U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  FORM 10 - KSB

 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 0-27561

                                EYECITY.COM, INC.
                 (Name of Small Business Issuer in Its Charter)

         DELAWARE                                    11-3327465
(State or Other Jurisdiction  of          (I.R.S. Employer Identification No.)
  Incorporation or Organization)

                  199 Lafayette Drive, Syosset, New York 11791
                    (Address of Principal Executive Offices)
                                 (516) 496-6070
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:  None
Securities  registered  under Section  12(g) of the Exchange  Act:
Common Stock $.001 par value per share

      Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such 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-B 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-KSB or any amendment to
this Form 10-KSB. |X|

Issuer's revenues for the fiscal year ended December 31, 2000:  $2,544,000.

The approximate aggregate market value of shares of Common Stock held by
non-affiliates of the registrant was approximately $562,000 as of March 26,
2001.

The number of shares of Common Stock outstanding was 13,506,714 as of March 26,
2001.

Transitional Small Business Disclosure Format.        Yes |_|          No |X|

<PAGE>

                                     PART I

--------------------------------------------------------------------------------
This report contains certain forward looking statements, which may involve known
and unknown material risks, uncertainties and other factors not under EyeCity's
control including without limitation its ability to operate as a going concern,
the need for additional financing, the impact of competition, the management of
growth, compliance with applicable regulatory requirements, EyeCity's ability to
implement its long term business plan for acquiring complementary businesses and
EyeCity's ability to enter into agreements with marketing or distribution
partners, which may cause actual results, performance and achievements of
EyeCity to be materially different from EyeCity's expectations.
--------------------------------------------------------------------------------

ITEM 1. DESCRIPTION OF BUSINESS

General

      EyeCity.com, Inc. ("EyeCity") in January 2001 refocused its business
strategy and is currently engaged in the marketing, distribution and retail sale
over the Internet of its EyeTools(R) computer glasses intended to relax the eyes
and ameliorate visual discomfort, focus difficulties, headaches and other
related problems associated with Computer Vision Syndrome (CVS) and Foggles(R)
optical products for the aviation, hunting and shooting industries through
distributors, catalogues, direct advertising, retail stores and the Internet.

      In addition, EyeCity previously announced that it intends to establish a
turnkey business-to-business ("B2B") and business -to-professional ("B2P")
electronic exchange providing end-to-end B2B and B2P e-commerce solutions to the
eyecare professional. In this regard, EyeCity expects to offer a suite of
services, including, e-commerce store design and fulfillment services to
professional eyecare providers including ophthalmologists, optometrists, and
opticians who want to create their own customized online stores, providing full
e-commerce capabilities for their patients and customers. Subject to obtaining
appropriate financing, EyeCity plans to provide the tools and systems necessary
for eyecare providers to function in e-commerce markets, including merchandise
selection and sourcing, storefront creation, hosting, advertising, customer
service, credit card processing and fulfillment services.

      EyeCity's B2B and B2P e-commerce model is also intended to help such eye
care providers retain customer relationships and increase sales. Unlike
traditional affiliate programs that refer customers to other web sites to shop,
EyeCity's B2B and B2P program is intended to enable eyecare providers to drive
traffic to their own stores, thereby building loyalty and repeat sales. With
EyeCity's planned suite of e-commerce service, such eye care providers will be
able to customize their online store to the unique interests of their audience.
Products offered for sale would be available through EyeCity's extensive
database, with transaction processing that creates a single unified shopping
experience that is seamless to the customer. See "Investment Considerations."

      EyeCity markets its patented EyeTools computer eyeglasses, which were
developed to relieve Computer Vision Syndrome ("CVS"), a potentially
debilitating condition that results in headaches, blurred vision and eyestrain
often associated with CVS under the website ergovision.com. EyeTools computer
eyeglasses feature a patented lens technology that enables the computer user to
focus more clearly by minimizing glare and equalizing all sources of ambient
lighting, such as from windows and overhead sources.


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<PAGE>

      From EyeCity's inception through December 1998, EyeCity's business
strategy was to become a leading producer, distributor and marketer of ergonomic
computer eyewear products designed to alleviate health-related problems
associated with CVS. In January 1999, EyeCity refocused its business strategy to
capitalize on the internet retailing opportunities associated with the optical
product industry. In this regard, in 1999 EyeCity acquired Eye Glass Place.com,
Inc., Peeper's Sunglasses and Accessories, Inc. and SunSource Technology, Inc.
See Note 6 of "Notes to Consolidated Financial Statements" for additional
information regarding these acquisitions. In January 2001 the Company divested
itself of substantially all of its business-to-consumer ("B2C") acquired
websites, including Binoculars.com, Peepers.com, and EyeGlassPlace.com, which
generated substantially all of the Company's sales in 1999 and 2000 as well as
its centralized Minnesota distribution facility that was used to coordinate and
process order fulfillment and customer service for all of its websites. The
Company is outsourcing the websites OpticalSite.com, SunglassSite.com and
Abeam.com until they are disposed of.

      In addition, in September 1999 EyeCity acquired a non-exclusive three-year
license from Yahoo! Inc. to use the "Yahoo!" name and logo for the distribution
and marketing of eyewear and eyewear accessories throughout the United States.
Contemporaneously with this transaction, EyeCity entered into a distributor
agreement with Sun Optics d/b/a Insight Eyeworks, Inc. under which Insight will
manufacture, market and distribute the Yahoo! eyewear and eyewear accessories in
traditional retail channels in the United States other than through the Internet
and other e-commerce channels.

      EyeCity was incorporated in May 1996 in New York under the name
Ergovision, Inc., and reincorporated in Delaware in April 1997 under the name
Ergovision, Inc. In May 1999, Ergovision, Inc. changed its name to EyeCity.com,
Inc. EyeCity's principal executive offices are located at 199 Lafayette Drive,
Syosset, New York 11791, and its telephone number is 516-496-6070.

Industry Overview

      During the 1980's and 1990's, there has been an unparalleled growth in the
computer industry. The installed base of PCs currently exceeds 80 million in the
U.S. and 200 million worldwide according to the January 1995 issue of Spectrum
Magazine. Information Week magazine reports that 82 million personal computers
were shipped worldwide in 1997 alone. According to IDC/LINK Research and Data
Quest, 44%-47% of the 80 million American homes have computers.

      As the demand for computers has significantly increased so has the rate of
health problems believed to be related to the use of computers. "In fact nearly
all surveys (NIOSH, CAL/OSHA, AMA) of computer workers show that vision related
problems are the most frequently reported health concern by VDT operators [3 out
of 4]," according to a report by VDT Solution entitled "Ergonomic Insights &
Innovations for the Computer Workplace." Moreover, a news release from the
American Optometric Association (1997) stated that Computer Vision Syndrome is
an epidemic that costs American companies and employees $1.9 billion per year to
diagnose and treat.

      Anyone using a computer regularly for two hours or more a day is at risk,
according to James Sheedy, OD, Ph.D., Chief of the VDT Eye Clinic at the
University of California at


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<PAGE>

Berkeley. According to the World Health Organization, while it appears that
VDT's do not lead to permanent damage to the eyes, visual discomfort is so
widespread among operators that it must be regarded as a health problem.

      Work at a VDT causes visual discomfort from the glare reflected from the
VDT as well as reflections off of the keyboard and all other surfaces or other
sources of light directed at the eyes that are in the vicinity of the VDT. A
variety of approaches have been used to create a less distracting and less
stressful visual environment. Overhead luminares have been shielded or utilized
with dimmers or diffusers. Windows have been covered with venetian blinds and
the general level of overhead lighting has been lowered. In some instances,
polarization filters, micromesh filters or color filters have been positioned in
front of the viewing screen to minimize glare. However, such approaches have had
less than a desirable result. For example, while the use of anti-glare screens
has had an impact on relieving CVS, they simply filter light reflected off the
monitor glass. Therefore, the effect of ambient lighting from multiple sources
is not addressed by this technique. Whenever the eye's gaze is changed from an
object of one luminance level to an object of a different luminance level, a
period of time is required for adaptation to the second level. The greater the
difference in these luminance levels, the longer the eye requires to effect this
adaptation. The sensitivity of the eye to detect and follow detail from a VDT is
maximized when the eye is properly adapted to the luminance level at which it is
looking and the eye is in a relaxed state.

Business Strategy

The Company's short-term objective is to establish a strong brand name and
corporate identity through retail distribution, internet alliances and sales,
and direct mail. The Company's long-term business objective is to become a
leading provider of ergonomic and computer accessory products that improve the
health and safety of workers in the workplace and at home. When possible, the
Company intends to introduce proprietary products, but may also market products
produced by others. While the Company intends to emphasize the sale of products
under its own branded label to foster name recognition and build brand loyalty,
it may also sell products under private label to other companies with existing
distribution systems.

      Management has formulated a multifaceted marketing strategy for its
EyeTools computer eyeglasses and EyeTools eyedrops products. The Company intends
to:

o     Gain brand name recognition and distribution into computer retailers by
      developing relationships with national computer distributors and
      manufacturers representatives. The Company will support its retail sales
      effort through co-op and market development funds, along with advertising,
      in-store product demonstrations, sales materials, public relations,
      bundling with other successful products, and other means to help achieve
      push-through. The promotional efforts will be spearheaded by a large
      strategic sales company.

o     Gain direct sales to computer retailers and bookstores by developing
      response-oriented trade advertising and public relations campaigns.


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<PAGE>

o     Gain direct sales to consumers by developing an Internet presence via
      advertising, listing opportunities on government and other sites,
      developing promotional relationships with other Internet companies, and by
      providing valuable information on the benefits of ergonomically designed
      computer products.

o     Develop a consumer public relations campaign, a school educational
      campaign and a print advertising campaign for magazines and computer
      catalogs.

o     Gain direct sales to corporations seeking to improve worker conditions and
      productivity by using mailings, a direct sales force and educational and
      testing programs.

o     Market a second generation product to retail optical chains and
      optometrists and to file for patent protection where applicable on the
      second generation product.

Products

      EyeCity currently operates the following websites, offering the following
products:

         ----------------------------------------------------------------
                    Websites                        Products
                    --------                        --------
         ----------------------------------------------------------------
                 Ergovision.com          Computer Glasses and eyedrops
         ----------------------------------------------------------------
                  Foggles.com             Sports and lifestyle glasses
         ----------------------------------------------------------------

      EyeCity's principal merchandising strategy is to distinguish its websites
by offering proprietary optical products. EyeCity currently carries the
following merchandise lines:

      o     EyeTools Computer Eyewear Products. EyeCity offers three different
            styles of its patented EyeTools computer glasses. EyeTools are
            intended to relax the eyes and ameliorate visual discomfort, focus
            difficulties, headaches and other related problems associated with
            CVS. EyeCity also offers EyeTools computer eyedrops which are
            designed to treat dry eye syndrome caused by prolonged computer use.

      o     Foggles Sports And Lifestyle Glasses. EyeCity offers Foggles
            patented optical products for the aviation, hunting and shooting
            industries through distributors, catalogues, direct advertising,
            retail stores and the Internet.

      o     Accessories. EyeCity sells cords, cleaning cloths, eyeglass cases
            and other related optical accessories. EyeCity intends to increase
            its optical accessory sales by devoting additional resources to
            improve the quality, breadth and visual presentation of such
            merchandise.

Marketing and Promotion - see above "Business Strategy"

Distribution, Fulfillment and Inventory

      Currently, EyeCity's websites operate as independent entities and orders
are accumulated and processed. Under the present system, once an order is
received, EyeCity checks the order against its inventory. Orders are shipped
through one of several channels, as selected by the


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<PAGE>

customer, including regular U.S. mail, United Parcel Service, second-day air or
overnight courier, with shipping charges varying by the carrier selected. Orders
are shipped the same day that they are placed if the product is in stock. If the
customer desires to order the currently out-of-stock product, it is back-ordered
and is shipped to the customer as soon as it is available.

      EyeCity's success depends, in part, on its ability to provide prompt,
accurate and complete service to its customers on a competitive basis, and its
ability to purchase and promote products, manage inventory, ship products,
manage sales and marketing activities and maintain efficient operations. A
significant disruption in EyeCity's management or websites could adversely
affect EyeCity's relations with its customers and its ability to manage its
operations and would have a material adverse effect on EyeCity's business,
financial condition and results of operations. EyeCity's ability to compete
effectively and to manage future growth, if any, will require EyeCity to
continue to improve its financial and management controls and to expand, train
and manage its employee base. EyeCity's failure or inability to accomplish any
of these goals could have a material adverse effect on its business, financial
condition and results of operations.

      EyeCity fulfills orders for prescription eyeglasses through eyeglass
grinding laboratories in the United States with whom EyeCity has non-contractual
arrangements. When an order is placed with EyeCity, EyeCity provides the
laboratory with the prescription information provided by the customer and the
frames that have been selected by the customer. Lenses are usually manufactured
by the laboratory within two to three business days if the necessary materials
are in stock; otherwise, orders are processed as soon as possible after the
materials become available.

      EyeCity's success depends, in part, on its ability to provide prompt,
accurate and complete service to its customers on a competitive basis, and its
ability to purchase and promote products, manage inventory, ship products,
manage sales and marketing activities and maintain efficient operations. A
significant disruption in EyeCity's management or websites could adversely
affect EyeCity's relations with its customers and its ability to manage its
operations and would have a material adverse effect on EyeCity's business,
financial condition and results of operations. EyeCity" ability to compete
effectively and to manage future growth, if any, will require EyeCity to
continue to improve its financial and management controls and to expand, train
and manage its employee base. EyeCity's failure or inability to accomplish any
of these goals could have a material adverse effect on its business, financial
condition and results of operations.

Competition

      While the Company is not aware of any other company selling computer
eyeglasses designed to both facilitate the eye's adjustment to variations in
ambient light and to reduce glare from VDTs, there are a number of companies
which produce tinted computer eyeglasses and sunglasses which are marketed as
products that help reduce glare from VDTs. The Company believes that sunglasses
are not effective in the VDT environment because they block out too much light.
EyeTools will also compete with several other existing products designed to
reduce glare from VDTs, such as polarization filters, micromesh filters, color
filters and hoods, as well as anti-reflection coatings applied to glare screens
and prescription eyeglasses. These products are produced and sold to the
consumer by several VDT original equipment manufacturers and by manufacturers of
computer enhancement products, ranging from large corporations with significant
resources to small privately-owned niche companies. Entry into the
non-prescription


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<PAGE>

eyewear market is not capital intensive and the Company could face competition
from large lens and eyeglass manufacturers should they choose to do so, as well
as from others.

      The Company's EyeTools computer eyedrops will compete with large and well
financed manufacturers of ophthalmic eyedrops, which are marketed as solutions
which relieve eye discomfort or produce artificial tears to moisten dry eyes.
These manufacturers, which include Alcon Laboratories, Inc., Allergan, Inc.,
Bausch & Lomb and Pfizer, Inc., account for the vast majority of
over-the-counter eye drop sales in the United States under such brands as Clear
Eyes, Murine Plus and Visine (which are designed to relieve eye discomfort) and
Hypotears, Refresh and Tears Naturale (which are designed to relieve dry eyes).
While these products have not been specifically marketed to computer users in
the past, Bausch & Lomb has recently introduced eyedrops expressly designed for
the computer user market. All of such manufacturers have significantly more
resources than the Company. The Company will seek to compete with Bausch & Lomb
and others who may enter this market by entering into arrangements with computer
manufacturers and computer retailers for inclusion of EyeTools computer eyedrops
(with its EyeTools computer eyeglasses product) in the computer packaging and by
packaging EyeTools computer eyedrops with its EyeTools computer eyeglasses (when
EyeTools is otherwise sold) to develop name recognition.

Government Regulation

      General. EyeCity is not currently subject to direct federal, state or
local regulation or laws or regulations applicable to access to or commerce on
the Internet, other than as discussed below and other than regulations
applicable to businesses generally. However, due to the increasing popularity
and use of the Internet and other online services, it is possible that a number
of laws and regulations may be adopted with respect to the Internet or other
online services covering issues such as user privacy, freedom of expression,
pricing, content, quality of products and services, taxation, advertising,
intellectual property rights and information security. The adoption of any such
laws or regulations might decrease the rate of growth of Internet use, which in
turn could decrease the demand for EyeCity's products or increase its cost of
doing business or in some other manner have a material adverse effect on
EyeCity's business, results of operations and financial condition. In addition,
applicability to the Internet of existing laws governing issues such as
regulatory licensing or permit requirements, property ownership, copyrights and
other intellectual property issues, taxation, libel, obscenity and personal
privacy is uncertain. The vast majority of such laws were adopted prior to the
advent of the Internet and related technologies and, as a result, do not
contemplate or address the unique issues of the Internet and related
technologies.

      At present, EyeCity does not collect sales or other similar taxes in
connection with the sale of its products to consumers located outside the state
of New York. From time to time, various states have sought to impose state sales
tax collection obligations on out-of-state direct marketing or internet-based
companies such as EyeCity. A successful assertion by one or more states that
EyeCity should have collected or should be collecting sales taxes on the sale of
its products could result in additional costs and administrative expenses to
EyeCity and corresponding price increases to its customers, which could
adversely affect EyeCity's business, financial condition and results of
operations.


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<PAGE>

      Several states have also proposed legislation that would limit the uses of
personal user information gathered online or require online services to
establish privacy polices. The Federal Trade Commission has also initiated
action against at least one online service regarding the manner in which
personal information is collected from users and provided to third parties.
Changes to existing laws or the passage of new laws intended to address these
issues, including some recently proposed changes, could create uncertainty in
the marketplace that could reduce demand for EyeCity's products or increase the
cost of doing business as a result of litigation costs or increased costs, or
could in some other manner have a material adverse effect on EyeCity's business,
results of operations and financial condition.

      Federal Regulation of Prescription Eyewear. Contact lenses and eyeglasses
are separately regulated by the Federal government. Contact lenses are regulated
by the Food and Drug Administration as "medical devices." The Food and Drug
Administration classifies medical devices as Class I, Class II or Class III and
regulates them to varying degrees, with Class I medical devices subject to the
least amount of regulation and Class III medical devices subject to the most
stringent regulations. Generally, contact lenses are classified as Class II
medical devices if intended only for daily wear and as Class III medical devices
if intended for extended wear. These regulations generally apply only to
manufacturers of contact lenses, and therefore do not directly impact EyeCity.
Federal regulations also require the labels on "medical devices" to contain
adequate instructions for their safe and proper use. However, there is an
exemption from this requirement for medical devices the use of which is not safe
except under the supervision of a practitioner licensed by law to direct the use
of such device. Devices which fall in this exception must contain as part of
their labeling the statement "Caution: Federal law restricts this device to sale
by or on the order of     ," the blank to be filled in with the word physician
or other practitioner authorized by the law of the state in which the
practitioner practices to use or order the use of the device. EyeCity believes
that this exception is often misconstrued as being a federal requirement that
the device be sold only pursuant to a prescription. The Food and Drug
Administration considers contact lenses to qualify for this labeling exemption;
however, there is no federal law that requires that contact lenses be sold only
pursuant to a prescription.

      Federal law requires that all dress eyewear (i.e., sunglasses or
prescription eyeglasses) be tested for impact resistance. This testing is
generally conducted by the lens manufacturer, but eyewear must be retested if a
protective or other coating is applied after initial manufacture. So long as a
retailer or optician does not manufacture or coat the eyewear, the retailer or
optician is entitled to rely on representations from the manufacturer or
laboratory, as applicable, as to the completion of all necessary impact
resistance tests on any given piece of eyewear. EyeCity's operating practice has
been to rely on these types of representations from manufacturers or
laboratories, as applicable.

      State Regulation of Prescription Eyewear. Because there is no applicable
federal law that regulates the distribution of prescription eyewear, the sale
and delivery of prescription eyewear to the consumer is subject to state laws
and regulations. EyeCity intends to sell prescription eyewear to customers in
all 50 states and each sale may be subject to the laws of the state where the
customer is located. The laws and regulations governing the sale and delivery of
prescription eyewear vary from state to state, but generally can be classified
in four categories: (i) laws that require prescription eyewear only be dispensed
pursuant to a prescription; (ii) laws that require the dispenser to be licensed
by the state as an optician, optometrist, ophthalmologist


                                       7
<PAGE>

or other professional authorized to dispense prescription eyewear; (iii) laws
that require prescription eyewear be dispensed only in a face-to-face
transaction and (iv) laws with requirements that are unclear or do not
specifically address the sale and delivery of prescription eyewear. Many of the
states requiring that prescription eyewear be dispensed in face-to-face meetings
or by a person licensed by such state to dispense prescription eyewear also
require that prescription eyewear only be dispensed pursuant to a valid
prescription.

      The laws and regulations in a significant number of states require that
prescription eyewear only be sold to a consumer pursuant to a valid
prescription. In some states, satisfying this prescription requirement obligates
the dispenser only to verify the customer's prescription with the customer's
prescriber, while other states specifically require that a written prescription
(which, in some states, must be an original) be obtained before providing the
prescription eyewear to the customer or that the prescription must have been
written within a specified period (e.g., two years) prior to fulfillment.
EyeCity's operating practice will be to attempt to obtain a valid prescription
from each of its customers or his/her eyecare practitioner. If the customer does
not have a copy of his/her prescription, EyeCity will attempt to contact the
customer's doctor to obtain a copy of, or verify the customer's prescription.
With respect to contact lenses, if EyeCity is unable to obtain a copy of or
verify the customer's prescription, EyeCity intends to complete the sale and
ship the lenses to the customer based on the prescription information provided
by the customer. EyeCity intends to retain copies of the written prescriptions
that it will receive and maintain records of its communications with the
customer's prescriber.

      EyeCity expects that its ability to comply with state laws and regulations
requiring a valid prescription will be hampered because EyeCity's customers will
often be unable to get a copy of their prescription. EyeCity believes that
optometrists, ophthalmologists and other contact lens prescribers have
historically refused to release copies of a patient's contact lens prescription
to the patient. In addition, such providers have refused to release or verify
prescriptions at the request of mail order companies. Federal law requires
prescribers to release prescriptions for eyeglasses to a patient, but the issue
of whether or not a prescriber must release a contact lens prescription to the
patient, or at the patients request, is currently governed by state law. There
are approximately 22 states that require contact lens prescribers to release the
prescriptions for contact lenses to the patient. However, even in states with a
mandatory release law, EyeCity believes that many prescribers will continue to
refuse to release prescriptions to their patients or to online or mail order
contact lens distributors, including EyeCity.

      In addition to requiring a valid prescription, a substantial number of
states also require that prescription eyewear only be dispensed by a person
licensed to do so under that state's laws. A dispenser may be required to be
licensed as an optometrist, ophthalmologist, optician, ophthalmic dispenser or
prescription eyewear dispenser, depending on the state in which the customer is
located. Also, certain states require that prescriptions only be filled in
facilities registered with such states. EyeCity formerly employed an optician at
its Duluth, Minnesota facility; however, neither EyeCity nor any of its
employees is a licensed or registered dispenser of contact lenses in any of the
other states in which EyeCity expects to do business nor are any of EyeCity's
facilities registered with any state in connection with the dispensing of
prescription eyewear. EyeCity has not initiated the application or registration
process in any jurisdiction, but it intends to do so where appropriate. The laws
in a number of states effectively prohibit the sale of prescription eyewear
through the mail by requiring that a person licensed under that state's law to
dispense prescription eyewear be in personal attendance at the place of sale.
Lastly, there


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are several states in which the laws and regulations do not specifically address
the issue of who may dispense prescription eyewear or are unclear with respect
to the requirements for dispensing prescription eyewear. For many of the laws
described in this paragraph, it is not clear whether some or all of these laws
would be applicable to EyeCity or whether the states that have enacted these
laws would have jurisdiction over EyeCity.

      Any action brought against EyeCity based on its failure to comply with
applicable state laws and regulations could result in significant fines or
criminal penalties to EyeCity, EyeCity being prohibited from making sales in a
particular state and/or EyeCity being required to comply with such laws. Such
required compliance could result in: (i) increased costs to EyeCity; (ii) the
loss of a substantial portion of customers for whom EyeCity is unable to obtain
or verify their prescription; and (iii) the inability to sell to customers at
all in a particular state if EyeCity cannot comply with such state's laws. The
occurrence of any of the above results could have a material adverse effect on
EyeCity's ability to sell prescription eyewear and continue to operate
profitably. Furthermore, there can be no assurance that states will not enact or
impose laws or regulations that prohibit mail order or online dispensing of
prescription eyewear or otherwise impair EyeCity's ability to sell prescription
eyewear and continue to operate profitably. EyeCity has not obtained an opinion
of counsel with regard to its compliance with applicable state laws and
regulations, and information contained herein regarding EyeCity's compliance
with applicable state laws and regulations should not be construed as being
based on an opinion of counsel.

      EyeCity has received a marketing clearance (as a device substantially
equivalent to an existing category of ophthalmic device) for its EyeTools(R)
line of computer glasses from the Federal Food and Drug Administration following
a "Section 510(k) Submission."

Intellectual Property

      EyeCity holds rights, title and interest to six U.S. patents for various
specialized eyeglasses, as set forth in Table I below.

      EyeCity holds rights, title and interest in the United States to three
registered trademarks (Beamblockers and Design #1,196,550, filed October 13,
1998; Foggles #1,210,355 filed September 18, 1982 and EyeTools # 2,350,708 filed
July 29, 1998), and to certain trademark applications pending in the U.S. Patent
and Trademark Office, used or intended to be used in connection with its
products and services, or for which it has obtained rights at common-law, based
on use in interstate commerce, (see Table II below). EyeCity believes that such
marks represent significant value and goodwill to the company in marketing its
products and services. EyeCity has entered into confidentiality and invention
assignment agreements with its employees and contractors, and nondisclosure
agreements with parties with whom it conducts business, in order to limit access
to and disclosure of its proprietary information. However, there can be no
assurance that these contractual arrangements or the other steps taken by
EyeCity will prove sufficient to prevent misappropriation of EyeCity's
technology or to deter independent third-party development of similar
technologies.

      EyeCity has rights in various domain names, certain of which it presently
uses to market its services, as set forth below in Table III. EyeCity believes
that such domain names represent significant value and goodwill to the company
in marketing its products and services. If third parties obtain rights to use
similar domain names, these third parties may confuse EyeCity's


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<PAGE>

customers and cause its customers to inadvertently place orders with these third
parties, which could result in lost sales for EyeCity and could damage its
brand. Due to the unique nature of domain names, EyeCity may have only limited
proprietary rights in its domain names, except to the extent greater protection
is granted under trademark or tradename law. As a result, EyeCity cannot assure
you that it will be able to retain the use of certain of its domain names, which
could have a material adverse affect on EyeCity's business.

      The following tables set forth a list of EyeCity's material intellectual
properties:

                                     TABLE I

                                     PATENTS

         Title                  Issued           Expiration        Patent Number

Eyewear With Translucent        9/11/84            1/11/02           4,470,673
Superior field of view

Eyewear With Translucent        9/24/85            9/24/02           4,542,964
Superior Field of View

Visual Occlusion                10/6/87            10/6/04           4,698,022
Apparatus For Pilot
Training

Eyewear Having                  7/11/95            1/10/14           5,432,568
Translucent Superior And
Inferior Fields of View

Night Driving Glasses           6/27/95            6/27/12           5,428,409

Translucent Eyewear            12/12/00           11/18/18           6,159,397
Lenses and Method Of
Manufacture Therefor

                                    TABLE II
                     PENDING MATERIAL TRADEMARK APPLICATIONS

Mark Name                  App #
                           App. Date

ABEAM                      75/777533
                           August 16, 1999

EYECITY                    75/673817
                           April 05, 1999

EYECITY.COM                75/673816
                           April 05, 1999


                                       10
<PAGE>

EYETOOLS                   75/459288
                           March 30, 1998

ICITY                      75/673815
                           April 05, 1999

ICITY.COM                  75/673814
                           April 05, 1999

OPTICALSITE                75/721891
                           June 4, 1999

SUNGLASSSITE               75/777534
                           August 16, 1999

                                    TABLE III

                           DOMAIN NAMES PRESENTLY USED

foggles.com                              sunglasssite.com
ergovision.com                           abeam.com
eyecity.com                              opticalsite.com

      In addition, EyeCity in 1999 acquired a three year non-exclusive license
from Yahoo! Inc. to use the "Yahoo!" name and logo for the distribution and
marketing of eyewear and eyewear accessories throughout the United States. In
connection with this license, EyeCity was required to pay to Yahoo! Inc. an
amount equal to the greater of (i) a percentage-based royalty, or (ii) a minimum
guaranteed royalty. Contemporaneously with this transaction, EyeCity entered
into a distributor agreement with Sun Optics d/b/a Insight Eyeworks, Inc., under
which Insight would manufacture, market and distribute the Yahoo! eyewear and
eyewear accessories in traditional retail channels in the United States other
than through the Internet and other e-commerce channels.

Employees

      As of March 23, 2001, EyeCity employed 5 full-time employees. None of
EyeCity's employees are covered by collective bargaining agreements and EyeCity
believes that its relations with its employees are good. EyeCity is dependent to
a large degree on the services of its management team, particularly Mark H.
Levin, its President and Chief Executive Officer, and Mark R. Suroff, its Chief
Operating Officer, Executive Vice President, Secretary and Treasurer. The loss
of any of EyeCity's key executives could have a material adverse effect on
EyeCity. EyeCity does not maintain key man insurance coverage on any of its
employees.


                                       11
<PAGE>

Investment Considerations Relating To Our Business

      In analyzing an investment in the Company, one should carefully consider
the investment considerations described below. If any of the matters
contemplated by the following investment considerations occur, our business,
financial condition or results of operations could be materially adversely
affected.

We may not be able to continue operating as a "going concern" without additional
capital through public or private offerings.

      As of December 31, 2000, EyeCity had negative working capital of
approximately $1,973,000. We believe that our currently available funds will be
sufficient to meet our anticipated working capital needs through the end of
April 2001. Thereafter, we need to raise additional funds. If we raise
additional funds through the issuance of equity or convertible debt securities,
the percentage ownership of our current stockholders will be reduced, our
stockholders may experience additional dilution and such securities may have
rights, preferences and privileges senior to those of our Common Stock. There
can be no assurance that additional financing will be available on terms
favorable to us or at all. If adequate funds are not available or are not
available on acceptable terms, we may not be able to continue to implement our
business plan. This inability could have a material adverse effect on our
business, results of operations and financial condition.

Losses.

      The Company has incurred significant losses from operations for the years
ended December 31, 1998, 1999 and 2000 ($1,410,324, $4,130,832 and $5,488,329,
respectively), and there can be no assurance the Company will not continue to
incur such losses or will ever generate revenues at levels sufficient to support
profitable operations. The Company's working capital deficit was approximately
$166,000, $2,092,000 and $1,973,000 as of December 31, 1998, 1999 and 2000,
respectively.

Our sales growth will not continue at historical rates.

      Since our formation in May 1996, and especially since our acquisitions
effected in the second quarter of 1999, we have experienced net sales growth
increasing from approximately $26,000 in 1997 to approximately $96,000 in 1998
and approximately $2,633,000 in 1999. Net sales were approximately $2,544,000 in
2000. However, with the disposition in January 2001 of substantially all of its
business-to-consumer websites, sales will materially decrease.

      There is no assurance that our prior or future acquisitions will have a
positive effect on our business, or that we will not experience future
unforeseen difficulties in connection with these acquisitions.

      If appropriate opportunities present themselves from time to time, we
intend to acquire businesses, technologies, services or products that we believe
are strategic to our business. There can be no assurance that we will be able to
identify, negotiate or finance future acquisitions successfully, or to integrate
the acquisitions with our current business. The process of integrating an
acquired business, technology, service or product into EyeCity may result in
unforeseen operating difficulties and expenditures and may absorb significant
management attention that would otherwise be available for ongoing development
of our business. Moreover, there can be no assurance that the anticipated
benefits of any acquisition will be realized. Future acquisitions could involve
our issuance of additional equity securities which could have a


                                       12
<PAGE>

dilutive effect on current stockholders, the incurrence of debt, contingent
liabilities and/or amortization expenses related to goodwill and other
intangible assets, which could materially adversely affect our business, results
of operations and financial condition. Any future acquisitions of other
businesses, technologies, services or products might require us to obtain
additional equity or debt financing, which might not be available on terms
favorable to us, or at all, and such financing, if available, might dilute those
shares of common stock currently held by our stockholders.

A portion of our sales may not comply with applicable state laws and regulations
governing the delivery and sale of prescription eyewear.

      The sale and delivery of contact lenses and prescription eyewear are
generally governed by state laws and regulations. We sell to customers in all 50
states and each sale may be impacted by the laws of the state where the customer
is located. The laws and regulations relating to the delivery and sale of
contact lenses and prescription eyewear vary from state to state, but can
generally be classified into five categories:

      laws that require contact lenses and prescription eyewear to be dispensed
only pursuant to a valid prescription;

      laws that require the dispenser to be licensed by the state as an
optometrist, ophthalmologist or other professional authorized to dispense
lenses;

      laws that require contact lenses and prescription eyewear be dispensed
only in a face-to-face transaction;

      laws with requirements that are unclear or do not specifically address the
sale and delivery of contact lenses or prescription eyewear; and

      laws that we believe place no restrictions on the dispensing of contact
lenses or prescription eyewear.

      Many of the states requiring that contact lenses and prescription eyewear
be dispensed in face-to-face meetings or by a person licensed by such state to
dispense contact lenses and prescription eyewear also require that such products
only be dispensed pursuant to a valid prescription.

      Our operating practice is to attempt to obtain a valid prescription from
each customer or his/her eyecare practitioner. If we are unable to obtain a copy
of or verify the customer's prescription, it is our practice to ship the product
to the customer based on the information that the customer has provided.

      Any action brought against us based on our failure to comply with
applicable state laws and regulations could result in us being subject to
significant fines, being prohibited from making sales in a particular state
and/or being required to comply with such laws. Such required compliance could
result in:

      increased costs to us;

      the loss of a substantial portion of our customers for whom we are unable
to obtain or verify their prescription; and

      the inability to sell to customers at all in a particular state if we
cannot comply with such state's laws.


                                       13
<PAGE>

      The occurrence of any of the above results could have a material adverse
effect on our ability to sell contact lenses and prescription eyewear and to
operate profitably. Furthermore, we cannot assure you that states will not enact
or impose laws or regulations that prohibit online dispensing of contact lenses
and prescription eyewear or otherwise impair our ability to sell contact lenses
and prescription eyewear and continue to operate profitably. We have not
obtained an opinion of counsel with regard to our compliance with applicable
state laws and regulations, and information contained herein regarding our
compliance with applicable state laws and regulations should not be construed as
being based on an opinion of counsel.

We cannot assure you that third parties will not infringe on our intellectual
property rights or that third parties will not claim we infringe on their
intellectual property rights.

      We regard the protection of our intellectual property rights as critical
to our future success and we rely on a combination of copyright, trademark,
service mark and trade secret laws and contractual restrictions to establish and
protect our intellectual property rights in products and services. We have
entered into confidentiality and invention assignment agreements with our
employees and contractors, and nondisclosure agreements with parties with whom
we conduct business in order to limit access to and disclosure of our
proprietary information. There can be no assurance that these contractual
arrangements or the other steps taken by us will prove sufficient to prevent
misappropriation of our technology or to deter independent third-party
development of similar technologies.

      Third parties have commenced legal proceedings alleging that certain of
our tradenames and URL's infringe on the proprietary rights of third parties.
See "Legal Proceedings."

We are dependent to a large degree on the services of our management team.

      We are dependent to a large degree on the services of our management team,
particularly Mark H. Levin, our President and Chief Executive officer, and Mark
R. Suroff, our Chief Operating Officer, Executive Vice President, Secretary and
Treasurer. In July 1998, Messrs. Levin and Suroff each entered into employment
agreements with us which were amended in July 2000. The loss of any of our key
executives could have a material adverse effect on us. Our ability to manage our
anticipated growth will depend on our ability to identify, hire and retain
highly skilled management and technical personnel. Competition for such
personnel is intense. As a result, we cannot assure you that we will be
successful in attracting and retaining such personnel, and the failure to
attract and retain such personnel could have a material adverse effect on our
business, financial condition and results of operations.

Our executive officers and directors have the ability to effectively control
substantially all actions taken by our stockholders.

      As of December 31, 2000, Messrs. Mark H. Levin, Mark R. Suroff, Nikos P.
Mouyiaris and Ms. Barbara Novick (each directors of the Company) own, in the
aggregate, 3,491,000 shares of our common stock and control approximately 27.32%
of the aggregate voting power of all outstanding shares. Acting together, these
stockholders can effectively control substantially all actions taken by our
stockholders, including the election of directors. Such concentration of
ownership could also have the effect of delaying, deterring or preventing a
change in control of EyeCity that might otherwise be beneficial to stockholders
and may also discourage acquisition bids for EyeCity and limit the amount
certain investors may be willing to pay for shares of Common Stock. Further, Mr.
Mouyiaris has the contractual right to appoint two members of


                                       14
<PAGE>

EyeCity's board of directors, and at least one of these members must approve of
the following transactions:

o     any merger of EyeCity into another company where EyeCity is not the
      surviving company and where the stockholders of EyeCity do not comprise
      the voting majority of the surviving company;

o     a sale of all or substantially all of the assets of EyeCity;

o     acquisitions by EyeCity for aggregate consideration of $1,000,000 or more;

o     the incidence or assumption by EyeCity of any obligation, debt or guaranty
      to any bank or financial institution of $1,000,000 or more;

o     the voluntary declaration of bankruptcy or consent to receivership by
      EyeCity or similar actions by EyeCity to seek protection from its
      creditors;

o     authorization or issuance of shares of Common Stock, or securities
      convertible into Common Stock, at a price (including amounts paid upon
      conversion or exercise) less than $1.00 per share; or

o     the entering into of certain types of transactions with related parties.

      Mr. Mouyiaris' right to nominate members of EyeCity's board of directors,
and the rights of those directors to approve the transactions set forth above,
will terminate upon the earlier to occur of (x) such time as Mr. Mouyiaris is
the beneficial owner of less than 825,000 shares of Common Stock or (y) the
consummation by EyeCity of an underwritten public offering of its securities for
gross proceeds of at least $7,500,000.

We conduct our operations through off site facilities.

      The Company presently has substantially all of our inventory stored and
shipped from distribution centers controlled by third parties. We depend in
large part on the orderly operation of the receiving and distribution process,
which depends, in turn, on adherence to shipping schedules and effective
management of the distribution centers by third parties. We cannot assure you
that we have anticipated all of the changing demands that our operations will
impose on these receiving and distribution systems or that events beyond our
control, such as disruptions in operations due to labor disagreements, shipping
problems, fires or natural disasters, will not result in a material adverse
effect on our business, results of operations and financial condition.

Increases in the cost of shipping, postage or credit card processing could
adversely affect our business.

      Orders are shipped through one of several channels, as selected by the
customer, including regular U.S. mail, United Parcel Service, second-day air or
overnight courier, with shipping charges varying by the carrier selected. We
generally invoice the costs of delivery and parcel shipments directly to
customers as separate shipping and handling charges. In addition, we receive a
majority of our payments from customers using credit cards. Any increases in
shipping, postal or credit card processing rates could have an adverse effect on
our operating results as we may not be able to effectively pass such increases
on to our customers. Similarly, strikes or other service interruptions by these
shippers could adversely affect our ability to market or deliver our products on
a timely basis.


                                       15
<PAGE>

Our business could be adversely affected if we are required to collect state
sales tax on the sale of products.

      At present, we do not collect sales or other similar taxes in connection
with the sale of our products to consumers located outside the state of New
York. From time to time, various states have sought to impose state sales tax
collection obligations on out-of-state companies such as ours conducting direct
marketing activities. A successful assertion by one or more states that we
should have collected or should be collecting sales taxes on the sale of our
products could result in additional costs and administrative expenses to us and
corresponding price increases to our customers, which could adversely affect our
business, financial condition and results of operations.

      Legislation limiting the ability of the states to impose taxes on
Internet-based transactions recently has been enacted by the United States
Congress. However, this legislation, known as the Internet Tax Freedom Act,
imposes only a three-year moratorium, which commenced October 1, 1998 and ends
on October 21, 2001, on state and local taxes on (1) e-commerce where such taxes
are discriminatory and (2) Internet access unless such taxes were generally
imposed and actually enforced prior to October 1, 1998. It is possible that the
tax moratorium could fail to be renewed prior to October 21, 2001. Failure to
renew this legislation would allow various states to impose taxes on
Internet-based commerce. The imposition of such taxes could adversely affect our
ability to become profitable.

We face an inherent risk of exposure to product liability claims in the event
that the use of the products we sell results in personal injury.

      We face an inherent risk of exposure to product liability claims in the
event that the use of the products we sell results in personal injury. Although
we have not experienced any losses due to product liability claims, we cannot
assure you that we will not experience such losses in the future. A successful
claim brought against us, or any claim that results in significant adverse
publicity against us, could have a material adverse effect on our business,
financial condition and results of operations.

Our results of operations may be subject to seasonal fluctuations

      We believe that our results of operations are somewhat seasonal in nature.
Our limited operating history, however, makes it difficult to fully assess the
impact of these seasonal factors or whether or not our business is susceptible
to cyclical fluctuations in the U.S. economy. There can be no assurance that
seasonal or cyclical variations in our operations will not become more
pronounced over time or that they will not materially adversely affect our
results of operations in the future.

      We intend to expense all advertising costs, including all direct-mail
advertising costs, when the advertising first takes place. As a result,
quarter-to-quarter comparisons will be impacted by the timing of advertisements
and related expenses within and between quarters. Our operating results for any
particular quarter may not be indicative of future operating results. You should
not rely on quarter-to-quarter comparisons of our results of operations as an
indication of our future performance.


                                       16
<PAGE>

Investment Considerations Relating To The Internet

Our success is dependent, in part, on continued growth in use of the Internet.

      The Internet is new and rapidly evolving. A decrease in the growth of
Internet usage would adversely affect our business, results of operations and
financial condition. The following factors may inhibit growth in Internet usage,
limit visits to our Internet addresses or limit orders placed through our
website:

       inadequate Internet infrastructure;

       security and privacy concerns;

       inconsistent quality of service; and

       unavailability of low cost, high-speed service.

      Our success is dependent, in part, upon the ability of the Internet
infrastructure to support increased use. The performance and reliability of the
Internet may decline as the number of users increases or the bandwidth
requirements of users increase, or if "viruses" and other attacks on the
integrity of the Internet infrastructure continue to cause widespread
interruptions in service. The Internet has experienced a variety of outages due
to damage to portions of its infrastructure. If outages or delays occur
frequently in the future, Internet usage, including usage of our website, could
grow slowly or decline. Even if the necessary infrastructure or technologies are
developed, we may have to spend considerable amounts to adapt our solutions
accordingly.

We do not have any property rights in the Internet addresses that we use.

      We have obtained the rights to various Internet addresses, including, but
not limited to, www.eyecity.com, www.foggles.com, and www.ergovision.com. If
third parties obtain rights to use similar addresses, these third parties may
confuse our customers and cause our customers to inadvertently place orders with
these third parties, which could result in lost sales for us and could damage
our brand. As with telephone numbers, we do not have and cannot acquire any
property rights in Internet addresses. As a result, we cannot assure you that we
will be able to retain the use of our addresses. The loss of our ability to use
our Internet addresses could have a material adverse effect on our business,
financial condition and results of operations.

Online security breaches could harm our business.

      The secure transmission of confidential information over the Internet is
essential to maintain consumer confidence in our websites. Substantial or
ongoing security breaches of our system or other Internet-based systems could
significantly harm our business. Any penetration of our network security or
other misappropriation of our customers' personal information could subject us
to liability. We may be liable for claims based on unauthorized purchases with
credit card information, impersonation or other similar fraud claims. Claims
could also be based on other misuses of personal information, such as for
unauthorized marketing purposes. These claims could result in litigation and
financial liability. Security breaches also could damage our reputation and
expose us to a risk of loss or litigation and possible liability. We rely on
licensed encryption and authentication technology to effect secure transmission
of confidential information, including credit card numbers. It is possible that
advances in computer capabilities,


                                       17
<PAGE>

new discoveries or other developments could result in a compromise or breach of
the technology used by us to protect customer transaction data.

      We may incur substantial expense to protect against and remedy security
breaches and their consequences. A party that is able to circumvent our security
systems could steal proprietary information or cause interruptions in our
operations. We cannot guarantee that our security measures will prevent security
breaches.

Government regulation and legal uncertainties relating to the Internet and
online commerce could negatively impact our business operations.

      Online commerce is new and rapidly changing, and federal and state
regulation relating to the Internet and online commerce is evolving. Currently,
there are few laws or regulations directly applicable to the Internet or online
commerce on the Internet, and the laws governing the Internet that exist remain
largely unsettled. Due to the increasing popularity of the Internet, it is
possible that additional laws and regulations may be enacted with respect to the
Internet, covering issues such as user privacy, pricing, taxation, content,
copyrights, distribution, antitrust and quality of products and services. The
adoption or modification of laws or regulations applicable to the Internet could
adversely affect our business operations.

      In addition, several telecommunications carriers have requested the
Federal Communications Commission to regulate telecommunications over the
Internet. Due to the increasing use of the Internet and the burden it has placed
on the current telecommunications infrastructure, telephone carriers have
requested the FCC to regulate Internet service providers and impose access fees
on those providers. If the FCC imposes access fees, the costs of using the
Internet could increase dramatically. This could result in the reduced use of
the Internet as a medium for commerce, which could adversely affect our business
operations.

Investment Considerations Related To Ownership Of EyeCity's Common Stock

The price of our Common Stock has been volatile and could continue to fluctuate
in the future.

      The market price for shares of our Common Stock has been volatile and
could fluctuate substantially based on a number of factors, including
quarter-to-quarter variations in our results of operations, news announcements,
changes in general market conditions for optical products, regulatory actions,
adverse publicity regarding us or the industry in general, changes in financial
estimates by securities analysts and other factors. In addition, broad market
fluctuations and general economic and political conditions may adversely affect
the market price of the Common Stock, regardless of our actual performance.

Privately held shares of our Common Stock will be available for sale in the
public markets in the future and may dilute the value of publicly traded shares.

      Sales of substantial amounts of our Common Stock (including shares issued
upon the exercise of outstanding options) in the public market in the future
could adversely affect the market price of our Common Stock. These sales also
might make it more difficult for us to sell equity or equity-related securities
in the future at a time and price that we think appropriate. As of March 23,
2001, there were 13,506,714 shares of Common Stock outstanding, of which
9,728,484 were restricted securities under the Securities Act of 1933, as
amended (the "Securities Act"). As of March 23, 2001, 7,072,181 restricted
securities were eligible for sale in the public market. The remaining restricted
securities will be eligible for sale from time to time thereafter upon
expiration of applicable holding periods under Rule 144 under the Securities
Act.


                                       18
<PAGE>

      Further, holders of 3,621,000 of these restricted shares have so-called
"piggy-back" registration rights which require these shares of Common Stock to
be registered for sale in our future registrations, subject to certain
restrictions. In addition, as of March 23, 2001, there were outstanding options
to purchase 2,958,000 shares of our Common Stock. Substantially, all of the
shares issuable upon exercise of such options will be restricted securities
under the Securities Act and not eligible for sale in the public markets until
the underlying securities are registered on a Form S-8.

You should be aware that we do not anticipate paying cash dividends on our
Common Stock.

      We intend to retain all future earnings for use in our business and,
therefore, do not anticipate paying any cash dividends on the Common Stock in
the foreseeable future.

Certain provisions in our charter documents could delay or prevent a change in
control.

      Certain provisions of our certificate of incorporation and our Bylaws may
inhibit changes in control of us not approved by our board of directors. These
provisions include the authority of the board of directors to issue without
stockholder approval preferred stock with such terms as the board of directors
may determine. We are also afforded the protections of Section 203 of the
Delaware General Corporation Law, which could have similar effects.

Certain provisions of our charter documents provide for limited personal
liability of members of our board of directors.

      Our certificate of incorporation and Bylaws contain provisions which
reduce the potential liability of members of our board of directors for certain
monetary damages and provide for indemnity of directors and other persons. We
are unaware of any pending or threatened litigation against us or our directors
that would result in any liability for which any of our directors would seek
indemnification or similar protection.

Exercise of Warrants.

      The price which the Company may receive for the Common Stock issued upon
exercise of any outstanding warrants may be less than the market price of the
Common Stock at the time such warrants are exercised. For the life of such
warrants, the holders thereof are given, at little or no cost, the opportunity
to profit from a rise in the market price of the Common Stock, if any, without
assuming the risk of ownership. So long as such warrants remain unexercised, the
terms under which the Company could obtain additional equity financing may be
adversely affected. Moreover, the holders of such warrants may be expected to
exercise them at a time when the Company would, in all likelihood, be able to
obtain any needed capital by a new offering of securities on terms more
favorable than those provided by such warrants. To the extent of any exercise of
the warrants, the interests of the Company's shareholders will be diluted
proportionately.

ITEM 2.     DESCRIPTION OF PROPERTY

      EyeCity maintains its corporate headquarters in approximately 1,200 square
feet of commercial office space at 199 Lafayette Drive in Syosset, New York,
pursuant to a month to month verbal lease providing for rent at a rate
(including common charges) of $1,500 per month.

      EyeCity, through its wholly-owned subsidiary, Peeper's, Inc., maintained
approximately 10,770 square feet of office and warehouse space at 1203 London
Road in Duluth, Minnesota,


                                       19
<PAGE>

pursuant to a five year lease providing for rent at an annual rate of $51,156
through June 30, 2000, at an annual rate of $61,927 through June 30, 2001 and at
a rate of $72,696 through June 30, 2004. This space was used for customer
service, sales, warehousing, shipping, order fulfillment and general office
purposes. EyeCity had five options to extend the lease for consecutive 3-year
terms each. During the renewal terms, the rent would increase 4% annually on
July 1st of each year. Peeper's, Inc. vacated the premises in January, 2001 and
is presently negotiating a formal termination of the lease.

ITEM 3. LEGAL PROCEEDINGS

      EyeCity is not aware of any material adverse claims regarding any of its
trademarks or domain names with the exception of its "Peeper's" mark and
peepers.com domain name. Rights in this mark and domain name have been
challenged in an action now pending entitled American Eyewear, Inc. v. Peeper's
Sunglasses and Accessories, Inc. and EyeCity.com, Inc. which was commenced in
July 1999 in the United States District Court for the Northern District of
Texas. Peepers, Inc. and EyeCity have moved to dismiss the action. The motion is
now pending. EyeCity has substantial defenses and may counter-claim to limit
American Eyewear's claimed rights in the trademark Peeper's. The parties are
also discussing settlement. It is premature to assess the likely outcome of the
proceeding. The former owner of the Peeper's mark has agreed to assume all
future legal expenses as to this matter.

      On or about June 20, 2000, Thomas Seltzer ("Seltzer"), commenced an action
in the United States District Court for the Southern District of New York
entitled Thomas Seltzer v. Eyecity.com, Inc., Mark H. Levin and Mark Suroff,
Civ. Action No. 00-4597 (NRB) (the "Action") asserting several causes of action,
including breach of contract, fraud, negligent misrepresentation, breach of the
implied covenant of good faith and fair dealing, and unjust enrichment. Seltzer
seeks unspecified monetary damages and declaratory relief. Seltzer was the
founder and president of a company known as Impact Eyewear, LLC ("Impact"),
which EyeCity acquired in September 1999. After EyeCity acquired Impact, Seltzer
entered into an employment agreement with EyeCity and was terminated by EyeCity
on February 7, 2000. Seltzer further alleges that EyeCity breached his
employment agreement when it terminated him. EyeCity answered the complaint and
asserted counterclaims on August 7, 2000. It is premature to assess the likely
outcome of the proceeding.

      A wholly owned subsidiary of EyeCity, Peeper's was named as a defendant in
an action entitled Oakley, Inc. v. Peeper's Sunglasses & Accessories Inc. and
Son Dad Boards Ltd. d/b/a Freestyle of Duluth and Larry Leege, which was
commenced in October 1999 in the Superior Court of California, Orange County.
This action, which is principally a contract claim against the third parties,
Son Dad Boards Ltd. and Larry Leege, also alleges that Peeper's, Inc. interfered
with the plaintiff's contractual relationship with these third parties when it
purchased sunglasses from them and then re-sold the merchandise. This action was
settled in January 2001 without any damages awarded against EyeCity.


                                       20
<PAGE>

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

No matters were submitted to a vote of security holders.

                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED OTHER STOCKHOLDER MATTERS

      EyeCity's common stock is listed by NASDAQ on the Over The Counter
Bulletin Board under the trading symbol ICTY. Trading of EyeCity's common stock
on the Over The Counter Bulletin Board market commenced in March 1998. The
following table reflects the high and low bid prices for EyeCity's common stock
for each quarterly period ended commencing in January 1999 and ending on
December 31, 2000. These quotations are based on information supplied by market
makers of EyeCity's common stock. These quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.

                             2000                           1999
                          Price Range                   Price Range
                          -----------                   -----------
                      Low            High            Low            High
                      ---            ----            ---            ----
1st Quarter          $2.000         $5.375         $0.625          $6.125
2nd Quarter           0.688          2.828          3.125           9.875
3rd Quarter           0.469          1.344          3.063           6.750
4th Quarter           0.094          0.875          1.125           4.625

      As of March 23, 2001, there are 171 holders of record of EyeCity's common
stock.

      EyeCity has never declared any dividends and is not likely to do so in the
near future.

RECENT SALES OF UNREGISTERED SECURITIES

      Under its 1997, 1998, 1999 and 2000 Stock Option Plans, EyeCity has
granted an aggregate of 3,843,000 options to various consultants and employees
to purchase shares of EyeCity's common stock at exercise prices ranging from
$1.00 to $7.75 including options issued through March 23, 2001. No commissions
were paid in connection with those grants. EyeCity relied on exemptions from
registration under Section 4(2) of the Securities Act of 1933.

      1996

      There were no sales of unregistered securities by EyeCity in 1996.

      1997

      In October 1997, EyeCity completed a non-underwritten private sale of
550,000 shares of its common stock to 74 individual investors. These shares were
sold at a price of $1.00 per share pursuant to Rule 504 of Regulation D of the
Securities Act of 1933.

      1998

      In February 1998, EyeCity privately issued 300,000 shares of its common
stock to Carousel Consulting Inc. in consideration for the provision of
marketing consulting services


                                       21
<PAGE>

valued at approximately $195,000. EyeCity relied on exemptions from registration
under Section 4(2) of the Securities Act of 1933.

      In April 1998, EyeCity completed a non-underwritten private sale of
450,000 shares of its common stock to 10 individual investors. These shares were
sold at a price of $1.00 per share pursuant to Rule 504 of Regulation D of the
Securities Act of 1933.

      In August 1998, EyeCity privately issued 214,000 shares of its common
stock in connection with the acquisition of all of the outstanding capital stock
of Foggles, Inc. by EyeCity. These shares of EyeCity were issued in equal
amounts to the four individual stockholders of Foggles, Inc. EyeCity relied on
exemptions from registration under Section 4(2) of the Securities Act of 1933.

      In August 1998, EyeCity privately sold $362,500 of subordinated
convertible promissory notes in a non-underwritten offering to seven individual
investors (EyeCity later repurchased $25,000 of the notes held by two of these
investors at their request). These notes may be converted on or after October 1,
1999 into shares of common stock of EyeCity at a conversion price of $1.25 per
share. EyeCity relied on Rule 506 of Regulation D under the Securities Act of
1933. All of these individual investors represented that they were accredited
investors as defined under Rule 501 of Regulation D under the Securities Act of
1933.

      In September 1998, EyeCity privately issued 15,000 shares of its common
stock in connection with the acquisition of all of the outstanding capital stock
of Gilead Enterprises, Inc. by EyeCity. These shares of EyeCity were issued in
equal amounts to the three individual stockholders of Gilead Enterprises, Inc.
EyeCity relied on exemptions from registration under Section 4(2) of the
Securities Act of 1933.

      In November 1998, EyeCity privately issued 10,000 shares of its common
stock to Adam Levin Consulting in consideration for the provision by Levin
Consulting of marketing consulting services valued at approximately $10,000.
EyeCity relied on exemptions from registration under Section 4(2) of the
Securities Act of 1933.

      1999

      In March 1999, EyeCity privately issued 100,000 shares of its common stock
in connection with the acquisition of all of the outstanding capital stock of
EyeGlassPlace.com, Inc. by EyeCity. These shares of EyeCity were issued to the
one individual stockholder of EyeGlassPlace.com, Inc. EyeCity relied on
exemptions from registration under Section 4(2) of the Securities Act of 1933.

      In March 1999, EyeCity privately issued 20,000 shares of its common stock
to Rosenman & Colin LLP, counsel to EyeCity, in consideration for the provision
of legal services valued at approximately $20,000. EyeCity relied on exemptions
from registration under Section 4(2) of the Securities Act of 1933.

      In March 1999, EyeCity privately issued 250,000 shares of its common stock
to Nikos Mouyiaris. These shares were sold for $1.00 per share, for a total
offering price of $250,000. EyeCity relied on exemptions from registration under
Section 4(2) of the Securities Act of 1933. Mr. Mouyiaris represented that he
was an accredited investor as defined under Rule 501 of Regulation D of the
Securities Act of 1933.


                                       22
<PAGE>

      In April 1999, EyeCity privately issued 10,000 shares of its common stock,
valued at $10,000, to Jerrold S. Pine in partial consideration for the exercise
of EyeCity's option to grant to EyeCity an exclusive license to use certain
patented computer security technology. EyeCity relied on exemptions from
registration under Section 4(2) of the Securities Act of 1933.

      In May 1999, EyeCity privately issued 130,000 shares of its common stock
to Stanley Altschuler and 130,000 shares of its common stock to Richard Cooper
in consideration for services rendered by Strategic Growth International, Inc,
valued at approximately $260,000. EyeCity relied on exemptions from registration
under Section 4(2) of the Securities Act of 1933.

      In May 1999, EyeCity privately issued 1,210,159 shares of its common stock
as partial consideration for all of the capital stock of Peeper's Sunglasses and
Accessories, Inc. in connection with the merger of Peeper's Sunglasses and
Accessories, Inc. with and into Peeper's, Inc, a wholly owned subsidiary of
EyeCity. These shares of EyeCity were issued to the one individual stockholder
of Peeper's Sunglasses and Accessories, Inc. EyeCity relied on exemptions from
registration under Section 4(2) of the Securities Act of 1933.

      In May 1999, EyeCity privately issued 2,105 shares of its common stock
valued at approximately $3,000 to Thomas Gilligan as partial consideration for
an assignment of all of Mr. Gilligan's rights to an internet domain name.
EyeCity relied on exemptions from registration under Section 4(2) of the
Securities Act of 1933.

      In May 1999, EyeCity privately sold 1,500,000 shares of its common stock
to 11 individual investors at a price of $1.00 per share for a total offering
price of $1,500,000. In connection with these sales, EyeCity paid to James J.
Armenakis a commission in the form of options to purchase 300,000 shares of
EyeCity common stock at an exercise price of $1.00 per share under the 1998
Stock Option Plan. EyeCity relied on exemptions from registration under Section
4(2) of the Securities Act of 1933. Each of these investors represented that he
or she was an accredited investor as defined under Rule 501 of Regulation D of
the Securities Act of 1933.

      In June, 1999, EyeCity privately issued 283,334 shares of its common stock
as partial consideration for all of the capital stock of SunSource Technology,
Inc. in connection with the merger of SunSource Technology, Inc. with and into
SunglassSite, Inc., a wholly owned subsidiary of EyeCity. These shares of
EyeCity were issued to the one individual stockholder of SunSource Technology,
Inc. EyeCity relied on exemptions from registration under Section 4(2) of the
Securities Act of 1933.

      In June 1999, EyeCity privately sold 50,000 shares of its common stock to
one individual investor. These shares were sold for $1.50 per share for a total
offering price of $75,000. EyeCity paid James J. Armenakis a commission in the
form of options to purchase 15,000 shares of EyeCity common stock at an exercise
price of $1.50 per share under the 1998 Stock Option Plan. EyeCity relied on
exemptions from registration under Section 4(2) of the Securities Act of 1933.
Such individual investor represented that he was an accredited investor as
defined under Rule 501 of Regulation D of the Securities Act of 1933.

      In June 1999, EyeCity privately sold 230,000 shares of its common stock to
10 individual investors. These shares were sold for $3.00 per share, for a total
offering price of $690,000. In connection with the sale of $490,000 of these
shares, EyeCity paid to James J. Armenakis a commission in the form of options
to purchase 98,000 shares of EyeCity common stock at an exercise price of $3.00
per share under the 1999 Stock Option Plan. EyeCity relied on


                                       23
<PAGE>

exemptions from registration under Section 4(2) of the Securities Act of 1933.
Each of these investors represented that he or she was an accredited investor as
defined under Rule 501 of Regulation D of the Securities Act of 1933.

      In July 1999, EyeCity privately issued 13,000 shares of its common stock
to the 1996 Joel Lebovitz Trust and 13,000 shares of its common stock to Manley
Goldfine in connection with certain improvements, valued at approximately
$78,000, to certain real estate in Duluth, Minnesota leased by EyeCity through
its wholly owned subsidiary, Peeper's, Inc. EyeCity relied on exemptions from
registration under Section 4(2) of the Securities Act of 1933.

      In July and August 1999, EyeCity privately sold 47,334 shares of its
common stock to seven individual investors. These shares were sold for $3.00 per
share, for a total offering price of $142,004. In connection with the sale of
$35,000 of these shares, EyeCity will pay to James J. Armenakis a commission in
the form of options to purchase 7,000 shares of EyeCity common stock at an
exercise price of $3.00 per share under the 1999 Stock Option Plan. EyeCity
relied on exemptions from registration under Section 4(2) of the Securities Act
of 1933. Each of these investors represented that he or she was an accredited
investor as defined under Rule 501 of Regulation D of the Securities Act of
1933.

      In August 1999, EyeCity privately issued 10,000 shares of its common stock
in connection with the exercise of stock options at $1.00 per share by Robert B.
Greenberg. These shares of EyeCity were issued in equal amounts to four family
members of Mr. Greenberg. EyeCity relied on exemptions from registration under
Section 4(2) of the Securities Act of 1933.

      In August 1999, EyeCity privately issued 15,000 shares of its common stock
to Rosenman & Colin LLP, counsel to EyeCity, in consideration for the provision
of legal services valued at approximately $45,000. EyeCity relied on exemptions
from registration under Section 4(2) of the Securities Act of 1933.

      In September 1999, EyeCity privately issued 166,667 shares of its common
stock valued at approximately $500,000 as partial consideration for certain
assets of Impact Eyewear, LLC. These shares of EyeCity were issued to Impact
Eyewear, LLC. EyeCity relied on exemptions from registration under Section 4(2)
of the Securities Act of 1933.

      In September 1999, EyeCity privately issued 40,000 shares of its common
stock in connection with the exercise of stock options at $1.00 per share by
Robert B. Greenberg. EyeCity relied on exemptions from registration under
Section 4(2) of the Securities Act of 1933.

      In October 1999, EyeCity privately issued 33,333 shares of its common
stock to one individual investor. These shares were sold for $3.00 per share for
a total offering price of $100,000. EyeCity relied on exemptions from
registration under Section 4(2) of the Securities Act of 1933. The investor
represented that he was an accredited investor as defined under Rule 501 of
Regulation D of the Securities Act of 1933.

      In October 1999, one of the investors in the subordinated convertible
promissory notes sold in EyeCity's August 1998 offering converted $12,500 of his
notes into 10,000 shares of EyeCity common stock. EyeCity relied on exemptions
from registration under Section 4(2) of the Securities Act of 1933. Such
individual investor represented that he was an accredited investor as defined
under Rule 501 of Regulation D of the Securities Act of 1933.

      In November 1999, EyeCity privately issued 160,000 shares of its common
stock to Rosenman & Colin LLP, counsel to EyeCity, in consideration for the
provision of legal services


                                       24
<PAGE>

valued at approximately $160,000. EyeCity relied on exemptions from registration
under Section 4(2) of the Securities Act of 1933.

      In December 1999, EyeCity privately sold 30,000 shares of its common stock
to two individual investors at a price of $1.00 per share for a total offering
price of $30,000. In connection with these sales, EyeCity paid to James J.
Armenakis a commission in the form of ten percent in cash and options to
purchase 3,000 shares of EyeCity common stock at an exercise price of $1.00 per
share under the 1999 Stock Option Plan. EyeCity relied on exemptions from
registration under Section 4(2) of the Securities Act of 1933. Each of these
investors represented that he or she was an accredited investor as defined under
Rule 501 of Regulation D of the Securities Act of 1933.

      2000

      During the year ended December 31, 2000 EyeCity privately sold an
aggregate of 2,475,000 shares of its common stock to 63 investors in unrelated
transactions of which 1,745,000 shares were sold for $1 per share, 50,000 shares
were sold for $0.75 per share and 680,000 shares were sold for $0.50 per share
generating gross proceeds of $2,122,500. The investors who purchased 680,000
shares of common stock at $.50 per share also received three year warrants to
purchase 680,000 shares of common stock at an exercise price of $1.00 per share.
In connection with the sale of $1,465,000 of these shares, EyeCity paid to James
J. Armenakis a commission equal to $232,000, issued 180,500 shares of EyeCity
common stock and issued warrants to purchase 68,000 shares of EyeCity common
stock at an exercise price of $1.00 per share. EyeCity relied on exemptions from
registration under Section 4 (2) of the Securities Act of 1933 (the "Securities
Act"). Each of these investors represented that he or she was an accredited
investor as defined by the rules promulgated under the Securities Act.

      During the year December 31, 2000, EyeCity issued 642,283 shares of its
common stock with a value of $409,400 in exchange for legal, accounting,
consulting and marketing services. EyeCity relied on exemptions from
registration under Section 4(2) of the Securities Act of 1933.

      During the year ended December 31, 2000, holders converted $275,000 of
subordinated convertible promissory notes into 400,000 shares of EyeCity common
stock. Of the notes which were converted, $150,000 in principal was converted in
connection with an incentive offered to the holder to convert these shares. In
connection with the incentive, the holder received an aggregate of 300,000
shares of common stock and three year warrants to purchase 150,000 shares of
common stock at an exercise price of $1.00 per share. The fair value of these
additional equity securities issued is $96,000 and has been recorded as interest
expense in the third quarter. EyeCity relied on exemptions from registration
under Section 4(2) of the Securities Act of 1933.

      During the year ended December 31, 2000, EyeCity issued 10,000 shares of
its common stock with a value of $10,000 in exchange for furniture and fixtures.
EyeCity relied on exemptions from registration under Section 4(2) of the
Securities Act of 1933.

      During the year ended December 31, 2000, EyeCity issued 30,000 shares of
its common stock with a value of $15,000 in consideration for the holder of a
promissory note agreeing to extend the maturity date of such promissory note.
EyeCity relied on exemptions from registration under Section 4(2) of the
Securities Act of 1933.


                                       25
<PAGE>

      During the year ended December 31, 2000, EyeCity issued 216,400 shares of
its common stock with a value of $118,128 to an investment advisor in connection
with financing transactions. EyeCity relied on exemptions from registration
under Section 4(2) of the Securities Act of 1933.

      During the year ended December 31, 2000, EyeCity issued 13,600 shares of
its common stock with a value of $10,200 for salary and expenses owed to an
employee. EyeCity relied on exemptions from registration under Section 4(2) of
the Securities Act of 1933.

      In August 2000, EyeCity completed a private placement "bridge" offering
("Unit Offering") pursuant to which it has sold, to certain accredited
investors, sixteen and one -quarter units (each a "Unit") for gross proceeds of
$1,625,000, each Unit consisting of a $100,000 10% Secured Convertible Debenture
due 2003 ("Debentures") and warrants ("Warrants") to purchase 400,000 shares of
EyeCity's common stock. The Debentures are secured by EyeCity's assets, subject
to certain exceptions, and are subordinate to certain other obligations of
EyeCity. The Debentures are convertible into common stock at a rate of $.50 per
share and the Warrants are exercisable for common stock at $1.00 per share, in
each case, subject to standard anti-dilution protection. EyeCity can require
conversion of the Debentures under certain circumstances, and the Debentures are
redeemable at EyeCity's option. The Warrants are, under certain circumstances,
redeemable by EyeCity for $.05 per warrant. EyeCity intends to use the proceeds
of the offering for working capital purposes. The securities in the Unit
Offering have not been registered under the Securities Act of 1933 (although
EyeCity has an obligation to effect registration of the shares of common stock
issuable upon conversion of the Debentures and exercise of the Warrants) and may
not be offered or sold in the United States absent such registration or an
applicable exemption. In connection with the sale of the Debentures EyeCity
issued placement agent Warrants to purchase 406,250 shares of EyeCity common
stock at an exercise price of $.50 per share. EyeCity relied on exceptions from
registration under Section 4 (2) of the Securities Act. Each of these investors
represented that he or she was an accredited investor as defined by the rules
promulgated under the Securities Act.

      In November 2000, EyeCity completed a private placement offering pursuant
to which it has sold, to certain accredited investors, one and one -fifteenth
units (each a "Unit") for gross proceeds of $115,000, each Unit consisting of a
$100,000 10% Secured Convertible Debenture due 2003 ("Debentures") and warrants
("Warrants") to purchase 200,000 shares of EyeCity's common stock. The
Debentures are secured by EyeCity's assets, subject to certain exceptions, and
are subordinate to certain other obligations of EyeCity. The Debentures are
convertible into common stock at a rate of $.50 per share and the Warrants are
exercisable for common stock at $1.00 per share, in each case, subject to
standard anti-dilution protection. EyeCity can require conversion of the
Debentures under certain circumstances, and the Debentures are redeemable at
EyeCity's option. The Warrants are, under certain circumstances, redeemable by
EyeCity for $.05 per warrant. EyeCity intends to use the proceeds of the
offering for working capital purposes. The securities have not been registered
under the Securities Act of 1933 (although EyeCity has an obligation to effect
registration of the shares of common stock issuable upon conversion of the
Debentures and exercise of the Warrants) and may not be offered or sold in the
United States absent such registration or an applicable exemption. In connection
with the sale of the Debentures EyeCity issued placement agent Warrants to
purchase 28,751 shares of EyeCity common stock at an exercise price of $.50 per
share. EyeCity relied on exceptions from


                                       26
<PAGE>

registration under Section 4 (2) of the Securities Act. Each of these investors
represented that he or she was an accredited investor as defined by the rules
promulgated under the Securities Act.

      In the case of the transactions referred to above as relying on the
Section 4(2) exemption, EyeCity did not engage in any general solicitation or
advertising; the investors were either accredited investors or experienced and
sophisticated investors or sellers in sale of business transactions or service
providers, there were a small number of investors overall, and the investors
were known to EyeCity or its advisors.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

      From EyeCity's inception through December 1998, its business strategy
primarily focused on becoming a leading producer, distributor and marketer of
EyeTools(R) ergonomic computer eyewear products designed to alleviate health
related problems associated with Computer Vision Syndrome and, on becoming a
leading producer, distributor and marketer of Foggles(R) branded optical
products designed for the aviation, hunting and shooting industries.

      In January 1999, EyeCity focused its business strategy to capitalize on
the Internet retailing opportunities associated with the optical product
industry. In this regard, EyeCity acquired EyeGlassPlace.com, Inc., Peeper's
Sunglasses and Accessories, Inc. and SunSource Technology, Inc. in March 1999,
May 1999 and June 1999, respectively. In connection with these acquisitions,
EyeCity recorded goodwill of approximately $4.2 million which will be amortized
over three years from the dates of such acquisitions. In addition, in September
1999 EyeCity acquired certain assets of Impact Eyewear, LLC, including a
non-exclusive license from Yahoo! Inc. to use the "Yahoo!" name and logo for the
distribution and marketing of eyewear and eyewear accessories throughout the
United States, and recorded an intangible asset in the amount of $646,000 which
will be amortized over three years from the closing.

      In January 2001 the Company divested itself of substantially all of its
business-to-consumer ("B2C") acquired websites, including Binoculars.com,
Peepers.com, and EyeGlassPlace.com, which generated substantially all of the
Company's sales in 1999 and 2000 as well as its centralized Minnesota
distribution facility that was used to coordinate and process order fulfillment
and customer service for all of its websites. The Company is outsourcing the
websites OpticalSite.com, SunglassSite.com and Abeam.com until they are disposed
of. At the same time, EyeCity refocused its business strategy and is currently
engaged in the marketing, distribution and retail sale over the Internet of its
EyeTools computer glasses intended to relax the eyes and ameliorate visual
discomfort, focus difficulties, headaches and other related problems associated
with Computer Vision Syndrome (CVS) and Foggles optical products for the
aviation, hunting and shooting industries through distributors, catalogues,
direct advertising, retail stores and the Internet.

      EyeCity has incurred substantial losses and has had significant negative
cash flow since its inception. Although EyeCity has obtained financing in the
past, EyeCity will require additional funding to cover current operations, repay
indebtedness and enable it to fund its business plan. EyeCity is currently
seeking from potential investors additional financing, but


                                       27
<PAGE>

there is no assurance that such financing will be sufficient or available, or if
available, will be available on acceptable terms.

Results of Operations

Fiscal Year Ended December 31, 2000 Compared to Fiscal Year Ended December 31,
1999.

      Net revenues for the fiscal year ended December 31, 2000 were
approximately $2,544,000 as compared to net revenues in 1999 of approximately
$2,633,000.

      Cost of revenues for 2000 were approximately $1,175,000 as compared to
approximately $1,888,000 in 1999.

      Gross profit amounted to approximately $760,000 in 2000 (29.9% of net
revenues) as compared to approximately $745,000 in 1999 (28.3% of net revenues).

      General and administrative expenses were approximately $3,340,000 in 2000
as compared to approximately $3,053,000 in 1999. The overall increase is
principally attributable to increases in salaries and related expenses primarily
due to an increase in headcount.

      Depreciation and amortization expenses were approximately $1,823,000 in
2000 as compared to approximately $1,056,000 in 1999. The increase is
principally attributable to amortization of goodwill and other intangible assets
resulting from various acquisitions including Peepers and SunSource.

      Technology and development expenses were approximately $236,000 in 2000 as
compared to approximately $251,000 in 1999. This expense is associated with the
development of the eyecity.com supersite.

      Interest expense was approximately $401,000 in 2000 as compared to
approximately $195,000 in 1999. This increase is primarily related to the
valuation of warrants issued in connection with the conversion of debt as well
as the subordinated convertible debentures issued in 2000. See "Liquidity and
Capital Resources".

Liquidity and Capital Resources

      During 1998, EyeCity issued $362,500 of subordinated convertible
promissory notes. The notes bear interest at a rate of 10% per annum, payable
quarterly, commencing January 1, 1999. The notes are convertible into EyeCity's
common stock at a price of $1.25 per share at the option of the holder at any
time after October 1, 1999 (the "Conversion Date"). EyeCity has the right to
call, redeem and prepay the notes if the market price of EyeCity's common stock
equals or exceeds $2.50 per share for ten consecutive trading days at any time
after the Conversion Date. The notes are repayable in twelve quarterly principal
payments commencing on October 1, 2000. EyeCity repaid $25,000 of such notes in
March 1999 and, between October 1999 and April 2000, $137,500 of such notes were
converted into 110,000 shares of EyeCity common stock. On August 3, 2000,
$150,000 of the notes were converted into 300,000 shares of EyeCity common stock
resulting in an additional charge of $90,000 and 150,000 three-year warrants
exercisable at $1.00 per share valued at $6,000. The value of these additional
equity securities of $96,000 has been recorded as interest expense. The current
outstanding principal balance of the note is $50,000.


                                       28
<PAGE>

A portion of the consideration paid by EyeCity in connection with its
acquisitions of Peeper's and SunSource was in the form of promissory notes in
the amounts of $875,000 and $212,500, respectively. On May 23, 2000 the maturity
date of the secured $875,000 note was extended to May 23, 2002 with principal
payments of $25,000 due on July 15, 2000, $150,000 due on August 31, 2001 and 5%
of the first $2,000,000 of gross proceeds, and 10% of all gross proceeds above
$2,000,000 raised by EyeCity in a financing transaction or series of financing
transactions, in each case, payable within 7 days of closing. The note now
accrues interest at a rate of 7% per annum. On June 30, 2000, EyeCity and the
holder of the $212,500 note amended it to provide that $3,000 of principal will
be due and payable on each of July 15, 2000, August 15, 2000, September 15,
2000, October 15, 2000, and November 15, 2000, and $197,500 will be due and
payable on December 31, 2000, provided that if EyeCity consummates a public or
private offering of debt or equity securities, four percent of the net proceeds
in excess of $2,000,000 of such offering shall be paid on account of the then
outstanding principal balance of such note. In addition, the amended $212,500
note has accrued interest from July 1, 2000 at Chase Bank's prime rate. There
can be no assurance that EyeCity will have available funds to satisfy these
notes at maturity, in which event the holders of these notes could claim that
EyeCity is in breach of its obligations. Such holders could commence proceedings
against EyeCity, including seeking to foreclose on the note collateral
(including the domain names, toll-free phone numbers, contract rights, website
content and certain intellectual properties formerly owned by Peeper's and
acquired by EyeCity in the Peeper's acquisition), which would have a material
adverse affect on EyeCity's operations.

      For the year ended December 31, 2000, EyeCity used approximately
$3,035,000 in connection with its operating activities, principally to fund its
net loss before non-cash charges of approximately $3,273,000, as well as
increases in operating assets such as prepaid expenses and decreases in
operating liabilities such as deferred salary to officers and accrued payroll
and related taxes. The use of cash was offset in part by increases in accounts
payable and accrued expenses as well as decreases in inventories. EyeCity used
$1,390,000 in cash to fund operations in 1999.

      For the year ended December 31, 2000, net cash used in investing
activities approximated $206,000. This is primarily attributable to cash paid
for the development of the website and the purchases of property and equipment.
EyeCity used $1,443,000 in cash for investing activities in 1999.

      For the year ended December 31, 2000, net cash provided by financing
activities approximated $3,120,000, primarily from the sale of common stock and
issuance of convertible debentures.

      As of December 31, 2000, EyeCity had approximately $55,000 of cash and
cash equivalents. As of December 31, 2000, EyeCity's principal commitments
consisted of:

      o     Accounts payable of approximately $1,229,446

      o     Interest bearing promissory notes issued to sellers in connection
            with prior acquisitions by EyeCity in the aggregate amount of
            $922,000 which mature in whole or in part at the earlier of dates
            ranging from December 31, 2000 to May 23, 2002;

      o     Notes payable to vendors of approximately $20,000;


                                       29
<PAGE>

      o     $50,000 of 10% subordinated convertible promissory notes, due
            October 1, 2003;

      o     $1,740,000 of 10% subordinated convertible debentures, due between
            August 14, 2003 and November 22, 2003;

      o     $192,000 of deferred salary for officers. Included in this amount is
            deferred salaries owed to Mark Levin of $92,000, Mark Suroff of
            $92,000 and Daniel Thralow of $8,000;

      o     obligations outstanding under operating leases; and

      o     obligations outstanding under capital leases.

      As of December 31, 2000, EyeCity had a working capital deficiency of
approximately $1,973,000. EyeCity will need to raise additional funds in order
to satisfy EyeCity's current obligations and to fund its business plan. If
EyeCity raises additional funds through the issuance of equity or convertible
debt securities, the percentage ownership of its current stockholders will be
reduced, its stockholders may experience additional dilution and such securities
may have rights, preferences and privileges senior to those of its common stock.
There can be no assurance that additional financing will be available on terms
favorable to EyeCity or at all. If adequate funds are not available or are not
available on acceptable terms, EyeCity may not be able to meet its financial
obligations or to continue to implement its business plan. This inability could
have a material adverse effect on EyeCity's business, results of operations and
financial condition.

Seasonality

      EyeCity's limited operating history makes it difficult to fully assess the
impact of seasonality or whether or not EyeCity's business is susceptible to
cyclical fluctuations in the U.S. economy. In addition, EyeCity believes that
its rapid growth may have overshadowed whatever seasonal or cyclical factors
might have influenced its business to date. EyeCity intends to expense all
advertising costs, including all direct-mail advertising costs, when the
advertising first takes place. As a result, quarter-to-quarter comparisons will
be impacted by the timing of advertisements and related expenses within and
between quarters. There can be no assurance that seasonal or cyclical variations
in EyeCity's operations will not become more pronounced over time or that they
will not materially adversely affect its results of operations in the future.

ITEM 7. FINANCIAL STATEMENTS

      The 1999 audited and the 2000 unaudited Financial Statements and the notes
thereto are contained in a separate section of this report beginning with the
page following the signature page.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

      None.


                                       30
<PAGE>

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
Name                    Position
----                    --------
<S>                     <C>
Mark H. Levin           President, Chief Executive Officer and Director

Mark R. Suroff          Executive Vice President, Chief Operating Officer, Secretary,
                        Treasurer and Director

Nikos P. Mouyiaris      Director

Barbara Novick          Director
</TABLE>

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

      Mark H. Levin, 29, serves as EyeCity's President, Chief Executive Officer
and as a member of EyeCity's Board of Directors. Mr. Levin has served as
EyeCity's President since its formation in May 1996. He also served as Chief
Executive Officer of EyeCity from inception until July 1998 at which time he
became Chief Operating Officer. In December 1998, Mr. Levin was re-elected as
Chief Executive Officer. Mr. Levin received his BBA and MBA in marketing from
Hofstra University. From May 1993 until May 1996 Mr. Levin was President of
F.M.B. Associates, Inc., a marketing consulting firm specializing in market
analysis, competitive analysis, market research, marketing plans and management
consulting. Mr. Levin has worked with manufacturers, healthcare providers,,
participants in the entertainment industry and others in a variety of service
related industries. Mr. Levin is a member of the business advisory committee of
North Shore University Hospital, Manhasset, New York.

      Mark R. Suroff, 27, serves as EyeCity's Executive Vice President, Chief
Operating Officer, Secretary and Treasurer and as a member of EyeCity's Board of
Directors. Mr. Suroff has served as EyeCity's Executive Vice President,
Secretary and Treasurer since its formation in May, 1996. He also served as
Chief Operating Officer from EyeCity's inception until July, 1998. In December
1998, Mr. Suroff was re-elected as Chief Operating Officer. From September 1993
to May 1996, Mr. Suroff served as president of Card Displays, Inc., a company
that sold space for businesses to advertise in high traffic locations in Nassau,
Suffolk, and Queens counties, New York.

      Nikos P. Mouyiaris, 56, has served as a director of EyeCity since May
1999. Mr. Mouyiaris has been President of Mana Products, Inc., a manufacturer of
cosmetic products, since 1972.

      Barbara Novick, 63, has served as a director of EyeCity since May 1999.
Ms. Novick has been Executive Vice President of Mana Products, Inc., a
manufacturer of cosmetic products, since 1980.

      Directors serve until the next Annual Meeting of the Stockholders of the
Company following their election and until their respective successors are
elected and qualified.

      Each executive officer is scheduled to hold office until the Annual
Meeting of Directors which is scheduled to be held after each Annual Meeting of
Stockholders. Any executive officer may be removed by the Board of Directors
either with or without cause.

      Except as set forth in Item 12, there are no understandings between any
director or executive officer and any other person pursuant to which any
director or executive officer was


                                       31
<PAGE>

elected as such. Mr. Levin and Mr. Suroff are parties to employment agreements
with the Company.

SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16 (a) of the Securities Exchange Act requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's Common Stock, to file initial reports of ownership, and reports
of changes of ownership, of the Company's equity securities with the Securities
and Exchange Commission and furnish copies of those reports to the Company.
Based solely on a review of copies of the reports furnished to the Company, or
written representation that no reports were required, the Company believes that
all reports required to be filed by such persons with respect to the Company's
year ended December 31, 2000 were timely filed.

ITEM 10. EXECUTIVE COMPENSATION

      The following table summarizes all plan and non-plan compensation awarded
to, earned by or paid to EyeCity's chief executive officer and each of the other
executive officers in excess of $100,000 for the fiscal years ended December 31,
2000, 1999 and 1998. No bonuses or long term payouts were awarded in the periods
presented. There were no long-term incentive plans in effect at the end of the
last fiscal year.

<TABLE>
<CAPTION>
                                                                                                 Long Term
                                                                                              Compensation
                                                                                                  Awards
                                                                                                  ------

                                                                                 Annual         Securities
                                                                              Compensation      Underlying
     Name and Principal Position                                    Year         Salary          Options
     ---------------------------                                    ----         ------          -------
<S>                                                                 <C>       <C>                <C>
Mark H. Levin                                                       2000      $125,000(1)        336,500
President and Chief Executive Officer                               1999      $100,000(2)        200,000
                                                                    1998        82,500(3)        100,000

Mark R. Suroff, Executive Vice  President                           2000      $125,000(1)        336,500
Chief Operating Officer, Secretary and Treasurer                    1999      $100,000(2)        200,000
                                                                    1998      $ 82,500(3)        100,000
</TABLE>

(1)   Base salary for January through June 30, 2000 was $100,000 and base salary
      for July 1 through December 31, 2000 was $150,000.
(2)   To date, of the salary indicated $32,692.31 has been paid to each and
      $67,307.69 has been accrued for each.
(3)   To date, of the salary indicated $57,921.16 has been paid to each and
      $24,578.84 has been accrued for each.

OPTION GRANTS IN LAST FISCAL YEAR

      The following table contains information concerning options to purchase
shares of the Company's capital stock granted by the Company during the year
ended December 31, 2000 to the executive officers named in the summary
Compensation Table. No stock appreciation rights have been granted by the
Company.


                                       32
<PAGE>

--------------------------------------------------------------------------
                                Individual
                                Options
                                Percent of
                                total
                   Number of    Options
                   Shares       Granted To
                   Underlying   Employees    Exercise
                   Options      In Fiscal    Price
Name               Granted      Year         Per Share    Expiration  Date
----------------------------------------------------------------------------
Mark Levin          325,000      29.02%        $1.00        12/31/05
----------------------------------------------------------------------------
                     11,500       1.03%        $1.00        12/31/05
----------------------------------------------------------------------------
Mark Suroff         325,000      29.02%        $1.00        12/31/05
----------------------------------------------------------------------------
                     11,500       1.03%        $1.00        12/31/05
----------------------------------------------------------------------------

OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES

      No options to purchase shares of the Company' capital stock were exercised
during 2000 by the executive officers named in the Summary Compensation Table.
The following table contains information concerning the number of shares of
Common Stock underlying unexercised options held at December 31, 2000 by the
executive officers named in the Summary Compensation Table.

<TABLE>
<CAPTION>
                                  Number of Shares  Underlying  Unexercised   Value Of  Unexercised  In-The-Money  Options
                                  Options Held At Fiscal Year-End             Held At Fiscal Year-End
Name                              (Exercisable/Unexercisable)                 (Exercisable/Unexercisable) (1)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                                             <C>
Mark H. Levin                            250,000/386,500                                 $0/$0
------------------------------------------------------------------------------------------------------------------------------------
Mark R. Suroff                           250,000/386,500                                 $0/$0
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Fair market value of securities underlying the option (based on $0.094
public trading price on the OTC Bulletin Board on December 31, 2000) minus the
exercise price of the options.

EMPLOYMENT AGREEMENTS

      Mark H. Levin entered into an employment agreement with EyeCity dated as
of July 1, 1998 and amended on July 1, 2000, and effective through December 31,
2004. Under this agreement, Mr. Levin is EyeCity's President and Chief Operating
Officer, as well as a director on EyeCity's board of directors (on December 31,
1998, by unanimous consent of EyeCity's Board of Directors, Mr. Levin was named
Chief Executive Officer). Under his agreement, Mr. Levin is entitled to receive
a total base salary for July 1, 1998 through December 31, 1998; January 1, 1999
through June 30, 2000; and July 1, 2000 through December 31, 2004 (and through
the end of the contract term) at an annual rate of $82,500, $100,000, $150,000,
respectively. Mr. Levin's base salary shall automatically increase five (5%) per
year commencing January 1, 2001, and he may be eligible for bonuses, at the
discretion of EyeCity's


                                       33
<PAGE>

Board of Directors. Mr. Levin is entitled to be reimbursed for costs of an
automobile approved by EyeCity. As of December 31, 2000 the accrued salary due
Mr. Levin was $ 92,000. Under the Agreement, if Mr. Levin dies or is unable to
perform his duties, he or his estate will be paid, in addition to any previously
earned but unpaid salary, three months' total base salary.

      Mark R. Suroff entered into an employment agreement with EyeCity, dated as
of July 1, 1998 and amended on July 1, 2000, and effective through December 31,
2004. Under this agreement, Mr. Suroff is EyeCity's Executive Vice President,
Secretary and Treasurer, as well as a director on EyeCity's board of directors
(on December 31, 1998, by unanimous consent of EyeCity's board of directors, Mr.
Suroff was also named Chief Operating Officer). Under his agreement, Mr. Suroff
is entitled to receive a total base salary for July 1, 1998 through December 31,
1998; January 1, 1999 through June 30, 2000; and July 1, 2000 through December
31, 2004 (and through the end of the contract term) at an annual rate of
$82,500, $100,000, and $150,000 respectively. Mr. Suroff's base salary shall
automatically increase five (5%) per year commencing January 1, 2001, and he may
be eligible for bonuses, at the discretion of EyeCity's board of directors. Mr.
Suroff is entitled to be reimbursed for the costs of an automobile approved by
EyeCity. As of December 31, 2000 the accrued salary due Mr. Suroff was $92,000.
Under this Agreement, if Mr. Suroff dies or is unable to perform his duties, he
or his estate will be paid, in addition to any previously earned but unpaid
salary, three months' total base salary.

ITEM 11. SECURITIES HOLDINGS OF CERTAIN STOCKHOLDERS AND MANAGEMENT

      The following table sets forth, as of March 23, 2000, certain information
concerning the beneficial ownership of the Common Stock of EyeCity by (i) any
person (including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) known to be the beneficial owner of
more than 5% of such Common Stock, (ii) each director of EyeCity, (iii) each of
the executive officers named in the Executive Compensation section in this
document and (iv) all directors and executive officers of EyeCity taken as a
group. Each of the stockholders has sole voting and investment power for the
shares listed as beneficially owned by them.

                                                   Amount
                                                   Beneficially     Percent of
Name and Address of Beneficial Owner (1)           Owned            Class
----------------------------------------           -----            -----

Mark H. Levin                                    1,000,000(2)       7.24%

Nikos P. Mouyiaris (3)                           1,350,000         10.00%

Daniel D. Thralow                                1,335,159          9.89%

Mark R. Suroff                                     650,000(4)       4.71%

James J. Armenakis (5)                           1,097,500(6)       7.70%

Barbara Novick (7)                                  91,000           .67%

All Executive officers and directors           -----------        -------
as a group (four persons):                       3,091,000(8)      21.91%

(1)   Except as specifically set forth, addresses for all of the listed
      beneficial owners and management are care of EyeCity at its corporate
      headquarters in Syosset, New York


                                       34
<PAGE>

(2)   Includes options exercisable within 60 days to purchase 200,000 shares of
      common stock at an exercise price of $1.10 per share under EyeCity's 1997
      stock option plan and 100,000 shares of common stock at an exercise price
      of $1.00 per share under EyeCity's 1998 Stock Option Plan.
(3)   Nikos P. Mouyiaris' address is c/o Mana Products, Inc., 32-02 Queens
      Boulevard, Long Island City, New York 11101
(4)   Includes options exercisable within 60 days to purchase 200,000 shares of
      common stock at an exercise price of $1.10 per share under EyeCity's 1997
      stock option plan and 100,000 shares of common stock at an exercise price
      of $1.00 per share under EyeCity's 1998 Stock Option Plan.
(5)   James J. Armenakis' address is c/o Armenakis & Armenakis, 65 Bleecker
      Street, New York, New York 10012.
(6)   Includes options exercisable within 60 days to purchase 450,000 shares of
      common stock at an exercise price of $1.00 per share, 60,000 shares of
      common stock at an exercise price of $1.75 per share and 15,000 shares of
      common stock at an exercise price of $1.50 per share under EyeCity's 1998
      stock option plan as well as 3,000 shares of common stock at an exercise
      price of $1.00 per share and 105,000 shares of common stock at an exercise
      price of $3.00 per share, in each case under EyeCity's 1999 stock option
      plan; and placement agent Warrants to purchase 42,500 shares of Common
      Stock at an exercise price of $.50 per share, and Warrants to purchase
      68,000 shares of common stock at $1.00 per share.
(7)   Barbara Novick's address is c/o Mana Products, Inc., 32-02 Queens Blvd.,
      Long Island City, New York 11101
(8)   Includes 600,000 options to purchase common stock.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      In March 1999, EyeCity entered into a Finders Agreement with James J.
Armenakis, a beneficial owner of over 5% of Common Stock (by virtue of the
option described below). This agreement provides that Mr. Armenakis will be
entitled to receive options to purchase 50,000 shares of Common Stock for every
$250,000 in private equity investments in EyeCity that are made by persons who
are introduced to EyeCity by Mr. Armenakis. In December 1999, this Finders
Agreement was amended to provide that Mr. Armenakis will be entitled to receive
options to purchase 25,000 shares of Common Stock as well as $25,000 in cash for
every $250,000 in private equity investments in EyeCity that are made by persons
who are introduced to EyeCity by Mr. Armenakis. The exercise price of the
options to be granted to Mr. Armenakis shall be equal to the price per share
paid to EyeCity by the equity investors introduced by him. To date, Mr.
Armenakis has received under this agreement immediately exercisable options
under the 1998 and 1999 Stock Option Plans for 423,000 shares, including 300,000
shares at an exercise price of $1.00 per share which expire in March 2002,
15,000 shares at an exercise price of $1.50 per share which expire in June 2002,
98,000 shares at an exercise price of $3.00 per share which expire in June 2002
and 7,000 shares at an exercise price of $3.00 per share which expire in August
2002 and 3,000 shares at an exercise price of $1.00 per share which expire in
December 2002. The Finders Agreement between EyeCity.com, Inc. and James J.
Armenakis was amended June 1, 2000. To date, Mr. Armenakis received under the
amended Finders Agreement immediately exercisable Warrants to purchase 68,000
shares at $1.00 per share; cash compensation of $219,750; and 180,500 shares of
Common Stock.

      In March 1999, EyeCity entered into a Consulting Agreement with James J.
Armenakis. Under this one-year agreement, Mr. Armenakis provides non-exclusive
legal consulting services to EyeCity in exchange for options to purchase 150,000
shares of Common Stock at an exercise price of $1.00 per share under the 1998
Stock Option Plan. These options are immediately exercisable and expire in March
2002. Mr. Armenakis also received options to purchase 60,000 shares of Common
Stock at an exercise price of $1.75. These options are immediately exercisable
and expire in March 2002. The Consulting Agreement between EyeCity and James J.
Armenakis was amended April 1, 2000. Under the amended Consultant Agreement
extending the term to March 31, 2002, Mr. Armenakis was issued 300,000 shares of
EyeCity Common Stock.


                                       35
<PAGE>

      In August 2000, Mr. Armenakis, in connection with the Company's Private
Placement offering, was issued 42,500 Placement Agent Warrants exercisable into
Common Stock at $.50 per share.

      In March 2001, EyeCity issued 100,000 shares of Common Stock for legal
services rendered by James J. Armenakis.

      In May 1999, Nikos P. Mouyiaris, a member of the Board of Directors of
EyeCity, was granted certain registration rights, including the right to demand
that EyeCity file a specific registration statement with respect to all or a
portion of his shares and that his shares be registered by EyeCity in connection
with a registration effected for the benefit of the Company and/or third parties
(in each case, subject to certain limitations on exceptions), in connection with
his purchase of 1,000,000 shares of Common Stock of as well as the right to
nominate two members of EyeCity's board of directors. At least one of Mr.
Mouyiaris' board nominees must approve any of the following transactions:

      o     any merger of EyeCity into another company where EyeCity is not the
            surviving company and where the stockholders of EyeCity do not
            comprise the voting majority of the surviving company;

      o     a sale of all or substantially all of the assets of EyeCity;

      o     acquisitions by EyeCity for aggregate consideration of $1,000,000 or
            more;

      o     the incidence or assumption by EyeCity of any obligation, debt or
            guaranty to any bank or financial institution of $1,000,000 or more;

      o     the voluntary declaration of bankruptcy or consent to receivership
            by EyeCity or similar actions by EyeCity to seek protection from its
            creditors;

      o     authorization or issuance of shares of Common Stock, or securities
            convertible into Common Stock, at a price (including amounts paid
            upon conversion or exercise) less than $1.00 per share; or

      o     the entering into certain types of transactions with related
            parties.

Mr. Mouyiaris' right to nominate members of EyeCity's Board of Directors, and
the rights of those directors to approve the transactions set forth above, will
terminate upon the earlier to occur of (x) such time as Mr. Mouyiaris is the
beneficial owner of less than 825,000 shares of Common Stock or (y) the
consummation by EyeCity of an underwritten public offering of its securities for
gross proceeds of at least $7,500,000. In August 2000 Mr. Mouyiaris waived
certain rights to permit EyeCity to sell securities under the Unit Offering.

      In May 1999, Daniel D. Thralow, was paid $875,000 in cash (including a
$25,000 deposit made in March 1999), $875,000 in the form of a secured
promissory note and 1,210,159 shares of Common Stock in connection with the
merger of Peeper's Sunglasses and Accessories, Inc., all of whose outstanding
capital stock was owned by Mr. Thralow, with and into Peeper's, Inc., a wholly
owned subsidiary of EyeCity. The promissory note was payable in one year and was
secured by a first priority interest in all of the intellectual and intangible
property that was owned by Peepers Sunglasses and Accessories, Inc. prior to the
merger. As part of this transaction, EyeCity agreed to have Mr. Thralow elected
as a member of its board of directors and entered into an employment agreement
with him.


                                       36
<PAGE>

      In May 2000, Mr. Thralow resigned as an officer and director of the
Company, his Employment Agreement was terminated and he became a Consultant to
EyeCity. In January 2001 EyeCity entered into an agreement with Mr. Thralow
which cancelled the indebtedness in the amount of $812,467, which was comprised
of $724,750 for the secured promissory note, interest in the amount of $34,633,
and the balances due under the consultant agreement of $45,162.24 and the
employment agreement of $7,923.12. As consideration for cancellation of the
indebtedness the Company conveyed to Mr. Thralow the websites it had acquired
from him in 1999, certain inventory and equipment as well as 125,000 shares of
the Common Stock of EyeCity.

      In July 2000, EyeCity entered into an amended Employment Agreement with
Mr. Levin extending the term until December 31, 2004 and at a base salary of
$150,000 per year from July 1, 2000 through the end of the contract term with an
automatic increase at a rate of five (5%) per year commencing January 1, 2001.

      In July 2000, EyeCity entered into an amended Employment Agreement with
Mr. Suroff extending the term until December 31, 2004 and at a base salary of
$150,000 per year from July 1, 2000 through the end of the contract term with an
automatic increase at a rate of five (5%) per year commencing January 1, 2001.

      During 2000, EyeCity paid an aggregate of $ 55,000 to a family member of
EyeCity's Chief Operating Officer for consulting services rendered during 1999
and 2000. As of December 31, 2000, EyeCity owed such individual $45,000.

      EyeCity believes that the transactions discussed in this section were on
terms at least as favorable to EyeCity as those that could have been secured in
arm's length transactions.

Item 13. Exhibits and Reports on Form 8K

             (a)  Exhibits

<TABLE>
<CAPTION>
Exhibit No.   Description
-----------   -----------

   <S>        <C>
   1.1        Certification of Incorporation.  Incorporated herein by reference
              to Exhibit 2(a) to EyeCity.com's Form 10-SB/A, File No.0-27561.

   1.2        Amendment to Certificate of Incorporation. .  Incorporated herein
              by reference to Exhibit 2(b) to EyeCity.com's Form 10-SB/A, File
              No.0-27561.

   1.3        Bylaws, as amended.  Incorporated herein by reference to Exhibit
              2(c) to EyeCity.com's Form 10-SB/A, File No.0-27561.

   4.1(a)     Form of Subscription Agreement used in connection with offering of
              450,000 and 550,000 shares of common stock under Rule 504 of
              Securities Act of 1933.  Incorporated herein by reference to
              Exhibit 3(a) to EyeCity.com's Form 10-SB/A, File No.0-27561.

   4.1(b)     Form of Subscription Agreement used in connection
              with offering of 10% Subordinated Convertible
              Promissory Notes. Incorporated herein by reference
              to Exhibit 3(b) to EyeCity.com's Form 10-SB/A, File
              No.0-27561.
</TABLE>


                                       37
<PAGE>

<TABLE>
   <S>        <C>
   4.1(c)     Form of 10% Subordinated Convertible Promissory Note. Incorporated
              herein by reference to Exhibit 3(c) to EyeCity.com's Form 10-SB/A,
              File No.0-27561.

   4.1(d)     Purchase and Investment Agreement with Nikos P. Mouyiaris.
              Incorporated herein by reference to Exhibit 3(d) to EyeCity.com's
              on Form 10-SB/A, File No.0-27561.

   4.1(e)     Form of Purchase and Investment Agreement with other
              investors in May 1999 $1,500,000 offering.
              Incorporated herein by reference to Exhibit 3(e) to
              EyeCity.com's Form 10-SB/A, File No.0-27561.

   4.1(f)     Form of Purchase and Investment Agreement with
              investors in June 1999 $690,000 offering.
              Incorporated herein by reference to Exhibit 3(f) to
              EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(a)     Stock Purchase Agreement between Ergovision, Inc. and shareholders
              of Foggles, Inc.  Incorporated herein by reference to Exhibit 6(a)
              to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(b)     Stock Purchase Agreement between Ergovision, Inc. and shareholders
              of Gilead Enterprises, Inc.   Incorporated herein by reference to
              Exhibit 6(b) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(c)     Stock Purchase Agreement by and between Ergovision, Inc. and
              EyeGlassPlace.com, Inc.  Incorporated herein by reference to
              Exhibit 6(c) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(d)     Severance and Consultancy Agreement with Robert B. Greenberg.
              Incorporated herein by reference to Exhibit  6(d) to EyeCity.com's
              Form 10-SB/A, File No.0-27561.

  10.1(e)     Amendments to Severance and Consultancy Agreement with Robert B.
              Greenberg. Incorporated herein by reference to Exhibit 6(e) to
              EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(f)     Agreement and Plan of Merger by and among Ergovision, Inc.,
              Peeper's Sunglasses and Accessories, Inc., Peeper's, Inc. and
              Daniel D. Thralow. Incorporated herein by reference to Exhibit 6(f)
              to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(g)*    Agreement dated May 23, 2000 among EyeCity.com, Inc., Peeper's,
              Inc. and Daniel Thralow.

  10.1(h)*    Memorandum of Understanding dated as of January 12, 2001 by and
              between EyeCity.com, Inc. and Daniel Thralow.

  10.1(i)     Purchase Agreement between EyeCity.com, Inc. and StarSystems.
              Incorporated herein by reference to Exhibit 6(f) to EyeCity.com's
              Form 10-SB/A, File No.0-27561.

  10.1(j)     Agreement and Plan of Merger by and among EyeCity.com, Inc.,
              SunglassSite, Inc., SunSource Technology, Inc. and G. Robert
              Wilson. Incorporated herein by reference to Exhibit 6(h) to
              EyeCity.com's Form 10-SB/A, File No.0-27561.
</TABLE>


                                       38
<PAGE>

<TABLE>
  <S>         <C>
  10.1(k)     Asset Purchase and Assignment Agreement by and among EyeCity.com,
              Inc., Impact Eyewear, LLC and Thomas Seltzer. .  Incorporated
              herein by reference to Exhibit 6(i) to EyeCity.com's Form 10-SB/A,
              File No.0-27561.

  10.1(l)     Agreement between EyeCity.com and IEM, Inc.  Incorporated herein by
              reference to Exhibit 6(l) to Eyecity.com's Form 10-SB/A, File
              No.0-27561.

  10.1(m)+    Employment Agreement between Ergovision, Inc. and Mark H. Levin.
              Incorporated herein by reference to Exhibit 6(m) to Eyecity.com's
              Form 10-SB/A, File No.0-27561.

  10.1(n)+    Amendment to Employment Agreement between Ergovision, Inc. and Mark
              H. Levin.  Incorporated herein by reference to Exhibit 6(n) to
              EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(o)+*   Amendment to Employment Agreement between EyeCity.com, Inc. and
              Mark H. Levin dated as of July 1, 2000.

  10.1(p)+    Employment Agreement between Ergovision, Inc. and Mark R. Suroff.
              Incorporated herein by reference to Exhibit 6(o) to EyeCity.com's
              Form 10-SB/A, File No.0-27561.

  10.1(q)+    Amendment to Employment Agreement between Ergovision, Inc. and Mark
              R. Suroff.  Incorporated herein by reference to Exhibit 7(p) to
              EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(r)+*   Amendment to Employment Agreement between EyeCity.com, Inc. and
              Mark R. Suroff dated as of July 1, 2000.

  10.1(s)     Employment Agreement between Ergovision, Inc. and Daniel D.
              Thralow.  Incorporated herein by reference to Exhibit 6(q) to
              EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(t)     Finders Agreement between Ergovision, Inc. and James J. Armenakis.
              Incorporated herein by reference to Exhibit 6(r) to EyeCity.com's
              Form 10-SB/A, File No.0-27561.

  10.1(u)     Amendment to Finders Agreement between EyeCity.com, Inc. and James
              J. Armenakis dated December 29, 1999.  Incorporated herein by
              reference to Exhibit 10.1(q) to EyeCity.com's Form 10-KSB for the
              period ended December 31, 1999, File No. 0-27561.

  10.1(v)*    Amendment to Finders Agreement between EyeCity.com, Inc. and James
              J. Armenakis dated June 1, 2000.

  10.1(w)     Consulting Agreement between Ergovision, Inc. and James J.
              Armenakis.  Incorporated herein by reference to Exhibit 6(s) to
              EyeCity's Form 10-SB/A, File No. 0-27561.
</TABLE>


                                       39
<PAGE>

<TABLE>
  <S>         <C>
  10.1(x)     Amendment to Consulting Agreement between Ergovision, Inc. and
              James J. Armenakis. Incorporated herein by reference to Exhibit
              6(t) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(y)*    Amendment to Consulting Agreement between EyeCity.com, Inc. and
              James J. Armenakis dated April 1, 2001.

  10.1(z)     1997 Qualified Stock Option Plan.  Incorporated herein by reference
              to Exhibit 6(w) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(aa)    1998 Stock Option Plan.  Incorporated herein by reference to
              Exhibit 6(x) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(bb)    1999 Stock Option Plan.  Incorporated herein by reference to
              Exhibit 6(y) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(cc)*   2000 Stock Option Plan.


  10.1(dd)    Lease between First Industrial, LP and EyeCity.com, Inc.
              Incorporated herein by reference to Exhibit 6(z) to EyeCity.com's
              Form 10-SB/A, File No.0-27561.

  10.1(ee)    Lease between Plaza Associates and Peeper's, Inc.  Incorporated
              herein by reference to Exhibit 6(aa) to EyeCity.com's Form 10-SB/A,
              File No.0-27561.

    21        List of Subsidiaries. Incorporated herein by reference to Exhibit
              21 to EyeCity.com's Form 10-KSB for the fiscal year ended December
              31, 1999, File No. 0-19041.

    27*       Financial Data Schedule

     *        Filed herewith. All other exhibits are incorporated by reference to
              the document following the description thereof.

     +        Management contract or compensatory plan.

    (b)       Reports on Form 8-K

              None
</TABLE>


                                       40
<PAGE>

                                   Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                      EYECITY.COM, INC.


March 28, 2001                        By:  /s/ Mark H. Levin
                                           -------------------------------------
                                           Mark H. Levin, President,
                                           Chief Executive Officer (principal
                                           executive officer) and Director

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


March 28, 2001                             /s/ Mark H. Levin
                                           -------------------------------------
                                           Mark H. Levin, President,
                                           Chief Executive Officer (principal
                                           executive officer) and Director


March 28, 2001                             /s/ Mark R. Suroff
                                           -------------------------------------
                                           Mark R. Suroff, Director


March 28, 2001                             /s/ Nikos P. Mouyiaris
                                           -------------------------------------
                                           Nikos P. Mouyiaris, Director


March 28, 2001                             /s/ Barbara Novick
                                           -------------------------------------
                                           Barbara Novick, Director

                                       41
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

                              Financial Statements

                                    Contents

<TABLE>
<S>                                                                                                    <C>
Consolidated Balance Sheet as of December 31, 2000 (unaudited).........................................F-1

Consolidated Statements of Operations for the Years
Ended December 31, 2000 (unaudited) and 1999...........................................................F-3

Consolidated Statements of Stockholders'
Equity (Deficit) for the Years Ended December 31, 2000 (unaudited) and 1999............................F-4

Consolidated Statements of Cash Flows for the Years
Ended December 31, 2000 (unaudited) and 1999...........................................................F-5

Notes to Consolidated Financial Statements.............................................................F-6
</TABLE>

<PAGE>

                       EyeCity.com, Inc. and Subsidiaries
                           Consolidated Balance Sheet
                                   (Unaudited)
                                December 31, 2000

<TABLE>
<S>                                                                                    <C>
ASSETS

Current assets:
   Cash and cash equivalents                                                           $        54,587
   Accounts receivable, net of allowance
     of $9,150                                                                                  20,906
   Inventories                                                                                 310,762
   Prepaid expenses and other current assets                                                   109,787
                                                                                       ---------------
Total current assets                                                                           496,042

Property and equipment, net of accumulated
   depreciation of $136,894                                                                    331,179

Intangibles, net of accumulated
   amortization of $2,730,341                                                                2,362,463

Website development costs, net of accumulated
   amortization of $36,889
                                                                                               129,111
Deferred financing costs, net of accumulated
   amortization of $35,209                                                                     304,355

Security deposits                                                                               13,322
                                                                                       ---------------
Total assets                                                                           $     3,636,472
                                                                                       ===============
</TABLE>

See accompanying notes.


                                      F-1
<PAGE>

<TABLE>
<S>                                                                                   <C>
LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued expenses                                              $     1,229,446
   Accrued payroll and related taxes                                                           50,561
   Deferred salaries to officers                                                              191,696
   Current portion of capital lease obligations                                                34,500
   Current portion of notes payable                                                           942,250
   Current portion of subordinated convertible promissory notes                                20,833
                                                                                       --------------
Total current liabilities                                                                   2,469,286

Capital lease obligations, less current portion                                                43,985
Subordinated convertible promissory notes, less current portion                                29,167
Convertible debenture                                                                       1,499,944
                                                                                     ----------------

Total liabilities                                                                           4,042,382
                                                                                      ---------------

Stockholders' equity:
   Preferred stock - $.001 par value:  authorized, 1,000,000 shares: no shares
     issued and outstanding                                                                        --
   Common stock - $.001 par value:  100,000,000 shares authorized, 12,780,214
     shares issued and outstanding                                                             12,780
   Additional paid-in capital                                                              11,147,567
   Accumulated deficit                                                                    (11,562,130)
   Unamortized compensation component of stock options                                         (4,127)
                                                                                    -----------------
Total stockholders' equity                                                                   (405,910)
                                                                                    -----------------
Total liabilities and stockholders' equity                                          $       3,636,472
                                                                                    =================
</TABLE>

See accompanying notes.


                                      F-2
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                                           Year Ended December 31,
                                                                                           2000               1999
                                                                                           ----               ----
                                                                                       (unaudited)
<S>                                                                                    <C>                <C>
Net revenues                                                                           $2,544,402         $2,632,664
Cost of revenues                                                                        1,784,640          1,888,161
                                                                                      -----------        -----------
Gross profit                                                                              759,762            744,503
                                                                                      -----------        -----------

Operating expenses:
  Marketing and sales                                                                     395,102            334,204
  General and administrative                                                            3,399,765          3,052,858
  Depreciation and amortization                                                         1,822,974          1,055,798
  Technology and development                                                              236,106            251,351
                                                                                      -----------        -----------
  Total operating expenses                                                              5,853,947          4,694,211
                                                                                      -----------        -----------

Operating loss                                                                         (5,094,185)        (3,949,708)
                                                                                      -----------        -----------

Other income (expense):
  Interest and investment income                                                            7,318             14,308
  Interest expense                                                                       (401,462)          (195,432)
                                                                                      -----------        -----------
Net other income (expense)                                                               (394,144)          (181,124)
                                                                                      -----------        -----------
Net loss                                                                              $(5,488,329)       $(4,130,832)
                                                                                      ===========        ===========


Basic and diluted net loss
  per common share                                                                          $(.59)             $(.57)
                                                                                      ===========        ===========
Shares used in the calculation of  basic
  and diluted net loss per common share                                                 9,315,165          7,213,272
                                                                                      ===========        ===========
</TABLE>

See accompanying notes.


                                      F-3
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries
            Consolidated Statements of Stockholders' Equity (Deficit)
               Years ended December 31, 2000 (Unaudited) and 1999
<TABLE>
<CAPTION>
                                                                                                  Unamortized         Total
                                             Common Stock          Additional                     Compensation     Stockholders'
                                      ------------------------       Paid-In      Accumulated     Component of        Equity
                                        Shares          Amount       Capital         Deficit      Stock Options      (Deficit)
                                    ----------------------------  ------------    ------------    -------------    ------------
<S>                                    <C>         <C>            <C>             <C>             <C>             <C>
Balance at January 1, 1999             4,539,000   $      4,539   $  1,756,728    $ (1,942,969)   $   (163,219)   $   (344,921)
Issuance of common stock for
  cash, net of expenses of
  $163,000                             2,140,667          2,141      2,621,861              --              --       2,624,002
Issuance of common stock for
  services                               481,000            481        562,519              --              --         563,000
Issuance of common stock in
  connection with acquisitions         1,772,265          1,772      2,874,599              --              --       2,876,371
Issuance of common stock for
  conversion of debt                      10,000             10         12,490              --              --          12,500
Issuance of stock options                     --             --        216,820              --        (216,820)             --
Exercise of stock options                 50,000             50         49,950              --              --          50,000
Amortization of compensation
  component of stock options                  --             --             --              --         329,443         329,443
Net loss for the year ended
  December 31, 1999                           --             --             --      (4,130,832)             --      (4,130,832)
                                    ------------   ------------   ------------    ------------    ------------    ------------
Balance at December 31, 1999           8,992,932          8,993      8,094,967      (6,073,801)        (50,596)      1,979,563
Issuance of common stock for
  cash net of expenses of
  $334,000                             2,475,000          2,475      1,786,025              --              --       1,788,500
Issuance of common stock for
  services                               642,283            642        408,758              --              --         409,400
Issuance of common stock in
  connection with cash financing         199,000            199        106,051              --              --         106,250
Issuance of common stock in
  connection with debt financing          17,400             17         11,861              --              --          11,878
Issuance of common stock for
  purchase of equipment                   10,000             10          9,990              --              --          10,000
Issuance of common stock for
  consideration of extending note         30,000             30         14,970              --              --          15,000
Issuance of common stock for
  salary and expenses                     13,600             14         10,186              --              --          10,200
Issuance of common stock for
  conversion of debt                     400,000            400        274,600              --              --         275,000
Value of warrants for debt
  financing                                   --             --        334,400              --              --         334,400
Value of warrants for conversion
  of debt                                     --             --         96,000              --              --          96,000
Issuance of stock options                     --             --           (241)             --             241              --
Amortization of compensation
  component of stock options                  --             --             --              --          46,228          46,228
Net loss for the year ended
  December 31, 1999                           --             --             --      (5,488,329)             --      (5,488,329)
                                    ------------   ------------   ------------    ------------    ------------    ------------
Balance at December 31, 2000          12,780,215   $     12,780   $ 11,147,567    $(11,562,130)   $     (4,127)   $   (405,910)
                                    ============   ============   ============    ============    ============    ============
</TABLE>

See accompanying notes.


                                      F-4
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                           Year Ended December 31,
                                                                            2000           1999
                                                                            ----           ----
                                                                        (unaudited)
<S>                                                                     <C>            <C>
Cash flows from operating activities
Net loss                                                                $(5,488,329)   $(4,130,832)
Adjustments to reconcile net loss to net cash
   used in operating activities:
   Depreciation and amortization                                          1,822,975      1,055,798
   Provision for doubtful accounts                                               --          8,100
   Amortization of discount                                                 119,561        157,083
   Amortization of compensation component of stock options                   46,228        329,443
   Amortization of deferred financing costs                                  35,209             --
   Issuance of stock for consulting and marketing services                   70,000        350,000
   Issuance of stock for consideration of extending note                     15,000             --
   Issuance of stock for salary and expenses                                 10,200             --
   Loss on conversion of debt                                                96,000             --
Changes in operating assets and liabilities, excluding the effect of
   acquisitions:
Accounts receivable                                                           3,876         12,789
Inventories                                                                 177,478       (303,112)
Prepaid expenses and other current assets                                   (18,136)       (14,832)
Accounts payable and accrued expenses                                       231,620      1,006,089
Accrued payroll and related taxes                                           (22,008)       (22,118)
Deferred salary to officers                                                (134,842)       161,538
                                                                        -----------    -----------
Net cash used in operating activities                                    (3,035,168)    (1,390,054)
                                                                        -----------    -----------

Cash flows from investing activities
Purchase of intangibles                                                          --        (17,000)
Capitalized website development costs                                      (150,000)       (16,000)
Cash paid for acquisitions, net of cash acquired and related expenses                   (1,175,531)
Purchases of property and equipment                                         (50,775)      (226,588)
Security deposits                                                            (5,063)        (8,259)
                                                                        -----------    -----------
Net cash used in investing activities                                      (205,838)    (1,443,378)
                                                                        -----------    -----------

Cash flows from financing activities
Exercise of options                                                              --         50,000
Repayment of notes payable                                                 (227,148)       (20,000)
Repayment of convertible subordinated notes                                      --        (25,000)
Proceeds from issuance of stock, net of expenses                          1,894,750      2,787,002
Proceeds from issuance of convertible debenture, net of expenses          1,477,514             --
Repayment of capital lease obligations                                      (24,678)        (8,163)
                                                                        -----------    -----------
Net cash provided by financing activities                                 3,120,438      2,783,839
                                                                        -----------    -----------

Net decrease in cash and cash equivalents                                  (120,568)       (49,593)
Cash and cash equivalents at beginning of year                              175,155        224,748
                                                                        -----------    -----------
Cash and cash equivalents at end of year                                $    54,587    $   175,155
                                                                        ===========    ===========

Supplemental disclosures
Cash paid for interest                                                  $    35,104    $    38,035
                                                                        ===========    ===========
</TABLE>

See accompanying notes.


                                      F-5
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements
                                December 31, 2000

1. Description of Business and Basis of Presentation

Since 1999, EyeCity.com, Inc. and its subsidiaries (collectively "EyeCity") were
engaged in one business segment: the online marketing, distribution and sale of
a broad range of optical products and accessories, including brand name
sunglasses, contact lenses, binoculars, prescription eyewear, telescopes, sports
and lifestyle eyewear and hunting glasses. In January 2001, EyeCity refocused
its business strategy and is currently engaged in the marketing, distribution
and retail sale over the Internet of its EyeTools computer glasses and Foggles
optical products for the aviation, hunting and shooting industries.

EyeCity has incurred operating losses since its inception and its working
capital is insufficient to cover continuing operating expenses. Accordingly,
EyeCity requires additional funding from financing or other sources to cover
operating expenses until sufficient revenues are generated to cover such
expenses. EyeCity believes that its currently available funds will be sufficient
to meet its anticipated working capital needs through at least April 2001.
Thereafter, EyeCity will need to raise additional funds to cover operating
expenses. There is no assurance that such funds will be available, or if
available, will be on terms satisfactory to EyeCity.

The foregoing conditions raise substantial doubt as to EyeCity's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
EyeCity.com, Inc. and its wholly-owned subsidiaries, Ergovision, Inc., Foggles,
Inc., Gilead Enterprises, Inc., and Peeper's, Inc. (see Note 6). All material
intercompany balances and transactions have been eliminated in consolidation.

Cash Equivalents

EyeCity considers all highly liquid investments with a maturity of three months
or less at the date of purchase to be cash equivalents.

Revenue Recognition

Net revenues are generated by online and retail operations and primarily consist
of the selling price of merchandise, net of returns and credits, and shipping
charges. Net revenues are recognized upon shipment of the order to the
recipient. EyeCity provides an allowance for sales returns in the period of sale
based upon historical experience.


                                      F-6
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Cost of Revenues

Cost of revenues includes the cost of merchandise sold from inventory and the
associated cost of inbound freight and outbound shipping.

Concentration of Credit Risk

EyeCity sells its products to a broad range of customers throughout the United
States. A significant portion of customers pay for their products through the
use of major credit cards. The timing of the cash realization and related fees
are determined based upon agreements with such major credit card companies.
Accordingly, credit losses related to the sale of merchandise are limited.

Inventories

Inventories are stated at the lower of cost (using the weighted-average cost
method) or market.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed by the
straight-line method over the estimated useful lives of the related assets,
ranging from 5 to 7 years.

Intangibles

Intangibles consist of: (i) goodwill - the excess of the purchase price over the
fair value of the net assets acquired, (ii) display technology, (iii) patents
and trademarks, (iv) internet domain names and (v) licenses. Amortization
expense relating to such intangibles is amortized on a straight-line basis over
three years.


                                      F-7
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Long-Lived Assets

EyeCity follows the provisions of Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. This standard establishes the accounting
for the impairment of long-lived assets, certain identifiable intangibles and
the excess of cost over net assets acquired, related to those assets to be held
and used in operations, whereby impairment losses are required to be recorded
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amount. SFAS No. 121 also addresses the accounting for long-lived assets and
certain identifiable intangibles that are expected to be disposed of.

When impairment indicators are present, EyeCity reviews the carrying value of
its assets in determining the ultimate recoverability of their unamoritized
values using future undiscounted cash flow analysis expected to be generated by
the asset. If such assets are considered impaired, the impairment recognized is
measured by the amount by which the carrying amount of the assets exceeds the
future discounted cash flows. Assets to be disposed of are reported at the lower
of the carrying amount or fair value, less costs to sell.

EyeCity evaluates the periods of amortization continually in determining whether
later events and circumstances warrant revised estimates of useful lives. If
estimates are changed, the unamortized costs will be allocated to the increased
or reduced number of remaining periods in the revised useful life.

Website Development Costs

The Company accounts for website development costs in accordance with the AICPA
Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use. Website development costs consist of
external costs incurred to purchase and implement the website software and
significant enhancements used in the Company's business. These costs are
capitalized and amortized using the straight-line method over the estimated
useful life of the asset of three years. Product development costs, preliminary
project and past implementation product costs are expensed as incurred.

Advertising Costs

EyeCity's policy is to expense advertising costs as incurred. For the years
ended December 31, 2000 and 1999, advertising expense was approximately $173,000
and $145,000, respectively.


                                      F-8
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Use of Estimates

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

Income Taxes

Income taxes are provided using the liability method. Accordingly, deferred tax
assets and liabilities are recognized for future tax consequences attributable
to differences between the carrying amount of assets and liabilities for
financial statement and income tax purposes, as determined under enacted tax
laws and rates that will be in effect when the differences are expected to
reverse.

Stock-Based Compensation

EyeCity accounts for its stock-based employee compensation agreements in
accordance with the provisions of Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and complies with the disclosure
provisions of SFAS No. 123, Accounting for Stock-Based Compensation.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year
financial statement presentation.

3.    Property and Equipment

Property and equipment consist of the following:

                                                            December 31, 2000
                                                            -----------------
Office equipment                                             $    307,678
Furniture and fixtures                                             61,877
Leasehold Improvements                                             90,765
Molds                                                               7,753
                                                             ------------
                                                                  468,073
Less accumulated depreciation and
   amortization                                                   136,894
                                                             ------------
                                                             $    331,179
                                                             ============

                                      F-9
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

4. Basic and Diluted Net Loss per Share

The following sets forth the computation of basic and diluted net loss per
share:

                                                Year ended December 31,
                                             --------------------------
                                                 2000           1999
                                             -----------    -----------
Numerator:
  Net loss                                   $(5,488,329)   $(4,130,832)
                                             ===========    ===========

Denominator for basic and diluted net
   loss per share--weighted average shares     9,315,165      7,213,272
                                             ===========    ===========
Basic and diluted net loss per share         $      (.59)   $      (.57)
                                             ===========    ===========

The calculation of diluted net loss per share excludes the effect of employee
stock options (see Note 9), as the effect of such exercises would be
antidilutive.

5. Subordinated Convertible Promissory Notes

During 1998, EyeCity issued $362,500 of subordinated convertible promissory
notes. The notes bear interest at 10% per annum and interest is payable
quarterly commencing January 1, 1999. The notes may be converted into shares of
EyeCity common stock at the option of the holder at a conversion price of $1.25
per share any time after October 1, 1999 (the "Conversion Date"). EyeCity has
the right to call, redeem or prepay the notes if the market price of EyeCity
common stock equals at least $2.50 per share for ten consecutive trading days at
any time after the Conversion Date. The notes are payable in 12 quarterly
principal payments commencing on October 1, 2000. EyeCity repaid $25,000 of such
notes in March 1999 and, between October 1999 and April 2000, $137,500 of such
notes were converted into 110,000 shares of EyeCity common stock. On August 3,
2000, $150,000 of the notes were converted into 300,000 shares of EyeCity common
stock resulting in an additional charge of $90,000 and 150,000 three-year
warrants exercisable at $1.00 per share valued at $6,000. The value of these
additional equity securities of $96,000 has been recorded as interest expense.

Principal payments for years ending on December 31 are as follows:

2000                                          $   4,166
2001                                             16,667
2002                                             16,667
2003                                             12,500
                                       --------------------
                                               $ 50,000
                                       ====================


                                      F-10
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

6. Acquisitions

EyeCity has closed on the acquisitions described below, each of which has been
accounted for as a purchase. Accordingly, the consolidated financial statements
include the operating results of each business from the respective date of
acquisition.

On April 24, 1998, EyeCity entered into a one-year agreement whereby it licensed
the use of certain patented display technology for an initial cash payment of
$10,000 and monthly payments of $350. On April 30, 1999, EyeCity acquired such
technology for a cash payment of $10,000, the issuance of 10,000 shares of
common stock and 15 monthly payments of $1,000 beginning on June 15, 1999. In
connection with the acquisition of this technology, EyeCity recorded an
intangible asset of $35,000.

On August 5, 1998, EyeCity acquired the common stock of Foggles, Inc.
("Foggles") in exchange for 214,000 shares of EyeCity's common stock. Foggles is
a distributor of specialty eyeglasses that are used in the aviation and sporting
industry. The fair value of EyeCity's common stock issued to Foggles
shareholders was approximately $165,000. The purchase has been allocated to the
assets acquired and the liabilities assumed based on the fair values at the date
of acquisition. The excess of the purchase price over the estimated fair values
of the net assets acquired of approximately $156,000 has been recorded as
goodwill.

On September 17, 1998, EyeCity acquired all the common stock of Gilead
Enterprises, Inc. ("Gilead") in exchange for 15,000 shares of EyeCity's common
stock and options to purchase 2,500 shares of common stock at an exercise price
of $3.00 per share. (The exercise price of the options was in excess of the fair
value of the common stock on the date of grant). Gilead's assets primarily
consist of a patent and trademark relating to night driving glasses. The fair
value of EyeCity's common stock and options issued to Gilead shareholders was
approximately $8,000. Accordingly, the entire purchase price of approximately
$8,000 has been recorded as intangibles.

On March 12, 1999, EyeCity acquired all of the outstanding shares of
EyeGlassPlace.com, Inc., an Internet retailer of optical products and
accessories, for 100,000 shares of EyeCity common stock. The fair value of
EyeCity's common stock issued in connection with this acquisition was
approximately $94,000. As the acquired entity had minimal operating assets and
liabilities, the entire purchase price has been recorded as goodwill. On August
5, 1999, EyeGlassPlace.com, Inc. was merged into Peeper's, Inc.

On May 7, 1999, Peeper's Sunglasses and Accessories, Inc. ("Peeper's") merged
into Peeper's, Inc., a wholly-owned subsidiary of EyeCity, for merger
consideration consisting of a cash payment of $875,000, issuance of a
non-interest bearing secured promissory note of $875,000 (see Note 7) and the
issuance of 1,210,159 shares of common stock. Peeper's is an Internet retailer
of eyewear, optical products and accessories. The total consideration paid in
connection with this merger was approximately $3,279,000 including acquisition
costs of $35,000. The merger consideration has been allocated to the assets
acquired and the liabilities assumed based on the fair values at the date of
merger. The excess of the merger consideration over the estimated fair values of
the net assets acquired of $3,151,000 has been recorded as goodwill.


                                      F-11
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

6. Acquisitions (continued)

In May 1999, EyeCity acquired the rights to an Internet domain name in exchange
for the issuance of 2,105 shares of common stock and a cash payment of $30,000.
The total consideration paid in connection with this acquisition was
approximately $33,000 and has been recorded as intangibles.

On June 30, 1999, SunSource Technology, Inc. ("SunSource") merged into
SunglassSite, Inc., a wholly-owned subsidiary of EyeCity. Pursuant to the
agreement, all issued and outstanding shares of SunSource common stock were
converted in exchange for the following merger consideration: cash of $212,500,
a promissory note in the amount of $212,500 (see Note 7) and the issuance of
283,334 shares of common stock; for total consideration of $979,000, including
acquisition costs of $26,000. The merger consideration has been allocated to the
assets acquired and the liabilities assumed based on the fair values at the date
of merger and, accordingly, EyeCity recorded $970,000 of goodwill. On August 5,
1999, SunglassSite, Inc. was merged into Peeper's Inc.

On September 28, 1999, EyeCity entered into an agreement with Impact EyeWear,
LLC whereby it acquired the rights, title and interest in and to certain assets,
including a merchandise license agreement with Yahoo!, Inc. for $120,000 in cash
and the issuance of 166,667 shares of EyeCity common stock. The total
consideration paid in connection with this acquisition was approximately
$646,000, including acquisition costs of $26,000 and has been recorded as
intangibles. Simultaneously, the Company entered into a distributor agreement
with Sun Optics d/b/a Insight Eyeworks, Inc. ("Insight") under which Insight
will manufacture, market and distribute the Yahoo! eyewear and eyewear
accessories.

The following table summarizes the intangibles recorded relating to the
above-described acquisitions:

                                                                  December 31,
                                                                      1999
                                                             -------------------

     Foggles, Inc.                                                  $156,000
     Gilead Enterprises, Inc.                                          8,000
     EyeGlassPlace.com, Inc.                                          94,000
     Peeper's Sunglasses and Accessories, Inc.                     3,151,000
     SunSource Technology, Inc.                                      970,000
     Impact EyeWear license agreement et al.                         646,000
     Other acquisitions                                               68,000
                                                             -------------------
                                                                   5,093,000
     Less accumulated amortization                                 2,730,000
                                                             -------------------

                                                                  $2,363,000
                                                             ===================


                                      F-12
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

7. Debt

EyeCity's debt obligations at December 31, 2000 are as follows:

<TABLE>
<S>                                                                                       <C>
Notes payable to vendors (1)                                                              $  20,000
Seller financed acquisition and merger obligations (2)                                      922,250
                                                                                    -------------------
Total                                                                                      $942,250
                                                                                    ===================
</TABLE>

(1)   In 1999, EyeCity issued a note payable to a vendor in return for
      advertising services. The note is payable as follows: $1,330 on October 1,
      1999 and the remaining $40,000 in equal monthly installments of $10,000
      commencing November 1, 1999. The outstanding balance at December 31, 2000
      is $20,000.

(2)   In connection with the merger of Peeper's in May 1999 (see Note 6),
      EyeCity issued a secured promissory note in the amount of $875,000. The
      note is non-interest bearing and is due upon the earlier of the
      anniversary date or the consummation of a public offering resulting in
      gross proceeds in excess of $10,000,000. In May 2000, the maturity date of
      the note was extended to May 2002 with principal payments of $25,000 due
      on July 15, 2000, $150,000 due on August 31, 2001 and 5% of the first
      $2,000,000 of gross proceeds, and 10% of all gross proceeds above
      $2,000,000 raised by EyeCity in a financing transaction or series of
      financing transactions, in each case, payable within 7 days of the
      closing. The note now accrues interest at a rate of 7% per annum. The
      carrying value of the note is recorded net of the unamortized discount of
      $200,000 which is being amortized over the term of the note. For the year
      ended December 31, 2000, $66,667 of amortization expense has been
      recorded.

      In connection with the merger of SunSource in June 1999 (see Note 6),
      EyeCity issued a secured promissory note in the amount of $212,500. The
      note is non-interest bearing and is due upon the earlier of the
      anniversary date or the consummation of a public offering resulting in
      gross proceeds in excess of $10,000,000. In June 2000, EyeCity amended the
      note to provide that $3,000 of principal will be due and payable on each
      of the 15th day of the month from July through November 2000 and $197,500
      will be due and payable on December 31, 2000, provided that if EyeCity
      consummates a public or private offering of debt or equity securities,
      four percent of the net proceeds in excess of $2,000,000 of such offering
      shall be paid on account of the then outstanding principal balance of such
      note. The note now accrues interest at Chase Bank's prime rate. The
      carrying value of the note is recorded net of the unamortized discount of
      $47,500 which is being amortized over the term of the note. For the year
      ended December 31, 2000, $23,750 of amortization expense has been
      recorded.


                                      F-13
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

8. Stockholders' Equity

EyeCity is authorized to issue 101,000,000 shares of stock, of which 100,000,000
is designated as common stock, par value $.001 per share, and 1,000,000 is
designated as preferred stock, par value $.001 per share. As of December 31,
2000, EyeCity has not issued any shares of preferred stock.

On March 12, 1999, EyeCity sold 250,000 shares of its common stock, at a price
of $1.00 per share, for proceeds of $250,000.

In May 1999, EyeCity sold 1,500,000 shares of its common stock to several
investors at a price of $1.00 per share for proceeds of $1,500,000. In
connection with this transaction, EyeCity granted 300,000 options to an
investment advisor to purchase common stock at an exercise price of $1.00 per
share.

In June 1999, EyeCity sold 50,000 shares to one investor at a price of $1.50 per
share, for proceeds of $75,000. In connection with this transaction, EyeCity
granted 15,000 options to an investment advisor to purchase common stock at an
exercise price of $1.50 per share.

In June 1999, EyeCity sold 230,000 shares of its common stock to several
investors. These shares were sold at a price of $3.00 per share, for proceeds of
approximately $690,000. In connection with this transaction, EyeCity granted
98,000 options to an investment advisor to purchase common stock at an exercise
price of $3.00 per share.

In July, August and October 1999, EyeCity privately sold 80,667 shares of its
common stock to eight individual investors. These shares were sold for $3.00 per
share, for a total offering price of $242,000.

In December 1999, EyeCity privately sold 30,000 shares of its common stock to
two individual investors. These shares were sold for $1.00 per share, for a
total offering price of $30,000.

During 1999, EyeCity issued 481,000 shares of its common stock with a value of
$563,000 in exchange for legal, consulting and leasehold improvements at its
Minnesota office space. The Company granted options to purchase 423,000 shares
of its common stock at exercise prices ranging from $1.00 to $3.00 per share in
exchange for services in connection with certain equity financings.

During the year ended December 31, 2000, EyeCity sold 1,745,000 shares of its
common stock to 63 investors at a price of $1.00 per share, 50,000 shares of its
common stock at a price of $.75 per share and 680,000 shares of its common stock
at a price of $.50 per share, resulting in aggregate gross proceeds of
$2,122,500. The investors who purchased 680,000 shares of common stock at $.50
per share also received three year warrants to purchase 680,000 shares of common
stock at an exercise price of $1.00 per share.


                                      F-14
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

8. Stockholders' Equity (continued)

During the year ended December 31, 2000, EyeCity issued 642,283 shares of its
common stock with a value of $409,400 in exchange for legal, accounting,
consulting and marketing services.

During the year ended December 31, 2000, holders converted $275,000 of
subordinated convertible promissory notes into 400,000 shares of EyeCity common
stock. Of the notes which were converted, $150,000 in principal was converted in
connection with an incentive offered to the holder to convert these shares. In
connection with the incentive, the holder received an aggregate of 300,000
shares of common stock and three year warrants to purchase 150,000 shares of
common stock at an exercise price of $1.00 per share. The fair value of these
additional equity securities issued is $96,000 and has been recorded as interest
expense in the third quarter.

During the year ended December 31, 2000, EyeCity issued 10,000 shares of its
common stock with a value of $10,000 in exchange for furniture and fixtures.

During the year ended December 31, 2000, EyeCity issued 30,000 shares of its
common stock with a value of $15,000 in consideration for the holder of a
promissory note agreeing to extend the maturity date of such promissory note.

During the year ended December 31, 2000, EyeCity issued 216,400 shares of its
common stock with a value of $118,128 to an investment advisor in connection
with financing transactions.

During the year ended December 31, 2000, EyeCity issued 13,600 shares of its
common stock with a value of $10,200 for salary and expenses owed to an
employee.

9. Stock Options

EyeCity has four stock option plans (the "Plans")--the 1997 Stock Option Plan
and the 2000 Stock Option Plan provides for the granting of either incentive
stock options or nonstatutory stock options, and the 1998 and 1999 Stock Option
Plans provide for the granting of nonstatutory stock options. The 1997 Plan
provides for the granting of up to 500,000 options, the 1998 and 1999 Plans each
provide for the granting of 1,500,000 options and the 2000 Plan provides for the
granting of 4,000,000 options to key employees of EyeCity (including directors
and officers) and consultants (including members of EyeCity's advisory board)
for the purchase of EyeCity common stock. Stock options granted under the Plans
may vest immediately and have a term not greater than ten years from the date of
grant or five years for a holder of more than 10% of EyeCity common stock.
Incentive stock options may be granted at an exercise price not less than the
fair market value of the underlying shares at the date of grant or for the 1997
Plan, less than 110% of the fair market value for a holder of more than 10% of
EyeCity common stock at the date of grant. The per share price of nonstatutory
stock options granted to Non-Insiders (as defined) shall be determined by the
Board of Directors. All options under the above plans have been granted at
exercise prices equal to or greater than the fair market value of the underlying
common shares at the date of grant.


                                      F-15
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

9. Stock Options (continued)

The following table summarizes activity in stock options:

<TABLE>
<CAPTION>
                                                       Year ended                               Year ended
                                                     December 31, 2000                     December 31, 1999
                                          ------------------------------------       -----------------------------------
                                                                   Weighted                                  Weighted
                                          Shares under              Average          Shares under             Average
                                             Options            Exercise Price          Options           Exercise Price
                                             -------            --------------          -------           --------------
<S>                                         <C>                      <C>              <C>                     <C>
Balance, beginning of year                  2,577,000                $1.99              752,000               $1.06
Granted                                     1,214,750                $1.10            1,876,250               $2.34
Forfeitures/expirations                     (656,000)                $3.79              (1,250)               $6.54
Exercised                                         --                    --             (50,000)               $1.00
                                            ---------                                 ---------
Balance, end of year                        3,135,750                $1.27            2,577,000               $1.99
                                            ---------                                 ---------
</TABLE>

The following tables summarize information about the stock options outstanding
at December 31, 2000:

<TABLE>
<CAPTION>


                                                         Weighted-
                                                          Average
                                                         Remaining
                    Exercise           Options          Contractual           Options
                      Price          Outstanding            Life             Exercisable
                ----------------- ------------------ ------------------- ------------------

                     <S>               <C>                 <C>               <C>
                     $1.00             2,348,500           5.9 years         1,268,750
                     $1.10               400,000           2.6 years           400,000
                     $1.50                56,000           5.9 years            56,000
                     $1.72                   750           8.8 years               372
                     $1.75                60,000           1.2 years            60,000
                     $2.38                10,000           1.2 years            10,000
                     $2.44                70,500           9.0 years            65,124
                     $3.00               107,500           1.7 years           107,500
                     $4.38                 5,000           8.3 years             3,750
                     $4.50                44,000           8.6 years            22,000
                     $7.75                33,500           8.4 years            25,128
                                  ------------------                     ------------------
                                       3,135,750                             2,018,624
                                  ==================                     ==================
</TABLE>


                                      F-16
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

10. Related Party Transactions

EyeCity subleased office space on a month-to-month basis from a related entity.
A major stockholder of EyeCity also is a major stockholder of this entity. Rent
expense paid to the related entity for the years ended December 31, 1999 was
approximately $11,000. EyeCity relocated its operations and no longer subleases
office space from such related entity.

During 2000, EyeCity paid an aggregate of $55,000 to a family member of
EyeCity's Chief Operating Officer for consulting services rendered during 1999
and 2000. As of December 31, 2000, EyeCity owed such individual $45,000.

11. Commitments

Employment Contracts

On July 1, 1998, December 31, 1998 and July 1, 2000, EyeCity amended and
extended its existing employment contracts with its president and executive vice
president, respectively, through December 31, 2004. The contracts provide for
each executive to receive at an annual rate $82,500 for July 1, 1998 through
December 31, 1998; $100,000 for January 1, 1999 through June 30, 2000; and
$150,000 for July 1, 2000 through December 31, 2004. The base salary shall
automatically increase five (5%) per year commencing January 1, 2001, and may be
eligible for bonuses, at the discretion of EyeCity's Board of Directors. Officer
salaries for 1999 and1998 in the amount of $184,000 have been accrued at
December 31, 2000.

Operating Leases

The Company has entered into various operating leases which expire at various
times through 2004. The minimum annual rental payments under the provisions of
these leases for years ending December 31 are as follows:

      2001                                         160,000
      2002                                         164,000
      2003                                         163,000
      2004                                          89,000
                                             -----------------
                                               $   723,000
                                             =================

Rent expense, including amounts paid to a related entity (see Note 11), was
approximately $110,000 and $63,000 for the years ended December 31, 2000 and
1999, respectively.

                                      F-17
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

11. Commitments (continued)

Capital Leases

Future minimum lease payments under capital leases for equipment with a net book
value of approximately $93,000, included in property and equipment for the years
ending December 31 are as follows:

      2001                                             $ 36,000
      2002                                               29,000
      2003                                               16,000
      2004                                                5,000
                                                        -------
      Total minimum lease payments                       86,000
      Less: Amount representing interest                 14,000
                                                        -------
      Present value of minimum lease payments           $72,000
                                                        =======

12. Legal Proceedings

EyeCity is not aware of any material adverse claims regarding any of its
trademarks or domain names with the exception of its "Peeper's" mark and
peepers.com domain name. Rights in this mark and domain name have been
challenged in an action now pending entitled American Eyewear, Inc. v. Peeper's
Sunglasses and Accessories, Inc. and EyeCity.com, Inc. which was commenced in
July 1999 in the United States District Court for the Northern District of
Texas. Peepers, Inc. and EyeCity have moved to dismiss the action. The motion is
now pending. EyeCity has substantial defenses and may counter-claim to limit
American Eyewear's claimed rights in the trademark Peeper's. The parties are
also discussing settlement. It is premature to assess the likely outcome of the
proceeding. The former owner of the Peepers's mark has agreed to assume all
future legal expenses as to this matter.

On or about June 20, 2000, Thomas Seltzer ("Seltzer"), commenced an action in
the United States District Court for the Southern District of New York entitled
Thomas Seltzer v. Eyecity.com, Inc., Mark H. Levin and Mark Suroff, Civ. Action
No. 00-4597 (NRB) (the "Action") asserting several causes of action, including
breach of contract, fraud, negligent misrepresentation, breach of the implied
covenant of good faith and fair dealing, and unjust enrichment. Seltzer seeks
unspecified monetary damages and declaratory relief. Seltzer was the founder and
president of a company known as Impact Eyewear, LLC ("Impact"), which EyeCity
acquired in September 1999. After EyeCity acquired Impact, Seltzer entered into
an employment agreement with EyeCity and was terminated by EyeCity on February
7, 2000. Seltzer further alleges that EyeCity breached his employment agreement
when it terminated him. EyeCity answered the complaint and asserted
counterclaims on August 7, 2000. It is premature to asses the likely outcome of
the proceeding.


                                      F-18
<PAGE>

                       EyeCity.com, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

12. Legal Proceedings (continued)

A wholly owned subsidiary of EyeCity, Peeper's was named as a defendant in an
action entitled Oakley, Inc. v. Peeper's Sunglasses & Accessories Inc. and Son
Dad Boards Ltd. d/b/a Freestyle of Duluth and Larry Leege, which was commenced
in October 1999 in the Superior Court of California, Orange County. This action,
which is principally a contract claim against the third parties, Son Dad Boards
Ltd. and Larry Leege, also alleges that Peeper's, Inc. interfered with the
plaintiff's contractual relationship with these third parties when it purchased
sunglasses from them and then re-sold the merchandise. This action was settled
in January 2001 without any damages awarded against EyeCity.

The Company has other asserted claims arising in the normal course of business.
The Company believes the asserted claims are without merit and the Company will
vigorously defend any litigation that is brought.

13. Subsequent Events

In January 2001, EyeCity entered into an agreement with Mr. Thralow which
cancelled the indebtedness in the amount of $812,467, which was comprised of
$724,750 for the secured promissory note, interest in the amount of $34,633, and
the balances due under the consultant agreement of $45,162 and the employment
agreement of $7,923. As consideration for the cancellation of the indebtedness,
the Company conveyed to Mr. Thralow the websites it had acquired from him in
1999, certain inventory and equipment as well as 125,000 shares of the common
stock of EyeCity.

During January 2001, the Company issued 100,000 shares of its common stock to a
former employee for services rendered.

During February 2001, the Company issued 200,000 shares of its common stock in
consideration for consulting services.

During March 2001, the Company issued 301,500 shares of its common stock in lieu
of cash payments to certain vendors.

                                      F-19
<PAGE>

                           Commission File No. 0-27561

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    EXHIBITS

                                       TO

                                   FORM 10-KSB

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
        OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
                                DECEMBER 31, 2000

                                EYECITY.COM, INC.

<PAGE>

<TABLE>
<CAPTION>
Exhibit No.            Description
-----------            -----------
  <S>           <C>
  1.1           Certification of Incorporation.  Incorporated herein by reference to Exhibit
                2(a) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  1.2           Amendment to Certificate of Incorporation. .  Incorporated herein by reference
                to Exhibit 2(b) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  1.3           Bylaws, as amended.  Incorporated herein by reference to Exhibit 2(c) to
                EyeCity.com's Form 10-SB/A, File No.0-27561.

  4.1(a)        Form of Subscription Agreement used in connection with
                offering of 450,000 and 550,000 shares of common stock
                under Rule 504 of Securities Act of 1933. Incorporated
                herein by reference to Exhibit 3(a) to EyeCity.com's Form
                10-SB/A, File No.0-27561.

  4.1(b)        Form of Subscription Agreement used in connection with offering of 10%
                Subordinated Convertible Promissory Notes.  Incorporated herein by reference to
                Exhibit 3(b) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  4.1(c)        Form of 10% Subordinated Convertible Promissory Note. Incorporated herein by
                reference to Exhibit 3(c) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  4.1(d)        Purchase and Investment Agreement with Nikos P. Mouyiaris.   Incorporated
                herein by reference to Exhibit 3(d) to EyeCity.com's on Form 10-SB/A, File
                No.0-27561.

  4.1(e)        Form of Purchase and Investment Agreement with other investors in May 1999
                $1,500,000 offering.  Incorporated herein by reference to Exhibit 3(e) to
                EyeCity.com's Form 10-SB/A, File No.0-27561.

  4.1(f)        Form of Purchase and Investment Agreement with investors in June 1999 $690,000
                offering.  Incorporated herein by reference to Exhibit 3(f) to EyeCity.com's
                Form 10-SB/A, File No.0-27561.

  10.1(a)       Stock Purchase Agreement between Ergovision, Inc. and shareholders of Foggles,
                Inc.  Incorporated herein by reference to Exhibit 6(a) to EyeCity.com's Form
                10-SB/A, File No.0-27561.

  10.1(b)       Stock Purchase Agreement between Ergovision, Inc. and shareholders of Gilead
                Enterprises, Inc.   Incorporated herein by reference to Exhibit 6(b) to
                EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(c)       Stock Purchase Agreement by and between Ergovision, Inc. and EyeGlassPlace.com,
                Inc.  Incorporated herein by reference to Exhibit 6(c) to EyeCity.com's Form
                10-SB/A, File No.0-27561.

  10.1(d)       Severance and Consultancy Agreement with Robert B. Greenberg.  Incorporated
                herein by reference to Exhibit  6(d) to EyeCity.com's Form 10-SB/A, File
                No.0-27561.

  10.1(e)       Amendments to Severance and Consultancy Agreement with Robert B. Greenberg.
                Incorporated herein by reference to Exhibit 6(e) to EyeCity.com's Form 10-SB/A,
                File No.0-27561.
</TABLE>


<PAGE>

<TABLE>
  <S>           <C>
  10.1(f)       Agreement and Plan of Merger by and among Ergovision, Inc., Peeper's Sunglasses
                and Accessories, Inc., Peeper's, Inc. and Daniel D. Thralow. Incorporated
                herein by reference to Exhibit 6(f) to EyeCity.com's Form 10-SB/A, File
                No.0-27561.

  10.1(g)*      Agreement dated May 23, 2000 among EyeCity.com, Inc., Peeper's, Inc. and Daniel
                Thralow.

  10.1(h)*      Memorandum of Understanding dated as of January 12, 2001 by and between
                EyeCity.com, Inc. and Daniel Thralow.

  10.1(i)       Purchase Agreement between EyeCity.com, Inc. and StarSystems.  Incorporated
                herein by reference to Exhibit 6(f) to EyeCity.com's Form 10-SB/A, File
                No.0-27561.

  10.1(j)       Agreement and Plan of Merger by and among EyeCity.com, Inc., SunglassSite,
                Inc., SunSource Technology, Inc. and G. Robert Wilson. Incorporated herein by
                reference to Exhibit 6(h) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(k)       Asset Purchase and Assignment Agreement by and among EyeCity.com, Inc., Impact
                Eyewear, LLC and Thomas Seltzer. .  Incorporated herein by reference to Exhibit
                6(i) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(l)       Agreement between EyeCity.com and IEM, Inc.  Incorporated herein by reference
                to Exhibit 6(l) to Eyecity.com's Form 10-SB/A, File No.0-27561.

  10.1(m)+      Employment Agreement between Ergovision, Inc. and Mark H. Levin.   Incorporated
                herein by reference to Exhibit 6(m) to Eyecity.com's Form 10-SB/A, File
                No.0-27561.

  10.1(n)+      Amendment to Employment Agreement between Ergovision, Inc. and Mark H. Levin.
                Incorporated herein by reference to Exhibit 6(n) to EyeCity.com's Form 10-SB/A,
                File No.0-27561.

  10.1(o)+*     Amendment to Employment Agreement between EyeCity.com, Inc. and Mark H. Levin
                dated as of July 1, 2000.

  10.1(p)+      Employment Agreement between Ergovision, Inc. and Mark R. Suroff.  Incorporated
                herein by reference to Exhibit 6(o) to EyeCity.com's Form 10-SB/A, File
                No.0-27561.

  10.1(q)+      Amendment to Employment Agreement between Ergovision, Inc. and Mark R. Suroff.
                Incorporated herein by reference to Exhibit 7(p) to EyeCity.com's Form 10-SB/A,
                File No.0-27561.

  10.1(r)+*     Amendment to Employment Agreement between EyeCity.com, Inc. and Mark R. Suroff
                dated as of July 1, 2000.

</TABLE>

<PAGE>

<TABLE>
  <S>           <C>
  10.1(s)       Employment Agreement between Ergovision, Inc. and Daniel D. Thralow.
                Incorporated herein by reference to Exhibit 6(q) to EyeCity.com's Form 10-SB/A,
                File No.0-27561.

  10.1(t)       Finders Agreement between Ergovision, Inc. and James J. Armenakis. Incorporated
                herein by reference to Exhibit 6(r) to EyeCity.com's Form 10-SB/A, File
                No.0-27561.

  10.1(u)       Amendment to Finders Agreement between EyeCity.com, Inc. and James J. Armenakis
                dated December 29, 1999.  Incorporated herein by reference to Exhibit 10.1(q)
                to EyeCity.com's Form 10-KSB for the period ended December 31, 1999, File No.
                0-27561.

  10.1(v)*      Amendment to Finders Agreement between EyeCity.com, Inc. and James J. Armenakis
                dated June 1, 2000.

  10.1(w)       Consulting Agreement between Ergovision, Inc. and James J. Armenakis.
                Incorporated herein by reference to Exhibit 6(s) to EyeCity's Form 10-SB/A,
                File No. 0-27561.

  10.1(x)       Amendment to Consulting Agreement between Ergovision, Inc. and James J.
                Armenakis. Incorporated herein by reference to Exhibit 6(t) to EyeCity.com's
                Form 10-SB/A, File No.0-27561.

  10.1(y)*      Amendment to Consulting Agreement between EyeCity.com, Inc. and James J.
                Armenakis dated April 1, 2001.

  10.1(z)       1997 Qualified Stock Option Plan.  Incorporated herein by reference to Exhibit
                6(w) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(aa)      1998 Stock Option Plan.  Incorporated herein by reference to Exhibit 6(x) to
                EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(bb)      1999 Stock Option Plan.  Incorporated herein by reference to Exhibit 6(y) to
                EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(cc)*     2000 Stock Option Plan.

  10.1(dd)      Lease between First Industrial, LP and EyeCity.com, Inc. Incorporated herein
                by reference to Exhibit 6(z) to EyeCity.com's Form 10-SB/A, File No.0-27561.

  10.1(ee)      Lease between Plaza Associates and Peeper's, Inc.  Incorporated herein by
                reference to Exhibit 6(aa) to EyeCity.com's Form 10-SB/A, File No.0-27561.
</TABLE>

<PAGE>

<TABLE>
    <S>         <C>
    21          List of Subsidiaries. Incorporated herein by reference to Exhibit 21 to
                EyeCity.com's Form 10-KSB for the fiscal year ended December 31, 1999, File No.
                0-19041.

    27*         Financial Data Schedule
</TABLE>