<PAGE>   1
DRAFT                                DRAFT                                DRAFT

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                 --------------

                                    FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000    COMMISSION FILE NUMBER: 000-22977

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

                             VISION TWENTY-ONE, INC.
             (Exact name of Registrant as specified in its charter)


                 FLORIDA                                 59-3384581
        (State or jurisdiction of                      (I.R.S. employer
     incorporation or organization)                  identification no.)

         120 W. FAYETTE STREET
                SUITE 700
              BALTIMORE, MD                                   21201
(Address of principal executive offices)                   (Zip code)

       Registrant's telephone number, including area code: (410) 752-0121

           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 $.001
                                (Title of Class)

         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 definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         The aggregate market value of the voting stock held by non-affiliates
of the Registrant on December 31, 2000, was $138,601.76 based upon the closing
price of such shares on such date on the NASDAQ OTC-Bulletin Board System. As of
December 31, 2000, there were 13,860,176 shares outstanding.


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<PAGE>   2

                             VISION TWENTY-ONE, INC.
                         2000 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                      Page
<S>                                                                                                                   <C>
ITEM  1.    BUSINESS...............................................................................................     1

ITEM  2.    PROPERTIES.............................................................................................     5

ITEM  3.    LEGAL PROCEEDINGS......................................................................................     6

ITEM  4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................................................     6

ITEM  5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.................................      7

ITEM  6.    SELECTED FINANCIAL DATA................................................................................     8

ITEM  7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............... .      9

ITEM  7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.............................................    17

ITEM  8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................................................    20

ITEM  9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...................    48

ITEM  10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.....................................................    49

ITEM  11.   EXECUTIVE COMPENSATION.................................................................................    53

ITEM  12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.........................................    60

ITEM  13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.........................................................    61

ITEM  14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K........................................    68
</TABLE>


                                        i

<PAGE>   3

                                     PART I

ITEM  1.  BUSINESS

OVERVIEW

         Vision Twenty-One, Inc. ("Vision Twenty-One" or the "Company") is a
vision care company that is mainly focused on the provision of administrative
services to managed care entities. The company manages routine vision and
medical/surgical eye care programs through contracts with managed care
organizations and other third-party payors.

         Previously, Vision Twenty-One's local area eye care delivery (LADS)
operating revenue was primarily derived from a wide range of service fees earned
through strategic affiliations with eye care clinics and retail optical
locations and through ownership interests in refractive surgery centers
("RSCs"), ambulatory surgery centers ("ASCs") and retail optical chains. LADS
also included the management of practices of optometry and ophthalmology through
the Physician Practice Management ("PPM") division. The PPM business involved
the Company entering into long-term management agreements ("Management
Agreements") with professional associations or corporations pursuant to which
the Company was the sole provider of comprehensive management, business and
administrative services for the non-professional aspects of the professional
practices. The PPM segment represented a substantial portion of the Company's
business in 1999. During 2000, the Company completed divesting itself of the PPM
business in order to focus on the managed care business. The PPM divestiture
required multiple transactions involving the sale of practice assets, typically
back to the doctors or their affiliates, and the termination of Management
Agreements. This divestiture program commenced late in the 4th quarter of 1999
and was completed by September 30, 2000. During third quarter of 2000 the
Company announced its plans to exit the ASC/RSC business.

         Vision Twenty-One was incorporated in Florida on May 9, 1996. Its
principal operating subsidiaries consist of Vision 21 Managed Eye Care of Tampa
Bay, Inc. ("Vision 21 MCO"), Vision 21 Physician Practice Management Company,
Inc. ("Vision 21 PPMC"), MEC Health Care Inc. ("MEC") and BBG-COA, Inc. and its
subsidiaries including Block Vision, Inc. ("Block Vision"). In an effort to
streamline costs, the Company decided to close its Largo, Florida corporate
headquarters and most of its operations at the Boca Raton, Florida managed care
service center and relocate and consolidate these functions into operations in
Baltimore, Maryland. The principal executive office of Vision Twenty-One, Block
Vision and MEC is located at 120 W. Fayette Street, Suite 700, Baltimore,
Maryland 21201, and its telephone number is (410) 752-0121.

RECENT DEVELOPMENTS

         Discontinued Operations. The divestiture of the physician practice
management ("PPM") business was completed by September 2000. The Company had
announced the adoption of a plan to exit the business of managing optometry and
ophthalmology practices in late 1999. The exit of the PPM business was
accomplished through the sale of the practice assets back to the physicians or
their affiliates, the termination of Management Agreements and the restructuring
of certain refractive surgery center facility access agreements. In
consideration for the termination of the Management Agreement and the sale and
assignment of the practice assets, Vision Twenty-One typically received at
closing a combination of cash and Vision Twenty-One Common Stock. The Common
Stock was placed in the Company's treasury and was expected to be canceled by
Vision Twenty-One. The terms of each managed practice divestiture were subject
to the prior approval of the banks under the Company's credit facilities.

         During the third quarter of 2000, the Company announced its intent to
exit the business of owning and managing Refractive and Ambulatory Surgery
Centers ("ASC/RSC"). A loss of $353,951 was realized on the transactions. The
Company sold substantially all of the assets and liabilities of five refractive
and ambulatory surgery centers to American Surgisite Management Services
Organization, Inc., and R.E.S.C., LLC for cash consideration of $3.7 million.
The transactions closed in the first quarter of 2001 with an effective date of
December 31, 2000. The anticipated loss, as of December 31, 2000, for the
remaining entities is $847,000 (net of 2001 revenue and expenses).

         As a result of the Company's sale of the retail optical chain segment
of its operation, exit from the physician practice management business, and its
intent to exit the ASC/RSC business the Company has accounted for these business
segments as discontinued operations. Consequently, prior period financial
statements have been restated to reflect discontinued operations treatment for
the results of these business segments.


                                       1
<PAGE>   4

         Management Restructuring. As part of the Company's plan of
restructuring, several officers and directors resigned and the vacancies created
by such departures were filled by promoting its MEC and Block Vision senior
executives. In addition, a seasoned financial executive was hired as the
Company's Chief Financial Officer.

         Consolidation of Managed Care Offices. The consolidation of the
Corporate Executive and Managed Care Offices was started in October 2000 and was
substantially completed by year-end 2000. Additional steps to integrate the IS
function from the Boca Raton service center into MEC's Baltimore service center
were completed in early 2001. The Vision Twenty-One executive offices in Largo
were leased directly from the landlord to a new tenant and all equipment was
moved or sold. The lease for the Block Vision facility in Boca Raton was
terminated on April 1, 2001, and Block Vision leased smaller space in the same
building for certain of its staff. Equipment not retained at the Boca Raton
location has either been moved to the Baltimore location or was sold.

         Credit Facilities. On November 10, 2000 the Company amended and
restated its credit agreement dated July 1, 1998, as previously amended. The
$64,185,000 restated and amended credit facility consists of a $3 million
revolving loan, $45.8 million term loan and $6.385 million Convertible Note with
maturity dates of October 31, 2003 and a $9 million bridge loan which matures on
October 31, 2002. Quarterly principal repayments under the term loan of $0.5
million begins March 31, 2002. The bridge loan was reduced to $5.277 million in
the first quarter of 2001 and is required to be further reduced by $1 million by
June 30, 2001, by $0.5 million on September 30, 2001, and by $0.5 million on
December 31, 2001, with a balloon payment due at maturity. Mandatory principal
payments are required from 100% of the proceeds of any asset sale. In addition,
mandatory prepayments are required from 75% of Annual Excess Funds. Annual
Excess Funds are defined as EBITDA, as determined by Generally Accepted
Accounting Principals ("GAAP"), for the immediately preceding four quarters,
less payments made for interest, income tax, capital expenditures, capital lease
payments, required term loan principal payments, and permanent revolver
paydowns. For 2001 only, EBITDA shall exclude income arising as a result of
excess prior period restructuring/transition accruals and shall be reduced by
cash payments on prior period restructuring/transition accruals. Mandatory loan
prepayments will be applied first to the permanent reduction of the Bridge Loan
Commitment and second to the Term Facility. Any Term Facility prepayments will
be applied to the reduction of the remaining scheduled amortization payments in
inverse order of maturity.

         Merger with OptiCare. On February 10, 2000, the Company entered into an
Agreement and Plan of Merger and Reorganization ("Merger Agreement") with
OptiCare Health Systems, Inc. and OC Acquisition Corp. The merger was to combine
the companies' refractive surgery, ambulatory surgery and managed care
businesses. Under the terms of the Merger Agreement, the Company's Common Stock
was to be converted into OptiCare Common Stock. This merger transaction was not
completed. As a result of the terminated merger agreement approximately $1.4
million of professional fees were expensed and shown as an extraordinary item
for the year ended December 2000.

         Delisting by NASDAQ. On April 20, 2000 the Company received a letter
from NASDAQ advising the Company of a possible delisting of the Company from the
NASDAQ National Market due to the Company's failure to timely file its Form 10-K
with the Securities and Exchange Commission. The delay in filing the Form 10-K
was primarily attributable to the Company's discontinued operations. Due to the
late filings and the fact the Company no longer met minimum equity and stock
price requirements of NASDAQ National Market, the Company's Common Stock was
moved to the NASDAQ's OTC-Bulletin Board System on June 19, 2000 and is traded
under the symbol EYES.OB.

MANAGED CARE

         Vision Twenty-One operates its managed care business under the brands
Block Vision, Block Vision of Texas, MEC Eye Care, ESAN (Eye Specialists of
Arizona), and VIPA (Vision Insurance Plans of America). Block Vision and Block
Vision of Texas currently provide services in 21 states, MEC Eye Care operates
in Maryland, Virginia, and Florida, while ESAN and VIPA operate essentially in
their respective home states of Arizona and Wisconsin. Through its operating
subsidiaries, Vision Twenty-One has a nationwide contracted panel of
approximately 14,000 providers.

         Vision Twenty-One's healthcare delivery system is a contracted model
with participating providers being compensated on a discounted fee for service
basis, sub-capitation or risk pool methodology.

         Vision Twenty-One's contracts with its clients cover either routine
vision alone or a carve-out of medical surgical which includes routine, primary
and tertiary care. With medical-surgical carve-outs, Vision Twenty-One is
generally only responsible for out patient care.

         Vision Twenty-One administers managed vision care benefit programs on
behalf of licensed health-plans, primarily health maintenance organizations.
Currently, the Company is not itself licensed as a health-plan (except in Texas
where its Block Vision of Texas, Inc., subsidiary is licensed as a
single-service vision HMO, and Wisconsin


                                       2
<PAGE>   5

where its Vision Insurance Plan of America subsidiary is a limited health
service organization) and, therefore, generally does not market its services
directly to employer groups and individuals. Rather, the Company sells its
services to licensed health-plans. This approach has allowed the Company to
build a large enrollment base through a relatively small number of clients and
low administrative cost.

         Vision Twenty-One's managed care programs are generally operated on the
basis of a "full-risk carve-out," meaning that the Company not only performs the
administrative aspects of a client's vision and/or medical eye care program, but
also assumes the financial risk associated with arranging covered vision
services. The Company is paid a contracted amount each month for each covered
member, regardless of whether that member chooses to access services that month.

         Vision Twenty-One assists health-plans with HEDIS reporting
requirements, disease state management, and quality assurance programs. The
Company also provides provider relations, network development, utilization
management, patient satisfaction surveys, and third party administration to
contracted clients.

         The Company receives data each month providing the names of all
eligible enrollees. With this information, the Company performs all functions of
the health-plan as it relates to the arrangement of vision services. These
functions include the following: provider contracting and credentialing,
preauthorization of services, claims adjudication and payment, customer service,
continuous quality improvement program and utilization reporting.

         The Company arranges vision benefits for more than 2.4 million covered
lives through a variety of programs offered to commercial, Medicaid and Medicare
populations. Rather than marketing a predetermined set of benefit plans, the
Company custom-designs benefit plans for each client. One of the chief reasons
the Company has been able to accommodate such varied plan designs is the
flexibility of its administrative systems, particularly its MIS capabilities.
Currently, each of Vision Twenty-One's managed care subsidiaries operates on its
own MIS platform. Because each MIS system is proprietary, the Company can
redesign its systems as necessary to meet individual client needs.

         The Company maintains a comprehensive Quality Assurance/Improvement
Program designed to monitor the credentials of participating providers, member
satisfaction and compliance with contractual quality standards. With the growth
of managed care, many regulatory and consumer advocacy groups have raised
quality issues about managed care organizations directing patient health
matters. In response, the quality assurance/improvement initiative has become
extremely important to health-plans in establishing credibility with their
clients. When outsourcing program administration to an entity such as Vision
Twenty-One, health-plans want to delegate quality-related activities to the
subcontractor. The Company has designed its Quality Assurance/Improvement
Program to comply with standards established by the National Committee for
Quality Assurance (NCQA), the industry's chief accrediting body. The Company's
program has been reviewed in-depth and approved by several of its clients and
prospective clients.

         As an increasing percentage of the population is covered by managed
care organizations, Vision Twenty-One believes that its success will be
dependent upon its ability to maintain its existing contracts and negotiate new
managed care contracts with HMOs, health insurance companies and other
third-party payors pursuant to which services will be provided on a risk-sharing
or capitated basis. Managed care contracts are typically for one-year terms that
renew automatically, and most of the contracts are terminable by either party on
ninety days notice.


                                       3
<PAGE>   6

GOVERNMENTAL AND STATE REGULATIONS

  General Overview

         The health care industry is highly regulated, and there can be no
assurance that the regulatory environment in which Vision Twenty-One operates
will not change significantly and adversely in the future. In general,
regulation of managed care vendors such as Vision Twenty-One is increasing.

         There are currently several federal and state initiatives designed to
amend regulations relating to the provision of health care services, the access
to health care, the costs of health care and the manner in which health care
providers are reimbursed for their services. However, it is not possible to
predict whether any such initiatives will be enacted as legislation or, if
enacted, what their form, effective dates or impact on Vision Twenty-One will
be.

         The following is a description of some of the various laws that affect
Vision Twenty-One's business:

         Insurance Licensure. Most states impose strict licensure requirements
on health insurance companies, HMOs, and other companies that engage in the
business of insurance. In the event that Vision Twenty-One is required to become
licensed under these laws, the licensure process can be lengthy and time
consuming and, unless the regulatory authority permits Vision Twenty-One to
continue to operate while the licensure process is progressing, Vision
Twenty-One could experience a material adverse change in its business while the
licensure process is pending. In addition, many of the licensing requirements
mandate strict financial regulation and other requirements that Vision
Twenty-One may not immediately be able to meet. Once licensed, Vision Twenty-One
would be subject to continuing oversight by, and reporting to, the respective
regulatory agency.

         Limited Health Service Plans and Third Party Administration Licensing.
Some states permit managed care networks that assume insurance risk for a
limited class of health services to be licensed as limited health service plans.
This avoids the need to be licensed as an insurer or HMO even if the managed
care network's arrangements are with individual subscribers or self-insured
employers. Additionally, some states require licensing for companies providing
administrative services in connection with managed care business. Vision
Twenty-One intends to seek such licenses in those states where it is necessary.
However, Vision Twenty-One may not be able to meet such requirements in all
cases and, should this result in the loss of any material business (individually
or in the aggregate), it could have a material adverse effect on Vision
Twenty-One's business and operating results.

         Reserve Requirements. Some states have enacted and others are actively
considering, by statute or regulation, the requirement that companies which
contract with HMO's, such as Vision-Twenty One, will have to post cash reserves
to a significant percentage of revenues derived from an HMO. These states
include ones where the Company currently does business. In addition, many of the
Company's clients are considering the contracted imposition of cash reserves.
The Company may not be able to meet all of these requirements, and should this
result in a loss of a material amount of business, Vision Twenty-One may be
materially and adversely affected.

         "Any Willing Provider" Laws. Some states have adopted, and others are
considering, legislation that requires managed care networks to include any
provider who is willing to abide by the terms of the network's contracts and/or
prohibit termination of providers without cause. Such laws could limit the
ability of Vision Twenty-One to develop effective managed care networks in such
states.

         Electronic Record Privacy and Security Regulations. Recently proposed
federal regulations will, if finalized, strictly regulate health care providers
and plans that transmit health information electronically. Under the
regulations, providers and plans must limit access to health information to
employees who have a business need. They must install computer security hardware
and software to ensure that access is appropriately limited. Further, a
patient's written consent would be required to release personally identifiable
health information for any purpose other than treatment, payment and certain
specified purposes (e.g., public health). Patients are granted rights to obtain
an accounting of all disclosures of personally identifiable information, access
their health information upon request, and amend or correct their health
information. Providers and plans would have to adopt numerous security and
privacy policies to implement the regulations. They would also have to identify
a privacy official and a person responsible for security and provide
employee-training programs regarding the security and privacy requirements.


                                       4
<PAGE>   7

         The final privacy regulations were issued in December 2000 and the
Security Regulations are expected to be issued in final form sometime in 2001.
Providers and plans will have two years to comply with the regulations. The
regulations could have an adverse impact on the cost of providing vision
care-related services, including the types of services furnished by the Company.

COMPETITION

         The health care industry is highly competitive and subject to continual
changes in the method in which services are provided and the manner in which
health care providers are selected and compensated. Vision Twenty-One believes
that the economics of private and public reforms in the health care industry
emphasizing cost containment and accountability will result in an increasing
shift of eye care from highly fragmented, small providers to larger providers or
other eye care delivery services. Companies in other health care industry
segments, some of which have financial and other resources greater than those of
Vision Twenty-One, may become competitors. Increased competition could have a
material adverse effect on Vision Twenty-One's financial condition and results
of operations. The basis for competition includes service, price, strength of
Vision Twenty-One's delivery network (where applicable), experience, reputation,
strength of operational systems, strength of informational systems, the degree
of cost efficiencies and synergies, marketing strength, managed care expertise,
patient access and quality assessments and assurances programs. The future
success of Vision Twenty-One will be directly related to its ability to expand
the managed eye care delivery network geographically, attract reputable
providers and dedicate resources to an active sales team focused exclusively on
Vision Twenty-One's sales effort.

SEASONALITY

         Vision Twenty-One in its Managed Care reconfiguration does not
experience significant seasonal fluctuations in revenue. However there are some
fluctuations in claims expense.

SERVICE MARKS

         Vision Twenty-One has registered trademarks and service marks as
follows: "Vision 21", "Vision Twenty-One" with its design logo, "Eye Care for
the 21st Century", "A Different Point of View", "LADS" and "VIPA "Vision
Insurance Plan of America" with the United States Patent and Trademark Office.

EMPLOYEES

         At December 31, 2000, the Company had approximately 320 employees, of
whom 18 were employed at the Company's headquarters, 169 were employed by the
managed care division, and 133 by the refractive and ambulatory surgery center
division. The Company believes that its relationship with its employees is good.

ITEM  2.  PROPERTIES

         The Company's Corporate headquarters, Block Vision and MEC are located
in Baltimore, Maryland and consist of approximately 6800 square feet of office
space at 120 W. Fayette Street and 6,000 square feet of office space at 100 Park
Avenue, with an option for an additional 2600 square feet at 120 W. Fayette
Street. The leases for these facilities expires August 2005. The Company
believes that such facility is adequate for its current and near term future
needs.

         The lease for the Block Vision facility in Boca Raton was terminated on
April 1, 2001, and Block Vision leased smaller space in the same building for
its staff.

         The Company also leases and subleases the surgical facilities it
manages. The Company is in the process of divesting itself of the assets and
obligations of its remaining surgical locations.

         Minimal, but adequate, facilities are leased for VIPA and ESAN managed
care operations.


                                       5
<PAGE>   8

ITEM  3.  LEGAL PROCEEDINGS

         Except as described below, the Company is not a party to any material
litigation and is not aware of any threatened material litigation:

         The Company, one of its former executive officers who was also a
director and two former officers are named as defendants in several purported
class action lawsuits filled in the United States District Court for the middle
District of Florida, Tampa Division. The complaints allege, principally, that
the Company and other defendants issued materially false and misleading
statements related to the Company's integration of its acquisitions, in
violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder. The plaintiffs seek to certify their
complaints as class actions on behalf of all purchasers of the Company's Common
Stock in the period between December 5, 1997 and November 5, 1998, and seek an
award of an unspecified amount of monetary damages to all of the members of the
purported class. The purported class action lawsuits were as follows: (i) Tad
McBride against Vision Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch,
and Michael P. Block (filed on January 22, 1999); (ii) Robert Rosen v, Vision
Twenty-One, Inc., Theodore N. Gillette and Richard T. Welch (filed on January
27, 1999); (iii) Charles Murray against Vision Twenty-One, Inc., Theodore N.
Gillette, Richard T, Welch and Michael P. Block (filed on January 29,1999); and
(iv) Sam Cipriano, on behalf of himself and all others similarly situated v.
Vision Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch and Michael P.
Block (filed on February 22, 1999 ).

         On April 20, 1999, pursuant to a motion and order, these complaints
were consolidated into one case captioned: Tad McBride, Plaintiff, v. Vision
Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch and Michael P. Block
(Case No. 99I38-CIV-T-25F), and one plaintiff's group was appointed lead
plaintiff by judicial order on May 6, 1999. This uncertified consolidated class
action seeks to hold the Company and one of its former officers, who was also a
director, as well as two former officers liable for alleged federal securities
law violations based upon alleged misstatements and omissions in analyst
reports, trade journal articles, press releases and filings with the Securities
and Exchange Commission.

         Pursuant to judicial orders, the lead plaintiffs filed an amended
consolidated complaint on August 14, 1999. On October 11, 1999, the lead
plaintiffs and Michael P. Block executed a stipulation dismissing without
prejudice the action against Mr. Block. The Defendants filed a motion to dismiss
the amended consolidated complaint on October 15, 1999. The lead plaintiffs
served answering papers on December 3, 1999. The Defendant's motion to dismiss
was granted in part on August 18, 2000. A Motion for Class Certification was
filed on January 26, 2001. The parties are now engaged in class certification
discovery to enable the Defendants to respond to the Plaintiffs' Motion for
Class Certification. The Company believes that it has substantial defenses to
this matter and intends to assert them vigorously.

         On or about November 1, 1999, The Source Buying Group, Inc. commenced
an action in the United States District Court for the Eastern District of
Pennsylvania against Block Vision. The action was transferred to the U.S.
District Court for the Southern District of Florida and thereafter stayed
pending arbitration. The action alleges a breach by Block Vision of a promissory
note and is seeking approximately $562,500 representing the accelerated
principal balance of the note that the plaintiff alleges is due, together with
interest and costs. In the alternative, the plaintiff is seeking approximately
$20,800 of interest allegedly due. Block Vision has asserted defenses to the
claim and has filed counterclaims. The Company believes that it has substantial
defenses to this matter and intends to assert them vigorously.

         Other Litigation. The Company is party to several lawsuits alleging
medical malpractice by physicians which were previously associated with the
Company through certain of its discontinued operations. The Company has
determined that its malpractice insurance carrier will defend the Company under
these lawsuits; however, the Company is unable to determine whether its exposure
if any would exceed its malpractice insurance coverage.

ITEM  4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  -NONE-


                                       6
<PAGE>   9

                                     PART II

ITEM  5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

         The Common Stock of the Company has been trading publicly under the
symbol "EYES" on NASDAQ since the Company's initial public offering on August
18, 1997. Prior to the Company's initial public offering, there was no active
trading market for the Company's Common Stock. As discussed under Recent
Developments, trading of the Company's Common Stock was moved from the NASDAQ
National Market to the NASDAQ OTC-Bulletin Board System on June 19, 2000. The
Common Stock of the Company is currently trading under the symbol EYES.OB. The
following table sets forth the high and low closing sale price of the Company's
Common Stock as reported in the NASDAQ National Market or OTC-Bulletin Board
System (rounded up to the nearest whole cent) for the periods indicated:

<TABLE>
<CAPTION>
                                                                             HIGH        LOW
         1999
         <S>                                                                <C>          <C>
         First Quarter..................................................     5.25        3.50
         Second Quarter.................................................     8.69        3.44
         Third Quarter..................................................    10.06        4.88
         Fourth Quarter.................................................     6.06        1.38

         2000

         First Quarter..................................................     2.88        1.06
         Second Quarter.................................................     1.50         .31
         Third Quarter..................................................      .44         .13
         Fourth Quarter.................................................      .23         .01
</TABLE>

HOLDERS

         On March 30, 2001, the last reported sales price of the Company's
Common Stock as reported by the NASDAQ OTC - Bulletin Board System was $.03 per
share and there were 228 stockholders of record. The number of record holders
was determined from the records of the Company's transfer agent and does not
include beneficial owners of Common Stock whose shares are held in the names of
various securities brokers, dealers and registered clearing agencies.

DIVIDENDS

         The Company has never paid cash dividends on its Common Stock. The
Company presently intends to retain all cash for use in the operation and
expansion of the Company's business and does not anticipate paying any cash
dividends in the near future. In addition, the Company's Amended and Restated
Credit Agreement restricts the declaration or payment of cash dividends on its
Common Stock.


                                        7
<PAGE>   10


ITEM  6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                      Year Ended December 31, 2000
                                                                 -----------------------------------------------------------------
                                                                   1996          1997           1998          1999          2000
                                                                 --------      --------      ---------      --------      --------
                                                                                 (In thousands except per share data)
<S>                                                              <C>           <C>           <C>            <C>           <C>
Statement of Operations Data (1):
Revenues:
  Managed care .............................................     $  8,192      $ 18,762      $  54,980      $ 56,744      $ 52,830
  Buying group .............................................           --         7,261         58,959        19,151            --
                                                                 --------      --------      ---------      --------      --------
       Total revenue .......................................        8,192        26,023        113,939        75,895        52,830
                                                                 --------      --------      ---------      --------      --------
Operating expenses:
  Medical claims ...........................................        9,475        14,090         42,159        42,444        39,227
  Cost of buying group sales ...............................           --         6,882         55,926        18,261            --
  General and administrative ...............................        3,114         7,807         18,433        27,652        20,438
  Depreciation and amortization ............................           81           519          2,348         2,765         2,555
  Special Items:
       Restructuring and other charges (credits) ...........           --            --          6,463        (1,413)         (236)
       Start-up and software development costs .............           --            --            932           511            --
       Merger costs ........................................           --            --            718            --            --
       Impairment Charge ...................................           --            --             --            --           745
       Business development ................................        1,927            --             --            --            --
                                                                 --------      --------      ---------      --------      --------
        Total operating expenses ...........................       14,597        29,298        126,979        90,220        62,729
                                                                 --------      --------      ---------      --------      --------
Loss from operations .......................................       (6,405)       (3,275)       (13,040)      (14,325)       (9,899)

Amortization of loan fees ..................................           --          (179)          (314)       (2,401)           --
Interest expense, net ......................................         (147)         (934)        (4,085)       (5,523)       (5,793)
Gain (loss) on sale of assets ..............................           --            --             --           561        (1,674)
                                                                 --------      --------      ---------      --------      --------
Loss from continuing operations before
        Income taxes and minority interest .................       (6,552)       (4,388)       (17,439)      (21,688)      (17,366)

Income Taxes ...............................................           --            --             --            --            --
Minority interest ..........................................           --            --             --            --            --
                                                                 --------      --------      ---------      --------      --------
Loss from continuing operations ............................       (6,552)       (4,388)       (17,439)      (21,688)      (17,366)

Discontinued operations:
  Income from discontinued operations ......................          905         4,794         11,370         4,327           555
  Income (loss) on disposal of discontinued operations .....           --            --             --       (65,722)          533
                                                                 --------      --------      ---------      --------      --------
Income (loss) before extraordinary charge ..................       (5,647)          406         (6,069)      (83,083)      (16,278)

Extraordinary item-gain on sale of EyeCare One Corp. .......           --            --             --         3,770            --
Extraordinary item-early extinguishment of debt ............           --          (323)        (1,886)           --            --
Extraordinary item-costs associated with the previously
planned OptiCare Health Systems, Inc. merger ...............           --            --             --            --        (1,429)
Extraordinary item-forgiveness of indebtedness .............           --            --             --            --           645
                                                                 --------      --------      ---------      --------      --------
Net income (loss) ..........................................     $ (5,647)     $     83      $  (7,955)     $(79,313)     $(17,062)
                                                                 ========      ========      =========      ========      ========
Income (loss) from continuing  operations ..................     $  (1.65)     $  (0.51)     $   (1.20)     $  (1.42)     $  (1.24)
Discontinued operations:
      Income from discontinued operations ..................         0.23          0.56           0.78          0.28           .04
      Loss on disposal of discontinued operations ..........           --            --             --         (4.29)          .03
                                                                 --------      --------      ---------      --------      --------
Income (loss) before extraordinary charge ..................        (1.42)         0.05          (0.42)        (5.43)        (1.17)

Extraordinary item-gain on sale of EyeCare One Corp. .......           --            --             --           .25
Extraordinary item-early extinguishment of debt ............           --         (0.04)         (0.13)           --            --
Extraordinary item-costs associated with the previously
planned OptiCare Health Systems, Inc. merger ...............           --            --             --            --          (.10)
Extraordinary item-forgiveness of indebtedness .............           --            --             --            --           .05
                                                                 --------      --------      ---------      --------      --------
Net earnings (loss) per common share .......................     $  (1.42)     $   0.01      $   (0.55)     $  (5.18)     $  (1.22)
                                                                 ========      ========      =========      ========      ========
Weighted average number of common
    Shares outstanding .....................................        3,978         8,571         14,385        15,309        13,970
                                                                 ========      ========      =========      ========      ========
</TABLE>


                                       8
<PAGE>   11

<TABLE>
<CAPTION>
                                                                                       YEAR ENDED DECEMBER 31,
                                                                 --------------------------------------------------------------
                                                                   1996          1997         1998         1999          2000
                                                                 --------      --------     --------     --------      --------
                                                                                (IN THOUSANDS EXCEPT PER SHARE DATA)
<S>                                                              <C>           <C>          <C>          <C>           <C>
BALANCE SHEET DATA (1):
Working capital (deficit) ..................................     $ (2,303)     $  4,868     $  6,946     $(57,108)     $(68,963)
Total assets ...............................................       20,576       119,380      191,333       84,879        55,652
Long-term debt and capital lease obligations, including
  Current maturities .......................................        5,196        24,475       83,201       58,163        64,899
Total stockholders' equity (deficit) .......................        3,624        67,731       73,722       (2,750)      (23,573)
</TABLE>

(1)      Data has been restated for the use of discontinued operations treatment
         of accounting for the financial condition and results of operation of
         the retail optical chains, physician practice management businesses,
         and refractive and ambulatory surgery centers.


QUARTERLY FINANCIAL DISCLOSURE

The following tables set forth certain unaudited quarterly financial data for
2000 and 1999. In the opinion of the company's management, this unaudited
information has been prepared on the same basis as the audited information and
includes all adjustments (consisting of normal recurring items) necessary to
present fairly the information set forth therein. The operating results for any
quarter are not necessarily indicative of results for any future period:

<TABLE>
<CAPTION>
                                                                             Three Months Ended
                                                      --------------------------------------------------------------
                                                       March 31,         June 30,          Sep 30,          Dec 31,
                                                         2000              2000             2000             2000
                                                      -----------      -----------      -----------      -----------
<S>                                                    <C>              <C>              <C>              <C>
Total revenues                                         13,492,020       13,356,836       12,897,630       13,083,065
Total operating expenses                               15,886,345       17,015,198       15,087,339       14,739,669
Interest expense                                        1,814,276        1,798,902        1,798,284          382,198
(Gain) loss on disposal of fixed assets, net                   --           17,026          (29,157)       1,685,969
                                                      -----------      -----------      -----------      -----------
Income (loss) from continuing operations               (4,208,601)      (5,474,290)      (3,958,836)      (3,724,771)
Income from discontinued operations                       594,229          490,233        1,245,792       (1,241,843)
                                                      -----------      -----------      -----------      -----------
Income (loss) before extraordinary item                (3,614,372)      (4,984,057)      (2,713,044)      (4,966,614)
Extraordinary item                                     (1,016,263)        (348,966)         581,734               --
                                                      -----------      -----------      -----------      -----------
Net income (loss)                                      (4,630,635)      (5,333,023)      (2,131,310)      (4,966,614)

Basic and diluted income (loss) per common share:
     Loss from continuing operations                        (0.28)           (0.39)           (0.28)           (0.27)
Income from discontinued operations                          0.04             0.04             0.09            (0.09)
                                                      -----------      -----------      -----------      -----------
Income (loss) before extraordinary items                    (0.24)           (0.35)           (0.19)           (0.36)
Extraordinary Items                                         (0.07)           (0.03)            0.04               --
                                                      -----------      -----------      -----------      -----------
Net Income (loss) per common share                          (0.31)           (0.38)           (0.15)           (0.36)
</TABLE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

OVERVIEW

         Vision Twenty-One, Inc. ("Vision Twenty-One" or the "Company") is a
vision care company that is mainly focused on the provision of administrative
services to managed care entities. The company manages routine vision and
medical/surgical eye care programs through contracts with managed care
organizations and other third-party payors.

         Previously, Vision Twenty-One's local area eye care delivery (LADS)
operating revenue were primarily derived from a wide range of service fees
earned through strategic affiliations with eye care clinics and retail optical
locations and through ownership interests in refractive surgery centers
("RSCs"), ambulatory surgery centers ("ASCs") and retail optical chains. LADS
also included the management of practices of optometry and ophthalmology
("PPM"). The PPM business involved the Company entering into long-term
management agreements ("Management Agreements") with professional associations
or corporations pursuant to which the Company was the sole provider of
comprehensive management, business and administrative services for the
non-professional aspects of the professional practices. The PPM segment
represented a substantial portion of the Company's business in 1999. During
2000, the Company completed divesting itself of the PPM business in order to
focus on the managed care business. The PPM divestiture required multiple
transactions involving the sale of practice assets back to the doctors or their
affiliates, and the termination of Management Agreements. This divestiture
program commenced late in the 4th quarter of 1999 and was completed by September
30, 2000. During third quarter the Company announced its plans to exit the
ASC/RSC business.


                                       9
<PAGE>   12

         Vision Twenty-One was incorporated in Florida on May 9, 1996. Its
principal operating subsidiaries consist of Vision 21 Managed Eye Care of Tampa
Bay, Inc. ("Vision 21 MCO"), Vision 21 Physician Practice Management Company,
Inc. ("Vision 21 PPMC"), MEC Health Care Inc. ("MEC") and BBG-COA, Inc. and its
subsidiaries including Block Vision Inc. ("Block Vision"). In an effort to
streamline costs, the Company decided to close its Largo, Florida corporate
headquarters and most of its operations at the Boca Raton, Florida managed care
service center and relocate and consolidate these functions into operations in
Baltimore, Maryland. The principal executive office of Vision Twenty-One, Block
Vision and MEC is located at 120 W. Fayette Street, Suite 700, Baltimore,
Maryland 21201, and its telephone number is (410) 752-0121.

MERGER AGREEMENT WITH OPTICARE HEALTH SYSTEMS

         During last quarter of 1999, the Company's Board of Directors voted to
explore a number of strategic alternatives intended to maximize shareholder
value. As a result, on February 10, 2000, the Company entered into an Agreement
and Plan of Merger and Reorganization ("Merger Agreement") with OptiCare Health
Systems, Inc. and OC Acquisition Corp. (collectively, "OptiCare"). This merger
was not completed. As a result of the terminated merger agreement, approximately
$1,429,000 of professional fees was expensed and shown as an extraordinary item
for the year ended December 31, 2000.

DISPOSITION OF BUSINESSES

         The Company had concentrated on developing its LADs since late 1997.
Over the past three years, the Company had been analyzing certain business units
within such LADs and assessing the long-term strategic value of each existing
component. Effective August 31, 1999, the Company completed the sale of Vision
World, Stein Optical (a trade name of EyeCare One Corp.), and The Eye DRx
("Retail Optical Chains") to Eye Care Centers of America, Inc. ("ECCA"). ECCA is
based in San Antonio, Texas and operates a national chain of full-service retail
optical stores. In connection with this transaction, the Company received
approximately $37.3 million in cash. Of the proceeds the Company received at
closing, approximately $30.8 million was applied as a permanent pay down of its
term debt credit facility, approximately $2.8 million was paid down under its
ongoing $7.5 million revolving credit facility, approximately $2.4 million was
used for costs and other obligations related to the transaction and
approximately $1.3 million was utilized to fund an escrow arrangement between
the parties relative to terms under the agreement. Based on post-closing
adjustments, the final sales price was approximately $31.8 million, and the
Company had recorded a liability of approximately $4.0 million to ECCA, net of
escrow, with respect to such post-closing adjustments. Under the sale agreement,
Vision Twenty-One indemnified one of its former managed optometry practices for
certain partnership obligations. In January 2001, the litigation regarding this
matter was settled for approximately $50,000, and the Company was released from
such indemnification obligations. A charge of $200,000 was recorded to loss on
disposal of discontinued operations in 1999. A net loss of approximately $3.2
million was recorded on the transaction in 1999. In September 2000, the Company
and ECCA reached a comprehensive resolution of all disputed matters between the
parties which provided for, among other things, the reduction in the
post-closing adjustment liability to ECCA from $4.0 million to $1.5 million. The
Company expects to issue a three-year convertible note to ECCA which will be
convertible into shares of Common Stock at $.18 per share. Interest will accrue
on the note at 7% per annum until the earlier of maturity or conversion. The
liability under the post-closing adjustment will be considered satisfied upon
issuance of the convertible note which was conditioned upon the recently
completed restructuring of the Company's credit facilities.

         On June 4, 1999, the Company completed the sale of its buying group
division. Net proceeds of $4.3 million received by the Company were primarily
used to repay outstanding borrowings under the Company's credit facilities.

         On October 25, 1999, the Company announced its intent to exit the
business of managing optometry and ophthalmology practices. The details of the
plan were finalized in December 1999. This represented a crucial step in the
Company's strategy of redirecting its corporate resources. The exit of the
physician practice management ("PPM") business was accomplished through the sale
of the practice assets generally back to the physicians or their affiliates, the
termination of Management Agreements and the restructuring of certain refractive
surgery center facility access agreements. The terms of each managed practice
divestiture were subject to the prior approval of the banks under the Company's
credit facilities. Accordingly, in 1999 the Company recorded a loss of $58.7
million, which is net of an income tax benefit of $1.1 million, related to the
sale of practice assets. The sales were completed by the third quarter of 2000.


                                       10
<PAGE>   13

         During the third quarter of 2000, the Company announced its intent to
exit the business of owning and managing Refractive and Ambulatory Surgery
Centers. A loss of $353,951 was realized on transactions with an effective date
of December 31, 2000. The anticipated loss, as of December 31, 2000, for the
remaining entities is $847,000 (net of 2001 revenue and expenses).

         As a result of the changes occurring in the Company's business,
including the divestiture of large business units, the shift in operating focus,
changes in the Company's managed care business, the Company's exiting of the PPM
and ASC/RSC business and issues related to the Company's accessibility to future
working capital, the overall results should not necessarily be relied upon as
being indicative of future operating performance.

DELISTING BY NASDAQ

         On April 20, 2000, the Company received a letter from NASDAQ advising
the Company of a possible delisting of the Company from the NASDAQ National
Market due to the Company's failure to timely file its Form 10-K with the
Securities and Exchange Commission. The delay in filing the Form 10-K was
primarily attributable to the Company's discontinued operations. Due to the late
filings and the fact the Company no longer met minimum equity and stock price
requirements of NASDAQ National Market, the Company's Common Stock was moved to
the NASDAQ's OTC-Bulletin Board System on June 19, 2000 and is traded under the
symbol EYES.OB.

ADDITIONAL OVERVIEW

         Managed care revenues are derived principally from fixed premium
payments received pursuant to its managed care contracts on a capitated or
risk-sharing basis. The Company also receives fees for the provision of certain
administrative services related to its fee-for-service plans. Pursuant to its
capitated managed care contracts, the Company receives a fixed premium payment
per-member-month for a predetermined benefit level of eye care services, as
negotiated between the Company and the payor. Profitability of the Company's
capitated managed care contracts is directly related to the specific terms
negotiated, utilization of eye care services by member patients and the
effectiveness of administering the contracts. Although the terms and conditions
of the Company's managed care contracts vary considerably, they typically have a
one-year term with automatic annual renewals unless either party elects to
terminate the contract pursuant to its terms.

         The Company manages risk of capitated managed care contracts by
monitoring utilization of each provider and comparing their utilization to
national averages, expected utilization at the time the contract was bid,
utilization of other providers and historical utilization of the provider.
Abnormal utilization of a provider may result in a medical chart review by the
Company and further counseling on appropriate clinical protocols. To further
manage the risk of capitated managed care contracts, the Company, in certain
instances, enters into agreements to pay providers a fixed per-member-per-month
fee for eye care services rendered or a pro rata share of managed care capitated
payments received (as determined by the number of eye care procedures performed
relative to other providers). The Company targets these payments at a range of
65% to 80% of total payments received pursuant to the Company's capitated
managed care contracts.


                                       11
<PAGE>   14

1998 RESTRUCTURING PLAN AND CERTAIN ACCOUNTING MATTERS

         The Company recognized various accounting impacts in the fourth quarter
of 1998 relative to a restructuring plan announced in 1998 (the "Restructuring
Plan"). The Restructuring Plan initiatives, which consisted of a number of
specific projects, were designed to position the Company to take full
operational and economic advantage of various key acquisitions and allow the
Company to complete the consolidation and deployment of necessary infrastructure
for the future. The total restructuring and other charges and business
integration costs recorded in 1998 were $8.9 million. (See Note
13--Restructuring Plan to the Consolidated Financial Statements). The
Restructuring Plan resulted in the accrual of a reserve for restructuring costs
at December 31, 1998 in the amount of approximately $2.8 million. These
initiatives included: a) the integration of managed care service centers and
business lines, b) the consolidation of retail back office functions, and c) the
consolidation of certain corporate functions. As provided for in the
Restructuring Plan, the Company also expensed other charges and related business
integration costs during the fourth quarter of 1998. These costs represented
incremental or redundant costs as well as internal costs that resulted directly
from the development and initial implementation of the Restructuring Plan, but
were required to be expensed as incurred. These other charges and business
integration costs totaled approximately $6.1 million in 1998 and consisted
primarily of: a) write-offs related to exiting certain markets, b) write-offs of
capitalized costs that would not be realized as a result of the Restructuring
Plan and c) redundant employee costs and expenses for severed employees through
the date of severance. Also included were training costs, re-branding costs,
relocation costs, retention payments, and lease costs for facilities that were
planned for closure.

         Several unusual accounting items occurred in 1998 which specific costs
related thereto were not expected to occur again in the future. These unusual
items consisted of restructuring and other charges and business integration
costs of $8.9 million related to the previously announced Restructuring Plan
discussed above, merger costs of $0.7 million, start-up and software development
costs of $0.9 million, an extraordinary charge of $1.9 million related to early
extinguishment of debt and expenses for the Company's previously disclosed
intercompany reconciliation and other items totaling $3.6 million. The $3.6
million consisted of $1.6 million of expenses related to the results of the
Company's previously announced unreconciled item and $2.0 million of one time
items related to revenue recognition of acquisition integration fees and
receivable write-offs. As a result of the Company's reconciliation of
intercompany accounts, change in accounting for start-up and software
development costs and the change in accounting treatment for revenue recognition
regarding acquisition integration fees in 1998, the Company restated its 1998
Form 10-Q's.

         The unreconciled items referenced above required extensive analysis of
the financial statements from fiscal years 1996, 1997 and 1998 for many of the
Company's acquired entities, resulting in a delay in filing the Company's 1998
Form 10-K. The identified items substantially resulted from the different
accounting systems used for each entity during the prior periods.


                                       12
<PAGE>   15

RESULTS OF OPERATIONS

         The following table sets forth, as a percentage of total revenues,
certain items in the Company's Consolidated Statements of Operations for the
periods indicated. As a result of the 1998 Acquisitions, the 1999 divestitures,
2000 exit of the PPM business, exit from the Refractive and Ambulatory Surgery
Center, and operational restructuring the Company does not believe that the
historical percentage relationships for 1998, 1999 and 2000 reflect the
Company's expected future operations.

<TABLE>
<CAPTION>
                                                                                           1998          1999         2000
                                                                                         -------       -------       -------
<S>                                                                                      <C>           <C>           <C>
Revenues:

  Managed care .....................................................................        48.3%         74.8%        100.0%
  Buying group .....................................................................        51.7          25.2            --
                                                                                         -------       -------       -------
       Total revenues ..............................................................       100.0         100.0         100.0
                                                                                         -------       -------       -------
Operating expenses:

  Medical claims ...................................................................        37.0          55.9          74.3
  Cost of buying group sales .......................................................        49.1          24.1            --
  General and administrative .......................................................        16.2          36.4          38.7
  Depreciation and amortization ....................................................         2.0           3.6           4.8
  Special Items:
       Restructuring and other charges (credits) ...................................         5.7          (1.9)          (.4)
       Start-up and software development costs .....................................         0.8           0.7            --
       Merger costs ................................................................         0.6            --            --
       Impairment charge ...........................................................          --            --           1.4
                                                                                         -------       -------       -------
        Total operating expenses ...................................................       111.4         118.8         118.8
                                                                                         -------       -------       -------
Loss from operations ...............................................................       (11.4)        (18.8)        (18.8)

Amortization of loan fees ..........................................................        (0.3)         (3.2)           --
Interest expense ...................................................................        (3.6)         (7.3)        (11.0)
Gain (loss)on sale of assets, net ..................................................          --           0.7          (3.1)
                                                                                         -------       -------       -------
Loss from  continuing  operations  before  income taxes and minority interest ......       (15.3)        (28.6)        (32.9)

Income Taxes .......................................................................          --            --            --
                                                                                         -------       -------       -------
Loss from continuing operations ....................................................       (15.3)        (28.6)        (32.9)

Discontinued operations:
  Income from discontinued operations ..............................................        10.0           5.7           1.1
  Income (loss) on disposal of discontinued operations .............................          --         (86.6)          1.0
                                                                                         -------       -------       -------
Income (loss) before extraordinary item ............................................        (5.3)       (109.5)        (30.8)
Extraordinary item-gain on sale of EyeCare One Corp. ...............................          --           5.0
Extraordinary item-early extinguishment of debt ....................................        (1.7)           --            --
Extraordinary item-costs associated with the previously planned OptiCare Health
Systems, Inc. merger ...............................................................                                    (2.7)
Extraordinary item-forgiveness of indebtedness .....................................                                     1.2
                                                                                         -------       -------       -------
Net income (loss) ..................................................................        (7.0)%      (104.5)%       (32.3)%
                                                                                         =======       =======       =======

Medical Claim Ratio ................................................................        76.7%         74.8%         74.3%
</TABLE>


                                       13
<PAGE>   16

  YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

REVENUES.

         Revenues decreased 30.4% from $75.9 million for the year ended December
31, 1999 to $52.8 million for the year ended December 31, 2000. This decrease
was primarily due to the Company's sale of the buying group Division. Managed
care revenues on a comparable basis decreased 6.9% from 1999 revenues due to the
termination of a large, unprofitable contract in 1999.

MEDICAL CLAIMS.

         Medical claims expense decreased 7.6% from $42.4 million for the year
ended December 31, 1999 to $39.2 million for the year ended December 31, 2000.
The Company's medical claims ratio decreased from 74.8% for the year ended
December 31, 1999 to 74.3% for the year ended December 31, 2000. Medical claims
expense consists of payments by the Company to its providers for vision care
wellness services and medical and surgical eye care services and facility
services.

COST OF BUYING GROUP SALES.

         The cost of buying group sales consists of the costs of various optical
products that are shipped directly to the providers of eye care services. The
Company completed the sale of the buying group division during the second
quarter of 1999.

GENERAL AND ADMINISTRATIVE.

         General and administrative expenses decreased 26% from $27.7 million
for the year ended December 31, 1999 to $20.4 million for the year ended
December 31, 2000. General and administrative expenses consist mainly of
salaries, wages and benefits related to management and administrative staff
located at the Company's corporate headquarters and its managed care service
centers as well as professional fees, advertising, building and occupancy costs,
operating lease expenses and other costs related to the maintenance of a
headquarters operation. Although expenses declined in dollar term, expenses as a
percentage of revenue increased from 36.4% for the year ended December 31, 1999
to 38.7% for the year ended December 31, 2000. The increased percentage is due
to lower revenue of the continuing businesses coupled with significant costs
associated with accounting, legal, and consulting professionals partially offset
by reductions in operating headcount and related expenses. Management has been
aggressively reducing staff and related overhead expenses in an effort to bring
overall general and administrative expense in line with the current run rate of
the continuing business, including the consolidation of the Managed Care and
Corporate Operation.

DEPRECIATION AND AMORTIZATION.

         Depreciation and amortization expense decreased 7.6% from $2.8 million
for the year ended December 31, 1999 to $2.6 million for the year ended December
31, 2000. As a percentage of revenues, depreciation and amortization expense
increased from 3.6% for the year ended December 31, 1999 to 4.8% for the year
ended December 31, 2000 due to the reduction of revenues resulting from the sale
of the Company's buying group division.

INTEREST EXPENSE.

         Interest expense increased 4.9% from $5.5 million for the year ended
December 31, 1999 to $5.8 million for the year ended December 31, 2000. In 1999,
approximately $963,000 of interest expense was allocated to discontinued
operations versus none in 2000. Although average borrowings were approximately
$12.5 million lower in the year 2000 versus the same period in 1999, the average
interest rate on the Company's borrowings rose significantly in 2000 due to a
general increase in interest rates as well as higher spreads required by its
lenders.


                                       14
<PAGE>   17

DISCONTINUED OPERATIONS.

         Discontinued operations represent the income from the Company's Retail
Optical Chains, PPM and ASC/RSC businesses previously discussed. The Company's
Retail Optical Chains were sold on August 31, 1999. The PPM divestiture was
complete in September 2000. During the third quarter 2000, the decision to exit
the business of owning and managing ASC/RSC's was made. Additionally, the
Company has allocated a portion of its interest expense to discontinued
operations in 1998 and 1999 based on the net assets attributed to the Retail
Optical Chains operations.

EXTRAORDINARY ITEMS.

           The extraordinary item of approximately $1.4 million represents costs
incurred by the Company in connection with the proposed merger with OptiCare
Health Systems, Inc. The .6 million forgiveness of indebtedness was related to
the settlement of outstanding litigation resulting in the reduction of debt
obligations.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

 REVENUES.

         Revenues decreased 33.4% from $114.0 million for the year ended
December 31, 1998 to $75.9 million for the year ended December 31, 1999. This
decrease was primarily due to the Company's sale of the buying group division.
Managed care revenues on a comparable basis increased 3.2% over 1998.

 MEDICAL CLAIMS.

          Medical claims expense increased .7% from $42.2 million for the year
ended December 31, 1998 to $42.4 million for the year ended December 31, 1999.
The Company's medical claims ratio decreased from 76.7% for the year ended
December 31, 1998 to 74.8% for the year ended December 31, 1999. The decrease
was caused by a higher percentage of vision care wellness contracts which
typically have lower utilization rates than medical/surgical contracts and
improved performance in 1999 on vision care wellness contracts at Block Vision.
The Company terminated one of its managed care contracts effective December 31,
1999. Medical claims expense consists of payments by the Company to its
providers for vision care wellness services, medical and surgical eye care
services and facility services. These payments are based on fixed payments
received (as determined by the number of eye care procedures performed relative
to other providers) or negotiated fee-for-service schedules.

 COST OF BUYING GROUP SALES.

         The cost of buying group sales consists of the costs of various optical
products that are shipped directly to the providers of eye care services. The
Company completed the sale of the buying group division during the second
quarter of 1999.

GENERAL AND ADMINISTRATIVE.

         General and administrative expenses increased 50.0% from $18.4 million
for the year ended December 31, 1998 to $27.7 million for the year ended
December 31, 1999. General and administrative expenses consist mainly of
salaries, wages and benefits related to management and administrative staff
located at the Company's corporate headquarters and its managed care service
centers as well as professional fees, advertising, building and occupancy costs,
operating lease expenses and other costs related to the maintenance of a
headquarters operation. The $9.3 million increase in general and administrative
expenses consisted primarily of severance costs of approximately $1.1 million,
headcount costs (officer, department managers and contract labor) of
approximately $2.1 million and professional fees (legal, accounting, and
consulting) of approximately $4.5 million. More than $4.0 million of the total
increase has been specifically identified as non-recurring due to known job
eliminations, termination of a consulting contract, and the one-time nature of
the costs associated with the intercompany accounts reconciliation effort.

DEPRECIATION AND AMORTIZATION.

         Depreciation and amortization expense increased 17.8% from $2.3 million
for the year ended December 31, 1998 to $2.8 million for the year ended December
31, 1999. As a percentage of revenues, depreciation and


                                       15
<PAGE>   18

amortization expense increased from 2.0% for the year ended December 31, 1998 to
3.6% for the year ended December 31, 1999 due to the reduction of revenues
resulting from the sale of the Company's buying group division.

RESTRUCTURING AND OTHER CHARGES (CREDITS).

         The restructuring credit of approximately $1.4 million resulted from
lease termination costs of $0.9 million that were reversed out of the accrual as
a result of the sale of the Retail Optical Chains and approximately $0.5 million
of severance costs that were reversed out of the accrual as a result of employee
resignations and a change in estimate.

START-UP AND SOFTWARE DEVELOPMENT COSTS.

         For the years ended December 31, 1998 and 1999, start-up costs relate
to start-up activities associated primarily with refractive surgery centers
initiatives. For the year ended December 31,1998, software development costs are
associated with the Company's implementation of the Great Plains accounting
software system.

MERGER COSTS.

         Merger costs were incurred in 1998 as a result of the pooling of
interests method of accounting for the EyeCare One and VIPA acquisitions and
consisted primarily of professional fees.

INTEREST EXPENSE.

         Interest expense increased 35.2% from $4.1 million for the year ended
December 31, 1998 to $5.5 million for the year ended December 31, 1999. The
increase was caused by higher borrowing costs and an increase in the average
debt outstanding for year ended December 31, 1999 compared to the year ended
December 31, 1998. During 1999, the Company repaid $30.8 million of the
outstanding term debt on its credit facilities as a result of the sale of its
Retail Optical Chains on August 31, 1999.

GAIN ON SALE OF ASSETS.

         In connection with the sale of assets, the Company realized a gain of
$0.6 million.

DISCONTINUED OPERATIONS.

         Discontinued operations represent the income from the Company's Retail
Optical Chains, PPM and ASC/RSC businesses previously discussed. The Company's
Retail Optical Chains were sold on August 31, 1999. Additionally, the Company
has allocated a portion of its interest expense to discontinued operations in
1998 and 1999 based on the net assets attributed to the Retail Optical Chains
operations.

EXTRAORDINARY ITEM.

         The sale of EyeCare One on August 31, 1999 resulted in a gain of
approximately $3.8 million that was recorded as an extraordinary item for the
year ended December 31, 1999.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has historically funded its working capital and capital
expenditure requirements primarily through institutional borrowings, private
debt and equity financing. Net cash used in operating activities for the year
ended December 31, 2000 was $16.7 million as compared to net cash used in
operating activities of $6.2 million for the year ended December 31, 1999.
Historical sources of funding are not currently and are not expected to be
available for the foreseeable future.

         The Company currently has insufficient liquidity and capital resources
to meet its obligations to unsecured creditors and mandatory principal payments
due to the Company's lenders. The Company may not be able to meet its
obligations due in the future to its lenders.

         In addition, the Company may have to post additional cash reserves to
meet reserve/solvency requirements. The Company cannot estimate the amount, if
any, of such reserve requirements at this time.


                                       16
<PAGE>   19

         Net cash provided by investing activities for the year ended December
31, 2000 was $9.5 million and resulted primarily from the net proceeds realized
from the sale of the ("PPM's"). Net cash provided by investing activities for
the year ended December 31, 1999 was $31.5 million and resulted from the net
proceeds realized from the sale of the Block Buying Group and Retail Optical
Chains, net of payments for acquisitions, medical equipment, office furniture
and capitalized acquisition costs.

         Net cash provided by financing activities for the year ended December
31, 2000 was $.2 million and was primarily attributable to modest increased net
borrowings under the Company's credit facilities. Net cash used in financing
activities for the year ended December 31, 1999 was $24.5 million resulting from
the application of proceeds from the sale of the Buying Group and Retail Optical
Chains to the reduction of the Company's outstanding debt.

         The Company believes the effects of inflation have not had a material
adverse impact on its operations or financial condition to date. Substantial
increases in prices in the future, however, could have a material adverse effect
on the Company's results of operations.

         During the fourth quarter of 1999, the Company's liquidity was
adversely impacted by the announced exit from the PPM business as collection of
PPM management fee revenues during the negotiation process declined
significantly. However, during the first quarter of 2000, the Company began
completing the sale of the practice assets back to physicians or affiliates. The
resulting proceeds provided additional resources to fund operations. As of
September 30, 2000, the Company had divested itself of the PPM business and
received proceeds of approximately $9.7 million in cash and 1,764,348 shares of
the Company's Common Stock valued at approximately $3.9 million. Management has
been aggressively reducing staff and overhead spending, carefully managing cash
flow in an effort to further improve the Company's liquidity position and
restore profitability.


ITEM  7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to changes in interest rates primarily as a
result of borrowing activities under its Amended and Restated Credit Agreement,
which is used to maintain liquidity and fund the Company's business operations.
The nature and amount of the Company's debt may vary as a result of future
business requirements, market conditions and other factors. The extent of the
Company's interest rate risk is not quantifiable or predictable because of the
variability of future interest rates and business financing requirements, but
the Company does not believe such risk is material. The Company did use
derivative instruments to adjust the Company's interest rate risk profile in
2000.


                                       17
<PAGE>   20

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         This Form 10-K, the annual report and certain information provided
periodically in writing and orally by the Company's designated officers and
agents contain certain statements which constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The terms "Vision Twenty-One,"
"Company," "we," "our" and "us" refer to Vision Twenty-One, Inc. The words
"expect," "believe," "goal," "plan," "intend," "estimate," and similar
expressions and variations thereof are intended to specifically identify
forward-looking statements. Those statements appear in this Form 10K, the annual
report and the documents incorporated herein by reference, particularly
"Management's Discussion and analysis of Financial Condition and Results of
Operations," and include statements regarding the intent, belief or current
expectations of the Company, its directors or officers with respect to, among
other things:

         (i)      our financial prospects;

         (ii)     our exit from the PPM and ASC/RSC businesses;

         (iii)    our financing plans including our ability to meet our
                  obligations under our current credit facility and obtain
                  satisfactory operating and working capital;

         (iv)     trends affecting our financial condition or results of
                  operations including our divestiture of business units;

         (v)      our operating strategy including the shift in focus to the
                  managed care business;

         (vi)     the impact on us of current and future governmental
                  regulations;

         (vii)    our current and future managed care contracts and the impact
                  such contracts have on gross profit;

         (viii)   our ability to maintain our relationships with providers;

         (ix)     our ability to operate the managed care business efficiently,
                  profitably and effectively;

         (x)      our integration of systems and implementation of cost savings
                  and reduction plans;

         (xi)     our expected savings from the restructuring programs;

         (xii)    our current and expected future revenue and the impact of the
                  consolidation of infrastructure and business divestitures may
                  have on our future performance;

         (xiii)   our timely filing of Securities and Exchange Act Reports;

         (xiv)    the purported class action complaints filed against the
                  Company;

         (xv)     our contemplated restructuring of certain outstanding
                  indebtedness;

         (xvi)    the issuance and expected issuance of a significant number of
                  additional shares of common Stock and securities convertible
                  into Common Stock; and

         (xvii)   the need for shareholder approval of a sufficient increase in
                  the number of authorization shares of Common Stock to enable
                  the Company to complete the financial restructuring.


                                       18
<PAGE>   21

         You are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in the forward-looking
statements as a result of various factors. The factors that might cause such
differences include, among others, the following:

         (i)      our inability to sell certain business units and any potential
                  losses arising therefrom;

         (ii)     our inability to obtain sufficient cash from our credit
                  facility and business divestitures to fund our ongoing
                  operations including severance obligations and contingent
                  payment obligations;

         (iii)    our loss of, changes in, or inability to keep, key personnel,
                  management or directors;

         (iv)     Any unexpected increases in or additional charges or losses
                  related to the unwinding of the ASC/RSC centers.

         (v)      the continuation of operating and net losses being experienced
                  by the Company and increases in such losses;

         (vi)     any material inability to acquire additional sufficient
                  capital at a reasonable cost to fund our continued operations
                  or to maintain compliance with our credit facility;

         (vii)    the inability to maintain our managed care business or to
                  increase and expand managed care initiatives;

         (viii)   any adverse changes in our managed care business, including
                  but not limited to, the inability to renew existing managed
                  care contracts or obtain future contracts or maintain and
                  expand our provider network;

         (ix)     our inability to negotiate managed care contracts with HMOs;

         (x)      our inability to successfully and profitably operate our
                  managed care business or for existing managed care contracts
                  to positively impact gross profit;

         (xi)     any adverse change in our medical claims to managed care
                  revenue ratio;

         (xii)    the inability to maintain or obtain required licensure in the
                  states in which we operate; or any changes in state or federal
                  governmental regulations which could materially affect our
                  ability to operate.

         (xiii)   consolidation of our competitors, poor operating results by
                  our competitors, or adverse governmental or judicial rulings
                  against our competitors;

         (xiv)    our inability to realize any significant benefits, cost
                  savings or reductions from our restructuring program;

         (xv)     unexpected cost increases;

         (xvi)    our inability to successfully defend against the class action
                  lawsuits, or any additional litigation that currently exists
                  or may arise in the future;

         (xvii)   our inability to timely file our required reports with the SEC
                  or to maintain the listing of our Common Stock on NASDAQ;

         (xviii)  our inability to restructure and settle any and all
                  indebtedness, claims and disputes in a manner that permits
                  continued operations of the Company;

         (xix)    our inability to enter into acceptable settlement agreements
                  with parties making claims against us or to fulfill our
                  obligations pursuant to such settlement agreements;


                                       19
<PAGE>   22

         (xx)     our inability to complete our restructuring efforts,
                  including, but not limited to, obtaining any required consents
                  or approvals of the shareholders;

         (xxi)    our stock price;

         (xxii)   in the event the Company becomes a debtor in Bankruptcy Court;
                  and

         (xxiii)  other factors including those identified in our filings from
                  time-to-time with the SEC.

         The Company undertakes no obligation to publicly update or revise
forward-looking statements to reflect events or circumstances after the date of
this Form 10-K and annual report or to reflect the occurrence of unanticipated
events.

ITEM  8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

(A) FINANCIAL STATEMENTS

         (1) Financial Statements. The Company's Financial Statements included
in Item 8 hereof, as required, including the report of the Independent Auditors,
are as follows:

<TABLE>
         <S>                                                                                                    <C>
         Report of Independent Auditors.....................................................................    21
         Consolidated Balance Sheets--December 31, 1999 and 2000............................................    22
         Consolidated Statements of Operations--Years Ended December 31, 1998, 1999 and 2000................    23
         Consolidated Statements of Stockholders' Equity (Deficit)--Years Ended December 31, 1998, 1999
           and 2000.........................................................................................    24
         Consolidated Statements of Cash Flows--Years Ended December 31, 1998, 1999 and 2000................    25
         Notes to Consolidated Financial Statements.........................................................    26
</TABLE>


                                       20
<PAGE>   23

                         REPORT OF INDEPENDENT AUDITORS


Board of Directors
Vision Twenty-One, Inc. and Subsidiaries

         We have audited the accompanying consolidated balance sheets of Vision
Twenty-One, Inc. and Subsidiaries as of December 31, 1999 and 2000, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for each of the three years in the period ended December 31,
2000. Our audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule 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 consolidated financial position of Vision
Twenty-One, Inc. and Subsidiaries at December 31, 1999 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

         The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
described in Note 17, the Company has incurred recurring operating losses and
has a working capital deficiency. In addition, the Company has not complied with
certain covenants in connection with its credit agreement, which were waived by
the Company's lenders on March 31, 2001. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regards to these matters are also described in Note 17. The
consolidated financial statements and financial statement schedule do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.


                                                /s/       ERNST & YOUNG LLP


Tampa, Florida
March 31, 2001



                                       21
<PAGE>   24

                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                December 31,
                                                                                      -------------------------------
                                                                                         1999                 2000
                                                                                      ------------      -------------
                                                              ASSETS
<S>                                                                                   <C>               <C>
Current assets:
  Cash and cash equivalents .....................................................     $  4,807,944      $   2,609,973
  Accounts receivable due from:
       Managed health benefits payors ...........................................          811,520            914,730
       ASC ......................................................................               --          3,700,000
       Other ....................................................................           24,553            241,968
     Prepaid expenses and other current assets ..................................          811,560            306,792
     Current assets of discontinued operations ..................................       22,747,603          1,741,693
                                                                                      ------------      -------------
               Total current assets .............................................       29,203,180          9,515,156
Fixed assets, net ...............................................................        3,781,265            701,253
Excess of purchase price over fair values of net assets acquired, net of
  accumulated amortization of approximately $3,322,000 and $4,959,000 at
December 31, 1999 and 2000, respectively ........................................       43,664,410         42,027,315
Other assets ....................................................................          182,380          1,175,547
Restricted cash .................................................................          500,000          1,718,844
Non current assets of discontinued operations ...................................        7,547,452            513,730
                                                                                      ------------      -------------
               Total assets .....................................................     $ 84,878,687      $  55,651,845
                                                                                      ============      =============

                                          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
    Accounts payable ............................................................     $  5,183,894      $   3,707,711
    Medical claims payable ......................................................        4,870,837          4,461,219
    Accrued expenses ............................................................        1,713,860          2,088,658
    Accrued compensation ........................................................        1,504,995            881,785
    Accrued restructuring charge ................................................          663,305            324,282
    Accrued interest and loan fees ..............................................        2,086,957             98,078
    Amount due to ECCA ..........................................................        4,031,870          1,531,873
    Current portion of long-term debt ...........................................       58,021,668         64,737,500
    Current portion of obligations under capital leases .........................           11,654             57,131
    Current liabilities of discontinued operations ..............................        8,222,569            590,216
                                                                                      ------------      -------------
         Total current liabilities ..............................................       86,311,609         78,478,453
Obligations under capital leases, less current portion ..........................           17,438            104,332
Long-term debt, less current portion ............................................          112,500                 --
Long-term liabilities of discontinued operations ................................        1,187,232            641,780
                                                                                      ------------      -------------
         Total liabilities ......................................................       87,628,779         79,224,565


Stockholders' equity (deficit):
Preferred stock, $.001 par value; 10,000,000 shares authorized; no
  shares issued .................................................................               --                 --
Common Stock, $.001 par value; 50,000,000 shares authorized;
 15,616,854 (1999) and 13,860,176 (2000) shares issued and outstanding ..........           15,617             13,860
Additional paid-in capital ......................................................       92,981,946         89,030,522
Deferred compensation ...........................................................         (192,135)                --
Note receivable .................................................................         (172,984)          (172,984)
Accumulated deficit .............................................................      (95,382,536)      (112,444,118)
                                                                                      ------------      -------------
                  Total stockholders' equity (deficit) ..........................       (2,750,092)       (23,572,720)
                                                                                      ------------      -------------
                  Total liabilities and stockholders' equity (deficit)...........     $ 84,878,687      $  55,651,845
                                                                                      ============      =============
</TABLE>

           See accompanying notes to consolidated financial statements


                                       22
<PAGE>   25


                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31,
                                                                           -------------------------------------------------
                                                                               1998               1999              2000
                                                                           -------------      ------------      ------------
<S>                                                                        <C>                <C>               <C>
Revenues:
  Managed care .......................................................     $  54,980,006      $ 56,743,696      $ 52,829,551
  Buying group .......................................................        58,959,195        19,150,982                --
                                                                           -------------      ------------      ------------
                                                                             113,939,201        75,894,678        52,829,551
Operating expenses:
  Medical claims .....................................................        42,159,210        42,444,111        39,226,043
  Cost of buying group sales .........................................        55,926,173        18,260,819                --
  General and administrative .........................................        18,433,625        27,651,610        20,437,546
  Depreciation and amortization ......................................         2,347,841         2,764,822         2,555,515
  Special Items:
       Restructuring and other charges (credits) .....................         6,462,595        (1,413,389)         (235,539)
       Start-up and software development costs .......................           932,494           511,768                --
       Merger costs ..................................................           717,835                --                --
       Impairment charge .............................................                --                --           744,987
                                                                           -------------      ------------      ------------
      Total operating expenses .......................................       126,979,773        90,219,741        62,728,552
                                                                           -------------      ------------      ------------
Loss from operations .................................................       (13,040,572)      (14,325,063)       (9,899,001)

Amortization of loan fees ............................................          (314,208)       (2,400,831)               --
Interest expense, net ................................................        (4,084,891)       (5,522,958)       (5,793,658)
Gain (loss) on disposal of fixed assets, net .........................                --           560,692        (1,673,838)
                                                                           -------------      ------------      ------------
Loss from continuing operations before income taxes
and minority interest ................................................       (17,439,671)      (21,688,160)      (17,366,497)

Income taxes .........................................................                --                --                --
                                                                           -------------      ------------      ------------
Loss from continuing operations ......................................       (17,439,671)      (21,688,160)      (17,366,497)

Discontinued operations:
  Income from discontinued operations, net of income tax benefit
  of $3,017,000 in 1998 ..............................................        11,370,386         4,327,222           555,389
  Income (loss) on disposal of discontinued operations, net of
income tax benefit of $1,096,931 in 1999 .............................                --       (65,722,430)          533,021
                                                                           -------------      ------------      ------------
Loss before extraordinary items ......................................        (6,069,285)      (83,083,368)      (16,278,087)

Extraordinary item-gain on sale of EyeCare One Corp. .................                --         3,770,823
Extraordinary item-loss on early extinguishment of debt ..............        (1,885,512)               --                --
Extraordinary item-costs associated with the previously planned
  OptiCare Health Systems, Inc. merger ...............................                --                --        (1,428,599)
Extraordinary item-forgiveness of indebtedness .......................                --                --           645,104
                                                                           -------------      ------------      ------------
Net loss .............................................................     $  (7,954,797)     $(79,312,545)     $(17,061,582)
                                                                           =============      ============      ============
Basic and diluted income (loss) per common share:
     Loss from continuing operations .................................     $       (1.21)     $      (1.41)     $      (1.24)
     Income from discontinued operations .............................              0.79              0.28              0.04
     Gain (loss) on disposal of discontinued operations ..............                --             (4.28)             0.03
                                                                           -------------      ------------      ------------
Income (loss) before extraordinary items .............................             (0.42)            (5.41)            (1.17)
     Extraordinary item-gain on sale of EyeCare One Corp. ............                --               .25                --
     Extraordinary item-loss on early extinguishment of debt .........             (0.13)               --                --
Extraordinary item-costs associated with the previously planned
  OptiCare Health Systems, Inc. merger ...............................                --                --              (.10)
Extraordinary item-forgiveness of indebtedness .......................     $          --      $         --      $       0.05
                                                                           -------------      ------------      ------------
Net income (loss) per common share ...................................     $       (0.55)     $      (5.16)     $      (1.22)
</TABLE>


See accompanying notes to consolidated financial statements


                                       23
<PAGE>   26


                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES

            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                                                                                                        Common
                                                              Common  Stock                     Additional              Stock
                                                   -----------------------------------            Paid-In                to be
                                                      Shares                Amount                Capital               Issued
                                                   -------------         -------------         -------------         -------------
<S>                                                <C>                   <C>                   <C>                   <C>
Balance at December 31, 1997 ..............           13,529,892         $      13,530         $  76,416,476         $          --
  Issuance of shares of common
    stock for business combinations .......            1,666,351                 1,666            14,109,907                    --
  105,164 shares of common stock
    to be issued in 1999 as additional
    consideration for acquisitions
    consummated in 1997 and 1998 ..........                   --                    --                    --             1,053,664
  Sale and issuance of detachable
    stock purchase warrants ...............                   --                    --               128,109                    --
  Purchase of common stock ................             (168,270)                 (168)           (1,547,916)                   --
  Compensatory stock options
    accounted for under SFAS 123 ..........                   --                    --               202,479                    --
  Exercise of options .....................               39,052                    39               132,784                    --
  Amortization of deferred
    compensation ..........................                   --                    --                    --                    --
  Collection of note receivable ...........                   --                    --                    --                    --
  Net loss ................................                   --                    --                    --                    --
  Capital distribution ....................                   --                    --              (245,547)                   --
                                                   -------------         -------------         -------------         -------------
Balance at December 31, 1998 ..............           15,067,025         $      15,067         $  89,196,292         $   1,053,664
  Issuance of shares of common
    stock for business combinations .......              117,409                   117               617,297                    --

  Issuance of shares of common
    stock as additional consideration
    for acquisitions consummated in
    1997 and 1998 .........................              145,594                   146             1,238,657            (1,053,664)
  Sale of shares to directors .............              177,099                   177             1,062,671                    --
  Compensatory stock options
    accounted for under SFAS 123 ..........                   --                    --               443,956                    --
  Exercise of options .....................               71,204                    71               291,651                    --
  Issuance of shares for employee
    stock purchase plan ...................               38,523                    39               131,422                    --
  Amortization of deferred
    compensation ..........................                   --                    --                    --                    --
  Net loss ................................                   --                    --                    --                    --
                                                   -------------         -------------         -------------         -------------
Balance at December 31, 1999 ..............           15,616,854         $      15,617         $  92,981,946         $          --

Retirement of treasury stock
received as consideration on disposal
of discontinued operations.................           (1,764,348)               (1,765)           (3,842,889)                   --

Forfeiture of compensatory stock
options accounted for under SFAS
123 .......................................                   --                    --              (300,969)                   --

  Compensatory stock options
    accounted for under SFAS 123 ..........                   --                    --               178,901                    --
  Issuance of shares for employee
    stock purchase plan ...................                7,670                     8                13,533                    --
  Amortization of deferred
   compensation ...........................                   --                    --                    --                    --
  Net loss ................................                   --                    --                    --                    --
                                                   -------------         -------------         -------------         -------------
Balance at December 31, 2000 ..............           13,860,176         $      13,860         $  89,030,522         $          --
                                                   =============         =============         =============         =============
<CAPTION>
                                                                                                                        Total
                                                                                                                    Stockholders'
                                                    Deferred                 Note              Accumulated             Equity
                                                  Compensation            Receivable             Deficit              (Deficit)
                                                  -------------         -------------         -------------         -------------
<S>                                               <C>                   <C>                   <C>                   <C>
Balance at December 31, 1997 ..............       $    (408,735)        $    (175,484)        $  (8,115,194)        $  67,730,593
  Issuance of shares of common
    stock for business combinations .......                  --                    --                    --            14,111,573
  105,164 shares of common stock
    to be issued in 1999 as additional
    consideration for acquisitions
    consummated in 1997 and 1998 ..........                  --                    --                    --             1,053,664
  Sale and issuance of detachable
    stock purchase warrants ...............                  --                    --                    --               128,109
  Purchase of common stock ................                  --                    --                    --            (1,548,084)
  Compensatory stock options
    accounted for under SFAS 123 ..........                  --                    --                    --               202,479
  Exercise of options .....................                  --                    --                    --               132,823
  Amortization of deferred
    compensation ..........................             108,300                    --                    --               108,300
  Collection of note receivable ...........                  --                 2,500                    --                 2,500
  Net loss ................................                  --                    --            (7,954,797)           (7,954,797)
  Capital distribution ....................                  --                    --                    --              (245,547)
                                                  -------------         -------------         -------------         -------------
Balance at December 31, 1998 ..............       $    (300,435)        $    (172,984)        $ (16,069,991)        $  73,721,613
  Issuance of shares of common
    stock for business combinations .......                  --                    --                    --               617,414
  Issuance of shares of common
    stock as additional consideration
    for acquisitions consummated in
    1997 and 1998 .........................                  --                    --                    --               185,139
  Sale of shares to directors .............                  --                    --                    --             1,062,848
  Compensatory stock options
    accounted for under SFAS 123 ..........                  --                    --                    --               443,956
  Exercise of options .....................                  --                    --                    --               291,722
  Issuance of shares for employee
    stock purchase plan ...................                  --                    --                    --               131,461
  Amortization of deferred
    compensation ..........................             108,300                    --                    --               108,300
  Net loss ................................                  --                    --           (79,312,545)          (79,312,545)
                                                  -------------         -------------         -------------         -------------
Balance at December 31, 1999 ..............       $    (192,135)        $    (172,984)        $ (95,382,536)        $  (2,750,092)

Retirement of treasury stock
received as consideration on disposal
of discontinued operations                                   --                    --                    --            (3,844,654)

Forfeiture of compensatory stock
options accounted for under SFAS
123 .......................................                  --                    --                    --              (300,969)

  Compensatory stock options
    accounted for under SFAS 123 ..........                  --                    --                    --               178,901
  Issuance of shares for employee
    stock purchase plan ...................                  --                    --                    --                13,541
  Amortization of deferred
   compensation ...........................             192,135                    --                    --               192,135
  Net loss ................................                  --                    --           (17,061,582)          (17,061,582)
                                                  -------------         -------------         -------------         -------------
Balance at December 31, 2000 ..............       $          --         $    (172,984)        $(112,444,118)        $ (23,572,720)
                                                  =============         =============         =============         =============
</TABLE>


See accompanying notes to consolidated financial statements.


                                       24
<PAGE>   27
VISION TWENTY-ONE, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                     Year Ended December 31,
                                                                                           ----------------------------------------
                                                                                               1998         1999           2000
                                                                                           -----------   -----------   -----------
OPERATING ACTIVITIES
<S>                                                                                        <C>          <C>           <C>
Net loss ................................................................................  $(7,954,797) $(79,312,545) $(17,061,582)
Adjustments to reconcile net loss to net cash used in operating activities:
Net (income) loss from discontinued operations ..........................................  (11,370,386)   61,395,208    (1,088,410)
Extraordinary items .....................................................................    1,885,512    (3,770,823)      783,495
Depreciation and amortization ...........................................................    2,347,841     2,764,822     2,555,515
Amortization of loan fees ...............................................................      314,208     2,400,831            --
Other amortization ......................................................................      662,391            --            --
Non-cash compensation expense ...........................................................      310,779       552,256        70,067
(Gain) loss on disposal of fixed assets, net ............................................           --      (560,692)    1,673,838
Impairment charge .......................................................................           --            --       744,987
Changes in operating assets and liabilities, net of effects from business combinations:
  Accounts receivable, net ..............................................................      (34,493)    8,081,737      (320,625)
  Prepaid expenses and other current assets .............................................   (1,197,463)      500,901       504,768
  Other assets and restricted cash ......................................................      141,111       205,796    (2,212,011)
  Accounts payable ......................................................................      758,872       444,015    (1,476,183)
  Medical claims payable ................................................................    1,097,355        95,397      (409,618)
  Accrued expenses ......................................................................    1,542,524    (3,126,971)      374,798
  Accrued compensation ..................................................................      310,973       863,206      (623,210)
  Accrued restructuring charge ..........................................................    2,796,000    (2,132,695)     (339,023)
  Accrued interest and loan fees ........................................................      426,073     1,487,186        91,558
  Accrued acquisition costs .............................................................           --      (165,753)           --
  Amount due to ECCA ....................................................................           --     4,031,870            --
                                                                                           -----------   -----------   -----------
  Net cash used in operating activities .................................................   (7,963,500)   (6,246,254)  (16,731,636)

INVESTING ACTIVITIES
Payments for fixed assets, net ..........................................................   (2,140,830)   (1,431,612)     (170,024)
Payments for acquisitions, net of cash acquired .........................................  (41,491,787)     (614,469)           --
Payments for capitalized acquisition costs ..............................................   (3,445,854)      (67,878)           --
Net proceeds from sale of Block Buying Group ............................................           --     4,340,103            --
Net proceeds from sale of Retail Optical Chains .........................................           --    29,281,327            --
Net proceeds from sale of PPM ...........................................................           --            --     9,687,164
Other ...................................................................................     (709,882)           --            --
                                                                                           -----------   -----------   -----------
Net cash provided by (used in) investing activities .....................................  (47,788,353)   31,507,471     9,517,140

FINANCING ACTIVITIES
Proceeds from long-term debt ............................................................  124,684,112    15,717,085     3,204,776
Payments on long-term debt and capital lease obligations ................................  (67,279,676)  (40,817,761)   (3,015,743)
Payments for financing fees .............................................................   (2,771,822)     (851,729)           --
Payments to acquire treasury stock ......................................................   (1,548,084)           --            --
Proceeds from sale of stock to directors ................................................           --     1,062,848            --
Sale of detachable stock purchase warrants and exercise of options ......................      148,893       291,722            --
Proceeds from sale of stock issued under an employee stock purchase plan ................           --       131,461            --
Decrease in notes receivable, officers and shareholders .................................        2,500            --            --
                                                                                           -----------   -----------   -----------
Net cash provided by (used in) financing activities .....................................   53,235,923   (24,466,374)      189,033
                                                                                           -----------   -----------   -----------
DISCONTINUED OPERATIONS
  Operating activities ..................................................................     (660,367)    3,127,986     5,079,444
  Investing activities ..................................................................      879,102      (890,177)     (141,290)
  Financing activities ..................................................................       21,457       387,723      (110,662)
                                                                                           -----------   -----------   -----------
  Cash provided by (used in) discontinued operations ....................................      240,192     2,625,532     4,827,492
                                                                                           -----------   -----------   -----------
Increase (decrease) in cash and cash equivalents ........................................  $(2,275,738)  $ 3,420,375   $(2,197,971)
Cash and cash equivalents at beginning of year ..........................................    3,663,307     1,387,569     4,807,944
                                                                                           -----------   -----------   -----------
Cash and cash equivalents at end of year ................................................  $ 1,387,569   $ 4,807,944   $ 2,609,973
                                                                                           ===========   ===========   ===========
Supplemental Disclosure of Cash Flow Information
Cash paid during the year for interest and loan fees  ...................................  $ 5,490,964   $ 5,910,773   $ 1,588,986
Accrued interest and loan fees converted to debt ........................................           --            --     6,385,000
                                                                                           ===========   ===========   ===========
Supplemental Schedule of Noncash Investing and Financing Activities .....................  $        --   $        --           $--
                                                                                           ===========   ===========   ===========
Assets purchased under capital leases ...................................................  $        --   $    21,140   $   161,670
                                                                                           ===========   ===========   ===========
</TABLE>

           See accompanying notes to consolidated financial statements


                                       25
<PAGE>   28

                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


1.       DESCRIPTION OF BUSINESS

         Vision Twenty-One, Inc. and Subsidiaries ("Vision Twenty-One" or the
"Company") is a Florida corporation formed in May 1996 as a holding company. The
Company's initial subsidiaries were Vision 21 Physician Practice Management
Company (MSO) and Vision 21 Managed Eye Care of Tampa Bay, Inc. (MCO).

         Vision Twenty-One, Inc. ("Vision Twenty-One" or the Company") is a
vision care company that is mainly focused on the provision of administrative
services to managed care entities. The Company manages routine vision and
medical/surgical eye care programs through contracts with managed care
organizations and other third-party payors to provide eye care services through
a network of associated optometrists and ophthalmologists. The Company's managed
care contracts involve the receipt by the Company from health benefits payors of
a fixed amount per-patient-per-month fee. The Company pays the health care
providers and bears the risk that the cost and utilization of eye care services
by patients may exceed the fixed capitation payments received. Vision Twenty-One
also has contracts for the provision of certain administrative services related
to its fee-for-service plans.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

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

RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("SFAS 133"). In June 2000, the
FASB issued Statement of Financial Accounting Standards No. 138, Accounting for
Derivative Instruments and Hedging Activities - An amendment of FASB Statement
No. 133. These statements require all derivatives to be recorded on the balance
sheet at fair market value and establishes new accounting rules for hedging
instruments. These statements are effective for fiscal years beginning after
June 15, 2000. The Company does not have any derivative instruments and is not
involved in hedging activities and therefore does not expect these statements to
have an impact on its results of operations or financial position.

         In June 1999, the FASB issued Statement of Financial Accounting
Standards No. 137, Accounting for Derivative Instruments and Hedging Activities-
Deferral of the Effective Date of FASB Statement No. 133 which defers the
implementation of SFAS 133 until years beginning after June 15, 2000. The
Company does not anticipate that the adoption of SFAS 133 will have a
significant effect on its results of operations or financial position.

USE OF ESTIMATES

         The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

RECLASSIFICATION OF FINANCIAL STATEMENTS

         As a result of the Company's exit from the physician practice
management business, its previously announced and completed sale of the retail
optical chain segment of its operation, and announced exit from the ASC/RSC
business in the third quarter of 2000, the Company has accounted and reported
for these business segments as discontinued operations. Consequently, prior
period financial statements have been restated to reflect discontinued
operations treatment for the results of these business segments.

REVENUE RECOGNITION


                                       26

<PAGE>   29

Managed Care

         Managed care revenues are derived principally from monthly capitation
payments from health benefits payors which contract with the Company for the
delivery of eye care services. The Company records this revenue on the accrual
basis at contractually agreed-upon rates.

         Most of the managed care contracts are for one-year terms that
automatically renew and most of the contracts are terminable by either party on
typically no more than ninety days notice.

Buying Group

         The buying group division provided benefits to local optometrists and
ophthalmologists (the "providers") through the consolidation and management of
purchases of optical goods. The Company aggregated provider purchase orders for
optical goods and submitted, on Company purchase orders, the combined purchase
orders to suppliers for direct shipment to the providers. From the supplier
perspective, the Company was the purchaser and was responsible for supplier
payments. The Company assumed the credit risks of its providers. The Company
invoiced the providers for their purchases and recognized buying group division
revenues upon shipment of merchandise by the suppliers.

MEDICAL CLAIMS PAYABLE

         In accordance with the capitation contracts entered into with certain
managed health benefits payors, the Company is responsible for payment of
providers' claims. Medical claims payable represent provider claims reported to
the Company and an estimate of provider claims incurred but not reported to the
Company (IBNR).

         The Company estimates the amount of IBNR using standard actuarial
methodologies based upon the average interval between the date services are
rendered and the date claims are reported and other factors considered relevant
by the Company.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of cash , cash equivalents, accounts payable and
accrued expense, approximate their fair value because of the short-term nature
of these items.

         The fair value of substantially all of the Company's long-term debt
approximates its carrying amount as the interest rates on substantially all of
the Company's long-term debt change with market interest rates.

CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.

FIXED ASSETS

         Fixed assets are stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of the various classes of
assets, which range from three to ten years. Leasehold improvements are
amortized using the straight-line method over the shorter of the term of the
lease or the estimated useful life of the improvements. Routine maintenance and
repairs are charged to expense as incurred while betterments and renewals are
capitalized.



                                       27
<PAGE>   30



GOODWILL

         In connection with certain of its business combinations, the Company
recognized the excess of the purchase price over the fair values of the net
assets acquired ("goodwill") from the business combinations, which is being
amortized on a straight-line method over 25 or 30 years.

         Amortization expense with respect to goodwill was approximately
$1,589,000, $1,600,000 and $1,637,000 for the years ended December 31, 1998,
1999 and 2000, respectively.

IMPAIRMENT OF ASSETS

         The Company utilizes Statement of Financial Accounting Standards No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ("SFAS 121") to determine whether any impairment of
value exists with respect to its fixed assets. In connection with its PPM
business which the Company exited (see Note 3), the Company previously
recognized the value of its long-term business management agreements
("Management Agreements") as identifiable intangible assets. The Company
previously utilized SFAS 121 to determine whether any impairment of value
existed with respect to its Management Agreements. The previously recognized
value of such Management Agreements, net of accumulated amortization, was
written off in the year ended December 31, 1999 as a component of the Company's
loss on disposal of discontinued operations.

         In accordance with SFAS 121, the Company reviews the carrying value of
its fixed assets at least quarterly on an entity-by-entity basis to determine if
facts and circumstances exist which would suggest that the fixed assets may be
impaired or that the useful life needs to be modified. Among the factors the
Company considers in making the evaluation are changes in the specific
companies' market position, reputation, profitability and geographical
penetration. If indicators are present which may indicate impairments, the
Company will prepare a projection of the undiscounted cash flows of the specific
entity and determine if the fixed assets are recoverable based on these
undiscounted cash flows. If impairment is indicated, then an adjustment will be
made to reduce the carrying amount of the fixed assets to fair value. The
Company recognized an impairment loss on its fixed assets during the year ended
December 31, 2000 of approximately $745,000 for the Boca Raton, Florida
location.

         The Company utilizes Accounting Principles Board Opinion No. 17,
Intangible Assets ("APB 17") to determine whether any impairment exists with
respect to its goodwill. In the event that facts and circumstances indicate that
goodwill may be impaired, an evaluation of recoverability would be performed. If
such an evaluation is performed, the estimated future undiscounted cash flows
would be compared to the asset's carrying value to determine if a write-down is
required. The Company did not recognize any impairment losses on goodwill during
the years ended December 31, 1998, 1999 and 2000. In connection with the sale of
the buying group division of BBG-COA, Inc. (see Note 4), the Company wrote off
goodwill of approximately $3,675,000, which is net of accumulated amortization
of $174,000. Such amount was written off as a component of the gain recognized
on the sale of the buying group division.

CONCENTRATIONS OF CREDIT RISK

         The Company has accounts receivable from its managed care clients. The
Company does not believe that there are any substantial credit risks associated
with those receivables. The Company does not require any form of collateral from
its managed care clients.

         The Company places cash and cash equivalents with high-quality
financial institutions. At times, the Company maintains cash balances in excess
of amounts insured by the Federal Deposit Insurance Corporation (FDIC).

NET LOSS PER COMMON SHARE

         Basic net income (loss) per share is calculated by dividing net income
(loss) by the weighted average number of common shares outstanding during the
period. Diluted net income (loss) per share is calculated by dividing net income
(loss) by the weighted average number of common and potential common shares
outstanding during the period. Potential common shares consist of the dilutive
effect of outstanding options and warrants calculated using the treasury stock
method.


                                       28

<PAGE>   31

STOCK-BASED COMPENSATION

         The Company accounts for stock-based compensation arrangements under
the provisions of Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees ("APB 25"). In 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation ("SFAS 123"), which is effective for
fiscal years beginning after December 15, 1995. Under SFAS 123, the Company may
elect to recognize stock-based compensation expense based on the fair value of
the awards or continue to account for stock-based compensation under APB 25 and
disclose in the financial statements the effects of SFAS 123 as if the
recognition provisions were adopted.

         The company accounts for any stock-based compensation arrangements not
specifically addressed by APB 25 under the fair value provisions of SFAS 123,
including options granted to non-employees. The pro forma disclosures required
by SFAS 123 are provided for all stock-based compensation arrangements which are
accounted for under APB 25.

INCOME TAXES

         Income taxes have been provided using the liability method in
accordance with Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes.

3.       DISCONTINUED OPERATIONS

         Effective August 31, 1999, the Company completed the sale of Vision
World, EyeCare One Corp., and The Eye DRx (the "Retail Optical Chains") to Eye
Care Centers of America, Inc. ("ECCA"). ECCA is based in San Antonio, Texas and
operates a national chain of full-service retail optical stores. In connection
with this transaction, the Company received approximately $37,300,000 in cash.
Of the proceeds the Company received at closing, approximately $30,800,000 was
applied as a permanent pay down of its term debt credit facility, approximately
$2,800,000 was paid down under its ongoing $7,500,000 revolving credit facility,
approximately $2,400,000 was used for costs and other obligations related to the
transaction and approximately $1,250,000 was utilized to fund an escrow
arrangement between the parties relative to terms under the agreement. Based on
post-closing adjustments, the final sales price was approximately $31,800,000,
and the Company had recorded a liability of approximately $4,032,000 to ECCA,
net of escrow, with respect to such post-closing adjustments in 1999. In
addition, Vision Twenty-One had indemnified one of its former managed optometry
practices for certain partnership obligations. A charge of $200,000 was recorded
to loss on disposal of discontinued operations in 1999, with respect to this
litigation. In January 2001, litigation regarding this matter was settled for
approximately $50,000 and the Company was released from such indemnification
obligations. A net loss of approximately $3,250,000 was incurred on the
transaction during the year ended December 31, 1999.

         On October 25, 1999, the Company announced its intent to exit the
business of managing optometry and ophthalmology practices. The details of the
plan were finalized in December 1999. This represented a crucial step in the
Company's strategy of focusing its corporate resources on expanding its managed
care business. The exit of the physician practice management ("PPM") business,
completed in September 2000, was accomplished through the sale of the practice
assets back to the physicians or affiliates, the termination of management
agreements and the restructuring of certain refractive surgery center facility
access agreements. The terms of each managed practice divestiture were subject
to the prior approval of the banks under the Company's credit facilities as well
as the Company's Board of Directors. Accordingly, in 1999, the Company recorded
a loss of $58,700,000, which was net of an income tax benefit of $1,097,000. As
of September 30, 2000, the Company had sold the assets of all of the practices
and received consideration of approximately $9,700,000, in the form of cash, and
1,764,348 shares of the Company's common stock valued at approximately
$3,845,000. In addition, the Company reduced their liability to ECCA by
$2,500,000 in connection with the settlement of various disputes between the
parties, including the transition of certain Optometry practices to ECCA for the
sale of certain practices to ECCA. The aggregate consideration was approximately
$16,045,000.

         The Company received approximately $1,100,000 of consideration in
excess of the amount previously estimated as of December 31, 1999. Also, the
Company recognized approximately $600,000 of management fees from certain of the
disposed practices during the year ended December 31, 2000.


                                       29
<PAGE>   32

         During the third quarter of 2000, the Company announced its intent to
exit the business of owning and managing Refractive and Ambulatory Surgery
Centers. A loss of approximately $354,000 was realized on transactions with an
effective date of December 31, 2000. The anticipated loss, as of December 31,
2000, for the remaining entities is $847,000. Since the actual proceeds could
differ from estimated proceeds, the actual loss on exiting the ASC/RSC business
could differ from the estimated loss recognized by the Company.

The operating results of these discontinued operations are summarized as
follows:

<TABLE>
<CAPTION>
                                                                                                       Nine months ended
                                                                           Year Ended December 31,       September 30,
                                                                        ------------------------------------------------
                                                                           1998               1999             2000
                                                                        ------------      -------------     -----------
<S>                                                                     <C>               <C>               <C>
Revenues .........................................................      $109,477,863      $ 131,462,184     $11,188,636
Operating expenses ...............................................       101,124,477        127,134,962      10,633,247
                                                                        ------------      -------------     -----------
Income from discontinued operations before income  tax benefit ...         8,353,386          4,327,222         555,389
Income tax benefit ...............................................         3,017,000                 --              --
                                                                        ------------      -------------     -----------
Income from discontinued operations ..............................        11,370,386          4,327,222         555,389
Income (loss) on disposal ........................................                --        (66,819,361)        533,021
Income tax benefit ...............................................                --          1,096,931              --
                                                                        ------------      -------------     -----------
Income (loss) on disposal including operating loss from October 1,        11,370,386        (65,722,430)        533,021
2000 to December 31, 2000 of approximately $116,000
                                                                        ------------      -------------     -----------
Total income (loss) on discontinued operations ...................      $ 11,370,386      $ (61,395,208)    $ 1,088,410
                                                                        ============      =============     ===========
</TABLE>

         The net loss on disposal for the year ended December 31, 1999 included
the loss on the sale of Vision World and The Eye DRx of approximately
$7,021,000, the estimated loss on exiting the PPM business of approximately
$59,798,000 and the income tax benefit of $1,097,000. The estimated loss on
exiting the PPM business of approximately $59,798,000 included the write-off of
the net assets of the PPM business of approximately $74,780,000, net of
estimated proceeds of approximately $14,982,000. Estimated proceeds included
approximately 1,800,000 shares of the Company's Common Stock to be received as
consideration.

         The gain on sale of EyeCare One Corp. of approximately $3,771,000 is
reported as an extraordinary item for the year ended December 31, 1999 because
this entity previously was combined with the Company in a merger which was
accounted for using pooling of interests accounting. Since the sale of EyeCare
One Corp. to ECCA occurred within two years of the merger with the Company, the
gain is recorded as an extraordinary item. When the merger with EyeCare One
Corp. was completed in March 1998, the Company had not contemplated the sale of
EyeCare One Corp.

         The operating expenses of the discontinued operations for the year
ended December 31, 1998, 1999 and 2000 include an allocation of interest expense
and amortization expense of intangible assets of approximately $3,743,000,
$4,034,000 and $145,000, respectively. Additionally, in connection with the
permanent pay down of its term debt credit facility, approximately $700,000 of
capitalized loan costs were expensed and included in operating expenses of the
discontinued operations for 1999. The interest expense allocated to discontinued
operations was based on the net assets attributed to the operations of the
Retail Optical Chains in accordance with the guidance in EITF 87-24, Allocation
of Interest to Discontinued Operations.

         The assets and liabilities of the discontinued operations primarily
include cash, patient accounts receivable, fixed assets, accounts payable and
accrued liabilities.

4.       BUSINESS COMBINATION

BBG-COA, INC. ACQUISITION

         During November 1997, the Company acquired all of the outstanding stock
of BBG-COA, Inc. and all related subsidiaries and affiliated companies ("Block
Vision") from Block Vision stockholders. Block Vision provided benefits to
Affiliated Providers through the consolidation and management of purchases of
optical goods through its buying group division and provides vision benefit
management services to health management organizations, preferred provider
organizations and other managed care entities through its managed care division.
The purchase price for Block Vision included 458,365 shares of the Company's
Common Stock valued at approximately $6,050,000, cash of approximately
$25,651,000 and the assumption of approximately $3,243,000 in long-term debt.
The acquisition was accounted for using the purchase method of accounting, with
the purchase


                                       30
<PAGE>   33

price allocated to the fair value of the assets acquired and liabilities
assumed. The excess of the purchase price over the fair value of the net assets
acquired amounted to approximately $34,000,000 and is being amortized on a
straight-line method over 30 years. The operating results of Block Vision have
been included in the Company's consolidated financial statements since November
1, 1997. On June 4, 1999, the Company completed the sale of the buying group
division. Net proceeds of $4,340,000 received by the Company were primarily used
to repay outstanding borrowings under the Company's credit facilities. The
Company recognized a gain on the sale of the buying group division of
approximately $665,000. Such amount was classified in gain on sale of assets in
the Company's consolidated statement of operations for the year ended December
31, 1999.

5.       FIXED ASSETS

         Fixed assets consist of the following:
<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                               -------------------------------
Description                                                                       1999                 2000
                                                                               -----------          ----------
<S>                                                                            <C>                  <C>
Equipment and office furniture .......................................         $ 5,641,248          $3,447,695
Leased equipment .....................................................              42,035             203,705
Leasehold improvements ...............................................             134,329             124,361
                                                                               -----------          ----------

                                                                                 5,817,612           3,775,761
Less accumulated depreciation, amortization and impairment charge ....          (2,036,347)         (3,074,508)
                                                                               -----------          ----------
                                                      Total ..........         $ 3,781,265          $  701,253
                                                                               ===========          ==========
</TABLE>

Depreciation and amortization of fixed assets totaled approximately $758,000,
$1,142,000 and $918,000 in 1998, 1999 and 2000, respectively. Amortization
expense related to capital leases is included in depreciation and amortization
in the consolidated statements of operations.

6.       LONG-TERM DEBT

<TABLE>
<CAPTION>

                                                                                                     December 31,
                                                                                          ----------------------------------
                                                                                             1999                  2000
                                                                                          ------------          ------------
<S>                                                                                       <C>                   <C>
Revolving line of credit (limited to $3,000,000 at December 31, 2000) due October
2003, Libor principal (6.79938% at December 31, 2000) ...........................         $  7,134,415          $  2,990,000
Term loans, $45,800,000 due October 2002, Libor principal (6.79938% at
December 31, 2000) ..............................................................           41,622,572            45,800,000
Bridge facility (limited to $9,000,000) due March 2002, Prime principal (7.5% at
December 31, 2000) ..............................................................            7,972,400             9,000,000

Convertible Senior Secured Notes, $ 6,385,000 due October 2003, Fixed rate ......                   --             6,385,000
principal (7.0% at December 31, 2000)

Notes payable due through 2001, fixed rate (8.50% at December 31, 2000) .........            1,404,781               562,500
                                                                                          ------------          ------------
                                                                                          $ 58,134,168          $ 64,737,500
Less current portion ............................................................          (58,021,668)          (64,737,500)
                                                                                          ------------          ------------
                                                                                          $    112,500          $         --
                                                                                          ============          ============
</TABLE>


                                       31
<PAGE>   34

         On January 30, 1998, the Company entered into a five-year, $50,000,000
credit agreement (the "Credit Agreement") with the Bank of Montreal as agent
(the "Agent") for a consortium of banks (the "Banks"). The Credit Agreement,
which was to mature in January 2003, provided the Company with a revolving
credit facility component in an aggregate amount of up to $10,000,000 and a term
loan component in an aggregate amount of up to $40,000,000. Borrowings under the
Credit Agreement were secured by a pledge of the stock of substantially all of
the Company's subsidiaries as well as the assets of the Company and certain of
its subsidiaries. Obligations under the Credit Agreement were guaranteed by
certain of the Company's subsidiaries. The Credit Agreement contained negative
and affirmative covenants and agreements that placed restrictions on the Company
regarding disposition of assets, capital expenditures, additional indebtedness,
permitted liens and payment of dividends, as well as required the maintenance of
certain financial ratios. The interest rate on the Credit Agreement was, at the
option of the Company, either (i) the London InterBank Offered Rate plus an
applicable margin rate, (ii) the greater of (a) the Agent's prime commercial
rate or (b) the "federal funds" rate plus 0.5%, or (iii) a fixed rate loan as
determined by the Agent at each time of borrowing. At the closing of the Credit
Agreement, the Company used approximately $26,900,000 of its available borrowing
to repay the outstanding balance under the Company's bridge credit facility with
Prudential Credit and related accrued interest and transaction costs. As of June
30, 1998, the Company had used approximately $48,300,000 of its available
borrowings under the Credit Agreement.

         On July 1, 1998, the Company entered into a restated $100,000,000 bank
credit agreement with the Bank of Montreal as agent for a consortium of banks
(the "Restated Credit Agreement"). The Restated Credit Agreement was used, in
part, for early extinguishment of the Company's outstanding balance of
approximately $48,300,000 under its prior Credit Agreement. The remaining
balance under the Restated Credit Agreement has been accessed in the past for
working capital, general corporate purposes and acquisitions. The Restated
Credit Agreement included a seven-year term loan of $70,000,000 and a
$30,000,000 five-year revolving credit and acquisition facility. Other terms and
conditions were substantially the same as the prior Credit Agreement with a
slightly higher margin spread on the seven-year term portion. At December 31,
1998, approximately $81,600,000 was outstanding under the Restated Credit
Agreement.

         On February 23, 1999, the Company entered into an amendment to the
Restated Credit Agreement (the "First Amendment"). The First Amendment provided
a $50,000,000 term loan maturing in June 2005 with quarterly principal payments
of one percent beginning in June 1999, a $20,000,000 term loan maturing in June
2003 with quarterly principal payments of approximately $1,300,000 beginning in
September 2000, a $12,500,000 term loan which was to be utilized for
acquisitions and capital expenditures maturing in June 2003, and a $7,500,000
revolving credit facility maturing in June 2003. The First Amendment resulted in
a reduction of $10,000,000 in the total borrowing capacity of the Company. The
First Amendment also revised certain of the covenants and included a slightly
higher margin spread on the seven-year term portion. Other terms and conditions
were substantially the same as the Restated Credit Agreement.

         On June 11, 1999, the Company entered into a second amendment to the
Restated Credit Agreement (the "Second Amendment" and together with the Restated
Credit Agreement and the First Amendment, the "Amended and Restated Credit
Agreement"). The Second Amendment principally revised certain financial
covenants in connection with the credit facility which the Company was
previously unable to meet, terminated early the Company's unused portion of its
borrowing capacity relative to the acquisition component of the credit facility
which was scheduled to expire June 30, 1999 and waived the Company's
non-compliance with certain obligations under the Amended and Restated Credit
Agreement through the date thereof.

         On August 30, 1999, the Company entered into a third amendment to the
Amended and Restated Credit Agreement (the "Third Amendment"). The Third
Amendment provided for the consent to the sale of the Company's Retail Optical
Chains to ECCA by the Banks and Agent as parties to the Amended and Restated
Credit Agreement, revised certain covenants and financial ratios and waived the
Company's non-compliance with certain obligations under the Amended and Restated
Credit Agreement through the date thereof. Effective August 31, 1999, the sale
of the Company's retail optical chains to ECCA was consummated. Of the proceeds
received by the Company, $30,800,000 was used to permanently reduce the
Company's term loan borrowings and $2,800,000 was used to reduce the outstanding
balance under the Company's $7,500,000 revolving credit facility.


                                       32
<PAGE>   35

         On November 12, 1999, the Company entered into a fourth amendment to
the Amended and Restated Credit Agreement (the "Fourth Amendment"). Pursuant to
the Fourth Amendment, a bridge loan facility of $3,000,000 was made available to
the Company that was to mature on November 26, 1999. Waivers were extended on a
short-term basis regarding certain of the Company's violations of loan covenants
and repayment obligations.

         On November 24, 1999, the Company entered into a fifth amendment to the
Amended and Restated Credit Agreement (the "Fifth Amendment"). Pursuant to the
Fifth Amendment, the repayment date for the bridge facility was extended, and
waivers with respect to violations of certain covenants including repayments of
certain interest and principal amounts currently due were granted until December
10, 1999.

         On December 3, 1999, the Company entered into a sixth amendment to the
Amended and Restated Credit Agreement (the "Sixth Amendment"). Pursuant to the
Sixth Amendment, availability under the bridge loan facility was increased from
an aggregate of $3,000,000 to an aggregate of $4,400,000, the repayment date of
the bridge loan facility was extended, and waivers for violations of certain
covenants and principal and interest payment due were granted until January 31,
2000.

         On December 10, 1999, the Company entered into a seventh amendment to
the Amended and Restated Credit Agreement (the "Seventh Amendment"). Pursuant to
the Seventh Amendment, availability under the bridge loan facility was increased
to an aggregate of $9,400,000, the repayment date of the bridge loan facility
was extended until March 31, 2000 and waivers for violations of certain
covenants and repayment obligations currently due were granted until December
31, 1999. Pursuant to the Seventh Amendment, the Company agreed to provide the
Banks with a weekly operating budget and to obtain approval from the Banks for
all significant cash expenditures.

         On December 29, 1999, the parties to the Amended and Restated Credit
Agreement executed a waiver letter (the "December Waiver"). The December Waiver
extended the waivers provided by the Seventh Amendment regarding violations of
certain covenants and repayment obligations currently due until February 29,
2000 while the Company explored the possibility of the sale of the business or a
substantial portion of its assets. The December Waiver granted the Company the
ability to use a portion of the proceeds from the sale of the physician practice
management businesses to meet its "reasonable and necessary" operating expenses
until the sale of the Company was consummated.

         On February 29, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter (the "February Waiver"). The February Waiver
related to the Company's announcement that it had entered into a definitive
merger agreement with OptiCare Health Systems, Inc. ("OptiCare") and extended
the waivers provided by the Seventh Amendment until the earlier of March 24,
2000 or the termination of the merger agreement with OptiCare pursuant to its
terms (see Note 16).

         On March 24, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter (the "March Waiver"). The March Waiver
extended (i) the waivers provided by the Seventh Amendment and the December
Waiver and February Waiver and (ii) the bridge facility due date, until the
earlier of April 14, 2000 or the termination of the merger agreement with
OptiCare pursuant to its terms.

         On April 14, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter (the "April Waiver"). The April Waiver
extended (i) the waiver provided by the Seventh Amendment and the December,
February and March Waivers and (ii) the bridge facility due date until the
earlier of May 5, 2000 or the termination of the merger agreement with OptiCare
pursuant to its terms.

         On May 5, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter (the "May Waiver"). The May Waiver extended
(i) the waiver provided by the Seventh Amendment and the December, February,
March and April Waivers and (ii) the bridge facility due date until the earlier
of May 19, 2000 or the termination of the merger agreement with OptiCare
pursuant to its terms.

         On May 19, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter (the "May 19th Waiver"). The May 19th Waiver
extended (i) the waiver provided by the Seventh Amendment and the December,
February, March, April and May Waivers and (ii) the bridge facility due date
until the earlier of June 2, 2000 or the termination of the merger agreement
with OptiCare pursuant to its terms.


                                       33
<PAGE>   36

         On June 2, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter which extended (i) the waiver provided by the
Seventh Amendment and the previously granted waivers and (ii) the bridge
facility due date, and postponed the due date for certain principal, interest
and commitment fees otherwise due until the earlier of June 9, 2000 or the
termination of the merger agreement with OptiCare pursuant to its terms.

         On June 9, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter which extended (i) the waiver provided by the
Seventh Amendment and the previously granted waivers and (ii) the bridge
facility due date, and postponed the due date for certain principal, interest
and commitment fees otherwise due until the earlier of June 16, 2000 or the
termination of the merger agreement with OptiCare pursuant to its terms.

         On June 16, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter which extended (i) the waiver provided by the
Seventh Amendment and the previously granted waivers and (ii) the bridge
facility due date, and postponed the due date for certain principal, interest
and commitment fees otherwise due until the earlier of June 29, 2000 or the
termination of the merger agreement with OptiCare pursuant to its terms.

         On June 29, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter which extended (i) the waiver provided by the
Seventh Amendment and the previously granted waivers and (ii) the bridge
facility due date, and postponed the due date for certain principal, interest
and commitment fees otherwise due until July 21, 2000.

         On July 21, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter which extended (i) the waiver provided by the
Seventh Amendment and the previously granted waivers and (ii) the bridge
facility due date, and postponed the due date for certain principal, interest
and commitment fees otherwise due until August 11, 2000.

         On August 11, 2000, the parties to the Amended and Restated Credit
Agreement executed a waiver letter which extended (i) the waiver provided by the
Seventh Amendment and the previously granted waiver and (ii) the bridge facility
due date, and postponed the due date for certain principal, interest and
commitment fees otherwise due until September 8, 2000.

         On September 8, 2000 and September 29, 2000, the parties to the Amended
and Restated Credit Agreement executed waiver letters (the "September Waivers").
The September Waivers extended (i) the waivers provided by the Seventh Amendment
and the December, February, March, April, May, June and July Waivers and (ii)
extended the bridge facility due date until September 29, 2000 and October 13,
2000, respectively.

         On October 13, 2000 and October 27, 2000, the parties to the Amended
and Restated Credit Agreement executed waiver letters ( the "October Waivers").
The October Waivers extended (i) the waivers provided by the Seventh Amendment
and the December, February, March, April, May, June, July and August Waivers and
(ii) extended the bridge facility due date until October 27, 2000 and November
10, 2000, respectively.

         On November 10, 2000 the Company further amended and restated the
Amended and Restated Credit Agreement (the "Current Credit Agreement") dated
July 1, 1998, as previously amended. The $64,185,000 credit facility under the
current Credit agreement provides for a $3. million revolving loan, $45.8
million term loan and $6.385 million convertible note with maturity dates of
October 31, 2003 and a $9.0 million bridge loan which matures October 31, 2002.
Quarterly principal repayments under the term loan of $0.5 million begin on
March 31, 2001. The bridge loan was reduced to $5.277 million in the first
quarter of 2001 and is required to be further reduced by $1.0 million by June
30, 2001, and $0.5 million by each of September 30, 2001 and December 31,
2001, with a balloon payment due at maturity. Mandatory principal payments are
required from 100% of the proceeds of any asset sale. In addition, mandatory
prepayments are required from 75% of Annual Excess Funds. Annual Excess Funds
are defined as EBITDA, as determined by expenditures, capital lease payments,
required term loan principal payments, and permanent revolver paydowns. For 2001
only, EBITDA shall exclude income arising as a result of excess prior period
restructuring/transition accruals. Mandatory loan prepayments will be applied
first to the permanent reduction of the Bridge Loan Commitment and second to the
Term Facility. Any Term Facility prepayments will be applied to the reduction of
the remaining scheduled amortization payments in inverse order of maturity.
Other terms and conditions were substantially the same as the Amended and
Restated Credit Agreement. At December 31, 2000, the full amount available under
the Current Credit Agreement was outstanding.


                                       34
<PAGE>   37
         On March 31, 2001, the Company entered into a first Amendment to the
Current Credit Agreement (the "First Amendment"). The First Amendment (i)
reduced the amount due under the bridge facility on March 31, 2001, (ii) revised
certain covenants and financial ratios, (iii) extended the date by which the
Company is required to obtain the approval of its shareholders, (the
"Shareholders Approval") of an increase in the authorized shares of the
Company's capital stock from February 28, 2001 until May 31, 2001 and (iv)
waived the Company's non-compliance with certain financial reporting obligations
through May 31, 2001, and the requirement to obtain Shareholder Approval through
May 31, 2001. On March 31, 2001, the Company also entered into a First Amendment
to the Convertible Note Agreement, Warrant Agreement, and Warrants providing for
the extension of the date by which the Company is required to obtain the
Shareholder approval.

         Long-term debt outstanding under the current Credit Agreement has been
classified as short term in the Consolidated balance sheet at December 31, 2000,
since the waiver received by the Company does not extend to at least January 1,
2002.

         As of December 31, 2000, the aggregate principal maturities of
long-term debt, after giving effect to the aforementioned covenant violations,
are as follows:

<TABLE>
                <S>                                               <C>
                2001...........................................   $  64,737,500
                                                                  =============
</TABLE>

         In connection with the 1998 amendments to the Company's Credit
Agreement, the Company incurred extraordinary charges of $1,885,512 for the year
ended December 31, 1998. These extraordinary charges represented the write-off
of unamortized deferred loan costs in connection with the early extinguishment
of debt.

         Amortization of loan fees for the year ended December 31, 1999 includes
approximately $2,100,000 of capitalized loan costs that were expensed because
such costs provide no future economic benefit to the Company.

         On February 10, 2000 the Company entered into an Agreement and Plan of
Merger and Reorganization ("Merger Agreement") with OptiCare Health Systems,
Inc. and OC Acquisition Corp. The merger was to combine the companies'
refractive surgery, ambulatory surgery and managed care businesses. Under the
terms of the Merger Agreement, the Company's Common Stock was to be converted
into OptiCare Common Stock. This merger transaction was not completed. As a
result of the terminated merger agreement approximately $1,400,000 of
professional fees were expensed and shown as an extraordinary item for the year
ended December 31, 2000.


                                       35
<PAGE>   38

7.       CAPITAL LEASE OBLIGATIONS

         The Company leases equipment under non-cancelable capital leases (with
an initial or remaining term in excess of one year). Future minimum lease
commitments are as follows:

          The Company leases equipment under non-cancelable capital leases (with
an initial or remaining term in excess of one year). Future minimum lease
commitments are as follows:

<TABLE>
<CAPTION>
                Year ending December 31:
                       <S>                                                    <C>
                       2001................................................       62,152
                       2002................................................       64,273
                       2003................................................       54,970
                       2004................................................           --
                                                                              ----------
                    Total minimum lease payments...........................   $  181,395
                    Less amount representing interest......................       19,932
                                                                              ----------
         Present value of minimum lease payments (including
                                                                              ----------
            current portion of $57,131)....................................   $  161,463
                                                                              ==========
</TABLE>

8.       COMMITMENTS AND CONTINGENCIES

COMMITMENTS

         The Company leases its facilities and certain office equipment under
non-cancelable operating lease arrangements that expire at various dates, most
with options for renewal. As of December 31, 2000, future minimum lease payments
under non-cancelable operating leases with original terms of more than one year
are as follows:

<TABLE>
         <S>                                                                     <C>
         2001 .................................................................. $ 3,022,762
         2002 ..................................................................   1,664,739
         2003 ..................................................................     936,075
         2004 ..................................................................     606,648
         2005 ..................................................................     548,374
         Thereafter ............................................................     160,981

                                                                                 -----------
            Total minimum lease payments........................................ $ 6,939,579
                                                                                 ===========
</TABLE>

         Included in total minimum lease payments is approximately $1,980,000 of
equipment lease obligations which are expected to be substantially offset by
subleases in connection with the Company's exit from the PPM business.

         Rent expense in 1998, 1999, and 2000 was approximately $720,000,
$1,278,000 and 1,366,000 respectively.

ASSIGNED FACILITY LEASES

         There are approximately forty facility leases which were assigned to
ECCA in connection with its purchase of the Retail Optical Chains where the
Company was not released from its liability under such leases (see Note 3). As
assignee, ECCA is responsible for the payment of rents to the various landlords,
and management is not aware of the existence of any payment or other defaults
under such leases which might give rise to a claim against the Company. At
December 31, 2000, ECCA was current with all assigned facility leases. The
Company also assigned the facility leases to the practices in connection with
the divestiture of the PPM business, but was not released from its liability
under all of such leases.


                                       36
<PAGE>   39

LITIGATION

         The Company, one of its former executive officers, who was also a
director, and two former officers are named as defendants in several purported
class action lawsuits filed in the United States District Court for the middle
District of Florida, Tampa Division. The complaints allege, principally, that
the Company and other defendants issued materially false and misleading
statements related to the Company's integration of its acquisitions, in
violation of Sections 10(b) and 20(a) if the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder. The plaintiffs seek to certify their
complaints as class actions on behalf of all purchasers of the Company's Common
Stock in the period between December 5, 1997 and November 5, 1998, and seek an
award of an unspecified amount of monetary damages to all of the members of the
purported class. The purported class action lawsuits were as follows: (i) Tad
McBride against Vision Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch,
and Michael P. Block (filed on January 22, 1999); (ii) Robert Rosen v, Vision
Twenty-One, Inc., Theodore N. Gillette and Richard T. Welch (filed on January
27, 1999); (iii) Charles Murray against Vision Twenty-One, Inc., Theodore N.
Gillette, Richard T, Welch and Michael P. Block (filed on January 29,1999); and
(iv) Sam Cipriano, on behalf of himself and all others similarly situated v.
Vision Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch and Michael P.
Block (filed on February 22, 1999).

         On April 20, 1999, pursuant to a motion and order, these complaints
were consolidated into one case captioned: Tad McBride, Plaintiff, v. Vision
Twenty-One, Inc., Theodore N. Gillette, Richard T. Welch and Michael P. Block
(Case No. 99I38-CIV-T-25F), and one plaintiff's group was appointed lead
plaintiff by judicial order on May 6, 1999. This uncertified consolidated class
action seeks to hold the Company and one of its former officers who was also a
director as well as two former officers liable for alleged federal securities
law violations based upon alleged misstatements and omissions in analyst
reports, trade journal articles, press releases and filings with the Securities
and Exchange Commission.

         Pursuant to judicial orders, the lead plaintiffs filed an amended
consolidated complaint on August 14, 1999. On October 11, 1999, the lead
plaintiffs and Michael P. Block executed a stipulation dismissing without
prejudice the action against Mr. Block. The Defendants filed a motion to dismiss
the amended consolidated complaint on October 15, 1999. The lead plaintiffs
served answering papers on December 3, 1999. The Defendant's motion to dismiss
was granted in part on August 18, 2000. A Motion for Class Certification was
filed on January 26, 2001. The parties are now engaged in class certification
discovery to enable the Defendants to respond to the Plaintiffs' Motion for
Class Certification. The Company believes that it has substantial defenses to
this matter and intends to assert them vigorously.

         On or about November 1, 1999, The Source Buying Group, Inc. commenced
an action in the United States District Court for the eastern District of
Pennsylvania against Block Vision. The action was transferred to the U.S.
District Court for the Southern District of Florida and there after stayed
pending arbitration. The action alleges a breach by Block Vision of a promissory
note and is seeking approximately $562,500 representing the accelerated
principal balance of the note which the plaintiff alleges is due, together with
interest and costs. In the alternative, the plaintiff is seeking approximately
$20,800 of interest allegedly due. Block Vision has asserted defenses to the
claim and has filed counterclaims. The Company believes that it has substantial
defenses to this matter and intends to assert them vigorously.

         Management of the Company is unable to determine the impact, if any,
that the resolution of the aforementioned lawsuits will have on the financial
position or results of operations of the Company. However, there can be no
assurances that the resolution of the aforementioned lawsuits will not have a
material adverse effect on the Company and further contribute to its negative
financial operations (see Note 17).

         Caremark Litigation. On or about November 15, 1999, Caremark RX, Inc.
commenced an action in the United States District Court Middle District, against
the Company. The action alleged a breach by the Company of a promissory note and
a leased property agreement and sought approximately $950,000 in damages. The
Company had asserted defenses to the claim and filed a counter-claim for damages
against Caremark Rx, Inc. for breach of contract and unfair trade practices. On
September 21, 2000 the parties entered into a settlement agreement, including
mutual releases, resolving all pending claims in which the Company paid
Caremark-RX, Inc., the sum of $120,000. The lawsuit was thereafter dismissed
with prejudice. As a result of the reduced settlement paid to Caremark RX, Inc.,
the Company recognized an extraordinary gain on forgiveness of indebtedness in
the amount of $645,104 during the year ended December 31, 2000.

         Other Litigation. The Company is party to several lawsuits alleging
medical malpractice by physicians which were previously associated with the
Company through certain of its discontinued operations. The Company has
determined that its malpractice insurance carrier will defend the Company under
these lawsuits; however, the Company is unable to determine whether its exposure
if any would exceed its malpractice insurance coverage.



                                       37
<PAGE>   40

OTHER
         Laws and regulations governing the Medicare, Medicaid and other
programs are complex and subject to interpretation. In the opinion of
management, the Company is in compliance with all applicable laws and
regulations. The Company is not aware of any pending or threatened
investigations involving allegations of potential wrongdoing at the Company.
While no such regulatory inquiries have been made, compliance with such laws and
regulations can be subject to future government review and interpretation as
well as significant regulatory action including fines, penalties and exclusion
from the Medicare, Medicaid and other programs.


                                       38
<PAGE>   41

9.       INCOME TAXES

         The Company did not have a current or deferred tax provision or benefit
for the years ended December 31, 1998, 1999 or 2000.

         At December 31, 1999 and 2000, the Company had temporary differences
between amounts of assets and liabilities for financial reporting purposes and
such amounts measured by income tax reporting purposes. The Company also has net
operating loss (NOL) carryforwards available to offset future taxable income.
Significant components of the Company's deferred tax assets and liabilities are
as follows:

<TABLE>
<CAPTION>
                                                                                       Deferred Tax
                                                                                     Asset (Liability)
                                                                           ----------------------------------
                                                                                       December 31,
                                                                                       ------------
Temporary Differences/Carryforwards                                             1999                  2000
                                                                           ------------          ------------
<S>                                                                        <C>                   <C>
Net operating losses .............................................         $  9,901,000          $ 32,487,000
Restructuring charge .............................................              250,000               122,000
Accrued expenses .................................................            2,344,000               465,000
Difference in book:  tax depreciation ............................            2,268,000                    --
Merger costs .....................................................            1,636,000               202,000
Difference in book:  tax amortization ............................           10,256,000                    --
Deferred loan costs ..............................................              782,000                    --
Other ............................................................              360,000               453,000
Valuation allowance ..............................................          (27,144,000)          (32,826,000)
                                                                           ------------          ------------
          Total deferred tax assets ..............................              653,000               903,000
                                                                           ------------          ------------
Identifiable intangible assets not deductible for tax purposes ...              136,000               130,000
Difference in book:  tax depreciation ............................                   --               283,000
Accrual to cash conversions ......................................              126,000                 4,000
Difference in book:  tax amortization ............................                   --               449,000
Deferred sales proceeds ..........................................              319,000                37,000
Other deferred tax liabilities ...................................               72,000                    --
                                                                           ------------          ------------
          Total deferred tax liabilities .........................              653,000               903,000
                                                                           ------------          ------------
Net deferred taxes ...............................................         $         --          $         --
                                                                           ============          ============
</TABLE>

         Management believes, considering all available information, including
the Company's history of earnings from continuing operations (after adjustments
for nonrecurring items, restructuring charges, permanent differences and other
appropriate adjustments) and after considering appropriate tax planning
strategies, that a valuation allowance of $32,826,000 is necessary to offset the
deferred tax assets at December 31, 2000. The increase in the valuation
allowance for 2000 is $5,682,000.


                                       39
<PAGE>   42

         Income taxes on continuing operations are different from the amount
computed by applying the United States statutory rate to loss before income
taxes for the following reasons:

<TABLE>
<CAPTION>

                                                                              Year Ended December 31,
                                                                ----------------------------------------------------
                                                                    1998                1999                 2000
                                                                -----------          -----------          -----------
<S>                                                             <C>                  <C>                  <C>
Income tax expense (benefit) at the statutory rate ....         $(5,847,000)         $(7,246,000)         $(5,905,000)
Permanent differences .................................             260,000            1,399,000              672,000
Effect of purchase price allocation ...................                  --                   --                   --
S corporation (income) loss ...........................                  --                   --                   --
State taxes, net of federal benefit ...................            (596,000)            (624,000)            (559,000)
Other .................................................             (97,000)                  --               (4,000)
Change in valuation allowance .........................           6,280,000            6,471,000            5,796,000
                                                                -----------          -----------          -----------
Income taxes ..........................................                  --                   --                   --
                                                                ===========          ===========          ===========
</TABLE>

         The Company has net operating loss carryforwards of approximately
$86,300,000 at December 31, 2000 that expire in various amounts from 2009 to
2020.

10.      STOCKHOLDERS' EQUITY (DEFICIT)

PRIVATE PLACEMENT

         On June 11, 1999 the Company entered into Subscription Agreements with
an entity controlled by one of the Company's former directors and with the
Company's former Chief Medical Officer, who is also a former director, for the
purchase of the Company's Common Stock. The aggregate proceeds received by the
Company of approximately $1,100,000 was used for working capital purposes.

STOCK OPTION PLANS

         In July 1996, the Board of Directors adopted, and the stockholders of
the Company approved, two stock option plans: the Stock Incentive Plan (the
"Incentive Plan") and the Affiliated Professionals Stock Plan (the
"Professionals Plan" and together with the Incentive Plan, the "Plans"). The
purpose of the Plans was to provide directors, officers, key employees, advisors
and professionals employed by the Managed Professional Associations with
additional incentives increasing their proprietary interest in the Company or
tying a portion of their compensation to increases in the price of the Company's
Common Stock. The aggregate number of shares of Common Stock reserved for
issuance related to the Incentive Plan and the Professionals Plan was 3,000,000.
Compensation expense under SFAS No. 123 for the options issued to non-employees
was approximately $202,000, $444,000 and $70,000 for the years ended December
31, 1998, 1999, and 2000, respectively. The options vest over three to four-year
periods.

         Pro forma information regarding net income is required by SFAS 123 and
has been determined as if the Company had accounted for its employee stock
options under the fair value method of that Statement. The fair value for these
options was estimated at the date of grant using the Black-Scholes option
pricing model with the following weighted-average assumptions for 1999,
risk-free interest rate 5.70%; a dividend yield of zero; volatility factors of
the expected market price of the Company's Common Stock based on industry trends
of .640; and a weighted-average expected life of the options of 3 to 4 years. In
addition, for pro forma purposes, the estimated fair value of the options is
amortized to expense over the options' vesting period. Based on these
assumptions, the pro forma net loss and basic and diluted net loss per common
share for the year ended December 31, 1999, would be approximately ($80,897,000)
and ($5.26). The proforma net loss and basic and diluted net loss per common
share for the year ended December 31, 2000 was not materially different than
actual net loss and basic and diluted net loss per common share.


                                       40
<PAGE>   43

         A summary of the Company's stock option activity and related
information is as follows:

<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                              -------------------------------------------------------------------------------------

                                                        1998                          1999                         2000
                                              --------------------------    ----------------------------  --------------------------
                                                               Weighted                        Weighted                    Weighted
                                                                Average                        Average                     Average
                                                                Exercise                       Exercise                    Exercise
                                                Options         Price        Options            Price      Options          Price
                                             ----------        ---------    ----------        ---------   ----------       ---------
<S>                                          <C>               <C>          <C>               <C>         <C>              <C>
Outstanding--beginning of the year ...          940,799        $    6.90     1,153,835        $   7.12     2,290,164        $   5.27
  Granted ............................          313,865             8.46     1,476,472            3.91       250,000            1.13
  Exercised ..........................          (39,052)            3.44       (70,703)           4.10            --
  Forfeited ..........................          (61,777)           10.85      (269,440)           6.52    (1,437,917)           5.51
                                             ----------        ---------    ----------        --------    ----------        --------
Outstanding--end of year .............        1,153,835        $    7.12     2,290,164        $   5.27     1,102,247        $   3.95
                                             ==========        =========     ==========       ========    ==========        ========
Exercisable at end of year ...........          399,723        $    6.16     1,012,035        $   5.96       742,659        $   3.86
                                             ==========        =========    ==========        ========    ==========        ========
Weighted-average fair value of options
  Granted during the year ............                         $    5.30                      $   1.71                      $   0.49
                                                               =========                      ========                      ========
</TABLE>

         Significant option groups outstanding at December 31, 2000 and related
price and life information are as follows:

<TABLE>
<CAPTION>
                                                                           Weighted
                                                                            Average
                                                 Weighted Average          Remaining                     Weighted Average
Range of Exercise Prices          Outstanding     Exercise Price        Contractual Life  Exercisable     Exercise Price
------------------------          -----------     --------------        ----------------  -----------    ----------------

<S>                               <C>             <C>                   <C>               <C>            <C>
$1.13-$4.16 .................       822,915       $        2.83               8.5          571,660       $        2.50
$4.38-$5.00 .................       144,500                4.86              8.85           46,167                4.88
$7.11-$9.25 .................        64,333                8.94              7.06           91,833                9.03
$9.50-$13.20 ................        70,499               10.59              7.46           32,999                11.5
                                  ---------       -------------                            -------       -------------
                                  1,102,247       $        3.95                            742,659       $        3.86
                                  =========       =============                            =======       =============
</TABLE>

STOCK COMPENSATION

         In May 1996, the Company granted 144,705 shares of Common Stock to a
consultant as compensation for prior service (the "Grant"). In October 1996, the
Company entered into advisory and services agreements (the "Agreements") with
the consultant and the Company's Chief Medical Officer whereby they would be
entitled to 233,760 shares of Common Stock as compensation over the term of the
Agreements. The Company recorded the issuance of the Common Stock at its fair
value on the dates of the Agreements and Grant. The expense was recognized in
1996 for the Grant and over the related terms for the Agreements. For the years
ended December 31, 1998, 1999 and 2000, the Company amortized approximately
$108,000, $108,000 and $192,000, respectively.

WARRANTS

         From time to time, the Company has issued detachable stock purchase
warrants ("warrants"). Each warrant enables the holder to purchase one share of
the Company's Common Stock. The warrants generally are issued in connection with
debt financings or as advisory fees. Certain of the warrants are sold and others
are issued for no consideration. Warrants issued for no consideration are
recorded at their fair value at the time of issuance. Fair value is determined
by the Company in consultation with its investment bankers based on certain
facts and circumstances at the time of issuance.


                                       41
<PAGE>   44

A summary of warrants outstanding at December 31, 2000 is as follows:

<TABLE>
<CAPTION>
                                                                                                        Exercise
Number of                                                                                                 Price
Warrants              Grant Date                            Expiration Date                             Per Share
--------              ----------                            ---------------                             ---------
<S>                   <C>                                   <C>                                       <C>
  200,000             December 1996                         December 2003                                 $6.00*
  333,333             February 1997                         December 2003                                 $6.00*
  210,000             August 1997                           August 2002                                  $10.00*
   35,000             October 1997                          October 2002                              $13.25-$13.63*
   50,000             November 1997                         November 2002                                $11.50*
  100,722             November-December 1997                November-December 2002                    $8.25-$12.38*
   45,753             January 1998                          January 2003                                 $8.75-$9.19*
8,208,000             November 2000                         October 2010                                   $.18
</TABLE>

* An adjustment to the exercised price will likely be required as a result of
  the company's issuance of the Convertible Note and Warrant to the lenders in
  connection with the closing of the Amended and Restated Credit Agreement on
  November 10 2000. Such adjustments will be completed once the Shareholders
  have approved an increase in the authorized number of shares of the Company's
  Common Stock.

EMPLOYEE STOCK PURCHASE PLAN

         In 1998, the Company adopted the Vision Twenty-One, Inc. Employee Stock
Purchase Plan ("ESPP"), under which 200,000 shares of the Company's Common Stock
are available for purchase by employees. The ESPP was approved by the Company's
shareholders at the 1999 Annual Shareholder Meeting. Eligible employees may
elect to withhold up to 10 percent of their salary to purchase shares of the
Company's Common Stock at a price equal to the lesser of: (a) 85 percent of the
closing market price on the first day of each fiscal quarter; or (b) 85 percent
of the closing market price on the purchase date. As of December 31, 2000,
46,193 shares were issued under the ESPP.

STATUTORY REQUIREMENTS

         Dividends paid by Vision Insurance Plans of America, Inc. ("VIPA") a,
wholly owned subsidiary of the Company, is restricted by regulations of the
Officer of the Commissioner of Insurance ("OCI"). The payment of cash dividends
is limited to available shareholders' equity derived from realized net profits.
Based upon the regulatory formula, no amount was available for dividends in 2000
without regulatory approval.

         VIPA is subject to regulation by the OCI, which requires, among other
matters, the maintenance of a minimum shareholders' equity. At December 31,
2000, approximately $100,000 of available letters of credit were outstanding to
satisfy VIPA's minimum shareholders' equity requirements.



                                       42
<PAGE>   45

11.      LOSS PER SHARE

         The following table sets forth the computation of basic and diluted
loss per share for loss from continuing operations:

<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                              ----------------------------------------------------
                                                                   1998               1999                2000
                                                              ------------        ------------        ------------
<S>                                                           <C>                 <C>                 <C>
Numerator for basic and diluted loss per share -
  Loss available to common  stockholders ..............       $(17,439,671)       $(21,688,160)       $(17,366,497)
Denominator for basic and diluted loss per share -
  Weighted-average shares .............................         14,385,359          15,377,673          13,970,275
                                                              ------------        ------------        ------------
Basic and diluted loss per share ......................       $      (1.21)       $      (1.41)       $      (1.24)
                                                              ============        ============        ============
</TABLE>

         There were no dilutive securities included in the computations of loss
per share in any of the years ended December 31, 1998, 1999 and 2000 because the
Company incurred a loss from continuing operations in all such years. Options
and warrants to purchase approximately 10,285,000 shares of Common Stock were
outstanding at December 31, 2000, but were not included in the computation of
diluted loss per share because the effect would have been anti-dilutive.

12.      EMPLOYEE BENEFIT PLAN

         The Company sponsors the Vision-Twenty One Retirement Savings Plan, a
defined contribution plan established under Section 401(k) of the U.S. Internal
Revenue Code (the "Plan"). Employees are eligible to contribute voluntarily to
the Plan after one-year of continued service and attaining age 21. At its
discretion, the Company may contribute 25% of the first 6% of the employee's
contribution. Employees are always vested in their contributed balance and vest
ratably in the Company's contribution over five years. For the years ended
December 31, 1998 and 1999, the expenses related to the Plan were approximately
$53,000 and $109,000, respectively. During 2000 the Company elected to eliminate
its contribution to the Plan.

13.      RESTRUCTURING PLAN

         During the fourth quarter of 1998, management of the Company committed
to and commenced the implementation of a restructuring plan (the "Restructuring
Plan") that was designed to facilitate the transformation of the Company into an
integrated eye care company. The Restructuring Plan initiatives, which were
composed of a number of specific projects, were expected to position the Company
to take full operational and economic advantage of recent acquisitions. The
Restructuring Plan was to enable the Company to complete the consolidation and
deployment of necessary infrastructure for the future, optimize and integrate
certain assets and exit certain markets. The Restructuring Plan initiatives
resulted in the elimination of over 100 positions throughout the Company and
were completed during 1999. The planned initiatives to be undertaken as part of
the Restructuring Plan included the integration of managed care service centers
and business lines, the consolidation of retail optical back office functions
and the consolidation of certain corporate functions.

         The Restructuring Plan resulted in a restructuring charge of
approximately $2,796,000 for the year ended December 31, 1998. The restructuring
charge was composed of severance costs of approximately $1,914,000 and facility
and lease termination costs of approximately $882,000. The restructuring charge
of $2,796,000 for 1998 is included in restructuring and other charges (credits)
in the consolidated statements of operations.

         For the year ended December 31, 1998, other charges included in
restructuring and other charges (credits) in the consolidated statements of
operations totaling approximately $3,667,000, included the write-off of certain
amounts due from shareholders of managed physician practices related to markets
which had been exited under the Restructuring Plan (approximately $1,911,000),
an impairment charge related to one business management agreement (approximately
$662,000), professional fees associated with the development of the
Restructuring Plan (approximately $521,000) and other charges to write-off or
write-down assets that would not be realized as a result of the Restructuring
Plan (approximately $573,000).


                                       43
<PAGE>   46

         The accrued restructuring charge of $2,796,000 at December 31, 1998 was
reduced during 1999 as follows: severance costs of approximately $720,000 were
paid and charged to the accrual; severance costs of approximately $531,000 were
reversed out of the accrual as a result of employee resignations and a change in
estimate; and lease termination costs of $882,000 were reversed out of the
accrual as a result of the sale of the Retail Optical Chains. The accrued
restructuring charge of approximately $663,000 at December 31, 1999 was reduced
during 2000 as follows: severance costs of approximately $103,000 were paid and
charged to the accrual and approximately $236,000 of severance costs were
reversed out of the accrual as a result of employee settlements.

         The aforementioned reversals of the accrued restructuring charge
resulted in a credit to restructuring and other charges (credits) of
approximately $1,413,000 and $236,000 in the Company's consolidated statement of
operations for the year ended December 31, 1999 and 2000, respectively.

         A summary of restructuring and other charges (credits) as described
above as follows:

<TABLE>
<CAPTION>
                                                                               1998              1999               2000
                                                                           -----------        -----------        ---------
<S>                                                                        <C>                <C>                <C>
Restructuring charge (credit) ......................................       $ 2,796,000        $(1,413,389)       $(235,539)
Write-off of certain receivables pertaining to markets to be
   exited under the Restructuring Plan .............................         1,910,402                 --               --
Write-off of identified intangibles for practice affiliations
   to be abandoned .................................................           662,391                 --               --
Professional fees incurred prior to December 31, 1998 in
   connection with the development of the Restructuring Plan .......           521,000                 --               --
Other charges or write-offs associated with the
Restructuring Plan .................................................           572,802                 --               --
                                                                           -----------        -----------        ---------
                                                                           $ 6,462,595        $(1,413,389)       $(235,539)
                                                                           ===========        ===========        =========
</TABLE>

         Prior to implementing the initiatives developed in the Restructuring
Plan, the Company expensed other business integration costs of approximately
$2,501,000 that were incurred during the fourth quarter of 1998. Such amount was
included in general and administrative expenses in the consolidated statements
of operations. These business integration costs represented incremental or
redundant costs, as well as internal costs, that resulted directly from the
development and initial implementation of the Restructuring Plan, but were
required to be expensed as incurred. These business integration costs consisted
primarily of redundant employee costs and expenses for severed employees through
the date of severance, training costs, re-branding costs, relocation costs,
retention payments and lease costs for facilities that had been planned for
future closure.

14.      SEGMENT REPORTING

         The Company identifies reportable segments based on management
responsibility for the strategic business units that offer different products
and services. The segments are managed separately based on the fundamental
differences in their operations. The Company's operations have been classified
into two segments: managed care and buying group. The managed care segment
includes the operations consisting primarily of Block Vision, MEC, ESAN and
VIPA. The buying group segment includes the operations of the buying group
division which was sold effective April 30, 1999. The corporate category
includes general and administrative expenses associated with the operations of
the Company's corporate and regional offices and expenses not allocated to
reportable segments, including the Company's restructuring and other charges
(credits).


                                       44
<PAGE>   47
         The accounting policies of the reportable segments are the same as
those described in Note 2. The Company evaluates the performance of its
operating segments based on income before income taxes, depreciation and
amortization, accounting changes, unusual items and interest expense. Summarized
financial information concerning the Company's reportable segments for 1998,
1999 and 2000 is as follows:


<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                                  -----------------------
                                                        1998                  1999                    2000
                                                  -------------           ------------           ------------
<S>                                               <C>                     <C>                    <C>
Revenues:

  Managed care .........................          $  54,980,006           $ 56,743,696           $ 52,829,551
  Buying group .........................             58,959,195             19,150,982                     --
                                                  -------------           ------------           ------------
         Total segments ................            113,939,201             75,894,678             52,829,551
  Corporate ............................                     --                     --                     --
                                                  -------------           ------------           ------------
         Total revenues ................          $ 113,939,201           $ 75,894,678           $ 52,829,551
                                                  =============           ============           ============
Segment profit:

  Managed care (a) .....................          $   2,442,143           $  4,783,626           $  4,234,349
  Buying group (b) .....................              3,033,022                890,163                     --
                                                  -------------           ------------           ------------
Total segments .........................              5,475,165              5,673,789              4,234,349
  Corporate ............................             (8,054,972)           (18,135,656)           (11,068,387)
                                                  -------------           ------------           ------------
         Total (loss) ..................          $  (2,579,807)          $(12,461,867)          $ (6,834,038)
                                                  =============           ============           ============
</TABLE>

(a)      Managed care segment profit includes general and administrative
         expenses related to the buying group division which the Company is
         unable to separately identify from the general and administrative
         expenses of Block Vision.

(b)      Buying group profit represents the gross profit from the sale of
         optical products.


<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                                            -----------------------
                                                                 1998                  1999                    2000
                                                           -------------           ------------           ------------
<S>                                                        <C>                     <C>                    <C>
Revenues:

Depreciation and amortization:

  Managed care ...................................          $  338,063          $   396,372           $   468,229
  Buying group ...................................                  --               24,000                    --
                                                            ----------          -----------           -----------
         Total segments ..........................             338,063              420,372               468,229
  Corporate ......................................           2,009,778            2,344,450             2,087,286
                                                            ----------          -----------           -----------
         Total depreciation and amortization .....          $2,347,841          $ 2,764,822           $ 2,555,515
                                                            ==========          ===========           ===========
Interest expense, net:

  Managed care ...................................          $    4,445          $   (64,122)          $  (177,487)
  Buying group ...................................                  --                   --                    --
                                                            ----------          -----------           -----------
         Total segments ..........................               4,445              (64,122)             (177,487)
  Corporate ......................................           4,080,446            5,587,080             5,971,145
                                                            ----------          -----------           -----------
         Total interest expense ..................          $4,084,891          $ 5,522,958           $ 5,793,658
                                                            ==========          ===========           ===========
</TABLE>


                                       45
<PAGE>   48

<TABLE>
<CAPTION>


                                                                             Year Ended December 31,
                                                            -----------------------------------------------------------
                                                                 1998                   1999                   2000
                                                            -------------           ------------           ------------
<S>                                                         <C>                     <C>                    <C>
Restructuring and other charges (credits):

  Managed care ...................................          $          --           $         --           $         --
  Buying group ...................................                     --                     --                     --
                                                            -------------           ------------           ------------
         Total segments ..........................                     --                     --                     --
  Corporate ......................................              6,462,595             (1,413,389)              (235,539)
                                                            -------------           ------------           ------------
         Total restructuring and other charges ...          $   6,462,595           $ (1,413,389)          $   (235,539)
                                                            =============           ============           ============
Merger costs:

  Managed care ...................................          $          --           $         --           $         --
  Buying group ...................................                     --                     --                     --
                                                            -------------           ------------           ------------
         Total segments ..........................                     --                     --                     --
  Corporate ......................................                717,835                     --                     --
                                                            -------------           ------------           ------------
         Total merger costs ......................          $     717,835           $         --           $         --

Impairment:

  Managed Care ...................................                     --                     --           $    744,987
  Buying Group ...................................                     --                     --                     --
                                                            -------------           ------------           ------------
                Total segments ...................                     --                     --           $    744,987
  Corporate ......................................                     --                     --                     --
                                                            -------------           ------------           ------------
                Total merger costs ...............                                                         $    744,987
                                                            =============           ============           ============
Extraordinary item:

  Managed care ...................................                     --                     --                     --
  Buying group ...................................                     --                     --                     --
                                                            -------------           ------------           ------------
         Total segments ..........................                     --                     --                     --
  Corporate ......................................             (1,885,512)             3,770,823               (783,495)
                                                            -------------           ------------           ------------
         Total extraordinary item ................          $  (1,885,512)          $  3,770,823           $   (783,495)
                                                            =============           ============           ============


<CAPTION>

                                                                                              December 31,
                                                                                              ------------
                                                                                        1999                     2000
                                                                                    -----------             -----------
<S>                                                                                 <C>                     <C>
Total assets:

  Managed care ........................................                             $ 6,099,135             $ 6,315,209
  Buying group ........................................                                      --                      --
                                                                                    -----------             -----------
         Total segments ...............................                               6,099,135               6,315,209
                                                                                    -----------             -----------
  Corporate ...........................................                              48,484,495              47,081,213
                                                                                    -----------             -----------
         Total assets of continuing operations ........                             $54,583,630             $53,396,422
                                                                                    ===========             ===========
</TABLE>


                                       46
<PAGE>   49
15.  OTHER RELATED PARTY TRANSACTIONS

         In 1996, the Company entered into a five-year services consulting
agreement with BSM Consulting to assist the Company with its operational and
management development. Bruce Maller, the Company's Chairman of the Board is an
employee and sole owner of the consulting company. For the years ended December
31, 1998, 1999 and 2000, the Company paid to the consulting company
approximately, $720,000, $420,000 and $279,000 respectively. Included in
accounts payable at December 31, 1999 and 2000 was approximately $305,000 and
$276,000 respectively owed to the consulting company.

         Effective November 23, 1999, Vision Twenty-One terminated its prior
services agreement and entered into a new agreement. The new agreement
contracted with Mr. Maller through the consulting company to be Chairman of the
Board and to assume overall control of the operations of the Company. The fees
payable under the new agreement are up to $6,250 per week, plus expenses. The
use of any other services other than Mr. Maller's time would be billed at
customary rates less a 20% discount. Additionally, Mr. Maller was awarded an
additional 100,000 stock options valued at approximately $49,000 in February
2000 that vest pro rata over the four quarters of 2000 and become immediately
vested upon the consummation of a merger transaction.

         Vision Twenty-One and Nightingale & Associates, LLC ("Nightingale") are
parties to a consulting services agreement dated November 24, 1999 (the
"Nightingale Agreement") pursuant to which Nightingale provides certain
consulting services which have included, but not been limited to, the services
of Howard Hoffmann as Interim Chief Financial Officer reporting directly to the
Board of Directors. Mr. Hoffmann, a principal of Nightingale, is a director of
Vision Twenty-One. The Nightingale Agreement may be terminated by either party
at any time. Under the Nightingale Agreement, Nightingale is paid based upon
hourly rates for individuals performing services for the company and out of
pocket expenses. Mr. Hoffmann's hourly rate is $325.00. Vision Twenty-One is
also obligated to pay Nightingale a performance fee under certain circumstances,
including but not limited to the consummation of a merger transaction. Under the
Nightingale agreement, Nightingale received options to purchase 150,000 shares
of Vision Twenty-One Common Stock at an exercise price of $1.13 per share,
50,000 of which are fully vested and 100,000 of which vest pro rata over the
four quarters of 2000 and become immediately vested upon the consummation of a
merger transaction. Payments to Nightingale under the Nightingale agreement
through December 31, 2000 were approximately $1.0 million. This agreement was
terminated as of December 2000. A small retainer was maintained for continuing
projects assigned by management.

Effective August 25, 2000, as part of its exit from the physician practice
management business, the Company sold the assets related to certain optometric
practices to TNG Management, Inc. (TNG), an entity owned by the Company's former
chairman and chief executive officer. The consideration for the transaction was
$412,117 , payable by TNG pursuant to a two year promissory note bearing
interest at the rate of 8% per annum. TNG also assumed certain obligations of
the Company arising prior to the closing.

16.   SUBSEQUENT EVENTS

ASC/RSC SALE - The Company sold substantially all of its assets and liabilities
of five refractive and ambulatory surgery centers to American SurgiSite
Management Services Organization, Inc. and R.E.S.C., LLC ("ASC") for cash
consideration of $3,700,000. The transaction closed in the first quarter of 2001
with an effective date of December 31, 2000. The cash consideration was then
used to pay down the Bridge facility.

CREDIT COVENANT WAIVER - On March 31, 2001, the parties to the current Credit
Agreement executed a First Amendment to the current credit Agreement to waive
covenant violations (see Note 6).

BOCA RATON CLOSING - The Block Vision relocation to Baltimore, Maryland was
completed by February, 2001. The staff remaining in Boca Raton, Florida were
moved to a smaller location by April 1, 2001. The previous facility and unneeded
office furniture was leased or sold to the new tenant.

17.  ABILITY TO CONTINUE AS A GOING CONCERN

         The Company incurred operating losses in each of the years ended
December 31, 1998, 1999 and 2000. At December 31, 2000, the Company had negative
working capital and a deficit in stockholders' equity. Additionally, in 2000 and
the first quarter of 2001, the Company violated a number of covenants in its
Current Credit Agreement with its Banks and has been dependent upon the
cooperation, approvals and availability of waivers from the Banks.

         The Company has undertaken a number of initiatives to address these
matters. As more fully described in Note 6, the Company has received waivers on
the covenant violations under the Current Credit Agreement.

         Following up on the prior Restructuring Plan, (see note 13), the
discontinuance of the Company's operations related to its Retail Optical Chains
and PPM and ASC/RSC businesses and the Company's prior plans to seek a potential
buyer for all or part of the remaining businesses, management undertook a number
of initiatives to reduce its corporate general and administrative expenses in
2000. The success of these initiatives is expected to result in less general and
administrative expenses in 2001 as compared to prior years. However, there can
be no assurances that this strategy will be achieved.

         The Company will need to use a combination or a small portion of cash
and preferred stock to settle claims and antecedent debts in order for the
efforts to be successful and permit the Company to continue operations. The
Company does not believe that other sources of capital are available to fund its
operations in the event it is unsuccessful in dealing with its creditors. While
there can be no assurances, the Company is hopeful that it can return to
profitability and positive cash flow. However, in the event the Company's
efforts are not successful, the Company may need to seek protection under the
Federal Bankruptcy Code.



                                       47
<PAGE>   50
         All of these factors raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying consolidated financial
statements do not reflect any adjustments to reflect the possible future effects
on the recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this
uncertainty.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         DISCLOSURE

         Not applicable.


                                       48
<PAGE>   51
                                    PART III

ITEM  10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

VISION TWENTY-ONE DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth (i) the names, ages and positions of the
directors and executive officers of Vision Twenty-One. Each director will hold
office until the annual meeting of shareholders following the expiration of his
term, or until his successor has been elected or qualified. Vision Twenty-One
executive officers are appointed by and serve at the discretion and pleasure of
the Board of Directors, subject to the terms of any applicable employment
agreements.

<TABLE>
<CAPTION>
NAME                                      AGE                                  POSITION
------------------------------------    ---------   ---------------------------------------------------------------
<S>                                     <C>         <C>
Mark B. Gordon, O.D.                       53       Chief Executive Officer and Director
Andrew  Alcorn                             45       President and Director
Ellen J. Gordon                            54       Chief Operating Officer and Secretary
Richard W. Jones                           57       Chief Financial Officer and Treasurer
Howard H. Levin,  O.D.                     54       Vice President and Clinical Director
Howard S. Hoffmann                         45       Chairman of the Board of Directors (1) (2)
Bruce S. Maller                            47       Director (1) (2)
</TABLE>

(1)      Member of Compensation Committee
(2)      Member of Audit Committee

         MARK B. GORDON, O.D., CHIEF EXECUTIVE OFFICER AND DIRECTOR. Dr. Gordon
has served as Chief Executive Officer and Director of Vision Twenty-One since
September 2000. Dr. Gordon is a founder of MEC Health Care, Inc., a wholly-owned
subsidiary of Vision Twenty-One, and has served as President, Chief Executive
Officer and a director of such subsidiary since September, 1993. Dr Gordon is
also an officer and/or director of the company's other direct or indirect
wholly-owned subsidiaries. Dr. Gordon is related to Ms. Ellen Gordon by
marriage. Dr. Gordon is a practicing Optometrist and serves as President and
part owner of Barenburg Eye Associates since 1983. In 1998, Dr. Gordon began a
venture known as Emergency Fuel LLC of which he serves as the Chairman of the
Board.

         ANDREW ALCORN, PRESIDENT AND DIRECTOR. Mr. Alcorn has served as
President and a Director of Vision Twenty-One since September, 2000. Previously
Mr. Alcorn served as Senior Vice President of Vision Twenty-One since August
1999 and has provided oversight of the Company's managed care business unit
since November 1999. Mr. Alcorn has also served in various executive positions
at Block Vision, Inc., a wholly-owned subsidiary of Vision Twenty-One, since
1993 and currently serves as Block Vision's President and a director. Mr. Alcorn
also serves as an officer and/or director of several of the company's other
direct or indirect wholly-owned subsidiaries.

         ELLEN J. GORDON, CHIEF OPERATING OFFICER AND SECRETARY. Ms. Gordon has
served as Chief Operating Officer and Secretary of Vision Twenty-One since
September, 2000. Ms. Gordon has also served as Chief Operating Officer of MEC
Health Care, Inc. since September, 1989 and also serves as Secretary or
Assistant Secretary of several of the Company's other direct or indirect
wholly-owned subsidiaries. Ms. Gordon is related to Dr. Gordon by marriage.

         RICHARD W. JONES, CHIEF FINANCIAL OFFICER. Mr. Jones has served as
Chief Financial Officer and Treasurer of Vision Twenty-One since September,
2000. Mr. Jones has also served as Chief Executive Officer of Emergency Fuel,
LLC since September, 1998 and was Chief Operating and Chief Financial Officer of
LaserSight, Inc.'s Managed Care Operations from 1992 to 1998.



                                       49
<PAGE>   52
         HOWARD H. LEVIN, O.D., VICE PRESIDENT AND CLINICAL DIRECTOR. Dr. Levin
has served as Vice President and Clinical Director of Vision Twenty-One since
September, 2000. Dr Levin has served as Vice President and Clinical Director of
MEC since September, 1993. Dr Levin has also served as Vice President and part
owner of Barenburg Optometric Services, Inc. since 1983.

         HOWARD S. HOFFMANN, CHAIRMAN OF THE BOARD OF DIRECTORS. Mr. Hoffmann
has served as a Director of Vision Twenty-One since September, 2000, and as
Chairman of the Board of Directors since February, 2001. Mr. Hoffmann previously
served as Interim chief Financial Officer of the company from November, 1999 to
September, 2000. He is currently a principal of Nightingale & Associates, LLC, a
management consulting firm which specializes in turnaround situations. Mr.
Hoffmann has over twenty years of financial, operational and general management
experience in a wide range of industries including computer hardware and
software, consumer products, financial services, health care, distribution and
transportation. Mr. Hoffmann joined Nightingale & Associates in 1990 after
serving as Interim Chief financial Officer of two privately held businesses. He
began his career with Irving Trust Company as a commercial lending officer and
later served as Vice President Corporate Lending at Bank of America. Mr.
Hoffmann is presently serving as a director of Illinois Superconductor
Corporation, a publicly traded telecommunications equipment supplier.

         BRUCE S. MALLER, DIRECTOR. Mr. Maller has served as a Director of
Vision Twenty-One since November 1996 and as Chairman of the Board of Directors
from November 1999 to February 2001. Mr. Maller also served as Treasurer of
Vision Twenty-One from November, 1999 to September, 2000 and has been a vision
care consultant to Vision Twenty-One since 1995. He is the founder of, and has
been the President of, the BSM Consulting Group of Incline Village, Nevada since
1978. BSM provides consulting services in the field of ophthalmology to
individual physicians and corporate clients such as Allergan, Inc. and Vision
Twenty-One. Mr. Maller has served as a Director of Gimbel Vision International,
Inc., a public company since 1996. Mr. Maller is a frequent lecturer for various
medical societies, including the American Academy of Ophthalmology and the
American Society of Cataract and Refractive Surgery.

         Pursuant to the terms of Vision Twenty-One's Articles of Incorporation
and Bylaws, the Board of Directors has the power to set the number of directors.
The number of directors is presently set at eight members. The directors are
divided into three classes. Each director in a particular class is elected to
serve a three-year term or until his or her successor is duly elected and
qualified. The classes are staggered so that their terms expire in successive
years resulting in the election of only one class of directors each year. There
are four vacancies on the Board of Directors, one vacancy in Class I left by the
resignation of Richard Welch in September, 1999, one vacancy in class II left by
the resignation of Peter Fontaine in September, 2000 and two vacancies in Class
III by the resignations of Theodore Gillette and Richard Lindstrom in September,
2000.

         The following table sets forth the classes and directors in each class
of the Company's Board of Directors:


<TABLE>
<CAPTION>
                                       SERVED AS
CLASS                                  DIRECTOR SINCE                  TERM EXPIRES(1)
-----                                  --------------                  ---------------
<S>                                    <C>                             <C>
Class I
   Mark B. Gordon, O.D. (2)            September 2000                           2001
   Andrew Alcorn (3)                   September 2000                           2001

Class II (4)
   Howard S. Hoffmann(5)               September 2000                           2002

Class III
   Bruce S. Maller                     November 1996                            2003
</TABLE>

(1)      The terms expire at the annual meeting for the year indicated or upon
         the earlier of a director's death, resignation or removal from office.
         The expiration period set forth for Class III assumes the re-election
         of Mr. Maller at the annual meeting for 1999. The Company's annual
         meetings for the years ended December 31, 1999 and 2000 are expected to
         be held in the second quarter of 2001.
(2)      Appointed to Board in September, 2000 to fill the vacancy left by the
         resignation of Martin Stein in February, 2000.
(3)      Appointed to the Board in September, 2000 to fill the vacancy left by
         the resignation of Jeffrey Katz in August, 2000.


                                       50
<PAGE>   53
(4)      The individual appointed to the Board in September, 2000 to fill the
         vacancy left by the resignation of Peter Fontaine in September, 2000,
         resigned shortly after appointment. The Board is in the process of
         identifying a successor to fill such individual's position.
(5)      Appointed to the Board in September, 2000 to fill the vacancy left by
         the resignation of Richard Sanchez in July 1999.

COMMITTEES OF THE BOARD OF DIRECTORS

         The Board of Directors has established two committees, the Audit and
Compensation Committees. Vision Twenty-One's two outside directors, Howard
Hoffmann and Bruce Maller, serve on Vision Twenty-One's Audit and Compensation
committees. The Board of Directors does not have a Nominating committee. The
entire Board of Directors functions as a Nominating Committee, and the Board
will consider written recommendations from shareholders for nominations to the
Board of Directors in accordance with the procedures set forth in the By-Laws of
Vision Twenty-One. There are no arrangements or understandings between any
director or nominee and any other person concerning service or nomination as a
director, except as set forth in Dr. Gordon's and Mr. Alcorn's employment
agreements. (See the description under "Employment Agreements" below). The Board
of Directors held 8 formal meetings during 2000.

         The Audit Committee currently consists of Bruce Maller and Howard
Hoffmann. Messrs. Maller and Hoffmann currently do not meet the requirements to
serve as independent directors due to payments in excess of $60,000 made by the
Company in 2000 to, in the case of Mr. Maller, BSM Consulting Group and to, in
the case of Mr. Hoffmann, Nightingale & Associates, LLC. See "Certain
Relationships and Related Transactions". The Audit Committee recommends the
appointment of the independent public accountants of Vision Twenty-One,
discusses and reviews the scope and fees of the prospective annual audit and
reviews the results thereof with the independent public accountants, reviews
previous quarterly financial statements with the independent auditors, reviews
and approves non-audit services of the independent public accountants, reviews
compliance with existing major accounting and financial policies of Vision
Twenty-One, reviews the adequacy of the financial organization of Vision
Twenty-One, reviews management's procedures and policies relative to the
adequacy of Vision Twenty-One's internal accounting controls and compliance with
federal and state laws relating to accounting practices, and reviews and
approves (with the concurrence of the majority of the disinterested directors of
Vision Twenty-One) transactions, if any, with affiliated parties. The Audit
Committee held no formal meetings in 2000. The Company's Board of Directors has
not adopted an audit committee charter in accordance with new regulatory
requirements.


                                       51
<PAGE>   54
         The Compensation Committee currently consists of Vision Twenty-One's
outside directors, Messrs. Maller and Hoffmann. The Compensation Committee's
principal function is to make recommendations to the Board of Directors with
respect to the compensation and benefits to be paid to key executive officers,
and perform other duties prescribed by the Board with respect to employee stock
plans and benefit programs. The Compensation Committee held no formal meetings
in 2000.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

         The Company's Articles of Incorporation (the "Articles") provide that a
Director will not be personally liable to the Company or its shareholders for
monetary damages for breach of fiduciary duty as a director, except: (i) for any
breach of duty of loyalty; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of laws; (iii) for
liability under the Florida Business Corporation Act (relating to certain
unlawful dividends, stock repurchases or stock redemptions); or (iv) for any
transaction from which the director derived any improper personal benefit. The
Company's Bylaws provide that the Company will indemnify each director and such
of the Company's officers, employees and agents as the Board of Directors shall
determine from time to time to the fullest extent provided by the Florida
Business Corporation Act.

         The Company has entered into indemnification agreements (the
"Indemnification Agreements") with all of its directors and certain of its
officers. Similar Indemnification Agreements may from time to time be entered
into with additional officers of the Company or certain other employees or
agents of the Company. The Company is empowered under its Articles to purchase
and maintain insurance or furnish similar protection on behalf of any person who
is required or permitted to indemnify and the Company has acquired such
insurance in connection with such individuals that the Company believes is
warranted.

DIRECTOR'S COMPENSATION

         Directors are reimbursed for expenses in connection with attendance at
Board and Committee meetings. Directors who are not officers of the Company or
affiliates of major shareholders are paid $1,000 per meeting plus expenses.
During 2000, the Company did not provide any cash compensation to its directors
for their service on the Board of Directors. In addition, non-employee directors
may be awarded options under the Company's 1996 Stock Incentive Plan or 2000
Stock Incentive Plan. See "Certain Relationships and Related Transactions" for
additional information on Mr. Maller and certain former directors and members of
management. On September 25, 2000 the Board of Directors approved the 2000 Stock
Incentive Plan, subject to the shareholders' approval of an increase in the
number of authorized shares of the Company's Common Stock. See "Compensation
Plans - 2000 Stock Incentive Plan" for a description of the terms of such plan.

         As part of the Company's plan of restructuring, the Board of Directors
and the Company's lenders authorized the Company's grant of options and issuance
of restrictive shares of Common Stock to its executive officers and outside
directors aggregating twenty percent (20%) of the equity of the Company on a
fully diluted basis, subject to shareholder approval of an increase in
authorized shares. Such person will be eligible for additional grants of stock
options and/or other securities at a future date in the event of such approval,
but the amounts and terms thereof are not determinable until the Compensation
Committee considers such future grants.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The members of Vision Twenty-One's Compensation Committee during the
year ended December 31, 1999 and through September 25, 2000, were former
directors Theodore N. Gillette, Peter Fontaine and Martin Stein (Mr. Stein
through February, 2000). Mr. Stein was appointed to the Compensation Committee
during 1999 to replace the position vacated by the resignation of a former
Director. Mr. Gillette served as the Company's Chief Executive Officer during
1999 and through July 2000. Neither Mr. Stein nor Mr. Fontaine were at any time
officers of Vision Twenty-One. Since September 25, 2000, the members of the
Compensation Committee have been the Company's outside directors, Messrs. Maller
and Hoffmann. During a portion of 2000, Mr. Hoffmann through Nightingale &
Associates, LLC, served as the Company's interim Chief Financial Officer. See
"Certain Relationships and Related Transactions."



                                       52
<PAGE>   55
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, officers and holders of more than 10% of the Company's
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of Common Stock and any other
equity securities of the Company. To the Company's knowledge, all of such
reports were timely filed for 2000.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION OF EXECUTIVE OFFICERS

         The following table is a summary of the compensation paid or accrued by
Vision Twenty-One for the last three fiscal years for services rendered in all
capacities to Vision Twenty-One by the Chief Executive Officer and each of the
persons who qualified as a "named executive officer" (as defined in Item
402(a)(3) of Regulation S-K under the Securities Exchange Act of 1934) during
fiscal year 2000 ("Named Executive Officers").

<TABLE>
<CAPTION>

                                                               Annual               Long-Term
                                                            Compensation        Compensation Awards
                                                                                    Securities
                                                                                    Underlying/         All Other
Name and Principal Position                              Year        Salary           Options         Compensation
---------------------------                              ----        -----      -------------------   ------------
<S>                                                      <C>        <C>         <C>                   <C>

Current Officers
Mark B. Gordon                                           2000       320,000               --              8,892(1)
               Chief Executive Officer
Andrew Alcorn                                            1998       220,000           10,000              8,600
               President                                 1999       220,000           50,000              8,676
                                                         2000       324,000                               6,609(1)

Ellen Gordon                                             2000       211,000            7,515(1)
               Chief Operating Officer
Richard Jones                                            2000       105,000            3,949(1)
               Chief Financial Officer
Howard Levin, O.D.                                       2000       190,000            2,964(1)
               Vice President and Clinical Director


Former Officers

Theodore N. Gillette                                     1998      $220,000              --              15,062
               Chief Executive Officer                   1999       220,000              --              21,525
                                                         2000       152,307              --              11,955(2)


Robert P. Collins
               Chief Operating Officer and
               Executive Vice President                  1999       187,932         150,000              52,141
                                                         2000       143,212              --               5,698(1)

Richard L. Sanchez
               Executive Vice President                  1998       180,000              --              15,169
                                                         1999       180,000              --              17,157
                                                         2000            --              --              21,920(3)
Richard T. Welch
               Chief Financial Officer                   1998       180,000              --              10,891
                                                         1999       180,000              --              11,541
                                                         2000            --           5,519(1)
------------------------------------------------------------------------------------------------------------------
</TABLE>



                                       53
<PAGE>   56

(1)      Amount represents an automobile allowance.
(2)      Amount represents an automobile allowance of $7,104 and premiums paid
         by Vision Twenty-One for a life insurance policy of $4,851.
(3)      Amount represents an automobile allowance of $3,735 and premiums paid
         by Vision Twenty-One for a life insurance policy of $18,185.

EMPLOYMENT AGREEMENTS

         In September, 2000, the Company entered into employment agreements with
Dr. Gordon, Mr. Alcorn, Ms. Gordon and Dr. Levin, which amended and restated
each of their previous employment agreements with the Company, and the Company
entered into an employment agreement with Mr. Jones, each effective as of July
31, 2000 (collectively the "Executive Employment Agreements"), providing annual
base compensation, and positions as follows:


<TABLE>
<CAPTION>
                                                                                         Initial Annual Base
Name                                     Title                                              Compensation
----                                     -----                                           --------------------
<S>                                      <C>                                             <C>
Mark B. Gordon, O.D.                     Chief Executive Officer                              $275,000
Andrew Alcorn                            President                                             275,000
Ellen J. Gordon                          Chief Operating Officer                               175,000
Richard W. Jones                         Chief Financial Officer                               175,000
Howard H. Levin, O.D.                    Vice President and Clinical Director                  155,000
</TABLE>

         The terms of the Executive Employment Agreements are five years and
five months ending December 31, 2005, and are renewable thereafter by mutual
agreement of the parties provided, if the Company fails to offer the executive
the opportunity to renew the employment agreement on terms as favorable as in
effect prior to the expiration, the Company shall be obligated to make twelve
monthly payments to the executive in an amount equal to one twelfth (1/12) of
the executive's base compensation. Under the Executive Employment Agreements the
executives have agreed to devote their best efforts and substantially all of
their business time and services to the business and affairs of Vision
Twenty-One, except that Ms. Gordon and Dr. Levin may devote up to 8% of their
working time to the business of Barenburg Optometric Service, Inc. and Mr. Jones
may devote up to 8% of his working time to the business of Emergency Fuel, LLC.


                                       54
<PAGE>   57
         The Executive Employment Agreements provide that each executive is
eligible for annual incentive bonuses of (i) from 20% to 50% of their annual
base salaries, to the extent that Vision Twenty-One achieves certain performance
measures based upon EBITDA targets and (ii) 10% of their annual base salaries if
the Company is in compliance with its credit facility and other financial
covenants. In addition, Dr. Gordon, Mr. Alcorn, Ms. Gordon and Mr. Jones are
each entitled to a consolidation bonus of $75,000, and Dr. Levin is entitled to
a consolidation bonus of $50,000. One-half of each consolidation bonus was
earned and paid in the 4th quarter of 2000 upon the completion of certain
transition events related to accounting and payroll. The other half will be
earned upon completion of certain transition events relating to managed care
operations and payable upon termination of the bridge loan component of the
Company's credit facility. In the event the Company is sold as a result of its
inability to obtain a refinancing arrangement of the existing indebtedness under
the Company's Amended and Restated Credit Agreement during the initial term
thereof, other than pursuant to any default, the executives are entitled to
receive two and one-half percent (2.5%) of the gross sales proceeds realized by
the Company (the "Sale Bonus") to be apportioned as follows: 21.43% of the Sales
Bonus to each of Dr. Gordon, Mr. Alcorn, Ms. Gordon and Mr. Jones and 14.28% to
Dr. Levin. The executives are also entitled to receive stock options or other
stock awards under Vision Twenty-One's Stock Incentive Plans to the extent that
the Compensation Committee determines such awards to be appropriate, and subject
to the shareholders' approval of an increase in the number of authorized shares
of the Company's common stock. See "Compensation Plans - The 2000 Stock
Incentive Plan."

         The Executive Employment Agreements further provide that in the event
that an executive's employment is terminated by Vision Twenty-One other than (i)
for cause, (ii) upon death or disability, or (iii) upon voluntary termination by
the employee, the Executive would be entitled to receive from Vision Twenty-One
monthly payments equal to one-twelfth of the sum of their annual base salary,
plus any bonuses paid in the previous year, for each month for twenty-four
months subject to reduction in the last 12 months thereof by amounts earned from
another employer. The Executive Employment Agreements provide that if the
executive's employment is terminated other than for cause within twelve months
following a change of control of Vision Twenty-One (as defined in the
agreement), Vision Twenty-One shall pay the executive twenty-four monthly
payments of one-twelfth of the sum of such executive's base salary plus his
previous year's bonus, if any. The Executive Employment Agreement also contains
a covenant not to compete with Vision Twenty-One for a period of twenty-four
months following termination of employment. Dr. Gordon's and Andrew Alcorn's
employment agreements provide that so long as they are so employed by the
Company they agree to serve as members of the company's Board of Director's, if
requested, without any additional compensation for such service.

STOCK OPTIONS

         Vision Twenty-One has options outstanding under its 1996 Stock
Incentive Plan (the "Stock Incentive Plan"). Options granted are for the right
to acquire Vision Twenty-One's Common Stock. The following tables provide
information concerning the option grants during 2000 to Named Executive
Officers, aggregate share option exercises in 2000 and year-end option values
for unexercised stock options held by each of the Named Executive Officers. The
options were granted under the Company's Stock Incentive Plan. In addition, no
grants of stock appreciation rights ("SARS") were made by the Company in fiscal
year 2000. Pursuant to the Securities Exchange rules, the options granted table
also shows the potential realizable value of the options granted at the end of
the option terms (ten years) assuming the stock price were to appreciate
annually by 5% and 10%, respectively. There is no assurance that the stock price
will appreciate at the rates shown in the table. The table also indicates that
if the stock price does not appreciate, the potential realizable value of the
options granted will be zero.



                                       55
<PAGE>   58
                   OPTION/SAR GRANTS IN LAST FISCAL YEAR 2000
                   ------------------------------------------

<TABLE>
<CAPTION>
       At Assumed
Annual Appreciation for                                                             Potential Realizable Value Rates
        Term(2)                         Individual Grants                                of Stock Price Option
--------------------------------------------------------------------------------------------------------------------
                                           Percent of
                                             Total
                                            Options
                           Number of       Granted to
                           Securities      Employees    Exercise or
                           Underlying      in Fiscal     Base Price
         Name           Options Granted       Year         ($/SH)     Expiration Date     0%         5%         10%
         ----           ---------------    ----------   -----------   ---------------     --         --         ---
<S>                     <C>                <C>          <C>           <C>                <C>       <C>       <C>
Mark B. Gordon, O.D.           --              --            --             --            --            --         --
Andrew Alcorn                50,000           5.2           3.50       May 31, 2009      $.00      $49,000   $182,000
Ellen Gordon                   --              --            --             --            --            --         --
Richard Jones                  --              --            --             --            --            --         --
Howard Levin, O.D.             --              --            --             --            --            --         --
</TABLE>

                 AGGREGATED OPTION EXERCISES IN FISCAL YEAR AND
                          FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>

                                                            NUMBER OF SECURITIES UNDERLYING      VALUE OF UNEXERCISED IN-THE-
                                                                    EXERCISED OPTIONS                    MONEY OPTIONS
                                                                   AT DECEMBER 31,2000              AT DECEMBER 31, 2000(2)
                              SHARES                        -------------------------------      -----------------------------
                            ACQUIRED ON        VALUE
          NAME              EXERCISE(1)     REALIZED(1)     EXERCISABLE    UNEXERCISABLE(3)      EXERCISABLE       UNEXERCISABLE
          ----              -----------     -----------     -----------    ----------------      -----------       -------------
<S>                         <C>             <C>             <C>            <C>                   <C>               <C>
Mark B. Gordon, O.D.                            --                --               --               $  .00            $  .00
Andrew Alcorn                                   --            15,500           67,500               $  .00            $  .00
Ellen Gordon                                    --                --               --                   --                --
Richard Jones                                   --                --               --                   --                --
Howard Levin, O.D.                              --                --               --                   --                --
Robert P. Collins                               --                --               --                   --                --
Richard T. Welch                                --                --               --               $  .00            $  .00
</TABLE>


         (1)      There were no options exercised during fiscal year 2000 by any
                  Named Executive Officer.
         (2)      Based upon Vision Twenty-One's closing stock price of $.01 at
                  December 31, 2000.
         (3)      The unexercisable portion of shares issuable pursuant to stock
                  options were not in-the-money at December 31, 2000.
         (4)      Pursuant to Mr. Welch's severance agreement, these options are
                  exercisable until November 30, 2002.

COMPENSATION PLANS

         Vision Twenty-One maintains the following compensation plans for the
benefit of employees, directors and executive officers. Vision Twenty-One does
not maintain a defined benefit pension plan or other actuarial retirement plan
for named executive officers or otherwise.

         The Stock Incentive Plans. The 1996 Stock Incentive Plan authorizes
Vision Twenty-One to grant eligible officers, employees, consultants and
directors of Vision Twenty-One awards consisting of options to purchase shares
of Common Stock, stock appreciation rights, shares of restricted stock or
performance shares, subject to the additional shares available from the pool of
unallocated shares in the Company's Affiliated Professional Plan. The
Compensation Committee has the discretion to select the particular officers,
employees and consultants who will receive awards. On December 31, 2000
approximately 320 officers and employees of Vision Twenty-One were eligible to
participate. The particular terms of the stock options and other awards granted
to eligible employees will be established by the Compensation Committee within
the limitations set forth in the provisions of the Stock Incentive Plan.
Eligible employees and other participants generally are not required to provide
Vision Twenty-One with consideration for the awards (other than their services),
but stock options will require the optionees to pay an option exercise price
based on the fair market value of the shares of Common Stock at the time the
grant of the options was approved by the Compensation Committee. Stock options
granted to


                                       56
<PAGE>   59
employees under the 1996 Stock Incentive Plan may be either stock options
intended to qualify as Incentive stock options under Section 422 of the Internal
Revenue Code or nonstatutory stock options which do not so qualify. Stock
options will expire no later than the tenth anniversary of the date of grant and
become exercisable under such vesting schedules as may be established by the
Compensation Committee. Vesting of the awards granted under the 1996 Stock
Incentive Plan may be accelerated in the event of a change in corporate control,
as defined in and upon the terms of the 1996 Stock Incentive Plan. The
Compensation Committee has discretionary authority to accelerate the vesting of
stock options and other awards in any other circumstances it determines to be
appropriate, and the stock option agreements under the Stock Incentive Plan may
provide for accelerated vesting upon death, disability, and, in some cases,
termination of employment without cause.

         The 1996 Stock Incentive Plan can be amended by the Board from time to
time in any manner the Board deems to be advisable, except that the Board must
obtain shareholder approval for amendments that require shareholder approval
under the federal tax or securities laws or the NASDAQ National Market System
stock exchange, including amendments to increase the aggregate number of shares
available for issuance under the Stock Incentive Plan.

         THE EMPLOYEE STOCK PURCHASE PLAN. On October 19, 1998, the Board of
Directors adopted an Employee Stock Purchase Plan, which was subsequently
approved by Shareholders at the 1998 annual meeting, in order to encourage
Company employees to have an ownership interest in Vision Twenty-One. The
Employee Stock Purchase Plan is intended to provide employees of Vision
Twenty-One and its subsidiaries with an opportunity to acquire shares of Vision
Twenty-One's Common Stock at an advantageous price, with savings accumulated
through payroll deductions. The purpose of the Employee Stock Purchase Plan is
to secure for Vision Twenty-One and its shareholders the benefits inherent in
employee stock ownership. The Employee Stock Purchase Plan is administered by
the Board of Directors. Subject to adjustment upon changes in the capitalization
of Vision Twenty-One, the maximum number of shares of Common Stock available for
purchase under the Employee Stock Purchase Plan is 200,000 shares.

         All employees of Vision Twenty-One and its subsidiaries who have been
employed for at least sixty (60) days as of the first day of any quarter are
eligible to participate in the Employee Stock Purchase Plan, provided that no
employee will be eligible if such employee: (i) owns, immediately after any
option to acquire Common Stock pursuant to provisions of the Employee Stock
Purchase Plan, stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of Company stock, (ii) is a member of the
Board of Directors or an executive officer of Vision Twenty-One whose
compensation must be reported in Vision Twenty-One's proxy statements, or (iii)
is an employee whose customary employment is twenty hours or less per week or
whose customary employment is for not more than five months in any calendar
year.

         The price to eligible employees for each share to be purchased under
the Employee Stock Purchase Plan is the lesser of: (i) eighty-five percent (85%)
of the Closing Market Price (as hereinafter defined) on the first day of any
calendar quarter (the "Offering Date"), or (ii) eighty-five percent (85%) of the
Closing Market Price (as hereinafter defined) on the first trading day of the
third calendar month following the immediately preceding Offering Date (the
"Purchase Date"). On each Purchase Date, payroll deductions made in accordance
with the Employee Stock Purchase Plan are applied to the purchase of Common
Stock from Vision Twenty-One. "Closing Market Price" means the last sale price
of the Common Stock as reported on the NASDAQ/National Market System (or any
other exchange or quotation system, if applicable) on the date specified; or if
no sales occurred on such day, at the last sale price reported for the Common
Stock; but if there should be any material alteration in the present system of
reporting sales prices of such Common Stock, or if such Common Stock should no
longer be listed on the NASDAQ/National Market System (or other exchange or
quotation system), or if the last sale price reported shall be on a date more
than 30 days from the date in question, the market value of the Common Stock as
of a particular date shall be determined in such a method as shall be specified
by the Employee Stock Purchase Plan. The foregoing discussion of the Employee
Stock Purchase Plan is qualified in its entirety by reference to the copy of the
Employee Stock Purchase Plan included with Vision the Twenty-One's Proxy
Statement for 1998.

         2000 Stock Incentive Plan. As part of the company's plan of
restructuring, the Board of Directors and the Company's lenders authorized the
Company's grant of options and issuance of restrictive shares of common stock to
its executive officers and outside directors aggregating twenty percent (20%) of
the equity of the company on a fully diluted basis, subject to shareholder
approval of an increase in authorized shares. Such person will be eligible for
additional grants of stock options and/or other securities at a future date in
the event of such approval, but the amounts and terms thereof are not
determinable until the Compensation Committee considers such future grants.


                                       57
<PAGE>   60
         As part of the company's plan of restructuring, the Board of Directors
and the Company's lenders authorized the Company's grant of options and issuance
of restrictive shares of common stock to its executive officers and outside
directors aggregating twenty percent (20%) of the equity of the company on a
fully diluted basis, subject to shareholder approval of an increase in
authorized shares. Such person will be eligible for additional grants of stock
options and/or other securities at a future date in the event of such approval,
but the amounts and terms thereof are not determinable until the Compensation
Committee considers such future grants.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS

         The following table sets forth, as of December 31, 2000, information as
to the beneficial ownership of Vision Twenty-One's Common Stock by (i) each
person known to Vision Twenty-One as having beneficial ownership of more than 5%
of Vision Twenty-One's Common Stock, (ii) each person serving Vision Twenty-One
as a Director on such date and each nominee for Director, (iii) each person
serving Vision Twenty-One as an executive officer on such date who qualifies as
a "named executive officer" as defined in Item 402(a)(3) of Regulation S-K under
the Securities Exchange Act of 1934, and (iv) all of the Directors and executive
officers of Vision Twenty-One as a group.

<TABLE>
<CAPTION>
 NAME AND ADDRESS OF BENEFICIAL OWNER(1)     SHARES BENEFICIALLY OWNED(2)         PERCENT(2)
----------------------------------------     -----------------------------        ----------
<S>                                          <C>                                  <C>
Directors and Executive Officers:
Bruce S. Maller(3)                                   479,331                          4%
Mark B. Gordon, O.D.                                      --                         --
Andrew Alcorn                                         37,500                          *
Howard S. Hoffmann                                    26,574                          *
Ellen J. Gordon                                           --                         --
Howard H. Levin, O.D.                                     --                         --
Richard W. Jones                                          --                         --
All directors and executive officers
  As a group                                              --                         --

</TABLE>

--------------------------------------------
* Less than one percent.

(1)      The address of each of the beneficial owners identified is 120 West
         Fayette Street, Baltimore, MD 21201

(2)      Based on 13,860,176 shares of Common Stock outstanding. Pursuant to the
         rules of the Securities and Exchange Commission (the "Commission"),
         certain shares of Common Stock which a person has the right to acquire
         within 60 days of the date hereof pursuant to the exercise of stock
         options are deemed to be outstanding for the purpose of computing the
         percentage ownership of such person but are not deemed outstanding for
         the purpose of computing the percentage ownership of any other person.

(3)      Includes (a) 108,976 shares owned by BSM Investment, Ltd. over which
         Mr. Maller has voting and investment control and (b) 203,000 shares
         issuable upon the exercise of stock options granted pursuant to the
         Company's 1996 Stock Incentive Plan which have vested and are fully
         exercisable and (c) 167,355 shares owned indirectly by Mr. Maller's
         children and The Maller Family trust.


                                       58
<PAGE>   61
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information set forth herein briefly describes transactions since
the beginning of Vision Twenty-One's last fiscal year between Vision Twenty-One
and its directors, officers and 5% shareholders. These transactions have been
approved by a majority of Vision Twenty-One's independent directors and were on
terms no less favorable to Vision Twenty-One than those that could be obtained
from unaffiliated parties.

         Vision Twenty-One entered into a five-year Advisory Agreement in 1996
with Mr. Bruce S. Maller, Chairman of the Board of Vision Twenty-One (the
"Advisory Agreement"), pursuant to which Mr. Maller rendered certain advisory
services to Vision Twenty-One, including the identification and integration of
eye care practices and the provision of assistance to Vision Twenty-One with its
strategic planning, growth and development. In consideration for such services,
Vision Twenty-One issued to Mr. Maller 125,627 shares of Common Stock. The
shares issued to Mr. Maller pursuant to the Advisory Agreement are subject to
certain piggyback and demand registration rights. In 1995, Vision Twenty-One
also entered into a five-year services agreement with the BSM Consulting Group
("BSM"), a consulting company of which Mr. Maller is an employee and the sole
owner (the "BSM Services Agreement"), pursuant to which BSM agreed to provide
substantial consulting services to assist Vision Twenty-One with its operational
and management development. These agreements were terminated effective November
23, 1999 with full vesting of any remaining restricted shares. Payments earned
by BSM under the BSM Services Agreement were approximately $725,000 in the year
ended December 31, 1999.

         Vision Twenty-One entered into an agreement with BSM effective November
23, 1999. This agreement contracted with Mr. Maller through BSM to be Chairman
of the Board and to assume overall control of the operations of the Company. The
fees payable under this agreement are up to $6,250 per week, plus expenses. The
use of any other BSM services other than Mr. Maller's time would be billed at
customary rates less a 20% discount. Payments earned by BSM under this agreement
through December 31, 2000 were approximately $279,000. Additionally, Mr. Maller
was awarded, on behalf of BSM, an additional 100,000 stock options in February
2000 that vest pro rata over the four quarters of 2000 and become immediately
vested upon the consummation of a merger transaction. The strike price would be
based on the five day average closing price prior to the date of issue.

         In May 1999, Bruce Maller, a director of the Company, was granted
options to purchase 100,000 shares of Common Stock at an exercise price of $3.44
per share.

          Vision Twenty-One and Nightingale & Associates, LLC ("Nightingale")
are parties to a consulting services agreement dated November 24, 1999 (the
"Nightingale Agreement") pursuant to which Nightingale provides certain
consulting services which have included, but not been limited to, the services
of Howard Hoffmann as Interim Chief Financial Officer reporting directly to the
Board of Directors. Mr. Hoffmann, a principal of Nightingale, is a director of
Vision Twenty-One. The Nightingale Agreement may be terminated by either party
at any time. Under the Nightingale Agreement, Nightingale is paid based upon
hourly rates for individuals performing services for the company and out of
pocket expenses. Mr. Hoffmann's hourly rate is $325.00. Vision Twenty-One is
also obligated to pay Nightingale a performance fee under certain circumstances,
including but not limited to the consummation of a merger transaction. Under the
Nightingale agreement, Nightingale received options to purchase 150,000 shares
of Vision Twenty-One Common Stock at an exercise price of $1.13 per share,
50,000 of which are fully vested and 100,000 of which vest pro rata over the
four quarters of 2000 and become immediately vested upon the consummation of a
merger transaction. Payments to Nightingale under the Nightingale agreement
through December 31, 2000 were approximately $1.0 million. This agreement was
terminated as of December 2000. A small retainer was maintained for continuing
projects assigned by management.

         Theodore Gillette, the former Chief Executive Officer and a former
director of Vision Twenty-One, owns a majority interest in Optometric Associates
Florida, P.A. ("OAF"), a Florida professional association located in Tampa,
Florida and engaged in the provision of optometry services. Vision Twenty-One
earned fees of approximately $562,000 in the year-ended December 31, 1999 and
fees of approximately $296,000 through the third quarter of 2000 under its
Management Agreement with OAF. Effective August 25, 2000 (the "Gillette
Transaction Effective Date"), as part of its previously announced plan to exit
the physician practice management business, the company sold the assets related
to OAF and the assets of Optometric Consultants of Florida, P.A. ("OCF")
situated at designated locations to TNG Management, Inc. ("TNG"), an entity
owned by Mr. Gillette and his wife, and assigned its rights in its Management
Agreement with OAF to TNG. The closing occurred on September 21, 2000. The
consideration for the transaction was $412,117 payable by TNG pursuant to a 2
year promissory note bearing interest at the rate of 8% per annum. The
promissory note is personally guaranteed by Mr. Gillette and his wife. TNG also
assumed certain obligations of Vision Twenty-One arising prior to the Gillette
Transaction Effective Date


                                       59
<PAGE>   62
related to OAF and the designated OCF locations, such as equipment lease
obligations, contracts for services or equipment, and accrued paid time off for
the individuals employed by Vision Twenty-One to provide services for OAF and
OCF designated locations, and assumed all obligations related to OAF and the
designated OCF locations arising after the Gillette Transaction Effective Date.
In connection with the closing of the OAF transaction, (i) Mr. Gillette
discharged Vision Twenty-One from any remaining obligations under his employment
agreement with the Company as of the Gillette Transaction Effective Date and
resigned as Chief Executive Officer and as a director of the Company as of
September 21, 2000, and (ii) OAF, Mr. Gillette and the company released each
other from any causes of action they may have against the other, except for
indemnification obligations of Mr. Gillette or OAF to the Company under the
Management Agreement regarding malpractice action, which obligations survived
the company's assignment of the Management Agreement to TNG.

         The consideration for the Gillette transactions was based upon
arms-length negotiation among the parties. The Company did not obtain a
third-party fairness opinion in connection with the Gillette transaction, and
the approval of the transaction by the company's Board of Directors, with Mr.
Gillette abstaining, was based upon the Board's determination that the terms of
the Gillette transaction were no less favorable than those that could have been
obtained from an unaffiliated party. The Company purchased the practice assets
in 1996 for 196,064 shares of Vision Common Stock and a promissory note in the
amount of $416,103.

         Richard L. Lindstrom, M.D., a director of Vision Twenty-One, owns a
majority interest in Minnesota Eye Consultants, P.A. ("Lindstrom P.A."), a
professional association located in Minneapolis, Minnesota and engaged in the
provision of ophthalmology services. Vision Twenty-One earned fees of
approximately $1,593,000 in the year ended December 31, 1999 under its
Management Agreement with Lindstrom P.A.

         Effective November 30, 1999 (the "Lindstrom Transaction Effective
Date"), as part of its previously announced plan to exit the physician practice
management business, the company sold the assets related to the Lindstrom P.A.,
the shareholders thereof or their designees and assigned its rights in its
Management Agreement with the Lindstrom P.A. to Laser Vision Centers, Inc.
("LVCI"). The closing occurred on September 14, 2000. The consideration for the
transaction was $2,190,000 which was paid in cash at the closing of the
transaction by LVCI. The Lindstrom P.A. assumed certain obligations of Vision
Twenty-One arising prior to the Lindstrom Transaction Effective Date related to
the Lindstrom P.A., such as leases for equipment, other than equipment subleased
by the company to the Lindstrom P.A. after the Lindstrom Transaction Effective
Date, real property leases, contracts for services or equipment and paid time
off accrued prior to January 29, 2000 (the "Employee Transition Date") for the
individuals employed by Vision Twenty-One to provide services for the "Lindstrom
P.A. (the "Lindstrom P.A. Employees"), and assumed all obligations related to
the Lindstrom P.A. arising after the Lindstrom Transaction Effective Date,
except for obligations relating to the Lindstrom P.A. Employees which were
assumed as of the employee Transition date. In connection with the closing of
the Lindstrom P.A. Transaction, the Lindstrom P.A., the shareholders thereof,
including Dr. Lindstrom, and the company released each other from any causes of
action they may have against the other, except for indemnification obligations
of the Lindstrom P.A. and the shareholders thereof to the company under the
Management Agreement regarding malpractice actions, which obligations survived
the company's assignment of the Management Agreement to LVCI. Vision Twenty-One
on the one hand, and the Lindstrom P.A. and the shareholders thereof on the
other hand, also agreed that they would not solicit or contract with the managed
care client of the other existing as of the closing of the Lindstrom P.A.
transaction, to administer such plans' vision benefits.

         The consideration for the Lindstrom P.A. transaction was based upon
arms-length negotiation among the parties. The Company did not obtain a
third-party fairness opinion in connection with the Lindstrom P.A. transaction,
and the approval of the transaction by the Company's Board of Directors, with
Dr. Lindstrom abstaining, was based upon the Board's determination that the
terms of the Lindstrom, P.A transaction were no less favorable than those that
could have been obtained from an unaffiliated party. The Company purchased the
practice assets in 1996, in exchange for approximately 247,108 shares of Vision
Common Stock and notes of approximately $460,000.


                                       60
<PAGE>   63
         The services agreement which Vision Twenty-One entered into in
September 1996 with Dr. Lindstrom (the "Lindstrom Services Agreement"), pursuant
to which Dr. Lindstrom provided certain consulting and advisory services
primarily related to assisting Vision Twenty-One in the identification and
integration of providers into vision Twenty-One's managed eye care delivery
network and assistance in the development of provider practices, was terminated
upon closing of the Lindstrom P.A. transaction. In consideration for his
services under the Lindstrom Services Agreement, Dr. Lindstrom was entitled to
receive $60,000 annually and 108,133 shares of Common Stock of which 40% was
non-forfeitable and the remaining 60% was subject to forfeiture in various
amounts if the Lindstrom Services Agreement was terminated by Vision Twenty-One
for cause or by Dr. Lindstrom prior to August 31, 2000. The shares issued to Dr.
Lindstrom pursuant to the Lindstrom Services Agreement are subject to certain
piggyback and demand registration rights. Payments earned by Dr. Lindstrom under
the Lindstrom Services Agreement were $60,000 in the year ended December 31,
1999. At the closing of the Lindstrom P.A. transaction, the company paid $65,000
to Dr. Lindstrom to fully settle and discharge any claims related to the
Lindstrom Services Agreement.

         The three year regional service agreements which the Company entered
into on May 29, 1997 with the shareholders of Midwest Eye Care alliance, Inc.
("MECA"), which included Dr. Lindstrom, (collectively the "Regional
Agreements"), were also terminated upon closing of the Lindstrom P.A.
transaction. The Regional Agreements provided for Dr. Lindstrom and the other
former MECA shareholders to render advisory services to Vision Twenty-One in
connection with identifying potential ophthalmology and optometry practices in
the Midwestern region of the United States for acquisition or affiliation and
assisting Vision Twenty-One in negotiating agreements with such practices in
exchange for specific cash compensation that varied among the Regional
Agreements. Dr. Lindstrom was due a total of $13,333 related to 1999 pursuant to
his Regional Agreement and this liability was paid by the company at the closing
of the Lindstrom P.A. transaction to fully settle and discharge any claims
related to Dr Lindstrom's Regional Agreement.

         In June 1999, Dr. Richard L. Lindstrom, was granted options to purchase
100,000 shares of Common Stock at an exercise price of $3.69 per share. In
September 1999, Mr. Lindstrom was granted an option to purchase 10,000 shares of
Common Stock at an exercise price of $4.88 per share.

         Jeffrey I. Katz, M.D., a former director of Vision Twenty-One, owns a
50% interest in Vital Sight P.C. ("Vital Sight"), an Arizona professional
corporation located in Tucson, Arizona and engaged in the provision of
ophthalmology services. Vision Twenty-One earned fees of $338,000 in the
year-ended December 31, 1999 under its Management Agreement with Vital Sight.

         Vision Twenty-One, the former shareholders of Eye Institute of Southern
Arizona, P.C., including Dr. Katz and certain other related entities also closed
in escrow an agreement dated as of July 31, 1997 to transfer certain ASC assets
from Vital Sight and such shareholders' limited liability company to Vision 21
of Southern Arizona, Inc. Vision Twenty-One received fees of approximately
$177,000 for the year ended December 31, 1999 for services related to such ASC
business.

         Effective January 1, 2000 (the "Katz Transaction Effective Date"), as
part of its previously announced plan to exit the physician practice management
business, the Company sold the assets related to Vital Sight to the shareholders
thereof, including Dr. Katz, and the assets related to the ASC business to
Ocusite-ASC, Inc., an affiliate of Dr. Katz. The closing occurred on May 24,
2000. The consideration for the transaction was (i) $350,000 which was paid in
cash at the closing by the shareholders of Vital Sight, (ii) the transfer to
Vision Twenty-One by Vital Sight or the shareholders thereof, of 158,677 shares
of Vision Twenty-One Common Stock, including the transfer of 289,727 shares by
Dr. Katz, and (iii) the release to Vision Twenty-One for cancellation of the
132,155 shares of Vision Twenty-One Common Stock which had been held in escrow
in connection with the ASC asset transaction. Vital Sight and Ocusite also
assumed certain obligations of Vision Twenty-One arising prior to the Katz
Transaction Effective Date related to Vital Site and the ASC business,
respectively, such as outstanding accounts payable, leases for equipment, other
than equipment subleased by the company to Vital Site or Ocusite after the Katz
Transaction Effective Date, real property leases, contracts for services or
equipment and paid time off accrued prior to December 18, 1999 (the "Vital Site
Employee Transition Date") for individuals employed by Vision Twenty-One to
provide services for Vital Site of the ASC business arising after the Katz
Transaction Effective Date, except for obligations relating to the Vital Site
Employees which were assumed as of the Vital Site employee Transition Date.
Vision Twenty-One's Management Agreement with Vital Site was terminated as of
the Katz Transaction Effective Date and Vital Site reimbursed Vision Twenty-One
at closing for certain expenses incurred under the Management Agreement
subsequent to September 30, 1999 not previously reimbursed. In connection with
the closing of the Vital Site transaction, Vital Site, the shareholders thereof,
including Dr. Katz, Ocusite and the


                                       61
<PAGE>   64
company released each other from any causes of action they may have against the
other, except for indemnification obligations of Vital Site and the shareholders
thereof to the company under the Management Agreement regarding malpractice
actions, which obligations survived termination of the Management Agreement.

         Effective as of the Katz Transaction Effective Date, Dr. Katz and the
other shareholder of Vital Site entered into a three year facility access
agreement (the "Access Agreement") with the Company pursuant to which they have
access to the Company's eye laser center in Tucson, Arizona. The Access
Agreement requires that a flat fee per laser procedure performed be paid to
Vision Twenty-One based upon the then prevailing fee schedule in effect for
community based physicians.

         The consideration for the Katz transaction was based upon arms-length
negotiation among the parties. The Company did not obtain a third-party fairness
opinion in connection with the Katz transaction, and the approval of the
transaction by the Company's Board of Directors with Dr. Katz abstaining, was
based upon the Board's determination that the terms of the Katz transaction were
no less favorable than those that could have been obtained from an unaffiliated
party. The Company purchased the practice assets in 1996 for 198,306 shares of
Common Stock.

         On June 11, 1999, the Company entered into Subscription Agreements with
J.K.K. Holdings, LLP ("J.K.K.") and Richard L. Lindstrom for the purchase of
Vision Twenty-One Common Stock. Dr. Lindstrom purchased 59,433 shares of Vision
Twenty-One Common Stock at a price of $356,598 and J.K.K. purchased 117,666
shares of Vision Twenty-One Common Stock at a price of $706,000. Dr. Katz, a
former director of the Company, has a voting and investment control of J.K.K.

         In September 1999, the Company entered into Agreements of Separation
and Release with Mr. Richard Sanchez and Mr. Richard Welch, former officers and
directors of the Company. Mr. Sanchez agreed to a reduced settlement of $18,000
in August of 2000. No such agreement has been reached with Mr. Welch.

         On October 1, 1997, the Company renewed its lease for space in a
building at 100 Park Avenue for approximately 6000 square feet. This building is
owned by Barenburg Optometric, Inc. of which Dr. Gordon and Dr. Levin are the
owners, the Lease is for a term of ten years. This lease is for $91,200
annually.

         Barenburg Optometric, Inc. entered into an agreement to provide
professional services to MEC Health Care, Inc. beginning in September 1987. The
supply of professional service by Barenburg Optometric, Inc. is done on terms
and rates consistent with other providers. Barenburg's approximate annual
revenue for services provided to Vision Twenty-One Division are approximately
$510,000.


                                       62
<PAGE>   65
                                     PART IV

ITEM  14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

<TABLE>
<S>      <C>
(a)      The following Financial Statements of the Registrant are included in Part II, Item 8:

         Report of Independent Auditors....................................................................................21

         Consolidated Balance Sheets--December 31, 1999 and 2000...........................................................22
         Consolidated Statements of Operations--Years Ended December 31, 1998,
         1999 and 2000 ....................................................................................................23
         Consolidated Statements of Stockholders' Equity--Years Ended December
         31, 1998, 1999 and 2000 ..........................................................................................24
         Consolidated Statements of Cash Flows--Years Ended December 31, 1998, 1999
         and 2000..........................................................................................................25
         Notes to Consolidated Financial Statements........................................................................26

(b)      Reports on Form 8-K:  During the last quarter of the year ended December 31, 2000, the Company filed the following Form
         8-K's: (i) Form 8-K dated December 4, 2000 announcing the closing of the restructuring of the Company's credit facilities.

(c)      Exhibits: See Exhibit Index.

(d)      Financial Statements Schedules of the Registrant:  The following valuation and qualifying accounts schedule is provided.
         All other financial statement schedules are omitted because of the absence of the conditions under which they are required.
</TABLE>



                                       63
<PAGE>   66
                    VISION TWENTY-ONE, INC. AND SUBSIDIARIES

                  SCHEDULE I--VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                                          Additions
                                                                 --------------------------
                                                 Balance at       Charged to     Charged to
                                                Beginning of      Costs and         Other          Deductions   Balance at End
Description                                        Period          Expenses        Accounts         Describe       of Period
-----------                                     ------------      -----------    -----------       ----------   --------------
<S>                                             <C>               <C>            <C>               <C>          <C>

For the year ended December 31, 1998
  Deducted from asset accounts:
         Allowance for doubtful accounts.....   $   33,000        $       --      $       --      $    3,000      $ 30,000
                                                ==========        ==========      ==========      ==========      ========
For the year ended December 31, 1999
  Deducted from asset accounts:
         Allowance for doubtful accounts.....   $   30,000        $       --      $       --      $   30,000(1)         --
                                                ==========        ==========      ==========      ==========      ========
For the year ended December 31, 2000
  Deducted from asset accounts:
         Allowance for doubtful accounts.....   $       --        $  363,445      $       --      $       --      $363,445
                                                ==========        ==========      ==========      ==========      ========
</TABLE>


(1)      Amount represents allowance for doubtful accounts sold in connection
         with the 1999 sale of the buying group division.



                                       64
<PAGE>   67

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Baltimore, State of Maryland on April 17, 2001.

                               VISION TWENTY-ONE, INC.



                               By:          /s/ MARK B. GORDON, O.D.
                                  --------------------------------------------
                                                Mark B. Gordon, O.D.
                                             Chief Executive Officer
                                           (Principal Executive Officer)



                               By:          /s/ RICHARD W. JONES
                                  --------------------------------------------
                                               Richard W. Jones
                                            Chief Financial Officer
                                   (Principal Financial and Accounting Officer)

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons in the capacities indicated
on April 17, 2001.

<TABLE>
<CAPTION>
      Signature                                         Title
      ---------                                         -----
<S>                                      <C>
   /s/ MARK B. GORDON, O.D.              Chief Executive Officer and Director
------------------------------------         (Principal Executive Officer)
     Mark B. Gordon, O.D.


     /s/ RICHARD W. JONES                Chief Financial Officer (Principal Financial and
------------------------------------                Accounting Officer)
           Richard W. Jones

    /s/ HOWARD S. HOFFMANN                           Chairman of the Board
------------------------------------
         Howard S. Hoffmann


     /s/ BRUCE S. MALLER                                  Director
------------------------------------
        Bruce S. Maller


      /s/ ANDREW ALCORN                            President and Director
------------------------------------
         Andrew Alcorn
</TABLE>



                                       65
<PAGE>   68

                                 2000 FORM 10-K
                             VISION TWENTY-ONE, INC.


                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

EXHIBIT
NUMBER

<S>      <C>      <C>

3.1*     --       Amended and Restated Articles of Incorporation of Vision
                  Twenty-One, Inc.(1)

3.2*     --       By-laws of Vision Twenty-One, Inc.(1)

4.5*     --       Note Purchase Agreement for 10% Senior Subordinated Notes due
                  December 19, 1999 (Detachable Warrants Exchangeable Into
                  Common Stock) dated December 20, 1996, by and between Vision
                  Twenty-One, inc. and certain purchasers.(1)

4.6*     --       Amendment No. 1 dated April 18, 1997 to that certain Note
                  Purchase Agreement dated December 20, 1996, by and between
                  Vision Twenty-One, Inc. and certain purchasers.(1)

4.7*     --       Note Purchase Agreement for 10% Senior Subordinated Series
                  1997 Notes Due December 19, 1999 (Detachable Warrants
                  Exchangeable into Common Stock) dated February 28, 1997
                  between Vision Twenty-One Inc. and Piper Jaffray Healthcare
                  Fund II Limited Partnership.(1)

4.8*     --       Amended and Restated Note and Warrant Purchase Agreement dated
                  June 1997 and First Amendment to Amended and Restated Note and
                  Warrant Purchase Agreement dated August 1997 between Vision
                  Twenty-One, Inc. and Prudential Securities Group.(4)

4.9*     --       Credit facility commitment letter dated October 10, 1997
                  between Prudential Securities Credit Corporation and Vision
                  Twenty-One, Inc.(5)

4.10*    --       Note Purchase Agreement dated October 1997 between Vision
                  Twenty-One, Inc. and Prudential Securities Credit Corporation.(9)

4.11*    --       Letter Amendment dated December 30, 1997 to the Note and
                  Warrant Purchase Agreement between Vision Twenty-One Inc. and
                  Prudential Securities Credit Corporation.(10)

4.13*    --       Credit Agreement dated as of January 30, 1998 among Vision
                  Twenty-One, Inc. and Bank of Montreal as Agent for a
                  consortium of banks.(11)

4.14*    --       Amended and Restated Credit Agreement dated as of July 1, 1998
                  among Vision Twenty-One, Inc., and the Bank of Montreal as
                  Agent for a consortium of banks.(15)

4.15*    --       First Amendment to the Amended and Restated Credit Agreement
                  dated as of February 23, 1999 among Vision Twenty-One, Inc.,
                  the Banks who are a party thereto and Bank of Montreal as
                  Agent.(18)

4.16*    --       Second Amendment to the Amended and Restated Credit Agreement
                  dated as of June 11, 1999 among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as Agent.(18)

4.17*    --       Third Amendment to the Amended and Restated Credit Agreement
                  dated as of August 30, 1999 by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(19)

4.18*    --       Waiver Letter dated October 14, 1999 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(20)
</TABLE>


                                       66
<PAGE>   69
<TABLE>
<S>     <C>       <C>
4.19*    --       Fourth Amendment and Waiver to the Amended and Restated Credit
                  Agreement dated as of November 12, 1999 by and among Vision
                  Twenty-One, Inc., the Banks who are a party thereto and Bank
                  of Montreal as Agent.(21)

4.20*    --       Fifth Amendment to the Amended and Restated Credit Agreement
                  dated as of November 24, 1999 by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(22)

4.21*    --       Sixth Amendment to the Amended and Restated Credit Agreement
                  dated as of December 3, 1999 by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(22)

4.22*    --       Seventh Amendment to the Amended and Restated Credit Agreement
                  dated as of December 10, 1999 by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(22)

4.23*    --       Waiver Letter dated December 29, 1999 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(23)

4.24*    --       Waiver letter dated February 29, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(26)

4.25*    --       Waiver letter dated March 24, 2000 to the Amended and Restated
                  Credit Agreement by and among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(26)

4.26*    --       Waiver letter dated as of April 14, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(26)

4.27*    --       Waiver letter dated as of May 5, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(26)

4.28*    --       Waiver letter dated as of May 19, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(27)

4.29*    --       Waiver letter dated June 1, 2000 to the Amended and Restated
                  Credit Agreement by and among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

4.30*    --       Waiver letter dated June 9, 2000 to the Amended and Restated
                  Credit Agreement by and among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

4.31*    --       Waiver letter dated June 16, 2000 to the Amended and Restated
                  Credit Agreement by and among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

4.32*    --       Waiver letter dated June 29, 2000 to the Amended and Restated
                  Credit Agreement by and among Vision Twenty-One, Inc., the
                  Banks who are party thereto and Bank of Montreal as Agent.(27)

4.33*    --       Waiver letter dated July 21, 2000 to the Amended and Restated
                  Credit Agreement by and among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

4.34*    --       Waiver letter dated August 11, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(28)

4.35*    --       Waiver letter dated September 8, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(29)

</TABLE>


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<PAGE>   70
<TABLE>
<S>     <C>       <C>
4.36*    --       Waiver letter dated September 29, 2000 to the Amended and
                  Restated Credit Agreement by and  among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(30)

4.37*    --       Waiver letter dated as of October 13, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(31)

4.38*    --       Waiver letter dated as of October 27, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(31)

4.39*    --       Amended and Restated Credit Agreement dated as of November 10,
                  2000 among Vision Twenty-One, Inc., the lenders party thereto
                  and Bank of Montreal as Agent.(31)

4.40*    --       Convertible Note Agreement dated as of November 10, 2000 Re:
                  $6,385,000 7% convertible Senior Secured Notes Due October 31,
                  2003.(31)

4.41*    --       Registration Rights Agreement dated as of November 10, 2000
                  among Vision Twenty-One, Inc., and the Lenders thereto.(31)

4.42*    --       Warrant Agreement dated as of November 10, 2000 Re: Class A
                  Warrants to Purchase Common Stock, Class B Warrants to
                  purchase Common Stock.(31)

4.43     --       First Amendment to Amended and Restated Credit Agreement dated
                  as of March 31, 2001, by and among Vision Twenty-One, Inc.,
                  the lenders party thereto and Bank of Montreal as Agent.

4.44     --       First Amendment to Convertible Note Agreement, Warrant
                  Agreement and Warrants dated as of March 31, 2001 by and among
                  Vision Twenty-One, Inc., the lenders party thereto and Bank of
                  Montreal as Agent.

10.4*    --       Services Agreement dated September 9, 1996 between Vision
                  Twenty-One, Inc. and Dr. Richard L. Lindstrom, M.D.(1)

10.5*    --       Vision Twenty-One, Inc. 1996 Stock Incentive Plan.(1)

10.6*    --       Vision Twenty-One, Inc. Affiliated Professionals Stock Plan(1)

10.7*    --       Agreement dated May 10, 1996 between Vision Twenty-One, Inc.
                  and Bruce S. Maller.(1)

10.8*    --       Advisory Agreement dated October 20, 1996 between Vision
                  Twenty-One, Inc. and Bruce S. Maller.(1)

10.9*    --       Services Agreement dated March 10, 1996 between Vision
                  Twenty-One, Inc and the BSM Consulting Group.(1)

10.14*   --       Note Purchase Agreement for 10% Senior Subordinated notes Due
                  December 19, 1999 (Detachable Warrants Exchangeable Into
                  Common Stock) dated December 20, 1996 by and between Vision
                  Twenty-One Inc., and certain purchasers.(2)

10.15*   --       Amendment No. 1 dated April 18, 1997 to that certain Note
                  Purchase Agreement dated December 20, 1996 by and between
                  Vision Twenty-One, Inc. and certain purchasers.(1)

10.16*   --       Note Purchase Agreement for 10% Senior Subordinated Series
                  1997 Notes Due December 19, 1999 (Detachable Warrants
                  Exchangeable Into Common Stock) by and between Vision
                  Twenty-

</TABLE>


                                       68
<PAGE>   71
<TABLE>
<S>     <C>       <C>
                  One, Inc. and Piper Jaffray Healthcare Fund II Limited
                  Partnership.(1)

10.17*   --       Amended and Restated Note and Warrant Purchase Agreement dated
                  June 1997 and First Amendment to Amended and Restated Note and
                  Warrant Purchase Agreement dated August 1997 between Vision
                  Twenty-One, Inc. and Prudential Securities Group, Inc.(4)

10.18*   --       Form of Indemnification Agreement.(1)

10.22*   --       Business Management Agreement dated December 1, 1996 between
                  Vision Twenty-One, Inc. and Gillette & Associates, #6965,
                  P.A.(2)

10.24*   --       Business Management Agreement dated December 1, 1996 between
                  Eye Institute of Southern Arizona, P.C. and ExcelCare, P.C.
                  (as assigned to Vision Twenty-One, Inc.)(1)

10.27*   --       Business Management Agreement dated December 1, 1996 between
                  Vision Twenty-One, Inc. and Lindstrom, Samuelson & Hardten
                  Ophthalmology Associates, P.A.(1)

10.43*   --       Regional Services Agreement dated May 1997 between Vision
                  Twenty-One, Inc. and Richard L. Lindstrom, M.D.(1)

10.47*   --       Form of Contract Provider agreement(2)

10.53*   --       Note Purchase Agreement dated October 1997 between Vision
                  Twenty-One, Inc. and Prudential Securities Credit Corporation,
                  filed as Exhibit 4.10 to this Report and incorporated herein
                  by reference.(9)

10.55*   --       Letter Agreement of October 2, 1997 by and between Prudential
                  Securities Incorporated, as exclusive agent for obtaining a
                  $50.0 million credit facility, and Vision Twenty-One, Inc.(9)

10.56*   --       Letter Agreement of October 14, 1997 by and between Prudential
                  Securities Incorporated, as exclusive financial adviser in the
                  Block Acquisition, and Vision Twenty-One, Inc.(9)

10.57*   --       Letter Amendment dated December 30, 1997 to the Note and
                  Warrant Purchase Agreement between Vision Twenty-One , Inc.
                  and Prudential Securities Credit Corporation, filed as Exhibit
                  4.11 to this Report and incorporated herein by reference.(10)

10.59*   --       Credit Agreement dated as of January 30, 1998 among Vision
                  Twenty-One, Inc., the Banks who are a party thereto and Bank
                  of Montreal as Agent, filed as Exhibit 4.13 to this Report and
                  incorporated herein by reference.(11)

10.60*   --       Amended and Restated Credit Agreement dated as of July 1, 1998
                  among Vision Twenty-One, Inc. the Banks who are a party
                  thereto and Bank of Montreal as Agent.(15)

10.61*   --       First Amendment to the Amended and Restated Credit Agreement
                  dated as of February 23, 1999 among Vision Twenty-One, Inc.,
                  the Banks who are a party thereto and Bank of Montreal as
                  Agent.(18)

10.62*   --       Second Amendment to the Amended and Restated Credit Agreement
                  dated as of June 11, 1999 among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(18)

10.65*   --       Third Amendment to the Amended and Restated Credit Agreement
                  dated as of August 30, 1999 by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(19)

10.66*   --       Waiver Letter dated October 14, 1999 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(20)
</TABLE>


                                       69
<PAGE>   72
<TABLE>
<S>     <C>       <C>
10.67*   --       Fourth Amendment and Waiver to the Amended and Restated Credit
                  Agreement dated as of November 12, 1999 by and among Vision
                  Twenty-One, Inc., the Banks who are a party thereto and Bank
                  of Montreal as Agent.(21)

10.72*   --       Fifth Amendment to the Amended and Restated Credit Agreement
                  dated as of November 27, 1999 among Vision Twenty-One, Inc.,
                  the Banks who are a party thereto and Bank of Montreal as
                  Agent.(22)

10.73*   --       Sixth Amendment to the Amended and Restated Credit Agreement
                  dated as of December 3, 1999 among Vision Twenty-One, Inc.,
                  the Banks who are a party thereto and Bank of Montreal as
                  Agent.(22)

10.74*   --       Seventh Amendment to the Amended and Restated Credit Agreement
                  dated as of December 10, 1999 among Vision Twenty-One, Inc.,
                  the Banks who are a party thereto and Bank of Montreal as
                  Agent.(22)

10.75*   --       Waiver letter dated December 29, 1999 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(23)

10.76*   --       Waiver letter dated February 29, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(26)

10.77*   --       Waiver letter dated March 24, 2000 to the Amended and Restated
                  Credit Agreement by and among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(26)

10.81*   --       Agreement and Plan of Merger and Reorganization among Vision
                  Twenty-One, Inc., OC Acquisition Corp. and OptiCare Health
                  Systems, Inc.(26)

10.82*   --       Waiver letter dated as of April 14, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(26)

10.83*   --       Waiver letter dated as of May 5, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(26)

10.84*   --       Waiver letter dated as of May 19, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

10.85*   --       Waiver letter dated as of June 1, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

10.86*   --       Waiver letter dated as of June 9, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

10.87*   --       Waiver letter dated as of June 16, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

10.88*   --       Waiver letter dated as of June 29, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

10.89*   --       Waiver letter dated as of July 21, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as
                  Agent.(27)

10.90*   --       Agreement dated May 5, 2000 by and among Vision Twenty-One,
                  Inc. and Vision 21 of Southern Arizona, Inc., Vital Sight,
                  P.C., Ocusite-ASC, Inc. and Jeffrey I. Katz, M.D. and Barry
                  Kusman, M.D.(28)

Schedules (or similar attachments) have been omitted, and the Registrant agrees
to furnish supplementally a copy of any omitted schedule to the Securities and
Exchange Commission upon request.
</TABLE>


                                       70
<PAGE>   73
<TABLE>
<S>      <C>      <C>
10.91*   --       Waiver letter dated as of August 11, 2000 to the Amended and
                  Restated Credit Agreement among Vision Twenty-One, Inc., the
                  Banks who are a party thereto and Bank of Montreal as Agent.
                 (filed as Exhibit 4.34 to this Report)(28)

10.92*   --       Waiver letter dated September 8, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(29)

10.93*   --       Waiver letter dated September 29, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the banks who are a party thereto and Bank of Montreal
                  as Agent(30)

10.94*   --       Amended and Restated Employment Agreement dated July 31, 2000
                  by and between Mark B. Gordon, O.D. and MEC Health Care, Block
                  Vision, Inc and Vision 21.(30)

10.95*   --       Amended and Restated Employment Agreement dated July 31, 2000
                  by and between Ellen Gordon and MEC Health Care, Block Vision,
                  Inc and Vision 21.(30)

10.96*   --       Amended and Restated Employment Agreement dated July 31, 2000
                  by and between Andrew Alcorn and MEC Health Care, Block
                  Vision, Inc and Vision 21.(30)

10.97*   --       Amended and Restated Employment Agreement dated July 31, 2000
                  by and between Richard Jones and MEC Health Care, Block
                  Vision, Inc and Vision 21.(30)

10.98*   --       Amended and Restated Employment Agreement dated July 31, 2000
                  by and between Howard Levin, O.D. and MEC Health Care, Block
                  Vision, Inc and Vision 21.(30)

10.99*   --       Warrant Agreement dated as of November 10, 2000 Re: Class A
                  Warrants to Purchase Common Stock, Class B Warrants to
                  purchase Common Stock (filed as Exhibit 4.42 to this
                  Report).(31)


10.100*  --       Waiver letter dated as of October 13, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(31)

10.101*  --       Waiver letter dated as of October 27, 2000 to the Amended and
                  Restated Credit Agreement by and among Vision Twenty-One,
                  Inc., the Banks who are a party thereto and Bank of Montreal
                  as Agent.(31)

10.102*  --       Amended and Restated Credit Agreement dated as of November 10,
                  2000 among Vision Twenty-One, Inc., the lenders party hereto
                  and Bank of Montreal as Agent.(31)

10.103*  --       Convertible Note Agreement dated as of November 10, 2000 Re:
                  $6,385,000 7% convertible Senior Secured Notes Due October 31,
                  2003.(31)

10.104*  --       Registration Rights Agreement dated as of November 10, 2000
                  among Vision Twenty-One, Inc., and the Lenders thereto.(31)

10.105   --       First Amendment to Amended and Restated Employment Agreement
                  dated November 10, 2000 by and between Mark B. Gordon, O.D.,
                  Vision Twenty-One, Inc. MEC Healthcare, Inc., and Block
                  Vision, Inc.

10.106   --       First Amendment to Amended and Restated Employment Agreement
                  dated November 10, 2000 by and between Ellen Gordon, Vision
                  Twenty-One, Inc., MEC Health Care, Inc., and Block Vision,
                  Inc.

10.107   --       First Amendment to Amended and Restated Employment Agreement
                  dated November 10, 2000 by and between Andrew Alcorn, Vision
                  Twenty-One, Inc., MEC Health Care Inc., and Block Vision, Inc.
</TABLE>


                                       71
<PAGE>   74
<TABLE>
<S>     <C>       <C>
10.108   --       First Amendment to Amended and Restated Employment Agreement
                  dated November 10, 2000 by and between Richard Jones, Vision
                  Twenty-One, Inc., MEC Health Care Inc., and Block Vision, Inc.

10.109   --       First Amendment to amended and Restated Employment Agreement
                  dated November 10, 2000 by and between Howard Levin, O.D.,
                  Vision Twenty-One, Inc., MEC Health Care, Inc., and Block
                  Vision, Inc.

10.110   --       Agreement dated September 2000 by and between Vision
                  Twenty-One, Inc., Optometric Associates of Florida, P.A., TNG
                  Management, Inc. and Theodore N. Gillette.

10.111   --       Agreement dated September 14, 2000 by and between Vision
                  Twenty-One, Inc., Minnesota Eye Consultants, P.A., Richard L.
                  Lindstrom, M.D., David R. Hardten, M.D. , Thomas W. Samuelson,
                  M.D. and Laser Vision Centers, Inc.

10.112   --       First Amendment to Amended and Restated Credit Agreement dated
                  as of March 31, 2001, by and among Vision Twenty-One, Inc.,
                  the lenders party thereto and Bank of Montreal as Agent.
                  (filed as Exhibit 4.43 to this Report)

10.113   --       First Amendment to Convertible Note Agreement, Warrant
                  Agreement and Warrants dated as of March 31, 2001 by and among
                  Vision Twenty-One, Inc., the lenders party thereto and Bank of
                  Montreal as Agent. (filed as Exhibit 4.44 to this Report)

21       --       List of the subsidiaries of Vision Twenty-One, Inc.

23       --       Consent of Ernst & Young, LLP, independent auditors.

</TABLE>

* Previously filed as an Exhibit in the Company filing identified in the
  footnote following the Exhibit description and incorporated herein by
  reference.

(1)      Registration Statement on Form S-1 filed on June 13, 1997 (File No.
         333-29213).

(2)      Amendment No. 1 to Registration Statement on Form S-1 filed on July 23,
         1997.

(3)      Amendment No. 3 to Registration Statement on Form S-1 filed on August
         14, 1997.

(4)      Amendment No. 4 to Registration Statement on Form S-1 filed on August
         14, 1997.

(5)      Form 8-K filed September 30, 1997.

(6)      Registration Statement on Form S-1 filed on October 30, 1997
         (33-39031).

(7)      Amendment No. 1 to Registration Statement on Form S-1 filed on November
         3, 1997.

(8)      Form 10-Q filed on November 14, 1997.

(9)      Amendment No. 2 to Registration Statement on Form S-1 filed November
         19, 1997.


                                       72
<PAGE>   75

(10)     Form 8-K filed January 13, 1998.

(11)     Form 8-K filed February 10, 1998.

(12)     Form 8-K filed April 14, 1998.

(13)     Registration Statement of Form S-1 filed on April 30, 1998 (File No.
         333-51437).

(14)     Amendment No. 1 to Registration Statement on Form S-1 filed on May 12,
         1998 (333-51437).

(15)     Form 8-K filed July 10, 1998.

(18)     Form 10-K filed June 18, 1999.

(19)     Form 8-K filed August 30, 1999.

(20)     Form 8-K filed October 14, 1999.

(21)     Form 10-Q filed November 14, 1999.

(22)     Form 8-K filed December 13, 1999.

(23)     Form 8-K filed January 10, 2000.

(26)     Form 10-K filed May 5, 2000.

(27)     Form 8-K filed July 31, 2000.

(28)     Form 10-Q filed August 14, 2000.

(29)     Form 8-K filed September 15, 2000.

(30)     Form 10Q filed November 14, 2000.

(31)     Form 8K filed December 5, 2000.


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