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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                   FORM 10-K

(Mark One)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

[_]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________

                        Commission file number: 0-21068

                          SIGHT RESOURCE CORPORATION
            (Exact name of registrant as specified in its charter)

           Delaware                                       04-3181524
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)

   100 Jeffrey Avenue, Holliston, MA                        01746
(Address of principal executive offices)                  (Zip Code)

      Registrant's telephone number, including area code: (508) 429-6916

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

     Securities registered pursuant to Section 12(g) of the Exchange Act:

                    Common Stock, $.01 par value per share
                    --------------------------------------
                               (Title of Class)

                        Preferred Share Purchase Rights
                        -------------------------------
                               (Title of Class)

    Redeemable Warrants, each exercisable for the purchase of one share of
               Common Stock, $.01 par value per share, at $6.00
               ------------------------------------------------
                               (Title of Class)

       Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [_]

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

       The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant (without admitting that any person whose shares are
not included in such calculation is an affiliate) on March 24, 1998, was
approximately $35,191,160, based on the last sale price as reported by NASDAQ.

       As of March 24, 1998, the registrant had 8,797,790 shares of common stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

       The following documents (or parts thereof) are incorporated by reference
into the following parts of this Form 10-K: Certain information required in Part
III of this Annual Report on Form 10-K is incorporated from the registrant's
Proxy Statement for the Annual Meeting of Stockholders to be held on May 28,
1998.

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                                    PART 1

Item 1.     BUSINESS

General

  Sight Resource Corporation (the "Company") manufactures, distributes and sells
eyewear and related products and services. As of December 31, 1997 the Company's
operations consisted of 86 eye care centers, with three regional optical
laboratories and distribution centers, making it one of the twenty largest
providers in the primary eye care industry. The Company's eye care centers
operate primarily under the brand names Cambridge Eye Doctors, E.B. Brown
Opticians, Vision Plaza and Vision World. The Company also provides, or where
necessary to comply with applicable law administers the business functions of
optometrists, ophthalmologists and professional corporations that provide,
vision related professional services. In addition, as of December 31, 1997 the
Company operated four laser vision correction ("LVC") centers.

Acquisition History and Strategy

  Effective January 1, 1995, the Company acquired the assets of Cambridge Eye
Associates, Inc. ("Cambridge Eye"), an optometric practice which, at
December 31, 1997, operated 22 primary eye care centers, principally in
Massachusetts. The assets and liabilities of Cambridge Eye were acquired from a
Company by the same name (Cambridge Eye Associates, Inc.) owned by Elliot S.
Weinstock, O.D. as sole stockholder. Following the acquisition, Cambridge Eye
entered into a management services contract with Optometric Providers, Inc.
("Optometric Providers"), a corporation established to employ the optometrists
previously employed by the acquired company.

  Effective July 1, 1995, the Company acquired the assets of Douglas Vision
World, Inc. ("Vision World"), a company which, at December 31, 1997, operated
eight primary eye care centers in Rhode Island.  The assets and liabilities of
Vision World were acquired from a company by the same name (Douglas Vision
World, Inc.) owned by Kathleen Haronian, Lynn Haronian and Shirley Santoro.
Following the acquisition Vision World entered into a management services
contract with Optometric Care, Inc. ("Optometric Care"), a professional
corporation established to employ the optometrists previously affiliated with
the acquired company.

  Effective July 1, 1996, the Company acquired the assets and liabilities of
three companies, The E.B. Brown Optical Company, Brown Optical Laboratories,
Inc. and E.B. Brown Opticians, Inc. ("E.B. Brown"), all owned by Gordon and
Evelyn Safran.  At December 31, 1997 E.B. Brown operated collectively 39 eye
care centers in Ohio and western Pennsylvania.  Independent optometrists
maintain offices at 28 of the E.B.Brown eye care centers; therefore, the Company
does not record revenue from the provision of vision related medical services at
these locations.  The Company may add optometrists to the staffs of several of
its eye care centers in Ohio and Pennsylvania.  To accomplish this, it may be
necessary to enter into management services contracts with professional
corporations established to employ such optometrists.

  Effective July 1, 1997, the Company acquired one hundred percent of the
outstanding shares of stock of Vision Holdings, Ltd., (formerly known as
Dr. Greenberg, An Optometry Corporation d/b/a Vision Plaza)("Vision Plaza") At
December 31, 1997 Vision Plaza operated 14 primary eye care centers and three
specialty eyewear centers in Louisiana and Mississippi. Following the
acquisition, Vision Plaza entered into a management services contract with Dr.
John Musselman, A Professional Corporation ("Musselman"), a corporation
established to employ the optometrists previously employed by the acquired
company.

  The Company has an acquisition strategy to acquire and integrate the assets of
multi-site eye care centers and the practices of eye care professionals and to
employ or enter into management services contracts with these professionals.
This strategy includes both expanding existing regional markets and entering new

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regional markets. The Company will also target acquisitions in strategic markets
that will serve as platforms from which the Company can consolidate a given
service area by making and integrating additional "in-market" acquisitions.

  In assessing potential acquisition candidates, the Company evaluates
qualitative issues such as the reputation of the eye care professional in the
local and national marketplace, the training and education of the eye care
professional, licensure and experience, Medicare and Medicaid compliance,
billing practices and operating history.  Prior to entering any market, the
Company considers such factors as the local level of eye care competition,
networking and consolidation activity, the regulatory environment, customer-
provider ratios and the economic condition of the local market.  The Company
from time to time also considers acquisitions of, or affiliations with,
ambulatory surgical centers, specialty eye hospitals and other complementary
practices and services that are consistent with its objective of being a leading
integrated provider of eye care products and services in select, regional
markets.

Current Operations

Eye Care Centers

  The Company's 86 eye care centers are located in major shopping malls, strip
shopping centers, and free-standing buildings and generally are clustered within
discrete market areas so as to maximize the benefit of advertising strategies
and to minimize the cost of supervising operations.  The Company's centers in
Massachusetts, Rhode Island, Ohio and Louisiana are leading providers of
prescription and non-prescription eye care products and services in those
markets.  In addition, the Company's eye care centers in New Hampshire,
Pennsylvania and Mississippi are leading providers in their local markets.

  The Company's eye care centers range in size and are substantially similar in
appearance within each region.  The eye care centers are operated under certain
uniform standards and operating procedures.  Each eye care center carries a
selection of eyeglass frames, ranging in price from value models to designer
collections.  Lens and frame selections include a variety of materials and
styles.  The Company continually analyzes sales of its frames to keep its eye
care centers stocked with a wide selection of the latest in eyewear fashion and
a proper assortment of styles, colors, and sizes.  In addition to prescription
eyewear, each eye care center also carries fashion sunglasses and eyewear
accessories.  E.B. Brown's eye care centers also offer hearing aids and
audiology goods and services which are provided by audiologists who service many
of E.B. Brown's centers on a rotating schedule.

  Each eye care center in Massachusetts, New Hampshire, Rhode Island, Louisiana
and Mississippi is staffed by one or more licensed optometrists, a manager and a
number of trained eye care technicians and/or licensed opticians.  The Company
intends to continue to add optometrists to several of its eye care centers in
Ohio and Pennsylvania.

Centralized Optical Laboratories and Distribution Centers

  To meet the volume needs of the eye care centers for certain prescription
eyeglass lenses and the delivery needs of each center's customers, the Company
operates three regional optical laboratories and distribution centers.  The
regional optical laboratories provide complete laboratory services to the
Company's eye care centers, including polishing, cutting and edging, tempering,
tinting and coating of ophthalmic lenses.  The distribution centers provide and
maintain an inventory of all accessories and supplies necessary to operate the
primary eye care centers in their regions, as well as "ready made" eye care
products, including contact lenses and related supplies.  The inventory of
eyeglass lenses, frames, contact lenses, accessories and supplies is acquired
through a number of sources, domestic and foreign.  The Company is not dependent
on any one

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supplier. Management believes that the regional optical laboratories and
distribution centers have the capacity to accommodate additional multi-site eye
care centers.

  In February, 1997 the Company discontinued the operations of an optical
laboratory and distribution facility operated by E.B. Brown in Cleveland, Ohio,
and consolidated its operations with those at its Holliston, Massachusetts
facility.  In August, 1997 the Company elected to re-open a smaller version of
the Cleveland facility to improve the quality and timeliness of product
delivery.  As the Company grows, it may elect to expand or contract the
operations of any or all of its optical laboratories and distribution centers
based on the needs of the Company at that time.

Management Information and Financial Systems

  In 1996 the Company selected a vendor and began the development, testing and
installation of new software associated with a new point of sale system and
perpetual inventory system for its primary eye care centers, regional optical
laboratories and distribution centers.  By late 1997 the Company, after testing
the software system in selected eye care centers, elected to utilize an
alternative software system vendor whose product is better suited to the needs
of the Company.  As a result, the Company wrote down the capitalized costs
associated with the original point of sale system.  The Company believes that
the new system will facilitate the processing of customer sales information and
replenishment of inventory by passing such information, including customer
specific orders, to the Company's home office, and its regional optical
laboratories and distribution centers for further processing.

Managed Primary Eye Care

  To address the expanding enrollment of customers in managed primary eye care
programs and the resulting customer flow to designated providers of these
managed primary eye care services, in 1997 the Company created its SightCare
program.  SightCare is responsible for developing programs for third party
payors, securing new contracts for providing managed primary eye care services,
and ensuring the consistency and quality of managed primary eye care products
and services delivered by the Company.

  As of December 31, 1997, the Company provided managed primary eye care
benefits to numerous organizations in New England, including private companies,
unions and leading health maintenance organizations.  The Company began offering
the SightCare program in its Ohio, western Pennsylvania and Louisiana markets in
late 1997.  The Company believes that its buying power, regional laboratories,
in-center optometrists, and broad outreach within its markets, enable it to
deliver consistent, quality eyewear and primary eye care at competitive prices,
thereby positioning the Company to achieve a leadership position in managed
primary eye care in its markets.

Management Services Contracts

  Many states have laws which prohibit or restrict the practice of optometry by
non-licensed persons or entities.  See "Government Regulations".  In states
which allow the Company to employ optometrists and ophthalmologists, the Company
plans on providing professional services directly.  Otherwise, the Company will
enter into management services contracts with optometrists, ophthalmologists
and/or professional corporations which will provide the professional eye care
services.  The Company's wholly owned subsidiaries, Cambridge Eye, Vision World,
and Vision Plaza each entered into a management services contract with
Optometric Providers, Optometric Care, and Musselman (collectively the "PCs"),
respectively.  Accordingly, Cambridge Eye operates as the management service
organization ("MSO") for Optometric Providers, Vision World operates as the MSO
for Optometric Care, and Vision Plaza operates as the MSO for Musselman.
Cambridge Eye, Vision World, and Vision Plaza, as MSOs, have exclusive decision
making authority for the ongoing major operations of the PCs, with the exception
of the provision of professional eye

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care services. Pursuant to these management service contracts, the Company,
among other things, (i) acts as the exclusive financial manager, business
manager and administrator of all business and administrative functions and
services associated with the provision of the professional services, (ii) orders
and purchases all professional and office inventory and supplies and arranges
for the availability of the same, (iii) maintains files and records, (iv)
provides or arranges for the provision of technical and ancillary service and
support personnel, (v) establishes, operates and maintains bookkeeping, payroll,
accounting, billing and collection systems, (vi) renders advice concerning the
marketing of services, (vii) develops and administers benefit plans for the
professionals and (viii) renders such other business and financial management,
consultation and advice as may reasonably be needed from time to time by the
practice in connection with its provision of professional services. As a result,
the Company is involved in the daily on-site financial and administrative
management of these optometric practices. The Company's goals in providing such
services are to (i) improve the performance of these optometric practices in
these non-professional activities, (ii) allow the optometrists employed by or
associated with these practices to more fully dedicate their time and efforts
toward their professional practice activities, and (iii) afford the Company
expanded service capabilities, and, for itself and on behalf of the optometric
practices, capitalize on opportunities for contracting with third party payors
and their intermediaries, including managed care providers. The management fees
payable to the Company by the affiliated practices under the management services
contracts vary based on the cost, nature and amount of services provided, and
may be adjustable or subject to renegotiation from time to time. Management fees
payable under existing and future contracts are subject to the requirements of
applicable laws, rules and regulations and negotiations with individual
professional practices.

  Under the management services contracts, the affiliated practices retain the
responsibility for, among other things, (i) hiring and compensating
professionals, (ii) ensuring that professionals have the required licenses,
credentials, approvals and other certifications needed to perform their duties
and (iii) complying with applicable federal and state laws, rules and
regulations.  In addition, the affiliated practices exclusively control all
aspects of professional practice and the delivery of professional services.  In
connection with each management services contract, the Company also enters into
a Stock Pledge Agreement (a "Pledge Agreement") with the shareholder of the
relevant PC, pursuant to which the shareholder pledges the PC shares to the
Company to secure the obligations under the Pledge Agreement.  Pursuant to the
terms of the Pledge Agreement, the Company may, in certain circumstances,
including termination of the shareholder's employment by the Company, effect a
substitution of shareholders by designating a qualified person to serve as the
new shareholder.

Laser Vision Correction Services

  At December 31, 1997 the Company operated four laser vision correction
("LVC") centers in association with selected ophthalmic surgical providers.  By
affiliating with the Company, these LVC surgical providers benefit by having a
convenient way of participating in LVC without incurring substantial capital
expenditures or the risk of technological obsolescence.  The LVC surgical
providers also benefit from the Company's ability to acquire, counsel and refer
customers for LVC services through its primary eye care centers.

  LVC centers are established in compliance with applicable law and pursuant to
a written LVC center agreement between the Company and the provider.  The
Company's obligations pursuant to such agreements typically include: furnishing
the laser system to be used for the delivery of LVC, therapeutic and related eye
care services at the LVC center; maintenance, repairs and upgrades to the laser
system; and certain training and oversight of medical, technical and
administrative personnel involved in the delivery of services at the center.
The providers' responsibilities pursuant to such agreements typically include:
providing ophthalmologists to perform the LVC, therapeutic and related eye care
services to patients at the LVC center, including performing LVC on qualified
customers originated through the Company's marketing efforts; furnishing
suitable space and certain ancillary equipment, furniture and supplies for the
LVC center's operations; and providing administrative, nursing and technical
support for the LVC center.

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  The LVC center agreements also generally provide for the Company to pay the
providers for certain services associated with each LVC procedure performed by
the provider on a customer generated through the Company's marketing efforts.
In addition, the provider pays the Company an access fee for use of the laser
system to perform LVC or therapeutic procedures on patients generated by such
provider.  Community-based ophthalmologists who access the LVC center pay the
Company an access fee for use of the laser.

  In 1997 the Company sold 12 of the excimer laser systems which it owned,
reducing the number of operating systems in place at the end of the year to
four.  In early 1998 the Company sold one additional excimer laser, reducing the
number of lasers it now owns to three, all of which operate in New England and
primarily service customers referred from the Company's primary eye care
centers.  In markets outside New England, the Company believes it can negotiate
contracts with excimer laser owners and operators who can offer LVC services at
favorable terms for the Company's customers.

Marketing and Merchandising

  The Company's marketing and merchandising strategy focuses on the following
key concepts: (i) selling quality, brand name and private-label eyewear at
competitive prices, (ii) offering a wide selection of eyewear products, (iii)
offering convenient locations and hours, and in-house optometric examinations by
licensed optometrists, (iv) using a variety of media, such as radio, newspaper,
direct mail, television and yellow pages advertising, to differentiate it from
competitors and to create general consumer awareness and traffic in its eye care
centers and (v) providing knowledgeable and personalized customer service.  The
Company makes use of various tools to market its products and services:

    Advertising.  The Company uses newspaper, magazine, television, radio,
  direct mail and other advertising to reach prospective, as well as existing,
  customers.  Advertisements emphasize the Company's benefits to the eyewear
  public, such as value pricing, product promotions, convenience of location,
  customer service and knowledgeable salespersons.  In-house optometric
  examinations by licensed optometrists are also emphasized in advertising,
  subject to regulatory requirements.

    In-center Marketing.  The Company prepares and revises point-of-purchase
  displays which convey promotional messages to customers upon arriving at its
  centers.  Visual merchandising techniques, educational videotapes, and take-
  home brochures are employed to draw attention to products displayed in the eye
  care centers.

    Quarterly Catalogs.  The Company mails a quarterly catalog to customers in
  New England who are in its marketing database.  This database consist of
  individuals who have utilized the services of the Company and over the last
  several years.  The catalog includes educational, promotional and marketing
  information about the Company's products and services, including LVC.  The
  Company is exploring the feasibility of expanding this program to its
  customers in Ohio, Pennsylvania, Louisiana and Mississippi in the coming year.

  The Company markets its comprehensive and competitively priced primary eye
care programs to leading HMOs, insurance companies and other third party payors
in the Company's regional markets.  The Company's marketing strategy towards
these organizations stresses its regional coverage, its complete range of eye
care products and services and its commitment to quality and service.  In 1997
the Company introduced its new SightCare programs in New England.  Through these
programs the Company has sought to upgrade its managed care product offerings
and simplify the administration of such programs in order to allow it to compete
more effectively for managed care contracts.  The Company intends to offer its
SightCare programs in all of its markets.

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Competition

  The Company experiences competition regarding the acquisition of the assets
of, and the provision of management services to, eye care centers and practices.
Several companies, both publicly and privately held, that have established
operating histories and greater resources than the Company are pursuing the
acquisition of the assets of general and specialty practices and the management
of such practices.

  Eye care practices affiliated with the Company will compete with other local
eye care practices as well as managed care organizations.  The Company believes
that changes in governmental and private reimbursement policies and other
factors have resulted in increased competition for consumers of eye care
services.  The Company believes that cost, accessibility and quality of services
are the principal factors that affect competition.

  The optical industry is highly competitive and includes chains of retail
optical stores, multi-site eye care centers, and a large number of individual
opticians, optometrists, and ophthalmologists who provide professional services
and/or dispense prescription eyewear.  Optical retailers generally serve
individual, local or regional markets, and, as a result, competition is
fragmented and varies substantially among locations and geographic areas.  The
Company believes that the principal competitive factors affecting retailers of
prescription eyewear are location and convenience, quality and consistency of
product and service, price, product warranties, and a broad selection of
merchandise, and that it competes favorably in each of these respects.

  The Company and its affiliated practices compete with other providers for
managed primary eye care contracts.  The Company believes that trends toward
managed primary eye care have resulted in increased competition for such
contracts.

  Competition in providing LVC comes from entities similar to the Company and
from hospitals, hospital-affiliated group entities, physician group practices
and private ophthalmologists that, in order to offer LVC to existing patients,
purchase refractive lasers.  Suppliers of conventional vision correction
alternatives (eyeglasses and contact lenses), such as optometric chains, may
also compete with the Company by purchasing laser systems and training personnel
to offer LVC to their customers.  Competition to provide LVC may lead to lower
prices for LVC, as has happened in some countries where the treatment has been
available for several years.

Government Regulation

  The Company and its operations are subject to extensive federal, state and
local laws, rules and regulations affecting the healthcare industry and the
delivery of healthcare, including laws and regulations prohibiting the practice
of medicine and optometry by persons not licensed to practice medicine or
optometry, prohibiting control over optometrists or physicians in the practice
of optometry by parties not licensed to practice optometry or medicine,
prohibiting the unlawful rebate or unlawful division of fees and limiting the
manner in which prospective patients may be solicited.  The Company attempts to
structure all of its operations so as to comply with the relevant state statutes
and regulations.  The Company believes that its operations and planned
activities do not violate any applicable medical practice, optometry practice,
fee-splitting or other laws identified above.  Laws and regulations relating to
the practice of medicine, the practice of optometry, fee-splitting or similar
laws vary widely from state to state and seldom are interpreted by courts or
regulatory agencies in a manner that provides guidance with respect to business
operations such as those of the Company.  There can be no assurance that courts
or governmental officials with the power to interpret or enforce these laws and
regulations will not assert that the Company or certain transaction in which it
is involved are in violation of such laws and regulations.  In addition, there
can be no assurance that future interpretations of such laws and regulations
will not require structural and organizational modifications of the Company's
business.

     Services that are reimbursed by third party payors may be subject to
provisions of the Social Security Act (sometimes referred to as the "anti-
kickback" statute) and similar state laws that impose criminal and civil
sanctions on persons who solicit, receive, or pay any remuneration, whether
directly or indirectly, in return for inducing the referral of a patient for
treatment or the ordering or purchasing of items or services that are paid for
in whole or in part by Medicare, Medicaid or other specified federal or state
programs, or, in some states, private payors. The federal government has
promulgated regulations that create exceptions or "safe harbors" for certain
business transactions. Transactions that are structured in accordance with such
safe harbors will not be subject to prosecution under federal law. In order to
obtain safe harbor protection, the business arrangement must satisfy each and
every requirement of the applicable safe harbor(s). Business relationships that
do not satisfy each element of a safe harbor do not necessarily violate the
anti-kickback statute but may be subject to greater scrutiny by enforcement
agencies. Many state anti-kickback statutes do not include safe harbors and some
state anti-kickback statutes apply to all third party payors. The Company is
concerned about federal and state anti-kickback statutes only to the extent that
it provides healthcare services that are reimbursed by federal, state and in
some states, private third party payors. The Company believes its business
relationships and operations are in material compliance with applicable laws.
Nevertheless, there can be no assurance that the Company will not be required to
change its practices or experience a material adverse effect as a result of a
challenge by federal or state enforcement authorities under the foregoing
statutes.


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  Significant prohibitions against physician referrals have been enacted by
Congress.  These prohibitions, commonly known as "Stark II," amended prior
physician self-referral legislation known as "Stark I" by dramatically enlarging
the field of physician-owned or physician-interested entities to which the
referral prohibitions apply.  Effective December 31, 1994, Stark II prohibits a
physician from referring Medicare or Medicaid patients to an entity providing
"designated health services" in which the physician has an ownership or
investment interest, or with which the physician has entered into a compensation
arrangement.  The designated health services include prosthetic devices, which
under applicable regulations and interpretations include one pair of eyeglasses
or contact lenses furnished after cataract surgery and intraocular lenses
provided at ambulatory surgery centers. The penalties for violating Stark II
include a prohibition on payment by these government programs and civil
penalties of as much as $15,000 for each violative referral and $100,000 for
participation in a "circumvention scheme." The Company's current business is not
governed by Stark I or II. To the extent the Company or any affiliated practice
is deemed to be subject to the prohibitions contained in Stark II for services,
the Company believes its activities fall within the permissible activities
defined in Stark II, including, but not limited to, the provision of in-office
ancillary services.

  The FDA and other federal, state or local governmental agencies may amend
current, or adopt new, rules and regulations that could affect the use of
ophthalmic excimer lasers for laser vision correction and therefore adversely
affect the business of the Company.


Environmental Regulation

  The Company's business activities are not significantly affected by
environmental regulations and no material expenditures are anticipated in order
for the Company to comply with environmental regulations.  However, the Company
is subject to certain regulations promulgated under the Federal Environmental
Protection Act ("EPA") with respect to grinding, tinting, edging and disposing
of ophthalmic lenses and solutions.

Proprietary Property

  The Company has no patents or registered copyrights. The Company does have
various registered trademarks in the U.S., including "Sight Resource",
"Cambridge Eye Doctors", "E.B. Brown Opticians", "Vision Plaza" and "SightCare".

Employees

  As of December 31, 1997, the Company had 596 employees.  The Company intends
to hire additional key personnel it believes will be required for advancement
and expansion of the Company's activities.

  The success of the Company's future operations depends in large part on the
Company's ability to recruit and retain qualified personnel over time.  There
can be no assurance, however, that the Company will be successful in retaining
or recruiting key personnel.

Business Risks and Cautionary Statements

  When used in this Form 10-K and in future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases and in oral
statements made with the approval of an authorized executive officer, the words
or phrases "will likely result", "are expected to", "estimate", "project" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.  Such
statements are subject to certain risks and uncertainties, including those

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discussed below, that could cause actual results to differ materially from
historical results and those presently anticipated or projected.  The Company
wishes to caution readers not to place undue reliance on any such forward-
looking statements, which speak only as of the date made.  The Company wishes to
advise readers that the factors listed below could affect the Company's
financial performance and could cause the Company's actual results for future
periods to differ materially from any opinions or statements expressed with
respect to future periods in any current statements.

  The Company will not undertake and specifically declines any obligation to
publicly release the result of any revisions which may be made to any forward-
looking statements to reflect events or circumstances after the date of such
statements or to reflect the occurrence of anticipated or unanticipated events.

  There are a number of risks and uncertainties that could cause actual results
to differ materially from historical results and those presently anticipated or
projected. Such significant risks and uncertainties include but are not limited
to:

  1. The Company has a limited operating history, entering the laser vision
     correction market in 1993 and the primary eye care industry in 1995.

  2. The Company has a history of operating losses, has not yet demonstrated
     sustained profitability and may continue to incur significant operating
     losses for the foreseeable future.

  3. The primary eye care market and laser vision correction market are highly
     competitive. The Company's current and potential competitors include many
     larger companies with substantially greater financial, operating, marketing
     and support resources than the Company.

  4. There can be no assurance that attractive acquisition candidates, or the
     financing necessary for any such acquisitions, will be available to the
     Company.

  5. There can be no assurance that the Company will be able to realize any
     operating efficiencies from the purchase and consolidation of primary eye
     care centers or optical chains.

  6. There can be no assurance that the Company will acquire new managed primary
     eye care contracts or that existing contracts will be expanded in any
     meaningful way.

  7. The Company and its operations are subject to extensive federal, state and
     local regulation, which could materially affect the Company's operations.

Corporate Liability and Insurance

  The provision of professional eye care services entails an inherent risk of
professional malpractice and other similar claims.  The Company does not
influence or control the practice of medicine or optometry by professionals or
have responsibility for compliance with certain regulatory and other
requirements directly applicable to individual professionals and professional
groups.  As a result of the relationship between the Company and its affiliated
practices, the Company may become subject to some professional malpractice
actions under various theories.  There can be no assurance that claims, suits or
complaints relating to professional services provided by affiliated practices
will not be asserted against the Company in the future.  The Company believes
that the providers with which the Company enters into LVC center agreements or
other strategic affiliation agreements are covered by such providers'
professional malpractice or liability insurance.  The Company may not be able to
purchase professional malpractice insurance, and may not be able to purchase
other insurance at reasonable rates, which would protect it against claims
arising from the professional practice conducted by providers.  Similarly, the
use of laser systems in the Company's LVC centers may give rise to claims
against the Company by persons alleging injury as a result of the use of such
laser systems.  The Company believes that claims alleging defects in the laser
systems it purchases from its

                                       9
<PAGE>

suppliers are covered by such suppliers' product liability insurance and that
the Company could take advantage of such insurance by adding such suppliers to
lawsuits against the Company. There can be no assurance that the Company's laser
suppliers will continue to carry product liability insurance or that any such
insurance will be adequate to protect the Company.

  The Company maintains insurance coverage that it believes will be adequate
both as to risks and amounts.  The Company believes that such insurance will
extend to professional liability claims that may be asserted against employees
of the Company that work on site at affiliated practice locations. In addition,
pursuant to the management services contracts, the affiliated practices are
required to maintain professional liability and comprehensive general liability
insurance. The availability and cost of such insurance has been affected by
various factors, many of which are beyond the control of the Company and its
affiliated practices.

  There can be no assurance that the Company will be able to retain adequate
liability insurance at reasonable rates, or that the insurance will be adequate
to cover claims asserted against the Company, in which event the Company's
business may be materially adversely affected.

Item 2.    DESCRIPTION OF PROPERTIES

  The Company leases space for 79 of the Company's eye care centers (which range
in size from approximately 1,100 to 6,300 square feet), under operating leases,
which expire as follows, exclusive of renewal options.

Year                                                   Number of leases expiring
----                                                   -------------------------
1998                                                               12
1999                                                               12
2000                                                               15
2001                                                               15
2002                                                               11
2003 and thereafter                                                14

  In addition, the Company is currently in lease negotiations or is an at will
tenant for 5 eye care centers.

  The Company's corporate headquarters, centralized optical laboratory and
distribution center occupy approximately 22,000 square feet of space leased in
an industrial complex in Holliston, Massachusetts pursuant to a lease which
expires in 1998.  In addition, the Company leased approximately 5,400 square
feet of space located at 67 South Bedford Street, Burlington, Massachusetts
01803 pursuant to a lease which expired in January 1998.  The Company believes
that its facilities are adequate for its present needs and that suitable space
will be available to the Company upon commercially reasonable terms to
accommodate its future needs.

Item 3.    LEGAL PROCEEDINGS

  From time to time the Company's subsidiaries may be defendants in certain
lawsuits alleging various claims incurred in the ordinary course of business.
These claims are generally covered by various insurance policies, subject to
certain deductible amounts and maximum policy limits.  In the opinion of
management, the resolution of existing claims should not have a material adverse
effect, individually or in the aggregate, upon the Company's business or
financial condition.

  Sight Resource Corporation is not currently a party to any claims, suits or
complaints, although there can be no assurance that such claims will not be
asserted against Sight Resource Corporation in the future.  From

                                       10
<PAGE>

time to time Sight Resource Corporation has been party to claims, litigation or
other proceedings in the ordinary course of its business, none of which has been
material to the Company or its business.

  There can be no assurance that future claims against the Company or any of its
subsidiaries will not have a material adverse effect on the Company, its
operations or financial condition.

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

  None.




                                      11
<PAGE>

                                     PART II

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

Market for Company's Common Equity

  The Company's Common Stock began trading on NASDAQ on March 31, 1993 under the
symbol "VISN".  The Company also issued Warrants which began trading on NASDAQ
on August 25, 1994 under the symbol "VISNZ".  The following table sets forth for
the periods indicated, the high and low sales prices for the Common Stock and
Warrants as reported by NASDAQ:


                   Common Stock      Warrants
                   ------------      --------
                   High    Low       High      Low
                   ----    ---       ----      ---
1997:
First Quarter      5 1/2   3 3/4     1 7/8    1 1/8
Second Quarter     5 1/16  3 3/8     1 7/8      7/8
Third Quarter      6 3/8   3 7/8     1 29/32  1 1/16
Fourth Quarter     5 3 /4  3 3/8     1 3/4    1 1/8

1996:
First Quarter         11   7 7/8     5 1/4    2 15/16
Second Quarter     9 1/8   6 1/2     4        2 11/16
Third Quarter      7 1/8   4 3/4     3 5/16   2 3/16
Fourth Quarter     6 3/4   4 1/2     2 7/8    1 1/8


  The Common Stock and Warrants have been quoted on the NASDAQ-National Market
System ("NASDAQ-NMS") since August 25, 1994.  Prior to that time, the Common
Stock was quoted on the NASDAQ-small cap market.

  The Company has not paid dividends to its stockholders since its inception and
does not plan to pay cash dividends in the foreseeable future.  The Company
currently intends to retain earnings, if any, to finance the growth of the
Company.  As of March 20, 1998, there were 270 and 20 holders of record of the
Company's Common Stock and Warrants, respectively.  There are approximately
3,800 beneficial owners of the Company's Common Stock.


                                      12
<PAGE>

Item 6.   SELECTED FINANCIAL DATA

(In thousands, except per share amounts)

<TABLE>
<CAPTION>

Year ended December 31            1997 (1,2,3)   1996 (3,4)   1995 (5)     1994      1993
-----------------------------------------------------------------------------------------
<S>                              <C>            <C>          <C>        <C>       <C>

Statement of Operations Data:
Net revenues                     $     44,576   $   29,987   $ 18,240   $   529   $   155
Net loss                               (2,004)      (5,850)    (4,888)   (2,945)   (1,530)
Net loss per common share               (0.46)       (0.78)     (0.89)    (0.94)    (0.74)
Weighted average number of
   common shares outstanding            8,669        7,523      5,488     3,122     2,057

Balance Sheet Data:
Working capital (deficiency)     $      4,243   $    7,774   $  5,325   $ 9,787   $  (690)
Total assets                           34,507       31,430     23,249    13,911     5,210
Non-current liabilities                   101        1,876      1,703         -         -
Redeemables Convertible
 Preferred Stock                        6,535            -          -         -         -

Stockholders' equity                   19,446       22,766     16,445    13,364     3,419
</TABLE>

1. Effective July 1, 1997, the Company acquired one hundred percent of the
   outstanding shares of stock of Vision Holdings, Ltd. (formerly known as Dr.
   Greenberg, An Optometry Corporation d/b/a/ Vision Plaza) ("Vision Plaza") At
   December 31, 1997 Vision Plaza operated 14 primary eye care centers and three
   specialty eyewear centers in Louisiana and Mississippi. Following the
   acquisition, Vision Plaza entered into a management services contract with
   Dr. John Musselman, A Professional Corporation ("Musselman"), a corporation
   established to employ the optometrists previously employed by the acquired
   company.

2. The net loss per share in 1997 includes a $1,953,000 dividend to the
   preferred stock holders as discussed in Note 8 of the Notes To Consolidated
   Financial Statements.

3. Includes a provision for write down of software development costs and store
   closings of $510,000 in 1997 and impairment of ophthalmic equipment of
   $2,622,000 in 1996.

4. Effective July 1, 1996, the Company purchased certain assets and assumed
   certain liabilities of The E.B. Brown Optical Company and Brown Optical
   Laboratories, Inc. and acquired by merger E.B. Brown Opticians, Inc.
   (collectively "E.B. Brown"). At December 31, 1997, E.B. Brown operated 39 eye
   care centers located throughout Ohio and western Pennsylvania which provide
   optometric and audiology goods and services to persons with vision and
   hearing disorders.

5. Effective January 1, 1995 and July 1, 1995 the Company purchased
   substantially all the assets of Cambridge Eye Associates, Inc. and Douglas
   Vision World, Inc. respectively. At December 31, 1997, these companies
   combined had a practice of 30 optometric offices throughout New England
   providing comprehensive vision care services to residents of this region.


                                      13

<PAGE>

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
          OF OPERATION

Overview

  Sight Resource Corporation (the "Company") manufactures, distributes and sells
eyewear and related products and services.  As of December 31, 1997 the
Company's operations consisted of 86 eye care centers, with three regional
optical laboratories and distribution centers, making it one of the twenty
largest providers in the United States' primary eye care industry.  The
Company's eye care centers operate primarily under the brand names Cambridge Eye
Doctors, E.B. Brown Opticians, Vision Plaza and Vision World.  The Company also
provides, or where necessary to comply with applicable law administers the
business functions of optometrists, ophthalmologists and professional
corporations that provide, vision related professional services.  In addition,
as of December 31, 1997 the Company operated four laser vision correction
("LVC") centers.

  The Company operates three regional optical laboratories and distribution
centers.  The regional optical laboratories provide complete laboratory services
to the Company's eye care centers, including polishing, cutting and edging,
tempering, tinting and coating of ophthalmic lenses.  The distribution centers
provide and maintain an inventory of all accessories and supplies necessary to
operate the primary eye care centers in their regions, as well as "ready made"
eye care products, including contact lenses and related supplies.  The inventory
of eyeglass lenses, frames, contact lenses, accessories and supplies is acquired
through a number of sources, domestic and foreign.  Management believes that the
regional optical laboratories and distribution centers have the capacity to
accommodate additional multi-site eye care centers.

  Based on review to date, the Company does not believe that the impact of any
Year 2000 issue will be material, because its principal information systems
appear to correctly define the year 2000 and only the Company's point of sale
system needs to be made Year 2000 compliant.  The Company expects to complete
such compliance as part of the installation of a new point of sale system which
is scheduled to be completed during 1998.

Results of Operations
1997 as compared with 1996

Revenue.  The Company generated net revenue of approximately $44.6 million
during the year ended December 31, 1997 from the operation of its 86 eye care
centers and four laser vision correction centers in the United States as
compared to net revenue of approximately $30.0 million from the operation of its
72 eye care centers and ten laser vision correction centers in the United States
for the same period in 1996.  Of the $14.6 million (or 48.7%) increase in net
revenue for the year ended December 31, 1997 as compared to the year ended
December 31, 1996, $5.7 million (or 19.0%) relates to the additional 17 eye care
centers acquired effective July 1, 1997.  The remaining increase of $8.9 million
(or 29.7%) relates primarily to recognition of a full year of revenue from the
E.B. Brown acquisition.

Cost of Revenue.  Cost of revenue decreased as a percentage of net revenue from
39.5% (approximately $11.8 million) for the year ended December 31, 1996, to
36.1% (approximately $16.1 million) for the year ended December 31, 1997.  The
decrease as a percentage of net revenue is primarily due to increased LVC
procedure volume which covered more of the fixed cost components of cost of
goods sold, and an increase in eyeglass sales as a percentage of total sales.
Cost of revenue for the years ended December 31, 1997 and 1996 principally
consisted of (i) the cost of manufacturing, purchasing and distributing optical
products to its customers and (ii) the cost of delivering LVC, including
depreciation and maintenance on excimer lasers.

  In February, 1997 the Company discontinued the operations of an optical
laboratory and distribution facility operated by E.B. Brown in Cleveland, Ohio,
and consolidated its operations with those at its Holliston,


                                      14
<PAGE>

Massachusetts facility in order to reduce the cost of revenue. In August, 1997
the Company elected to re-open a smaller version of the Cleveland facility to
improve the quality and timeliness of product delivery. As the Company grows, it
may elect to expand or contract the operations of any or all of its optical
laboratories and distribution centers based on the needs of the Company at that
time.

Selling, General and Administration Expenses. Selling, general and
administration expenses were approximately $30.7 million and $21.6 million for
the years ended December 31, 1997 and 1996, respectively. The increase primarily
relates to payroll and facility costs incurred in operating the additional 17
eye care centers acquired effective July 1, 1997 and a full year of operations
from the E.B. Brown acquisition. Selling, general and administrative expenses,
as a percentage of net revenue, declined from 72.1% for the year ended December
31, 1996, to 68.9% for the year ended December 31, 1997. This decrease is a
result of operating efficiencies which the Company has begun to realize from the
acquisition and expansion of multi-site eye care centers and an increase in LVC
revenue.

Provision for Store Closings.  The Company had a $110,000 provision for store
closings in 1997.  No similar closings were provided for in 1996.

Provision for Write Down of Software Development Costs. In 1996 the Company
selected a vendor and began the testing and installation of software associated
with a new point of sale system and perpetual inventory system for its primary
eye care centers, regional optical laboratories and distribution centers. By
late 1997 the Company, after testing the software system in selected eye care
centers, elected to utilize an alternative software vendor whose product is
better suited to the needs of the Company. As a result, the Company wrote down
$400,000 of capitalized costs associated with the original point of sale system.
The Company believes that the new system will facilitate the processing of
customer sales information and replenishment of inventory by passing such
information, including customer specific orders, to the Company's home office,
and its regional optical laboratories and distribution centers for further
processing.

Impairment of Ophthalmic Equipment.  During the fourth quarter of 1996 the
Company recognized a $2.6 million write down due to impairment of ophthalmic
equipment.  Operating losses sustained during 1996 from the operation of this
equipment coupled with anticipated future operating losses over the remaining
depreciable life of the equipment, which were based upon operating history and a
recent industry report indicating a slower than expected growth in LVC, resulted
in the Company's decision to recognize the impairment in the fourth quarter
1996.  The fair value of the equipment is based upon recent publications in
ophthalmic trade journals, offers from third parties, as well as recent sales of
similar equipment.  Since the Company has no other significant tangible or
intangible assets associated with LVC, the Company believes the impairment
relates only to ophthalmic equipment.

Other Income and Expenses.  Interest income totaled approximately $360,000 and
$499,000 for the years ended December 31, 1997 and 1996, respectively.  This
decrease resulted from the investment of a lower average cash and cash
equivalents balance during 1997 as compared to 1996.  Interest expense increased
from approximately $248,000 to $344,000 for the years ended December 31, 1996
and 1997, respectively. This increase is associated with a higher average
balance of debt outstanding during 1997 as compared to 1996. The sale of certain
ophthalmic equipment during 1997 generated a gain of approximately $738,000.  In
1997 the Company sold 12 of the excimer laser systems which it owned, reducing
the number of operating systems in place at the end of the year to four.  In
early 1998 the Company sold one additional excimer laser, reducing the number of
lasers it now owns to three, all of which operate in New England and primarily
service customers referred from the Company's primary eye care centers.  In
markets outside New England, the Company believes it can negotiate contracts
with excimer laser owners and operators who will provide LVC services at
favorable terms for the Company's customers.


                                      15
<PAGE>

Net Loss. The Company realized a net loss of approximately $2.0 million ($0.46
per share, including the $1,953,000 dividend to the preferred stock holders as
discussed in Note 8 of the Notes To Consolidated Financial Statements) and $5.9
million ($0.78 per share) for the years ended December 31, 1997 and 1996,
respectively. The decrease in net loss is attributable to the increased income
generated by a full year of operations from the E. B. Brown acquisition in 1996,
the additional 17 eye centers acquired effective July 1, 1997, the gain on sale
of excimer laser systems of $738,000, and the $2.6 million impairment of
ophthalmic equipment recognized in 1996.

1996 as compared with 1995

Revenue.  The Company generated net revenue of approximately $30.0 million
during the year ended December 31, 1996, from the operation of its 72 eye care
centers and ten laser vision correction centers in the United States as compared
to net revenue of approximately $18.2 million from its 29 eye care centers and
its network of laser vision correction centers in the United Kingdom ("UK") for
the same period in 1995.  Of the $11.8 million (or 64.8%) increase in net
revenue for the year ended December 31, 1996 as compared to the year ended
December 31, 1995, $7.4 million (or 40.7%) relates to the additional 42 eye care
centers acquired effective July 1, 1996.  The remaining increase of $4.4 million
(or 24.2%) relates to a full year of revenue from the Vision World acquisition
as well as the Company's first full year of  LVC services in the U.S.

Cost of Revenue.  Cost of revenue decreased as a percentage of net revenue from
44.7% (approximately $8.1 million) for the year ended December 31, 1995, to
39.5% (approximately $11.8 million) for the year ended December 31, 1996.  The
decrease as a percentage of net revenue is attributable to an increase in LVC
procedures as well as manufacturing efficiencies realized at the Company's
central lab.  Cost of revenue for the years ended December 31, 1996 and 1995
principally consisted of (i) the cost of manufacturing, purchasing and
distributing optical products to its customers and (ii) the cost of delivering
LVC, including depreciation and maintenance on excimer lasers.

Selling, General and Administration Expenses.  Selling, general and
administration expenses were approximately $21.6 million and $15.3 million for
the years ended December 31, 1996 and 1995, respectively.  The increase
primarily relates to payroll and facility costs incurred in operating additional
eye care centers in 1996 as compared to 1995.  Selling, general and
administrative expenses, as a percentage of net revenue, declined from 83.7% for
the year ended December 31, 1995, to 72.1% for the year ended December 31, 1996.
This decrease is a result of operating efficiencies which the Company began to
realize from the acquisition and expansion of multi-site eye care centers and an
increase in LVC revenue.

Impairment of ophthalmic equipment.  During the fourth quarter of 1996 the
Company recognized a $2.6 million write down due to impairment of ophthalmic
equipment.  Operating losses sustained during 1996 from the operation of this
equipment coupled with anticipated future operating losses over the remaining
depreciable life of the equipment which were based upon operating history and a
recent industry report indicating a slower than expected growth in LVC, resulted
in the Company's decision to recognize the impairment in the fourth quarter
1996.  The fair value of the equipment is based upon recent publications in
ophthalmic trade journals, offers from third parties, as well as recent sales of
similar equipment.  Since the Company has no other significant tangible or
intangible assets associated with LVC, the Company believes the impairment
relates only to ophthalmic equipment.

Other Income and Expenses.  Interest income totaled approximately $499,000 and
$387,000 for the years ended December 31, 1996 and 1995, respectively.  This
increase resulted from the investment of a higher average cash and cash
equivalents balance during 1996 as compared to 1995.  Interest expense remained
comparable at approximately $248,000 and $253,000 for the years ended December
31, 1996 and 1995, respectively.


                                      16
<PAGE>

The Company also recorded a $150,000 foreign currency translation gain on the
liquidation of the UK business at the close of 1995.

Net Loss.  The Company realized a net loss of approximately $5.9 million ($0.78
per share) and $4.9 million ($0.89 per share) for the years ended December 31,
1996 and 1995, respectively.  The increase in net loss is primarily attributable
to the $2.6 million impairment of ophthalmic equipment recognized in the fourth
quarter of 1996 offset in part by an increase in volume of laser vision
correction services as well as six months of operations of the 42 eye care
centers acquired effective July 1, 1996.

Liquidity and Capital Resources

  At December 31, 1997, the Company had approximately $6.0 million in cash and
cash equivalents and working capital of approximately $4.2 million in comparison
to approximately $9.9 million in cash and cash equivalents and working capital
of approximately $7.8 million as of December 31, 1996.

  In 1997, the Company issued 1,452,119 shares of Series B Convertible Preferred
Stock and warrants to purchase common stock to investment affiliates of The
Carlyle Group for net proceeds of approximately $4.5 million. The Company
anticipates using the net proceeds for working capital and other general
corporate purposes, including acquisitions.

  Effective July 1, 1997, the Company acquired one hundred percent of the
outstanding shares of stock of Vision Holdings, Ltd. (formerly known as Dr.
Greenberg, An Optometry Corporation d/b/a Vision Plaza) ("Vision Plaza"). The
purchase price paid in connection with this acquisition was $2.0 million of cash
on hand and the assumption and payment of notes payable outstanding as of July
1, 1997 of approximately $800,000. Vision Plaza operated 17 eye care centers in
Southeast Louisiana and Mississippi. The acquisition was accounted for using the
purchase method of accounting.

  As of  December 31, 1997, the Company had securities outstanding  which
provide it with potential sources of financing as outlined below:

Securities                                                  Potential proceeds
--------------------------------------------------         --------------------

Warrants                                2,472,100                  $14,800,000
Class A Warrants                           85,000                      500,000
Class II Warrants                         290,424                    2,032,968
Unit Purchase Options                     215,000                    3,700,000
IPO Representative Warrants                85,000                    1,300,000
Creditanstalt Warrants                    150,000                      694,000
Representative Warrants                   170,000                    1,400,000
                                                                   $24,426,968
                                                           ====================


  The Company also has 842,294 Class I Warrants. The Class I Warrants entitle
the holders to purchase an amount of shares of the Company's common stock equal
to an aggregate of up to 19.9% of the shares of common stock purchasable under
the Company's outstanding warrants and options on the same terms and conditions
of existing warrant and option holders. The purchaser is obligated to exercise
these warrants at the same time the options and warrants of existing holders are
exercised, subject to certain limitations. The amount of proceeds from the
exercise of these warrants cannot be estimated at this time.

  There can be no assurance that the Company will obtain any of the proceeds
from the exercise of the above securities.


                                      17
<PAGE>

  On February 20, 1997, the Company entered into a Credit Agreement (the
"Agreement") with a bank pursuant to which the Company can borrow up to $5.0
million on a term loan basis and up to $5.0 million on a revolving credit basis,
subject to certain performance criteria. Such certain performance criteria
include, among others, financial condition covenants such as rolling EBITDA
levels, indebtedness to EBITDA ratios, current ratio of 1:1 and minimum net
worth ratios. The term loan facility bears interest at the bank's prime rate
plus 1.5% or LIBOR plus 3% at the Company's election, and the revolving credit
facility bears interest at the bank's prime rate plus 1.25% or LIBOR plus 2.75%
at the Company's election. These loans are secured by all assets of the Company
and its wholly owned subsidiaries. Amounts borrowed under the Agreement have
been and will continue to be used to refinance existing debt, finance future
acquisitions, provide ongoing working capital and for other general corporate
purposes. As part of the Agreement, the Company issued to the bank warrants to
purchase 150,000 shares of the Company's common stock at a purchase price of
$4.625 per share. The warrants expire December 31, 2003.

  As of December 31, 1997, there were no amounts outstanding under the Agreement
and the Company was not in compliance with certain of its financial covenants.
The Company obtained a waiver from the bank for noncompliance with these
covenants.

  The Company has an acquisition strategy to acquire and integrate the assets of
multi-site eye care centers and the practices of eye care professionals and to
employ or enter into management services contracts with these professionals.
This strategy includes both expanding existing regional markets and entering new
regional markets.  The Company will also target acquisitions in strategic
markets that will serve as platforms from which the Company can consolidate a
given service area by making and integrating additional "in-market"
acquisitions.  The Company is currently evaluating potential acquisition
candidates.  Without additional funding, the Company's rate of acquisition and
size of acquisition could be limited.

  The Company anticipates that its working capital and sources of capital, such
as the existing credit facility, will be adequate to fund the Company's
currently proposed operating activities for at least the next twelve months.
The Company anticipates using financing vehicles such as bank debt, leasing, and
other sources of funding, such as additional equity offerings, to achieve its
business plan, including the acquisition of eye care centers.

Recent Accounting Pronouncements

  In June 1997, the Financial Accounting Standards Board issued SFAS 130,
"Reporting Comprehensive Income," which establishes standards for reporting and
display of comprehensive income and its components in a full set of general-
purpose financial statements.  Under this concept, all revenues, expenses, gains
and losses recognized during the period are included in income, regardless of
whether they are considered to be results of operations of the period.  SFAS
130, which becomes effective for the Company in its year ending December 31,
1998, is not expected to have a material impact on the Consolidated Financial
Statements of the Company.

  In June 1997, the Financial Accounting Standards Board issued SFAS 131,
"Disclosures about Segments of an Enterprise and Related Information," which
establishes standards for the way that public business enterprises report
selected information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports to stockholders.  It also establishes
standards for related disclosures about products and services, geographic areas
and major customers.  SFAS 131, which becomes effective for the Company in its
year ending December 31, 1998, is not expected to have a material impact on the
Company's results of operations.  The Company is in the process of determining
the impact of SFAS 131 on its footnote disclosures.

                                       18
<PAGE>

Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Sight Resource Corporation:



  We have audited the consolidated balance sheets of Sight Resource Corporation
and its subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1997.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sight
Resource Corporation and its subsidiaries at December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1997 in conformity with generally accepted
accounting principles.

/s/ KPMG Peat Marwick LLP

KPMG Peat Marwick LLP

Boston, Massachusetts
February 27, 1998

                                       19
<PAGE>

                           SIGHT RESOURCE CORPORATION
                          CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

December 31                                                         1997         1996
-------------------------------------------------------------------------------------
(in thousands except for share amounts)
                           ASSETS

Current assets:
<S>                                                             <C>          <C>
  Cash and cash equivalents                                     $  6,076     $  9,924
  Accounts receivable, net of allowance of $478 and $353,
   respectively                                                    1,781        1,405
  Inventories                                                      4,434        2,489
  Prepaid expenses and other current assets                          377          286
  Assets held for sale (note 3)                                        -          458
                                                                --------     --------
          Total current assets                                    12,668       14,562
                                                                --------     --------
Property and equipment, net (note 3)                               5,664        4,935
                                                                --------     --------
Other assets:
  Intangible assets (note 4)                                      14,898       11,768
  Other assets (note 13)                                           1,277          165
                                                                --------     --------
          Total other assets                                      16,175       11,933
                                                                --------     --------
                                                                $ 34,507     $ 31,430
                                                                ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Revolving note payable (note 6)                               $      -     $    475
  Current portion of long term debt (note 6)                       1,000          800
  Accounts payable                                                 1,797        1,843
  Accrued expenses (note 5)                                        5,628        3,670
                                                                --------     --------
          Total current liabilities                                8,425        6,788
                                                                --------     --------
Non-current liabilities:
  Long term debt, less current maturities (note 6)                     -        1,600
  Other liabilities                                                  101          276
                                                                --------     --------
          Total non-current liabilities                              101        1,876
                                                                --------     --------

Commitments (note 7)
 Redeemable, convertible preferred stock
   1,452,119 shares issued (note 8)                                6,535            -
                                                                --------     --------
Stockholders' equity (note 9):
  Preferred stock, $.01 par value. Authorized 5,000,000
   shares; no shares issued and outstanding                            -            -
  Common stock, $.01 par value. Authorized 20,000,000
   shares; issued 8,787,100 and 8,648,768 shares in
   1997 and 1996, respectively                                        88           86
  Additional paid-in capital                                      36,329       37,510
  Common stock issuable, 71,181 shares in 1997 and 1996
   (note 1(b))                                                       432          432
  Treasury stock at cost (30,600 shares in 1997)                    (137)           -
  Accumulated deficit                                            (17,266)     (15,262)
                                                                --------     --------
          Total stockholders' equity                              19,446       22,766
                                                                --------     --------
                                                                $ 34,507     $ 31,430
                                                                ========     ========
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       20
<PAGE>

                           SIGHT RESOURCE CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

Years Ended December 31                                  1997          1996          1995
-----------------------------------------------------------------------------------------
(in thousands except for per share amounts)
<S>                                                 <C>           <C>           <C>
Net revenue                                         $  44,576     $  29,987     $  18,240
Cost of revenue                                        16,096        11,841         8,147
                                                    ---------     ---------     ---------
        Gross margin                                   28,480        18,146        10,093

Selling, general and administrative expense            30,703        21,600        15,265
Provision for store closings                              110             -             -
Provision for write down of software                      400             -             -
  development costs
Impairment of ophthalmic equipment (note 3)                 -         2,622             -
                                                    ---------     ---------     ---------
  Total operating expenses                             31,213        24,222        15,265
                                                    ---------     ---------     ---------

      Loss from operations                             (2,733)       (6,076)       (5,172)
                                                    ---------     ---------     ---------
Other income (expense):
  Interest income                                         360           499           387
  Interest expense                                       (344)         (248)         (253)
  Gain on sale of ophthalmic equipment                    738             -             -
  Other                                                     -             -           150
                                                    ---------     ---------     ---------
          Total other income                              754           251           284
                                                    ---------     ---------     ---------

      Loss before income tax expense                   (1,979)       (5,825)       (4,888)

Income tax expense                                         25            25             -
                                                    ---------     ---------     ---------

          Net loss                                    ($2,004)      ($5,850)      ($4,888)
                                                    =========     =========     =========

Dividends on redeemable convertible
  preferred stock (see note 8)                        1,953               -             -
                                                    =========     =========     =========

Basic and Diluted loss per common share and            ($0.46)       ($0.78)       ($0.89)
  potential common share (see note 2)
                                                    =========     =========     =========
Weighted average number of common shares
  outstanding                                           8,669         7,523         5,488
                                                    =========     =========     =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       21
<PAGE>

                           SIGHT RESOURCE CORPORATION
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years Ended December 31, 1997, 1996 and 1995
--------------------------------------------
(in thousands)

<TABLE>
<CAPTION>
                                          Common Stock   Additional               Common   Cumulative                Total
                                                  Par     Paid-in   Accumulated   Stock    Translation  Treasury  Stockholders
                                         Shares  Value    Capital     Deficit    Issuable  Adjustment    Stock       Equity
                                         -------------------------------------------------------------------------------------

<S>                                      <C>     <C>     <C>        <C>          <C>       <C>          <C>       <C>
Balance, December 31, 1994                4,770    $48    $17,636   ($ 4,524)        $  -       $ 204          -       $13,364
Issuance of common stock for
 acquisitions                               556      6      1,721          -            -           -          -         1,727
Issuance of common stock for equipment
 and other                                   64      -        206          -            -           -          -           206

Proceeds from exercise of warrants
 (note 9)                                   955      9      6,221          -            -           -          -         6,230

Proceeds from exercise of stock
 options                                      2      -         10          -            -           -          -            10
Net loss                                      -      -          -     (4,888)           -           -          -        (4,888)
Cumulative translation adjustment             -      -          -          -            -        (204)         -          (204)
                                         ------   ----   --------  ---------        -----       -----     ------      --------

Balance, December 31, 1995                6,347     63     25,794     (9,412)           -           -          -        16,445
Proceeds from exercise of warrants            -      -          1          -            -           -          -             1
Proceeds from public offering, net of                                                               -          -
 offering costs                           1,775     18      9,816          -            -                                9,834
Issuance of common stock for                522      5      1,896          -          432           -          -         2,333
 acquisitions
Proceeds from exercise of stock options       5      -          3          -            -           -          -             3
Net loss                                      -      -          -     (5,850)           -           -          -        (5,850)
                                         ------   ----   --------  ---------        -----       -----     ------      --------

Balance, December 31, 1996                8,649     86     37,510    (15,262)         432           -          -        22,766
Exercise of stock options (notes 9 and      138      2        592          -            -           -          -           594
 13)
Acquisition of treasury stock (note 9)      (31)     -          -          -            -           -       (137)         (137)
Dividend to preferred shareholders            -      -     (1,953)         -            -           -          -        (1,953)
 (note 8)
Issuance of warrants under Credit             -      -        180          -            -           -          -           180
 Agreement (note 6)
Net loss                                      -      -          -     (2,004)           -           -          -        (2,004)
                                         ------   ----   --------  ---------        -----       -----     ------      --------
Balance, December 31, 1997                8,756    $88    $36,329   ($17,266)        $432          $-      ($137)      $19,446
                                         ======   ====   ========  =========        =====       =====     ======      ========
</TABLE>


          See accompanying notes to consolidated financial statements

                                       22
<PAGE>

                           SIGHT RESOURCE CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

Years Ended December 31                                                   1997          1996          1995
----------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                                   <C>           <C>           <C>
Operating activities:
 Net loss                                                             ($ 2,004)     ($ 5,850)     ($ 4,888)
 Adjustments to reconcile net loss to net cash used in
   operating activities:                                                     -             -             -
   Depreciation and amortization                                         2,183         2,221         1,688
   Impairment of ophthalmic equipment                                        -         2,622             -
   Realization of foreign currency gain                                      -             -          (150)
   Gain on sale of assets                                                 (738)            -             -
   Provision for store closings and write down of software                 510             -             -
    developments costs
 Changes in operating assets and liabilities:
   Accounts receivable                                                     138          (248)           (1)
   Inventories                                                          (1,027)          153           424
   Prepaid expenses and other current assets                               (78)          (47)           75
   Accounts payable and accrued expenses                                (1,349)       (1,408)         (844)
                                                                      --------      --------      --------
     Net cash used in operating activities                              (2,365)       (2,557)       (3,696)
                                                                      --------      --------      --------
 Investing activities:
  Purchases of property and equipment                                   (1,948)       (1,639)       (1,948)
  Payments for acquisitions                                             (2,075)       (2,854)       (2,363)
  Proceeds from sale of assets                                           1,747             -             -
  Other assets                                                            (240)          (72)           (4)
                                                                      --------      --------      --------
     Net cash used in investing activities:                             (2,516)       (4,565)       (4,315)
                                                                      --------      --------      --------
 Financing activities:
  Principal payments on debt                                            (2,754)         (400)         (400)
  Debt Financing Costs                                                    (320)            -             -
  Proceeds from exercise of warrants and stock options                       -             4         6,240
  Net proceeds from offerings                                            4,582         9,834             -
  Purchase of treasury stock                                              (137)            -             -
  Payment of other liabilities                                            (338)         (427)            -
                                                                      --------      --------      --------
      Net cash provided by financing activities                          1,033         9,011         5,840
                                                                      --------      --------      --------

 Effect of exchange rate changes on cash                                     -             -            12
                                                                      --------      --------      --------

 Net increase (decrease) in cash and cash equivalents                   (3,848)        1,889        (2,159)

 Cash and cash equivalents, beginning of period                          9,924         8,035        10,194
                                                                      --------      --------      --------
 Cash and cash equivalents, end of period                              $ 6,076       $ 9,924       $ 8,035
                                                                      ========      ========      ========
</TABLE>


See note 12 for supplementary cash flow information.
See accompanying notes to consolidated financial statements.

                                       23
<PAGE>

                           SIGHT RESOURCE CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       December 31, 1997, 1996, and 1995
(1) The Company

(a) Nature of Business
Sight Resource Corporation (the "Company") manufactures, distributes and sells
eyewear and related products and services.

(b) Acquisitions
During 1995, the Company acquired two primary eye care chains, effective January
1, 1995 and July 1, 1995, respectively.  The aggregate purchase price paid in
connection with the acquisitions consisted of (i) $2,660,000 in cash, (ii)
555,525 shares of common stock, (iii) the assumption of approximately $1,600,000
of net liabilities, and (iv) $660,000 payable over a 3 year period and $250,000
payable over 18 months, contingent upon the occurrence of certain future events.
The transactions were accounted for using the purchase method of accounting.

Effective July 1, 1996, the Company purchased certain assets and assumed certain
liabilities of The E.B. Brown Optical Company and Brown Optical Laboratories,
Inc. as well as entered into a merger with E.B. Brown Opticians, Inc. (together
"E.B. Brown") for approximately $7,733,000, consisting of: $4,000,000 in cash,
521,997 shares of common stock issued, 71,181 shares of common stock to be
issued and $1,400,000 in notes payable over an eighteen month period.  When the
common stock to be issued is issued, the $432,000 of common stock issuable will
be reclassed into common stock and additional paid-in capital.  As of July 1,
1996, E.B. Brown operated forty-two eye care centers located throughout Ohio and
Western Pennsylvania which provide optometric and audiology goods and services
to persons with vision and hearing disorders.  The transaction was accounted for
using the purchase method of accounting.

Effective July 1, 1997, the Company acquired one hundred percent of the
outstanding shares of stock of Vision Holdings, Ltd. (formerly known as Dr.
Greenberg, An Optometry Corporation d/b/a/ Vision Plaza) ("Vision Plaza"). The
purchase price paid in connection with this acquisition was $2,000,000 of cash
on hand and the assumption and payment of notes payable outstanding as of July
1, 1997 of approximately $800,000. Vision Plaza operated seventeen eye care
centers in Southeast Louisiana and Mississippi. The acquisition was accounted
for using the purchase method of accounting.

The results of operations of the four acquisitions have been included in the
consolidated financial statements from their respective dates of acquisition.
The excess of the purchase price and expenses associated with each acquisition
over the estimated fair value of the net assets acquired has been recorded as
goodwill.  As a result of the acquisition, the Company has also recorded
adjustments to increase liabilities and establish reserves for the closing of
stores and related restructuring costs, including lease commitments and
severance costs.  Total acquisition related reserves established during 1997
were $2,066,000.

                                       24
<PAGE>

The following unaudited pro forma financial information gives effect to the
acquisitions as if:

      i) the acquisition of E.B. Brown was effective January 1, 1995
     ii) the acquisition of Vision Plaza was effective January 1, 1996

These pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of the results of operations which actually would
have resulted had the acquisitions occurred on the date indicated, or which may
result in the future.

(in thousands)                          1997         1996         1995
                                  -----------    ---------    --------

Revenue                             $ 50,384     $ 48,636     $ 32,817
                                  ===========    =========    ========
Net loss                             ($1,934)     ($5,084)     ($4,613)
                                  ===========    ========     ========
Loss per share (1)                    ($0.45)      ($0.63)      ($0.77)
                                  ===========    =========    ========

Weighted average number of
 common shares outstanding             8,669        8,045        6,010
                                  ===========    =========    ========

(1) The loss per share in 1997 includes a $1,953,000 dividend to the preferred
    stockholders as discussed in Note 8.

The above unaudited  pro forma financial information reflects certain
adjustments, including amortization of goodwill, and an increase in the weighted
average shares outstanding.  This pro forma information does not necessarily
reflect the results of operations that would have occurred had the acquisitions
taken place at the beginning of 1995, 1996 and 1997 and is not necessarily
indicative of results that may be obtained in the future.

(c) UK Operations
The Company fully discontinued its UK operations in the fourth quarter 1995.
The costs associated with the discontinuance of UK operations is immaterial and
is included in operating expenses in 1995.  The Company realized a foreign
currency gain of approximately $150,000 on the liquidation of the UK
subsidiaries which is included in other income at December 31, 1995.

(2) Summary of Significant Accounting Policies

(a) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company, its wholly-owned subsidiaries and three professional corporations
("PCs") in which the Company's subsidiaries assume the financial risks and
rewards of such entities through a management contract and a stock agreement.
The Company has no direct equity ownership in the PCs.  All significant
intercompany balances and transactions have been eliminated.

In preparation of these consolidated financial statements in conformity with
generally accepted accounting principles, management of the Company has made
estimates and assumptions that affect the reported amounts of assets and
liabilities, such as accounts receivable, inventory, impairment of property and
equipment and intangibles.  Actual results could differ from those estimates.

(b) Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the exchange rate on the balance sheet date.  Income and expense
items are translated at average rates of exchange prevailing during

                                       25
<PAGE>

each period. Translation adjustments are accumulated in a separate component of
stockholders' equity. Transaction gains and losses are included in the results
of operations and have not been material in any year. As described above, the UK
operations were discontinued as of December 31, 1995 and the assets and
liabilities were transferred to the U.S.

(c) Statement of Cash Flows
Cash and cash equivalents consist of cash in banks and short-term investments
with original maturities of three months or less.

(d) Financial Instruments
The carrying amount of cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses approximate fair value because of the short
maturity of these items.  The carrying amount of other long-term maturities
approximates fair value.  The carrying amount of the Company's revolving line of
credit approximates fair value because the borrowing rate changes with market
interest rates.

(e) Revenue Recognition
During 1997 the Company has changed its revenue recognition policy to recognize
revenue and the related costs from the sale of eyewear at the time that an order
is complete. Previously revenue and the related costs from the sale of eyewear
were recognized at the time an order was placed. The cumulative effect of this
change in accounting policy is immaterial as of the beginning of the year as
well as the effect on current year earnings and has therefore been recognized in
current year operations. Revenue from eye care services is recognized when the
service is performed. The Company has fee for service arrangements with all of
its third party payors. Revenue is reported net of contractual allowances.

Under revenue sharing arrangements for refractive surgery where the Company is
not responsible for patient billing, the Company receives a specified payment
from the hospital or center for each refractive surgical procedure performed.
Accordingly, the Company recognizes revenue on a per procedure basis at the time
procedures are performed.  Under revenue-sharing arrangements for refractive
surgery where the Company is responsible for the collection from the patient and
payment to the ophthalmologist and other operating costs, the total patient
charge is recorded as revenue with the corresponding expenses recorded in cost
of revenue.

(f) Inventories
 primarily consist of the costs of eyeglass frames, contact lenses,
ophthalmic lenses, sunglasses and other optical products and are valued at the
lower of cost (using the first-in, first-out method) or market.

(g) Property and Equipment
Property and equipment is stated at cost.  The Company provides for depreciation
at the time the property and equipment is placed in service.  The straight-line
method is used over the estimated useful life of the assets. The Company
assesses the recoverability of the undepreciated property and equipment on an
ongoing basis by comparing anticipated operating profits and future,
undiscounted cash flows to net book value.  In performing this analysis,
management considers such factors as current results, trends, and future
prospects, in addition to other economic factors.

(h) Advertising
Production costs of media advertising and related promotional campaigns are
expensed over the life of the event.  All other advertising costs are expensed
when incurred.

(i) Intangible Assets
Intangible assets resulting from the business acquisitions consist of customer
lists, trademarks, non-compete agreements and the excess cost of the acquisition
over the fair value of the net assets acquired (goodwill).  Certain values
assigned are based upon independent appraisals and are amortized on a straight
line basis over a period of 5 to 25 years.  The Company assesses the
recoverability of unamortized intangible assets on an ongoing basis by comparing
anticipated operating profits and future, undiscounted cash flows to net book
value.  In performing this analysis, management considers such factors as
current results, trends, and future prospects, in addition to other economic
factors.

                                       26
<PAGE>

(j) Income Taxes
The Company follows the asset and liability method of accounting for income
taxes and records deferred tax assets and liabilities based on temporary
differences between the tax bases of assets and liabilities and their carrying
amounts for financial statement purposes.

(k) Deferred revenue
The Company offers a contact lens purchasing program in which, for a set fee,
customers may purchase contacts at discounted rates for a 12 month period.  The
Company recognizes revenue from the sales of its contact lens purchasing program
on a monthly basis over the life of the program.

(l) Net Loss Per Share
Earnings per share are computed based on Statement of Financial Accounting
Standards No. 128 "Earnings per Share" ("SFAS 128").  SFAS 128 requires
presentation of basic earnings per share ("Basic EPS") and diluted earnings per
share ("Diluted EPS") by all entities that have publicly traded common stock or
potential common stock (options, warrants, convertible securities or contingent
stock arrangements).  Basic EPS is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
during the period.  The computation of Diluted EPS does not assume conversion,
exercise or contingent exercise of securities that would have an antidilutive
effect on earnings.

The following table provides a reconciliation of the numerators and denominators
of the basic and diluted earnings (loss) per share computations for the years
ended December 31:
<TABLE>
<CAPTION>
Years Ended December 31                                             1997      1996      1995
(in thousands)                                                  -------------------------------
<S>                                                               <C>       <C>       <C>
Basic Loss Per Share
Net loss                                                          ($2,004)  ($5,850)  ($4,888)
Less: dividends on redeemable convertible preferred stock          (1,953)        -         -
                                                                -------------------------------
Net loss available to common stockholders                         ($3,957)  ($5,850)  ($4,888)
                                                                ===============================
Weighted average common shares outstanding                          8,669     7,523     5,488
Net loss per share                                                 ($0.46)   ($0.78)   ($0.89)
                                                                ===============================
Diluted Loss Per Share
Net loss                                                          ($2,004)  ($5,850)  ($4,888)
Less: dividends on redeemable convertible preferred stock          (1,953)        -         -
                                                                -------------------------------
Net loss available to common stockholders                         ($3,957)  ($5,850)  ($4,888)
                                                                ===============================
Weighted average common shares outstanding                          8,669     7,523     5,488
Net loss per share                                                 ($0.46)   ($0.78)   ($0.89)
                                                                ===============================
</TABLE>

The options and warrants discussed in Note 9 were not included in the
computation of diluted Earnings Per Share because the effect would be anti-
dilutive.

                                       27
<PAGE>

(3) Property and Equipment

    Property and equipment consists of the following:

                                                                   Estimated
Years Ended December 31                        1997      1996      Useful Life
--------------------------------------------------------------------------------
(in thousands)

         Land and building                  $    87    $   87      40 years
         Ophthalmic equipment                 4,123     2,921      3-5 years
         Computer equipment                     485       108      3 years
         Furniture and fixtures               1,243       659      3 years
         Leasehold improvements               3,974     1,698      Life of lease
         Construction-in-progress               158       557
                                            --------   -------
                                             10,070     6,030

         Less accumulated depreciation        4,406     1,095
                                            --------   -------
         Property and equipment, net        $ 5,664    $4,935
                                            ========   =======

During the fourth quarter of 1997, the Company recognized a $400,000 provision
for the write down of development costs associated with Point of Sale software
due to a decision to change the system provider to be utilized.

During 1996, the Company recognized a $2,622,000 write down due to impairment of
ophthalmic equipment.  Operating losses sustained during 1996 from the operation
of the equipment coupled with anticipated future operating losses over the
remaining depreciable life of the equipment resulted in the Company's decision
to recognize the impairment.  The fair value of the equipment was based upon
recent publications in ophthalmic trade journals, offers from third parties as
well as recent sales of similar equipment.  During 1997, the Company sold twelve
of the excimer laser systems, generating a gain of approximately $738,000.

(4) Intangible Assets

    Intangible assets consists of the following:


                                                                   Estimated
Years Ended December 31                        1997      1996      Useful Life
--------------------------------------------------------------------------------
(in thousands)

         Goodwill                            $ 13,061    $9,132    20-25
         Customer lists                         2,659     2,659    11-15
         Non-compete                              120       120        5
         Trademarks                               713       713       15
                                            ----------  --------
                                               16,553    12,624

         Accumulated amortization               1,655       856
                                            ----------  --------

             Total                            $14,898   $11,768
                                            ==========  ========

The useful lives of the above intangible assets are estimated based upon, among
other things, independent appraisals, history of operations acquired, terms of
agreements and industry standards.


                                      28
<PAGE>

(5) Accrued Expenses

    Accrued expenses consists of the following:

Years Ended December 31               1997        1996
------------------------------------------------------
(in thousands)

         Professional fees            $  308     $ 220
         Payroll and related cost      1,671     1,263
         Acquisition reserves and      1,863       303
          accruals
         Deferred revenue                161       303
         Other                         1,625     1,581
                                    --------- ---------
                                      $5,628    $3,670
                                    ========= =========

(6) Debt

    Long term debt consists of the following:

Years Ended December 31                                          1997      1996
-------------------------------------------------------------------------------
(in thousands)

      Bank term loan, secured by all assets of one of the
      Company's subsidiaries.                                 $    -     $1,000


      Unsecured notes payable, 7% interest rate, $400 paid on
      September 18, 1997 and $1,000 due on March 18, 1998;
      due on demand if the Company's cash balance is less than
      $2,800                                                   1,000      1,400
                                                              ------     ------
                                                               1,000      2,400

      Less current maturities                                  1,000        800
                                                              ------     ------
      Long term debt, less current maturities                 $   -      $1,600
                                                              ======     ======

At December 31, 1996, the Company had available a revolving credit facility in
the amount of $500,000 based on eligible accounts receivable and inventory
balances. As of December 31, 1996, $25,000 was unused.

On February 20, 1997, the Company entered into a Credit Agreement (the
"Agreement") with a bank pursuant to which the Company can borrow $5,000,000 on
a term loan basis and $5,000,000 on a revolving credit basis, subject to certain
performance criteria. The performance criteria include, among others, financial
condition covenants such as rolling EBITDA levels, indebtedness to EBITDA
ratios, current ratio of 1:1 and minimum net worth requirements. The term loan
facility bears interest at the bank's prime rate plus 1.5% or LIBOR plus 3% at
the Company's election and the revolving credit facility bears interest at the
bank's prime rate plus 1.25% or LIBOR plus 2.75% at the Company's election.
These loans are secured by all assets of the Company and its wholly owned
subsidiaries. As of December 31, 1997, the entire term loan and revolving note
was unused. Amounts borrowed under the Agreement will be used to finance future
acquisitions, provide ongoing working capital and for other general corporate
purposes. As part of the Agreement, the Company issued to the bank warrants to
purchase 150,000 shares of the common stock at a purchase price of $4.625 per
share. The warrants expire December 31, 2003. The warrants were accounted for as
additional paid in capital based upon the fair value of the securities. Fair
market value was determined by using the relationship of the interest rate
charged with the warrants versus the rate to be charged without the warrants.
This value approximated that obtained using the Black Scholes Method.


                                      29
<PAGE>

As of December 31, 1997, there were no amounts outstanding under the Agreement
and the Company was not in compliance with certain of its financial covenants.
The Company obtained a waiver from the bank for noncompliance with these
covenants.

(7) Commitments

The Company has operating leases primarily for its primary eye care centers,
distribution center, corporate offices and certain equipment.  The leases are
generally for periods of up to 10 years with renewal options at fixed rentals.
Certain of the leases provide for additional rentals based on sales exceeding
specified amounts.

The future minimum lease rental commitments for facilities and equipment for the
periods following December 31, 1997 are as follows:

                                         (in thousands)
       1998                                     $ 3,890
       1999                                       3,282
       2000                                       2,654
       2001                                       2,036
       2002                                       1,421
       Thereafter                                 3,790
                                          -------------
                                                $17,073
                                          =============

Rental expenses charged to operations, including real estate taxes, common area
maintenance and other expenses related to the leased facilities and equipment,
were approximately $4,500,000, $2,592,000,  $1,750,000 for fiscal years 1997,
1996 and 1995, respectively.

(8) Redeemable, Convertible Preferred Stock

On November 25, 1997, the Company issued 1,452,119 shares of Series B
Convertible Preferred Stock (the "Series B"), Class I and Class II Warrants to
an outside investor (the "Purchaser") for a net purchase price of $4,582,000.
The Series B was purchased at a price lower than market value, and as a result,
the difference of $1,953,000 was reflected as a dividend to the preferred
stockholders. Each share of Series B is convertible into one share of Common
Stock, subject to adjustment, at the Purchaser's option at any time and at the
Company's option if the price per share of Common Stock during any period of
thirty consecutive trading days equals or exceeds $7.00 at any time during the
first three years or $9.00 at any time thereafter. The holders of the Series B
have the right to appoint two directors to the Company's Board of Directors.

The Class I (Mirror) Warrants entitle the Purchaser to purchase an amount of
shares of the Company's Common Stock equal to an aggregate of up to 19.9% of the
shares of Common Stock purchasable under the Company's outstanding warrants
and options on the same terms and conditions of existing warrant and option
holders.  The Purchaser is obligated to exercise these warrants at the same time
the options and warrants of existing holders are exercised, subject to certain
limitations.

The Class II Warrants entitle the Purchaser to purchase an aggregate of 290,424
shares of the Company's Common Stock at an exercise price of $7.00 for a term of
five years.

The Purchaser is entitled to "shelf" registration rights and "piggyback"
registration rights with respect to the shares of Common Stock underlying the
Series B, the Class I Warrants and the Class II Warrant.

Upon a change of control of the Company, defined as (i) a change in any person
or group obtaining a majority of the securities ordinarily having the right to
vote in an election of Directors; (ii) during any two year period,


                                      30
<PAGE>

the individuals who at the beginning of the period constituted the Company's
Board of Directors no longer constitute a majority of the Board of Directors;
(iii) any merger, consolidation, recapitalization, reorganization, dissolution
or liquidation of the Company which results in the current stockholders no
longer owning more than 50% of the voting securities or the Company; (iv) any
sale, lease exchange or other transfer of all, or substantially all, of the
assets of the Company; or (v) the adoption of a plan leading to the liquidation
or dissolution of the Company, at the option of the Purchaser, the Company would
have to redeem the Series B at a price of 105% of the offering price, subject to
certain adjustments, plus accrued and unpaid dividends.

(9) Stockholders' Equity

Preferred Stock

As of December 31, 1997 and 1996, the Company has authorized 5,000,000 shares of
preferred stock of $.01 par value of which 1,452,119 shares of Series B are
issued and outstanding. The terms and conditions of the preferred stock,
including any preferences and dividends, will not be established until such
time, if ever, as such shares are in fact issued by the Company.

Common Stock

As of December 31, 1997 and 1996, the Company has authorized 20,000,000 shares
of common stock at $.01 par value.  Common stock is entitled to dividends if
declared by the Board of Directors, and each share carries one vote.

In 1996, the Company issued 1,775,000 shares of common stock to the public for
net proceeds of approximately $9.8 million.  The Company anticipates using the
net proceeds for working capital and other general corporate purposes, including
acquisitions.

Warrants

During the second half of 1995, the Company received net proceeds of
approximately $6,078,000 from the exercise of 929,140 IPO Warrants.  Each IPO
Warrant entitled the holder to purchase one share of common stock at $6.75.  On
October 31, 1995, the expiration date of the IPO Warrants, 3,110 IPO Warrants
expired unexercised.

In connection with the Company's initial public offering, the Company sold to
the IPO Representative (at an aggregate price of $85), warrants to purchase up
to 85,000 IPO Units at an exercise price of $7.98 per IPO Unit at any time
during the four-year period commencing March 31, 1994.  Each IPO Unit consists
of one share of common stock and one redeemable common stock purchase warrant,
which entitles the holder to purchase one share of common stock at a price of
$6.75.  At December 31, 1997 and 1996, no IPO Units have been exercised.

In connection with the Company's private placement of Bridge Notes, the Company
issued 110,000 Class A Warrants.  Each Class A Warrant entitles the holder to
purchase one share of common stock at a price of $6.00 and is exercisable at any
time through March 25, 1999.  During 1995, 25,000 Class A Warrants were
exercised providing the Company with net proceeds of $150,000.

In connection with the Company's second public offering, the Company issued
2,472,500 redeemable common stock purchase warrants ("Z Warrant").  Each Z
Warrant entitles the holder to purchase one share of common stock at a price of
$6.00 and terminates on August 25, 1999, unless previously redeemed.  The Z
Warrants are redeemable at the option of the Company at a price of $.05 per
warrant, upon 30 days written notice, provided that the closing price of the
common stock exceeds $9.50 for a period of 20 consecutive business days.  During
fiscal 1995, 300 Z Warrants were exercised providing the Company with $1,800 in
proceeds.  During the year ended December 31, 1996, 100 Z Warrants were
exercised providing the Company with $600 in proceeds.


                                      31
<PAGE>

In connection with the Company's second public offering, the Company sold to its
underwriter and a finder, 215,000 Unit Purchase Options (UPOs) at a price of
$.001 per UPO. Each UPO consists of one share of common stock and one redeemable
common stock purchase warrant, which entitles the holder to purchase one share
of common stock at a price of $7.20. The UPOs are exercisable for a period of
four years commencing August 25, 1995, at a price of $9.90. At December 31, 1997
and 1996, no UPOs have been exercised.

In connection with its third public offering in 1996, the Company sold to its
underwriter warrants to purchase an aggregate of 170,000 shares of  the
Company's common stock at $8.45.  At December 31, 1996, no warrants had been
exercised.

In connection with  the Company issuing 1,452,119 shares of Series B Convertible
Preferred Stock , Class I and Class II Warrants were issued to an outside
investor (the "Purchaser"). The Class I (Mirror) Warrants entitles the Purchaser
to purchase an amount of shares of the Company's Common Stock equal to an
aggregate of up to 19.9% of the shares of Common Stock purchasable under the
Company's outstanding warrants and options on the same terms and conditions
of existing warrant and option holders.  The Purchaser is obligated to exercise
these warrants at the same time the options and warrants of existing holders are
exercised, subject to certain limitations.  The Class II Warrants entitles the
Purchaser to purchase an aggregate of 290,424 shares of the Company's Common
Stock at an exercise price of $7.00 for a term of five years.  At December 31,
1997, no Class I or Class II Warrants have been exercised.

Treasury Stock

From time to time, the Company's Board of Directors has authorized the
repurchase of shares of the Company's common stock in the open market.  During
the year ended December 31, 1997, the Company repurchased 30,600 shares of
common stock at a cost of $137,000.

Stock Option Plan

On November 30, 1992, the Company's Board of Directors and the stockholders
approved the Company's 1992 Employee, Director and Consultant Stock Option Plan
(the "Plan"). On April 26, 1994, the Board of Directors and the stockholders
approved the increase shares of common stock reserved for issuance under the
Plan to an aggregate of 1,000,000 shares. In March of 1996, the Board
recommended and the stockholders subsequently approved, that an additional
500,000 shares of common stock be reserved for issuance under the Plan. Under
the Plan, incentive stock options may be granted to employees of the Company.
Non-qualified stock options may be granted to consultants, directors, employees
or officers of the Company. Most options vest after two or three years from date
of grant with a maximum term of ten years.

In December 1994, the Compensation Committee of the Board of Directors approved
a Stock Option Exchange Program (the "Program").  All employees and consultants
with stock options with exercise prices in excess of $4.40 per share were given
the election to cancel the existing option for new options at a per share price
of $4.40.  Upon election all prior vesting was forfeited and the replacement
options began vesting on the exchange date on a schedule equal to the original
option being canceled.  The $4.40 exercise price was in excess of the then
current fair market value of the share on the date of exchange.  Options for a
total of 270,800 were canceled and reissued under the Program.


                                      32
<PAGE>

The Company applies APB Opinion No. 25 and related interpretations in accounting
for the Plan and as a result has not been recorded as compensation expense.  Had
compensation costs  been determined consistent with FASB Statement No. 123, the
Company's net loss and loss per share would have been as follows:

(in thousands, except for per share data)

                                     1997          1996         1995
                                   ----------  -----------  -----------
Net loss             as reported    ($2,004)    ($ 5,850)    ($ 4,888)
                                   ==========  ===========  ===========
                     pro forma      ($2,370)    ($ 6,308)    ($ 5,328)
                                   ==========  ===========  ===========

Net loss per share   as reported    ($ 0.46)     ($ 0.78)     ($ 0.89)
                                   ==========  ===========  ===========
                     pro forma      ($ 0.50)     ($ 0.84)     ($ 0.97)
                                   ==========  ===========  ===========

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants as follows:

                                   1997           1996           1995
                                   ----           ----           ----
Dividend Yield                     0.00%          0.00%          0.00%
Volatility                         93.9%          63.9%          63.9%
Interest Rate                      5.73%          6.41%          6.37%
Expected Life                         7.97 years     6.00 years     6.00 years

A summary of the stock option transactions follows:

<TABLE>
<CAPTION>
                                                                                  Weighted
                                                                Number of         Average
                                                  Shares      Shares Under        Price per
                                                Available        Option            Share
                                              ------------  ----------------     ----------------
<S>                                             <C>           <C>              <C>
Balance, December 31, 1994                        524,000          476,000                $5.00
Canceled                                          181,167         (181,167)                6.49
Granted                                          (368,400)         368,400                 5.21
Exercised                                               -           (2,100)                4.40
                                              ------------  ----------------     ----------------
Balance, December 31, 1995                        336,767          661,133                 4.80
Increase in Plan                                  500,000                -                    -
Canceled                                           42,600          (42,600)                5.16
Granted                                          (225,400)         225,400                 6.46
Exercised                                               -          (20,700)                4.39
                                              ------------  ----------------     ----------------
Balance, December 31, 1996                        653,967          823,233                 5.25
Canceled                                          154,600         (154,600)                4.67
Granted                                          (296,428)         296,428                 4.13
Exercised                                               -         (138,332)                4.29
                                              ------------  ----------------     ----------------
Balance, December 31, 1997                        512,139          826,729                $5.11
                                              ============  ================     ================
</TABLE>

There were 405,561 and 376,965 shares exercisable under the Plan at December 31,
1997 and 1996, respectively.

The weighted average fair value of options granted under the Plan was $3.53 and
$5.12 for the years ended December 31, 1997 and 1996, respectively.


                                      33
<PAGE>

The following table summarizes information about options outstanding as of
December 31, 1997:

<TABLE>
<CAPTION>
                             Options Outstanding                             Options exercisable
             ----------------------------------------------      ----------------------------------------
                                    Weighted
                                    average        Weighted
 Range of         Number           remaining        average             Number                Weighted
 Exercise       outstanding       contractual      exercise          exercisable at           Average
 Prices         at 12/31/97          life           price              12/31/97            Exercise price
 ------         -----------          ----           -----              --------            --------------
<S>            <C>               <C>             <C>                <C>                   <C><C>
$0.00-$0.95          15,000               4.9          $0.43                   15,000               $0.43
$2.85-$3.80         115,000               9.9          $3.53                   10,000               $3.50
$3.80-$4.75         312,596               7.9          $4.37                  174,629               $4.36
$4.75-$5.70          86,100               7.6          $5.03                   43,600               $5.01
$5.70-$6.65         199,700               5.7          $6.40                   80,498               $6.34
$6.65-$7.60          62,000               7.5          $6.89                   46,501               $6.90
$7.60-$8.55          36,333               5.9          $8.44                   35,333               $8.46
             ---------------                                     ---------------------
                    826,729                                                   405,561
             ===============                                     =====================
</TABLE>

(10) Income Taxes

Income tax benefit attributable to loss from operations differed from the
amounts computed by applying the U.S. federal income tax rate of 34 percent as a
result of the following:

Years Ended December 31                             1997        1996        1995
--------------------------------------------------------------------------------
(in thousands)

     Computed "expected" tax benefit               $ 680     $ 1,989     $ 1,662
     Increase in tax benefit resulting from:
      State net operating loss                       111         338         466
      Loss in foreign subsidiary                       -           -         868
     Decrease in tax benefit resulting from:
      Foreign net loss                                 -           -           -
      Other                                         (78)         (7)         (6)
      Increase in valuation allowance for deferred
        tax assets allocated to income tax
        expense                                    (738)     (2,345)     (2,990)
                                                  -------   ---------   --------
                                                   ($25)       ($25)    $     -
                                                  =======   =========   ========


                                      34
<PAGE>

The tax effects of temporary differences that give rise to significant portions
of the net deferred tax asset are presented below:

Years Ended December 31                                      1997          1996
--------------------------------------------------------------------------------
(in thousands)

             Deferred tax assets:
              Net operating loss carryforwards             $7,001        $6,890
              Plant and equipment                             819             -
              Vacation accrual                                181           135
              Bad debt reserve                                107           107
              Other reserves                                  761           530
                                                        ---------     ---------
                   Gross deferred tax assets                8,869         7,662

             Valuation allowance under SFAS 109            (8,869)       (7,600)
                                                        ---------     ---------
                   Net deferred tax assets                      -            62
             Less deferred tax liabilities:
             Plant and equipment                                -           (62)
                                                        ---------     ---------

                   Net deferred tax                        $    -         $   -
                                                        =========     =========

A valuation allowance in the amount of $8,869,000 and $7,600,000 was established
at December 31, 1997 and 1996, respectively.  This allowance has been
established due to the uncertainty of the Company to benefit from the federal
and state operating loss carryforwards.

Subsequently recognized tax benefit relating to the valuation allowance for
deferred tax assets will be allocated as follows:

Years Ended December 31                                      1997          1996
--------------------------------------------------------------------------------
(in thousands)

             Income tax benefit that would be reported
              in the statement of earnings                 $7,763        $6,775
             Charge to goodwill for recognition of
              acquired tax assets                           1,106           825
                                                        ---------     ---------
                                                           $8,869        $7,600
                                                        =========     =========

The net operating loss carryforwards ("NOLs") for federal and state tax purposes
at December 31, 1997 are approximately $17,474,000 and $17,130,000, respectively
and expire through 2010 and 2009, respectively.

(11) Foreign Operations

Revenue generated by the Company's UK operations was approximately $448,000 for
1995.  No revenue was recorded in 1997 and 1996, since the Company's operations
had been discontinued at the end of 1995.  The Company incurred a loss from its
UK operations of approximately $2.1 million in 1995.  As discussed in note 1, in
order to better utilize its resources on the growth opportunities in the U.S.,
the Company discontinued its UK operations in the fourth quarter 1995 and its
assets, consisting primarily of laser equipment, have been transferred to the
U.S.

                                       35
<PAGE>

(12) Supplementary Cash Flow Information

The following represents supplementary cash flow information:

Years Ended December 31                                1997      1996      1995
--------------------------------------------------------------------------------
(in thousands)
   Interest paid                                       $343      $223      $210
   Non-cash financing activities:
   Equity issued associated with Credit
   Agreement
                                                       $180        $-        $-
                                                   ========  ========  ========
   Issuance of stock for equipment and other             $-        $-      $206
                                                   ========  ========  ========
   Acquisitions:
   Assets acquired                                   $5,571   $10,266    $7,697
   Net liabilities assumed                           (3,548)   (2,533)   (3,310)
   Notes payable                                          -    (1,400)        -
   Common stock issued                                    -    (1,901)   (1,727)
   Common stock issuable                                  -      (432)        -
                                                   --------  --------  --------
   Cash paid                                          2,075     4,000     2,660

   Less cash acquired                                     -    (1,146)     (296)
                                                   --------  --------  --------
   Net cash paid for acquisition                     $2,075    $2,854    $2,364
                                                   ========  ========  ========

(13) Related Party Transactions

In connection with the exercise of stock options, the Company's Executive Vice
President and Director (the "Borrower") issued a promissory note (the
"Promissory Note") to the Company for $594,000. The Promissory Note is due the
earlier of September 2, 2007 or the date upon which the Borrower receives the
proceeds of the sale of not less than 20,000 shares of the shares acquired by
the exercise of the stock options.  Interest accrues at the rate of 6.55%,
compounding annually, and is payable on the earlier of the maturity date of the
Promissory Note or upon certain defined Events of Default.  The Borrower may
prepay all or any part of the Promissory Note without penalty or premium.

                                       36
<PAGE>

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

               None.

                                   PART III

Item 10.       DIRECTORS AND OFFICERS OF THE REGISTRANT

               The response to this item is incorporated by reference from the
               discussion responsive thereto under the captions "Management" and
               "Compliance with Section 16(a) of the Securities Exchange Act of
               1934" in the Company's Proxy Statement for the 1998 Annual
               Meeting of Stockholders.

Item 11.       EXECUTIVE COMPENSATION

               The response to this item is incorporated by reference from the
               discussion responsive thereto under the caption "Executive
               Compensation" in the Company's Proxy Statement for the 1998
               Annual Meeting of Stockholders.

Item 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

               The response to this item is incorporated by reference from the
               discussion responsive thereto under the caption "Share Ownership"
               in the Company's Proxy Statement for the 1998 Annual Meeting of
               Stockholders.

Item 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

               On November 25, 1997, Sight Resource Corporation (the
               "Registrant") completed the closing under the Series B
               Convertible Preferred Stock ("Series B") Purchase Agreement by
               and between the Registrant and Carlyle Venture Partners, L.P.,
               C/S Venture Investors, L.P., Carlyle U.S. Venture Partners, L.P.
               and Carlyle Venture Coinvestment, L.L.C. (collectively the
               "Purchasers"), dated October 9, 1997, pursuant to which the
               Registrant issued to the Purchasers an aggregate of 1,452,119
               shares of Series B Convertible Preferred Stock as well as Class I
               and Class II Warrants for a purchase price of $5,082,417.

               The Class I (Mirror) Warrants entitles the Purchasers to purchase
               an amount of shares of the Registrant's Common Stock, par value
               $.01 per share (the "Common Stock"), equal to an aggregate of up
               to 19.9% (presently 842,294 shares) of the shares of Common Stock
               purchasable under the Registrant's outstanding warrants and
               options on the same terms and conditions of existing warrant and
               option holders. The Purchasers are obligated to exercise these
               warrants at the same time the options and warrants of existing
               holders are exercised, subject to certain limitations. The Class
               II Warrants entitles the Purchasers to purchase an aggregate of
               290,424 shares of the Registrant's Common Stock at an exercise
               price of $7.00 for a term of five years. If the Registrant
               proposes to sell any shares of its Common Stock in the future,
               other than in certain permitted circumstances, the Purchasers
               shall be entitled to preemptive rights to purchase an amount of
               shares of such sale or issuance which would enable the Purchasers
               to maintain the same proportionate percentage of ownership as was
               held by the Purchasers immediately prior to such issuance or
               sale, calculated as if the Series B had been converted and the
               Class II Warrants had been exercised. The Purchasers are entitled
               to "shelf" registration rights and "piggyback" registration
               rights with respect to the

                                       37
<PAGE>

               shares of Common Stock underlying the Series B, the Class I
               Warrant and the Class II Warrants. Each share of Series B is
               convertible into one share of Common Stock, subject to
               adjustment, at the Purchaser's option at any time and at the
               Registrant's option if the price per share of Common Stock during
               any period of thirty consecutive trading days equals or exceeds
               $7.00 at any time during the first three years or $9.00 at any
               time thereafter. The holders of the Series B have the right to
               appoint two directors to the Registrants Board of Directors. In
               connection with the closing of this transaction, the holders
               appointed Richard Darman to the Board of Directors of the
               Registrant.

                                    PART IV

Item 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

Item 14(a)(1). INDEX TO CONSOLIDATED FINANCIAL STATEMENTS COVERED BY REPORT OF
               INDEPENDENT AUDITORS

               The Consolidated Financial Statements of Sight Resource
               Corporation are included in Item 8:

                   -  Independent Auditors' Report
                   -  Consolidated Balance Sheets as of December 31, 1997 and
                        1996
                   -  Consolidated Statements of Operations for the Years Ended
                        December 31, 1997, 1996 and 1995
                   -  Consolidated Statements of Stockholders' Equity for the
                        Years Ended December 31, 1997, 1996 and 1995
                   -  Consolidated Statements of Cash Flows for the Years Ended
                        December 31, 1997, 1996 and 1995
                   -  Notes to Consolidated Financial Statements

Item 14(a)(2)  INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

               Financial statement schedules have not been included because they
               are not applicable or the information is included in the
               financial statements or notes thereto.

Item 14(a)(3)  EXHIBITS

               The exhibits listed on the Exhibit Index below are filed or
               incorporated by reference as part of this report and such Exhibit
               Index is hereby incorporated herein by reference.

                                 Exhibit Index

Exhibit
Number         Description
------         -----------

(3.1)     -    Certificate of Incorporation of the Company (incorporated herein
               by reference to Exhibit 3.1 of the Company's Registration
               Statement filed with the Securities and Exchange Commission on
               Form SB-2 File No. 33-56668)

(3.2)     -    By-Laws of the Company (incorporated herein by reference to
               Exhibit 3.2 of the Company's Registration Statement filed with
               the Securities and Exchange Commission on Form SB-2 File No.
               33-56668)

                                       38
<PAGE>

Exhibit
Number         Description
------         -----------

(3.3)     -    Certificate of Designation for Series A Junior Participating
               Preferred Stock (incorporated herein by reference to Exhibit 1 of
               the Company's Report on Form 8-K filed with the Securities and
               Exchange Commission on May 13, 1997)

(3.4)     -    Certificate of Registration, Preferences and Rights of Series B
               Convertible Preferred Stock (incorporated herein by reference to
               Exhibit 4.1 of the Company's Report on Form 8-K filed with the
               Securities and Exchange Commission on December 9, 1997)

(4.1)     -    Article 4 of the Certificate of Incorporation (incorporated
               herein by reference to Exhibit 3.1 of the Company's Registration
               Statement filed with the Securities and Exchange Commission on
               Form SB-2 File No. 33-56668)

(4.2)     -    Form of Common Stock Certificate (incorporated herein by
               reference to Exhibit 4.2 of the Company's Registration Statement
               filed with the Securities and Exchange Commission on Form SB-2
               File No. 33-56668)

(4.3)     -    Warrant Agreement dated August 24, 1994 between the Registrant
               and American Stock Transfer and Trust Company (incorporated
               herein by reference to Exhibit 4.5 of the Company's Registration
               Statement filed with the Securities and Exchange Commission on
               Form S-1 File No. 33-77030)

(4.4)     -    Form of Redeemable Warrant Certificate (included in 4.3 above)

(4.5)     -    Form of Class A Warrant (incorporated herein by reference to the
               Company's Form 10-K for the year ended December 31, 1994 filed
               with the Securities and Exchange Commission as Exhibit 4.7)

(4.6)     -    Form of Class 1 (Mirror) Warrants (incorporated herein by
               reference to Exhibit 4.2 of the Company's Report on Form 8-K
               filed with the Securities and Exchange Commission on December 9,
               1997)

(4.7)     -    Form of Class II Warrants (incorporated herein by reference to
               Exhibit 4.3 of the Company's Report on Form 8-K filed with the
               Securities and Exchange Commission on December 9, 1997)

+(10.1)   -    Employment Agreement, dated as of December 1, 1992, between the
               Registrant and William G. McLendon, as amended (incorporated by
               reference herein to Exhibit 10.5 of the Company's Registration
               Statement filed with the Securities and Exchange Commission on
               Form S-1 File No. 33-77030)

+(10.2)   -    1992 Employee, Director and Consultant Stock Option Plan
               (incorporated by reference herein to Exhibit 10.7 of the
               Company's Registration Statement filed with the Securities and
               Exchange Commission on Form S-1 File No. 33-77030)

+(10.3)   -    Employment Agreement for Stephen M. Blinn, as amended
               (incorporated by reference herein to Exhibit 10.18 of the
               Company's Registration Statement filed with the Securities and
               Exchange Commission on Form S-1 File No. 33-77030)

+(10.4)   -    Employment Agreement, dated as of February 24, 1995, between the
               Registrant and Elliot S. Weinstock, O.D. (incorporated herein by
               reference to the

                                       39
<PAGE>

Exhibit
Number         Description
------         -----------

               Company's Form 10-K for the year ended December 31, 1994 filed
               with the Securities and Exchange Commission as Exhibit 10.9)

+(10.5)   -    Amendment Number 1, dated as of January 2, 1997, to Employment
               Agreement between the Registrant and Elliot S. Weinstock, O.D.
               (incorporated herein by reference to Exhibit 10.1 of the
               Company's Form 10-Q filed with the Securities and Exchange
               Commission on May 6, 1997)

**(10.6)  -    Contract for Professional Services, dated December 21, 1994,
               between the Registrant and Massachusetts Eye and Ear Associates,
               Inc. (incorporated herein by reference to the Company's Form 10-K
               for the year ended December 31, 1994 filed with the Securities
               and Exchange Commission as Exhibit 10.10)

**(10.7)  -    Agreement dated December 21, 1994 between the Registrant and
               Massachusetts Eye and Ear Infirmary (incorporated herein by
               reference to the Company's Form 10-K for the year ended December
               31, 1994 filed with the Securities and Exchange Commission as
               Exhibit 10.11)

(10.8)    -    Asset Purchase Agreement dated February 24, 1995 between the
               Registrant, CEA Acquisition Corporation, Cambridge Eye
               Associates, Inc. and Elliot S. Weinstock, O.D. (incorporated
               herein by reference to Exhibit 2.1 of the Company's Form 8-K
               filed with the Securities and Exchange Commission on March 8,
               1995)

(10.9)    -    Credit Agreement, dated February 20, 1997, between the Company
               and Creditanstalt Corporate Finance Corporation, Inc.
               (incorporated herein by reference to Exhibit 10.1 of the
               Company's Form 8-K filed with the Securities Exchange Commission
               on March 7, 1997)

(10.10)   -    Asset Purchase Agreement dated August 24, 1995 between the
               Registrant, Douglas Vision World, Inc., S.J. Haronian, Kathleen
               Haronian, Lynn Haronian, Shirley Santoro and Tri-State Leasing
               Company (incorporated herein by reference to Exhibit 2.1 of the
               Company's Form 8-K filed with the Securities and Exchange
               Commission on September 8, 1995)

(10.11)   -    Asset Transfer and Merger Agreement dated as of July 1,1996 by
               and among Sight Resource Corporation, E.B. Acquisition Corp., The
               E.B. Brown Optical Company, Brown Optical Laboratories, Inc.,
               E.B. Brown Opticians, Inc., Gordon Safran and Evelyn Safran
               (incorporated herein by reference to Exhibit 2.1 of the Company's
               Form 8-K filed with the Securities and Exchange Commission on
               October 3, 1996.)

(10.12)   -    Form of Rights Agreement dated as of May 15, 1997 between the
               Company and American Stock Transfer & Trust Company (incorporated
               herein by reference to Exhibit 1 of the Company's Form 8-K filed
               with the Securities and Exchange Commission on May 13, 1997)

(10.13)   -    Stock Purchase Agreement dated as of July 1, 1997 by and among
               Marjory O. Greenberg, As Testamentary Executrix of the Succession
               of Tom I. Greenberg, Peter Brown, and Vision Plaza Corp.
               (incorporated herein by reference to

                                       40
<PAGE>

Exhibit
Number         Description
------         -----------

               Exhibit 10.1 of the Company's Form 10-Q filed with the Securities
               and Exchange Commission on November 12, 1997)

(10.14)   -    Promissory Note dated as of September 2, 1997 between Sight
               Resource Corporation and Mr. Stephen Blinn (incorporated herein
               by reference to Exhibit 10.2 of the Company's Form 10-Q filed
               with the Securities and Exchange Commission on November 12, 1997)

(10.15)   -    Series B Convertible Preferred Stock Agreement (incorporated
               herein by reference to Exhibit 10.1 of the Company's Form 8-K
               filed with the Securities and Exchange Commission on December 9,
               1997)

(21)      -    Subsidiaries of the Company; as amended (filed as Exhibit 21)

**        -    Confidential Treatment has been granted by the Securities and
               Exchange Commission.

+         -    Management contract or compensatory plan, contract or
               arrangement.

Item 14(b)     REPORT ON FORM 8-K

               On December 9, 1997, the Company filed a Form 8-K related to a
               Series B Convertible Preferred Stock Purchase Agreement by and
               between the Company and Carlyle Venture Partners, L.P., C/S
               Venture Investors, L.P., Carlyle U.S. Venture Partners, L.P. and
               Carlyle Venture Coinvestment, L.L.C., dated October 9, 1997.

                                       41
<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, in Holliston,
Massachusetts on March 27, 1998.



                                       SIGHT RESOURCE CORPORATION


                                       By: /s/ William T. Sullivan
                                           -------------------------
                                           William T. Sullivan
                                           President and Chief Executive Officer

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

<TABLE>
<CAPTION>


  Signatures                                  Title                                  Date
  ----------                                  -----                                  ----
<S>                                           <C>                                    <C>
By:  /s/ William T. Sullivan                  President (principal executive         March 27, 1998
     ---------------------------------        officer), Chief Executive
     William T. Sullivan                      Officer and Director

By:  /s/ William G. McLendon                  Chairman                               March 27, 1998
     ---------------------------------
     William G. McLendon

By:  /s/ Stephen M. Blinn                     Executive Vice President,              March 27, 1998
     ---------------------------------        and Director
     Stephen M. Blinn

By:  /s/ Elliot S. Weinstock, O.D.            Executive Vice President               March 27, 1998
     ---------------------------------        and Director
     Elliot S. Weinstock, O.D.

By:  /s/ Richard G. Darman                    Director                               March 27, 1998
     ---------------------------------
     Richard G. Darman

By:  /s/ Gary Jacobson, M.D.                  Director                               March 27, 1998
     ---------------------------------
     Gary Jacobson, M.D.

By:  /s/ Allen R. Kirkpatrick                 Director                               March 27, 1998
     ---------------------------------
     Allen R. Kirkpatrick

By:  /s/ J. Mitchell Reese                    Director                               March 27, 1998
     ---------------------------------
     J. Mitchell Reese

By:  /s/ Russell E. Taskey                    Director                               March 27, 1998
     ---------------------------------
     Russell E. Taskey

By:  /s/ Amy Feldman                          Corporate Controller (principal        March 27, 1998
     ---------------------------------        financial and accounting officer)
     Amy Feldman
</TABLE>


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