)



<PAGE>

                                                                    Exhibit 31.2

I, Myles S. Lewis, certify that:

     1. I have reviewed this Form 10-K of Emerging Vision, Inc.;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
statements of a material fact or omit to state a material fact necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the period presented in this report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

     a)  Designed  such  disclosure  controls  and  procedures,  or caused  such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant's internal control
over  financial  reporting  that occurred  during the  registrant's  most recent
fiscal quarter (the registrant's  fourth fiscal quarter in the case of an annual
report) that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most recent evaluation of internal control over financial  reporting,  to
the registrant's  auditors and the audit committee of the registrant's  board of
directors (or persons performing the equivalent function):

     a) All significant  deficiencies  and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     b) Any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's  internal control over
financial reporting.


Date:  April 5, 2004


  /s/ Myles S. Lewis
---------------------------------
Myles S. Lewis
Co-Chief Operating Officer
(Co-Principal Executive Officer)






<PAGE>

                                                                    Exhibit 31.3


I, Samuel Z. Herskowitz, certify that:

     1. I have reviewed this Form 10-K of Emerging Vision, Inc.;

     2.  Based  on my  knowledge,  this  report  does  not  contain  any  untrue
statements of a material fact or omit to state a material fact necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge,  the financial  statements,  and other  financial
information included in this report, fairly present in all material respects the
financial  condition,  results of operations and cash flows of the registrant as
of, and for, the period presented in this report;

     4. The  registrant's  other  certifying  officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

     a)  Designed  such  disclosure  controls  and  procedures,  or caused  such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that  material  information  relating to the  registrant,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant's  disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant's internal control
over  financial  reporting  that occurred  during the  registrant's  most recent
fiscal quarter (the registrant's  fourth fiscal quarter in the case of an annual
report) that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

     5. The registrant's other certifying  officers and I have disclosed,  based
on our most recent evaluation of internal control over financial  reporting,  to
the registrant's  auditors and the audit committee of the registrant's  board of
directors (or persons performing the equivalent function):

     a) All significant  deficiencies  and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     b) Any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's  internal control over
financial reporting.



Date:  April 5, 2004


  /s/ Samuel Z. Herskowitz
---------------------------------
Samuel Z. Herskowitz
Co-Chief Operating Officer
(Co-Principal Executive Officer)




<PAGE>

                                                                    Exhibit 32.1


  CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERS AND PRINCIPAL FINANCIAL OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     The  undersigned  hereby  certifies,  pursuant  to, and as required  by, 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that the Annual Report of Emerging Vision,  Inc. (the "Company") on
Form 10-K for the  period  ended  December  31,  2003  fully  complies  with the
requirements  of Section 13(a) or 15(d) of the Securities  Exchange Act of 1934,
as amended,  and that  information  contained in such Annual Report on Form 10-K
fairly presents,  in all material respects,  the financial condition and results
of operations of the Company.

Dated:  April 5, 2004


                                   /s/ Christopher G. Payan
                                 ---------------------------------------
                                   Christopher G. Payan
                                   Co-Chief Operating Officer and
                                   Chief Financial Officer
                                   (Co-Principal Executive Officer and
                                   Principal Financial Officer)


                                   /s/ Myles S. Lewis
                                 ---------------------------------------
                                  Myles S. Lewis
                                  Co-Chief Operating Officer
                                  (Co-Principal Executive Officer)


                                   /s/ Samuel Z. Herskowitz
                                 ---------------------------------------
                                   Samuel Z. Herskowitz
                                   Co-Chief Operating Officer
                                   (Co-Principal Executive Officer)


     The foregoing  certification  is being furnished solely pursuant to Section
906 of the  Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350,
chapter 63 of title 18,  United  States  Code) and is not being filed as part of
the Form 10-K or as a separate disclosure document.